Takasago Thermal Engineering : CORPORATE REPORT 2021

TAKASAGO CORPORATE REPORT

2021

Environmental Creator®

RT O P E R E AT R O P R O C O G A S A K TA

TAKASAGO

CORPORATE REPORT

2021

Environmental Creator®

Mission and Targets as an

"Environmental Creator® "

CONTENTS

Principles and strategies

Missions and Targets as"Environmental Creator® "	01
Content and Editorial Policy	02
Corporate Mission, Management Philosophy,
and Action Guideline (TakasagoWay)	03
Message from CEO	05
Message from COO	07
History of Value creation	13
Value Creation Model	15
Message from CFO	17
Financial and Non-Financial Performance	21
FY2020 Highlights	23

Commitment to ESG

Principles and strategies

S CommitmentSociety to

Human and Organizational Capital:
Employee Satisfaction	45
	Establishment of TakasagoWay	49
Special Feature
Harmony with Society	51
G	GovernanceCommitment to
Enhancement of Corporate Governance	53
Management Team	59
Interviews with Outside Director	63
Risk Management	65
Supply of Quality that Generates Satisfaction
and Trust	69
Compliance	71

"Environmental creation needed by the earth and people"

Takasago Thermal Engineering Group, as an "Environmental Creator® ,"will commit to the creation of comfortable and optimum space and the conservation of the global environment through the development of a one-stop service business targeting building space with HVAC construction at the core and

ESG and SDGs Promotion System	25
Progress in the Business
Material Issues			27
		Business in Japan	73
TCFD Initiatives and Information Disclosure	29
		Interview with CDXO	77
	Special Feature
E	Commitment to			International Business	79
the Environment			Environmental Business	83
			Hydrogen Business	31
Special Feature
			Takasago Thermal Engineering
Special Feature		33	Basic Information
			Innovation Center	85
			Corporate Overview
Research and Development	35
Financial and Non-Financial Data	89
Natural Capital: Environmental Conservation	39
	Energy-Saving and Environmental
Special Feature	41
			Impact Reduction Technology

Editorial policy

The Takasago Thermal Engineering Group started to issue the Corporate Report (an integrated report) in 2017, and this is the fifth report. We have kept in mind that this report contains useful information for those who are interested in the current situation and medium- to long-term future of the Takasago Thermal Engineering Group. We will continue to improve the quality of the report based on your feedback and suggestions.

●Target organizations for this report	●Month of issue
Takasago Thermal Engineering Co., Ltd. (all offices both in Japan and overseas) and	December 2021
Takasago Thermal Engineering Group companies	●Referenced guidelines
* The entire Takasago Thermal Engineering Group is referred to as"the Takasago Thermal
Engineering Group"or"our Group,"and Takasago Thermal Engineering Co., Ltd. alone is	"International Integrated Reporting Framework," International
referred to as"Takasago Thermal Engineering"or"we."	Integrated Reporting Council (IIRC)
●Reporting period	"Guidance for Integrated Corporate Disclosure and Company-
Investor Dialogues for Collaborative Value Creation," Ministry of
April 1, 2020 to March 31, 2021	Economy, Trade and Industry (METI)
* Some information before/after this period is included.	"G4 Sustainability Reporting Guidelines (4th edition)," Global
	Reporting Initiative (GRI)

the establishment of innovative business fields in the

energy sector, among other sectors.

Relationship of major reporting materials

TAKASAGO

CORPORATE REPORT

2021

環境クリエイター ®

Corporate Report

(This booklet)

Technology & Services

(website)

ESG･CSR

(website)

Investor

Relations

(website)

●CSR Activities Report(including data section) ●Corporate Governance Report

●Brief note on the settlement of accounts ●Securities report ●Shareholder newsletter ●Financial Results (in English)

●Financial results presentation(reference materials) ●Green Air® Tech

For details, see the website of Takasago Thermal Engineering https://www.tte-net.com

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TAKASAGO CORPORATE REPORT 2021 02

Corporate Mission,

Management Philosophy,Principles and strategies and Action Guideline

As a pioneer of HVAC technology, Takasago Thermal Engineering, with adherence to the Corporate Mission of "Contribution to society through personal harmony and creativity," has been working on the provision of the best product quality, ingenious technological development, and the development of human resources that can live up to these two. We will remain committed to raising different stakeholders'hopes and contributing to society after the 100th anniversary of our founding as well.

Corporate Mission

Management Philosophy

Contribution to society through personal harmony and creativity

1 To serve society through the development of business activities that focus on the creation of the best product quality

2 To develop distinctive technology that serves our customers'needs and utilizes the creativity of all employees

3 To enhance personal character and harmony between people by nurturing talent and promoting mutual respect

Corporate

Mission

Management

Philosophy

Action Guideline

TakasagoWay

Declares the corporate attitude straightforward through a summarized expression of the concept of the management philosophy

Expresses Takasago Thermal Engineering's basic principles that should be practiced through daily business activities

Values based on which each person thinks and acts by themselves to embody the corporate mission, management philosophy

It has been over 30 years since we formulated the action guideline in 1985. In order to align the Takasago Thermal Engineering Group employees across the world in the same direction in view of our 100th anniversary in 2023, we renewed the action guideline as"TakasagoWay."By familiarizing TakasagoWay, which specifies the company's DNA (or values) in the form of three core values and 12 phrases for understanding the core values deeply, with the employees to encourage each of them to act autonomously, we will build up a solid foundation for the next 100 years.

