Asahi Holdings, Inc.

Financial Results for Q1 FY2023.3

July 28, 2022
These forecast performance figures are based on information currently available to the company’s management and certain
assumptions judged rationally. Accordingly, there might be cases in which actual results materially differ from forecasts of thisreport.
Copyright © Asahi Holdings, Inc. All rights reserved.

I.
II.

Financial Results for Q1 FY2023.3(April 1, 2022 ~ June 30, 2022)

Appendix

Copyright © Asahi Holdings, Inc. All rights reserved.

10１ Consolidated Results
Unit：billion yen
Q1FY2022.3
ResultQ1
FY2023.3
ResultFY2023.3

YoY
ChangeForecast

YoY
ChangeRevenue

50.4

59.7

9.3

200.0

7.6

Operating profit

6.9

5.7(1.2)

24.0(2.4)

13.7％

9.5%(4.2％)

12.0％(1.7％)

Profit before tax

6.8

6.1(0.7)

23.5(2.9)

Profit※1

4.8

4.3(0.6)

16.0(2.7)

Capex

2.1

1.3(0.9)

6.5(1.8)

Depreciation

0.7

0.8

0.1

3.0

0.3

Ratio

※1 ※Profit attributable to owners of parent

Copyright © Asahi Holdings, Inc. All rights reserved.

2

02 Business Environment in Each Segment
Precious Metals BusinessIn the precious metals recycling sector in Japan and Asia, the volume of collection from jewelry and electronics field increased while thevolume of collection from dentistry and catalyst decreased.
In refining business in North America, the volume of product processing and sales increased.

Business field

Dentistry
Jewelry
Catalyst
Electronics sector
North American refining

Business Environment

Decreasing trend in collection volume due to the penetration of alternative products caused by soaring
prices of precious metals
Purchase demand expanded in line with soaring precious metals prices, and collection volume from buyers
increased significantly.
The volume of collection decreased both In Japan and overseas due to the decrease in the number ofautomobiles sold.
Although some electronics units was influenced by reduction in production caused by Shanghai Lock down, thevolume of collection increased by demand expansion for industrial use.
The volume of product processing and sales increased.

Environmental Preservation Business
The volume of collection from educational institutions, medical, construction and chemical industries increased, but food service
industries remained sluggish. The volume of collection from the Automobile decreased by the semiconductor shortage

Industry

Business Environment

Educational/Researchinstitution

The amount of collection in education industry increased.

Construction

The number of housing starts was on a recovery and the volume of industrial waste generated is increasing.

Automobile

The volume of industrial waste decreased due to decline in plant usage caused by semiconductor shortage.

Food

The decline of demand in the food service industry continued, leading to a decrease in the volume of waste.
The volume of medical wastes collection and incineration increased due to the increase in accommodations
for infected patient.
The volume of collection of disinfectant-related products increased.

MedicalChemicalCopyright © Asahi Holdings, Inc. All rights reserved.

3

03 Precious Metals Business
Precious Metals Recycling Business(Japan and Asia)

Refining Business in North America

Q1 FY2023.3 Result
Although precious metals sales was strong,expenditure related to the launch of new plant inBando, etc. increased.

Q1 FY2023.3 Result
The volume of product processing and sales increased.

➡ Increase in both revenue and profit➡Increase in revenue and decrease in profit

Precious Metals

Q1FY2022.3Results[Unit: ¥ billion]

Q1
FY2023.3
Results

FY2023.3

YoY Change

Forecast

YoY Change

Revenue

46.3

55.3

9.0

181.0

7.1

Operating Profit

7.2

5.6(1.6)

24.0(2.6)

15.5%

10.0%

(5.5%)

13.3%(2.0%)

Ratio

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4

04 Ref: Volume of Precious Metals Collected

The volume of gold collected increased mainly from jewelry business

The volume of palladium collected decreased due to the penetration of alternative dental
products caused by the soring prices of precious metals and the decrease in new carproduction

Au

Pd

Unit：kgPt

18,054

6,364

6,280

5,009

4,153
1,576

1,390

FY2022/3

FY2023/3

FY2023/3

FY2022/3

FY2023/3

FY2023/3

Q1

Q1

Plan

Q1

Q1

Plan

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1,287

1,542

FY2022/3

FY2023/3

FY2023/3

Q1

Q1

Plan

5

05 Environmental Preservation Business
Environmental Preservation■Positive impact
Thanks to the recovery of industrial production activities,
the disposal volume of industrial waste is gradually increasing.
■Negative impact
JW Glass Recycling Co., Ltd. was removed from the scope of consolidation, etc.

