Asahi Holdings, Inc.

Financial Results for Q2 FY2023.3

October 27, 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 Q2 FY2023.3(April 1, 2022 ~ September 30, 2022)

Appendix

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1

01 Consolidated Results
Unit：billion yenQ2Q2

FY2022.3

FY2023.3

ResultsPlan

FY2023.3

Results

Initial Plan

Revised Plan

Revenue

96.9

100.0

132.7

200.0

270.0

Operating profit

13.7

12.0

11.5

24.0

24.0

14.1%

12.0%

8.7%

12.0%

8.9%

Profit before tax

13.6

11.7

10.2

23.5

22.6

Profit※1

9.7

8.0

7.3

16.0

15.6

Capex

3.2-

2.1

6.5

6.5

Depreciation

1.3-

1.6

3.0

3.0

Ratio

※1※Profit attributable to owners of parent

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202 Business Environment in Each Segment
Precious Metals Business In the precious metals recycling business, the launch of new Bando Plant has enabled a much higher volume of precious metals to becollected, particularly from the jewelry sector. However, collection volumes are continuing to trend downward in the dentistry andcatalyst sector.
 In the North American refining business, product processing and sales operations remain as strong as last year

Business field
Dentistry
Jewelry
Catalyst
Electronics sector
North American refining

Business Environment
Patient numbers continue to be restricted as a measure against COVID-19, and this, along with widespread
adoption of alternative products, has seen collection volumes continue to trend downward.
With precious metal prices continuing to soar, purchasing demand remains strong, and high volumes arecollected from purchasing traders.
Focusing on collection of high grade automotive catalyst despite decrease in automobile sales. Collection
volumes from South Korean catalyst manufacturers increased.
The recession in the Chinese market has seen a decrease in demand for communications products such as
smartphones. Adjustments in production volumes have seen collection volumes stagnate.
Trades in areas such as product processing and sales remain strong.

Environmental Preservation Business✓While collection volumes from education and construction are trending upward, the downward trend in the automobile sector
continues. The extraordinary demand created by COVID-19 in the medical sector is abating.

Industry
Educational/Research
institution
Construction
AutomobileFood
MedicalChemicalBusiness Environment
Collection volumes from educational institutions are trending upward compared to the same period last year.
With an increasing number of private non-residential building projects being commenced, collection volumesof associated waste are trending upward.
Collection volumes from automobile industry is still sluggish due to decrease in plant utilization caused bysemiconductor shortage.
Demand for eating out is trending upward after the lifting of COVID-19 restrictions, but it has yet to return toits peak.
With COVID-19 cases abating, fewer quarantine facilities are now being used, which will have seen a decreasein collection volumes of medical waste in the future.
Production indexes in the chemical industry are slightly increasing compared to last year.

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3

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

Refining Business in North America

Q2 FY2023.3 Results
Increase in volume of precious metals sales andcollection from jewelry sector.
Profit ratio declined due to the decrease in volumeof collection from dentistry and catalyst sector.
Increase in expenditure related to the launch of new
Bando plant.

Q2 FY2023.3 Results
Increase in volume of product processing and sales.
The volume of “Stock-Take” exceeded the plan, while
it has not achieved that of last year’s, which has twoyears worth of volume.

➡Increase in revenue and decrease in profit➡Increase in revenue and decrease in profit[Unit: billion yen]

Precious

Q2 FY2022.3

MetalsResults

Q2 FY2023.3
Plan

FY2023.3

Results

Initial Plan

Revised Plan

Revenue

88.2

91.0

123.9

181.0

251.0

Operating Profit

14.3

12.0

11.7

24.0

24.2

16.2%

13.2%

9.5%

13.3%

9.6%

Ratio

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4

04 Ref: Volume of Precious Metals Collected

The volume of gold and platinum collected increased mainly from jewelry sector.

The volume of palladium collected increased. Increase in volume of collection from jewelry
and catalyst sector covered the decrease in volume of collection from dentistry sector.

AuPd

Unit：kg

Pt

Progress
Rate
72％
Progress
Rate
49％

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ProgressRate
61％

505 Environmental Preservation Business
Environmental Preservation
Thanks to the recovery of industrial production activities, the transaction volume of industrial waste hascontinued to trend upward. The plant utilization increased due to the increase in total volume of processing.
Increase in volume of higher-priced transaction covered the effect of deconsolidation of JW Glass Recycling Co.,
Ltd., which had accounted for 0.5 billion yen in revenue and 0.1 billion yen in operating profit.

➡Increaseinbothrevenue and profit[Unit: billion yen]

EnvironmentalPreservation

Q2 FY2022.3
Results

Q2 FY2023.3
Plan

FY2023.3

Results

Initial Plan

Revised Plan

Revenue

8.6

9.0

8.8

19.0

19.0

Operating Profit

1.5

1.7

2.1

3.5

3.9

17.6%

18.9%

24.1%

18.4%

20.5%

Ratio

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6

06 Revision to Financial Forecast for the YearEnding March 31, 2023

 Upward revision of revenue due to the significant increase in the volume of
precious metals collected and sales from jewelry sector.
 The plan for operating profit remains unchanged, based on actual results for thefirst half and current trends for the second half.
InitialRevenue

Operating profit

Unit：billion yen

FY2023.3
Revised

Plan

Plan

200.0

270.0

24.0

24.0

Remarks

ChangeRevised upward because of the significant increase in both collections and70.0 sales especially from the jewelry sector with the launch of Bando Plant.