Corporate

Mission

Management

Philosophy

Action Guideline

TakasagoWay

Long-Term Management Framework

GReeN PR!DE 100

Beyond

Offer more value than is expected

Pride

Get through a task openly

and squarely

01. If anything is needed but not available, we will make it ourselves

02. Take it not as someone's matter but your own matter

1. Place yourself in the other person's position
2. Go beyond conventional frameworks

05. Takasago as a company respecting safety, Takasago as a company respecting compliance

06. Respectable behaviors

07. Have eagerness and sincerity for whatever you do

08. Give it a try, offer opportunities to give it a try

Medium-Term Business Plan iNnovate on 2023 go beyond!

Trust

Ties with other people

are a fortune

1. It is people, not organizations that you please
2. Respect all people involved
3. Help and supplement each other
4. One for All, All for One

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Message from CEO

Principles and strategies

Riding on the strength as a professional comfortable space creator, we will go on driving innovative changes to achieve a low carbon society as a global environmental solution company.

At present, the business environment is steady as the manufacturing sector, such as semiconductors and electronics parts, is thriving and redevelopment projects in large urban cities are in progress, while it is forecast that future workforce supply capabilities at a macro level will decline in view of the falling population in the country and the year 2024 problem. In addition to enhancing each person's productivity to improve our business competitiveness, we believe that expanding solution fields contributing to the global environment with the air conditioning business at the core will increase our corporate value and meet the expectations of stakeholders who support us. As the"Takasago as technology"that handles heat and energy, and a professional company that is currently focusing on energy services and green hydrogen to offer a comfortable environment, we

will work on business model reform and our business fields expansion on the basis of air conditioning technology capable of creating comfortable space.

We are operating in 10 countries centered on Southeast Asia apart from the mother market Japan. Although the COVID-19 impact is huge, we have to enhance our presence in the global market to contribute to the global environment in view of a post-COVID-19 world.

Citing the phrase"Strategy the second class, action the first class"in-house, we always stress that it is important to act as soon as you form a strategy and to review it flexibly according to the action result.

As a global environmental solution company, we will contribute to the realization of a low carbon society with promptness of action in mind.

Toward increasing non-financial value―investment in

human resources, Takasago brand

Rise in uncertainties like climate change and contributions to a

low carbon society

While we do not have hardware assets such as large production bases, our Group employees are working with makers and partner companies to create various spaces. Business is people, indeed, and no other asset is greater than people. With further investment in human resources, we will help each employee stimulate one another on a daily basis, demonstrate their ability to the fullest, and offer new values to society sustainably.

Takasago Thermal Engineering is known within the industry, but public awareness of us is still low.

opportunity. In the face of the situation, we have to raise the Takasago brand and its visibility through active public relations emphasizing efforts for environmental creations based on our high-level construction management and energy-savingtechnology-led comfortable spaces creation. We will try to further enhance human resources value as a non-financialoff-balance-sheet asset, and Takasago brand.

While 2021 witnessed the Olympics and Paralympics Games, put off for one year, draw to close, COVID-19 is still casting a shadow globally partly because of the emergence of mutant strains. Apart from COVID-19, as extreme weather events such as record heavy rains and large wildfires are raging, uncertainties are rising to such an extent that VUCA does not have to be used any longer. On the

other hand, what is becoming more certain is that there is no time left to lose for accelerating efforts for decarbonization. Of the energy consumed in buildings, air conditioning accounts for as much as r o u g h l y 4 0 % . W h i l e r e c o g n i z i n g o u r s o l i d responsibility for realizing a low carbon society, we feel that it has huge potential for our growth.

Environmental and ESG efforts will prevail globally at an accelerating pace not as a cost but as an

First step toward the new Takasago

Takasago, which marks our 100th anniversary in	comfortable spaces and the realization of a low
2023, has to move toward the next 100 years. As a	carbon society based on the establishment of new

Further strengthening Takasago Thermal Engineering's core value,

on-site capabilities and reforming the business model

leading air conditioning company, we will take	business fields. Your support for us would be
steady and powerful steps toward a global	appreciated.
environmental solution company contributing to the
global environment through the creation of

Our main business is air conditioning and since our founding in 1923, we have applied air conditioning and heat storage technologies to create comfortable infrastructures needed by customers, which are required to be environmentally friendly in recent times. This is supported by our on-site capabilities built on knowledge and technologies accumulated

through construction results over the ages. In addition to promoting ongoing DX and off-site construction work, we will accelerate research and development in the Takasago Thermal Engineering Innovation Center, which was newly built in Tsukubamirai City, Ibaraki Prefecture, to further strengthen our on-site capabilities.

Atsushi Ouchi

Chairman and Representative Director

CEO

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Message from COO
Principles and strategies

As an environmental creator® that creates an environment the earth and people need, we will contribute to the development of a sustainable society.

Kazuhito Kojima

President and Representative Director

COO

Dear stakeholders

While our 100th anniversary is approaching, we are facing various management issues including the development of the environment for a low carbon society, COVID-19, and the proliferation of digital technology.

Amid an era when future prediction is said to be difficult, we will open up the future with our technology capable of addressing global issues based on the DNA of Takasago Thermal Engineering that has been seeking to offer more added value than our customers and society expect.

Today is symbolized by the acronym ESG, which we recognize as exactly embodying Takasago Thermal Engineering's corporate mission, management philosophy. Since our founding, we have adhered to the corporate mission"Contribution to society through personal harmony and creativity,"committing to enriching people's life and developing a socioeconomy through HVAC.

I believe that the basic principle of corporate activities is understanding nature's law, putting harmony among nature, society, and humans before anything else, and acting with restraint. Principles must be expressed by deeds, not by words. To achieve"carbon neutrality by 2050"as declared by the government, a pile of challenges lies ahead, but as an environmental creator®, we will lead society, dedicated to the realization of a low carbon society.

We would appreciate it if you could expect much from our future and provide your continued support to us.

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