➡Increaseinbothrevenue and profit

Environmental
貴金属Preservation

Q1
FY2022.3
Results

Q1
FY2023.3
Results〔Unit：¥ billion〕

FY2023.3
増減

YoY Change

Forecast増減YoY Change

Revenue

4.2

4.4

0.3

19.0

0.4

Operating profit

0.7

0.9

0.3

3.5

(0.2)

16.0%

21.0%

5.1%

18.4%

(1.7%)

Ratio

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6

06 Financial Position[Unit: ¥ billion]

Current Assets
Tradereceivables

Mar 31,2022

June 30,2022

Change

241.8

232.3

(9.5)

151.4

125.4

(26.1)

Inventories

63.4

70.8

7.4

Others

26.9

36.1

9.2

Non-current assets

56.6

54.8

(1.8)

Total Assets

298.4

287.1

(11.3)

Liabilities

193.3

176.4

(16.8)

Bonds and loans

150.9

142.9

(8.0)

Others

42.3

33.5

(8.8)

Capitals

105.1

110.6

5.5

Total equity and liabilities

298.4

287.1

(11.3)

Copyright © Asahi Holdings, Inc. All rights reserved.

Remarks

The greater part of the balance and changes are receivables that constituteborrowings to match metal procurement in North American business.
The greater part of the balance and change are collected raw materials that
contain precious materials, works-in-progress and finished products in the
precious recycling business. Risks associated with price fluctuations and quality
degradation remain minimal because raw materials are purchased after the
precious metal content is analyzed and the precious metal prices are hedged on thefutures market at the time of the purchase.

The greater part of the balance is changes in loans for Advance Trading in North
American business. Risks associated with price fluctuations and bad debts
remain minimal because procurement of metals for Advance Trading by loans istaken out within the scope of the precious metal content analysis conducted on
incoming raw materials and precious metal prices are hedged on the futures market
at the time of the repayment.

7

07 Cash Flow
Operating CF

Q1 FY2023.3

Changes in inventories

Changes in trade andother receivables

Changes in trade andother payables

OthersInvestment CF
Financing CF

Changes in loans andbonds

(1.4)

(7.4)

The greater part of the changes is the collected raw materials that containprecious materials, works-in-progress and finished products in precious metal
recycling business. Risks associated with price fluctuations and quality
degradation remain minimal because raw materials are purchased after theprecious metal content is analyzed and the precious metal prices are hedged on thefutures market at the time of the purchase.

36.2

Of the changes, (34.7) billion yen are matching claims for loans for AdvanceTrading in North American business. Risks associated with price fluctuations andbad debts remain minimal because procurement of metals for Advance Trading byloans is taken out within the scope of the precious metal content analysis conducted
on incoming raw materials and precious metal prices are hedged on the futures
market at the time of the repayment.

(30.4)Of the changes, (31.5) billion yen are for loans for Advance Trading in North
American business. Changes in loans for Advance Trading in North Americanbusiness is classified as changes in trade receivables in Operating CF, not Financing
CF. There are no risks associated with quality degradation and bad debts
because all loans are used for metal procurement for Advance Trading. In addition,risks associated with price fluctuations remains minimal because the precious
metal prices are hedged on the futures market.

0.2
0.7
4.2
7.8

Dividends(3.5)

Others(0.1)

Effect of exchange rate change
on cash and cash equivalents
Changes in cash deposits

Copyright © Asahi Holdings, Inc. All rights reserved.

Remarks[Unit: ¥ billion]

(0)
3.4
8

08 Shareholder Return Policy
Basic Policy:
We will strive to consistently pay dividends without decreasing the annual dividend level from the current level.
Moreover, we aim to maintain a dividend payout ratio of 40%, while retaining sufficient internal reserves for capital
investment and M&A for future growth.

Changes in dividends per share(yen)10080

Commemorative dividend
Year-end dividendInterim dividend
6060402001515
FY2018.3

904545404545

FY2021.3

FY2022.3

FY2023.345353031.5

9085
65(Forecast)

3030

FY2019.3

FY2020.3

Earnings pershare (yen)135.39114.07125.12326.90231.27203.45

Dividend payout
ratio (%)

23.3

52.6

52.0

26.0

38.9

44.2

* The Company conducted a stock split with a ratio of two-for-one on April 1, 2021. The figures before and including FY2020 are converted
to the figures reflecting the stock split.
Copyright © Asahi Holdings, Inc. All rights reserved.

9I.
II.

Financial Results for Q1 FY2023.3(April 1, 2022 ~ June 30, 2022)

Appendix

Copyright © Asahi Holdings, Inc. All rights reserved.

10

Ref

Main Revenue Elements of Precious Metals Business

Precious Metals Recycling Business

Refining Business in North America

Income from yield differential is added to refining
fees, which is a stable source of fixed income.

Refining fees are a stable source of income. In
financial revenue, earning opportunities increase inline with the growth in incoming raw materials.

Segment

Refining fees
Precious Metals
Recycling

Yield differential(differential between actual
yield and contracted yield =free metal)

Refining fees
Yield differential
Refining in North
America

Impact on revenue

Category(differential between actual
yield and contracted yield =free metal)■Refining fees increase in line with the expansion of the amount collected.
■The unit price for refining fees is higher for those that require difficult pre-processing,which means the average unit price rises when the proportion of items that require difficult
processing is higher.

■ The volume of free metal expands when the actual yield climbs on account ofimprovements in technical capabilities and processes.

■ Income from free metal increases in line with a hike in prices.
■ The amount of fees expands when the volume of incoming raw materials (dore) increases.
■ The unit fee cost does not change over short term because contracts are long-term.
■ The volume of free metal expands when the actual yield climbs on account of improvements

in technical capabilities and processes.

■ Income from free metal increases in line with a hike in prices.
■ Income opportunities for financial transactions increase when a larger amount of raw

materials is received.

Financial revenue■ Income increases when the interest rate for advanced delivery is improved in contracts withmines.

■ Income increases when the period of advanced delivery is extended.
■ Financial revenue increases when metal procurement costs fall, and the interest rate spread

expands.

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11

Ref

“Advance Trading” in North American Business✓Provide “Advance Trading” to return products by shortening the delivery time from the arrival of raw materials
to the return of products.
✓Will receive "interest for the number of days delivered in advance" from the clients by accepting the delivery
before the contract delivery date.
✓There is no risk of bad debt since advance delivery is performed after receiving raw materials from the client.

Financial
Institutions

Clients①Raw materials②Loan③Advance delivery④Finishing⑤Repayment

Development of new finance services suchas structured finance

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12Sound Financial Base

Ref

Financial Position

Equity Ratio[Unit: ¥ billion]

June 30, 2022

Excluding North
America businessCurrent
Assets

232.3

122.3

Non-current
assets

54.8

54.8

Total
Assets

287.1

177.1

Liabilities

176.4

66.5

Capitals

110.6

110.6

Total equity
and liabilities

287.1

177.1




June 30, 2022

38.5%
loan for “Advance Trading”

Excluding North
America business

62.5%

Enabling large-scale funding for the finance services with low interest.
To expand our business, refining and finance is indivisible.

In general, rising interest will not affect the profitability of the North American business.

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13

Ref

Digital Transformation Business of Waste Treatment

 Launched SaaS services that digitalize flow of industrial waste managementin June 2022

Disposalcompany

Collection andtransportation
providerWastegenerator

The service update for disposal company andwaste generator scheduled in January 2023.

✓ Service examples
User registration

Provider selection andorder registration

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Collection reservation

Reception and disposal
reservation

Issuance of electronic
manifesto

Completion of collectionand disposal

14

Progress of Capital Investment

Ref

Investment purposes: Business expansion, margin improvement

Total amount of investment in Mid-term business plan: ¥22.7billion

Bando Plant Largest state-of-the-art precious
metals recycling plant in Asia

FY2022/3
Mid-term
planPrecious
MetalsNorth American Refining Business Launching warehouse business &strengthening existing equipment

FY2023/3

ResultMid-term
plan

New incinerator in Yokohama Large incinerator in eastern Japan

Unit: ¥billion
RemarkForecast

6.3

7.7

3.2

5.8 ―

Domestic

4.7

4.0

1.9

2.2

Approx. ¥300 million as an investment in building ahydrogen supply chainOverseas1.6

3.6

1.3

3.6

Delay in facility to be completed in FY2022.3 andadditional investment

Environmental
Preservation

0.8

0.7

2.2

0.7 Partial review of investment plan by reviewing processTotal

7.1

8.3

5.4

6.5 No change in total investment for 3 years

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15

RefBando Plant

 The largest state-of-the-art precious metals recycling plant in Asia

→ Consolidating processes from raw material collection to finishing→ Improving production efficiency over the long term by introducing cutting-edge IoT technology.
→ Excellent industrial production area from the viewpoint of BCM (Business Continuity Management).
→ Certified as top tier and “ZEB Ready” by Building-Housing Energy-efficiency Labeling System of Japan's
Ministry of the Environment.

© BANDO CITY.

Ref: Bando City Resilience Plan
In the "Bando City Resilience Plan" created by Bando City, which learned from the lessons from the 2011 Great
East Japan Earthquake. From the perspective of BCM and supply chain, posted with the goal of "Goal 5: Do notcause economic activities to malfunction."<Source> https://www.city.bando.lg.jp/page/page006456.html
https://www.mlit.go.jp/common/001031559.pdf

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16

Ref

Climate Change Countermeasures

 Reduced energy-derived CO₂ emissions in FY2021 by 27% compared to base year Reduced for Scope1: 90 thousand t , Scope2: 13 thousand t, Scope3: 137 thousand t
 The current status of responses based on TCFD recommendations is the following:
Recommended
disclosures

Governance

Strategy

Risk Management

Situation of efforts / Action policy• Deliberating on climate change issues at the management level in the Sustainability
Committee, which is chaired by CEO, and consists of directors from Business Unit,
Technical Unit, and Administration Unit
• Building a system to supervise the matters discussed by the Sustainability Committee at theBoard of Directors• Conducting scenario analysis of risks and opportunities at 4℃ and 1.5℃
• Setting "Reduction of CO2 emissions" as one of the business materiality themes• Reporting the progress of measures on risks and targets extracted from scenario analysis,
etc. to the Sustainability Committee and the Board of Directors on a regular basis• Has set a target of reducing energy-derived CO2 by 50% from the FY2015 level by 2030

Metrics and Targets • Has declared that we will achieve carbon neutrality in 2050 (Scope 1 and Scope 2)• Results of CO2 emissions in FY2021: Scope 1 -> 90kt, Scope 2 -> 13kt, Scope 3 -> 137kt

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17

Ref
Au

Trend in Metals Prices (Au, Palladium)
9,000

FY2021/3

FY2023/3 〔Unit：Yen/g〕

FY2022/3

8,500
8,000
7,500
7,000
6,500
6,000
5,500
5,000
4,500
4,000

2020/07

2020/102021/01

2021/04

2021/072021/102022/01

2022/04

Palladium〔Unit：Yen/g〕

13,000

FY2021/3

FY2023/3

FY2022/3

12,00011,00010,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000

2020/07

2020/102021/01

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2021/04

2021/072021/102022/01

2022/04

18

Ref

Trend in Metals Prices (Platinum),Mid-term Average Price

Platinum
5,000

FY2021/3〔Unit：Yen/g〕

FY2022/3

FY2023/3

4,500
4,000
3,500
3,000
2,500
2,000

2020/07

2020/102021/01

2021/04

2021/07

Mid-term Average Price2021/102022/01

2022/04

Unit: Yen

Precious
Metal Prices(per gram)

Q1
FY2022/3

Q1
FY2023/3

Mid-term
average priceMid-term
average price

Gold

6,421

7,832

1,411

Palladium

9,805

8,950(855)Platinum

4,241

4,087(154)

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Change◆Reference
Gold…Quote from mining company
Palladium …Nikkei low price
Platinum …retail price(exclude tax)
19