Operating profit was 11.5 billion yen in the first half because profit ratio declined by0.0 billion yen of share of loss of investments accounted for using equity method was recorded.
changes in the composition of collection sectors in precious metals recycling and 0.6
The full-year plan remains unchanged based on the assumption that current businessenvironment will continue in precious metals recycling business, the steady volume ofRatio

12.0%

8.9%

“Stock-Take” is expected in North American refining business in Canada, there is a(3.1) tendency for higher earnings in the second half, mainly in Environmental Preservation
business, etc.

Revised downward due to partial liability for damages of equity-method

Profit before tax

23.5

22.6(0.9) affiliate.

Profit※1

16.0

15.6(0.4) same as above

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7

07 Financial Position
Unit：billion yen

Current Assets
Trade receivables

Mar 31,

Sep 30,

2022

2022

Remarks

Change

241.8

231.4

(10.3)

151.4

126.9

(24.5)The greater part of the balance and changes are receivables that constitute borrowings 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 priceInventories

63.4

69.4

6.0 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 the futures market at thetime of the purchase.

Others

26.9

35.1

8.2

Non-current assets

56.6

54.2

(2.4)

Total Assets

298.4

285.6

(12.8)

Liabilities

193.3

178

(15.7)The greater part of the balance is changes in loans for Advance Trading in North Americanbusiness. Risks associated with price fluctuations and bad debts remain minimal because

Bonds and loans

150.9

142.6

(8.3) procurement of metals for Advance Trading by loans 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.

Others

42.3

34.9

(7.4)

Capitals

105.1

108.1

3.0

Total equity and liabilities

298.4

285.6

(12.8)

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8

08 Cash Flow
Unit：billion yen
Q2 FY2023.3

Operating CFRemarks

4.5
The greater part of the changes is the collected raw materials that contain precious materials, works-in-progress

Changes in inventories(6.0)

and finished products in precious metal 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 theprecious metal prices are hedged on the futures market at the time of the purchase.

Changes in trade and otherreceivables

Of the changes, (35.4) billion yen are matching claims for loans for Advance Trading in North American business.
34.8

Risks associated with price fluctuations and bad debts remain minimal because procurement of metals for AdvanceTrading by loans 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.

Changes in trade and otherpayables

Of the changes, (37.7) billion yen are for loans for Advance Trading in North American business. Changes in loans(34.3) for Advance Trading in North American business is classified as changes in trade receivables in Operating CF, notFinancing CF. There are no risks associated with quality degradation and bad debts because all loans are used forOthers

10.0

Investment CF

0.0

Financing CF(2.1)

Changes in loans and bonds

5.7

Dividends(3.5)

Others(4.3)

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

1.6
4.0

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9

09 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. (No change from the previous forecast announced on April 27, 2022)

Earnings pershare(yen)Dividend payout
ratio(%)

135.39114.07125.12326.90231.27201.52

23.3

52.6

52.0

26.0

38.9

44.7

* 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.

10

I.
II.

Financial Results for Q2 FY2023.3(April 1, 2022 ~ September 30, 2022)

Appendix

Copyright © Asahi Holdings, Inc. All rights reserved.

11

Ref

Sound Financial BaseFinancial Position

Equity Ratio[Unit: ¥ billion]

June 30, 2022

Excluding North
America businessCurrent
Assets

231.4

119.8

Non-current
assets

54.2

54.2

Total
Assets

285.6

173.9

Liabilities

177.5

65.8

Capitals

108.1

108.1

Total equity
and liabilities

285.6

173.9

June 30, 2022

37.9%
loan for “Advance Trading”

Excluding North
America business

62.1%

 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.
Copyright © Asahi Holdings, Inc. All rights reserved.

12Ref

Digital Transformation Business of Waste
Treatment
In June, our subsidiary DXE Inc. launched an SaaS service for digital management of industrial waste disposal
processes for collection / transportation providers. Showing a smooth start with acquiring clients just afterservice launch.
In September, DXE Inc. was selected to provide support for the Ministry of Economy, Trade and Industry's IT
Introduction Subsidy 2022, which subsidizes up to 1/2 of service usage fees, providing momentum for theexpansion of contracts.

Waste generator

Collection and transportation
providerDisposal company

Services for disposal companies and waste
generators will be launched in the fourth
quarter of this financial year

✓Advantages of SaaS

Centralized management of electronic manifest management, order acceptance and vehicle dispatch on the cloudStreamlining of work by using electronic manifests as an alternative to vouchers and reducing workload

Electronic
manifests:

Alternativeto vouchers

Centralized
management on
the cloud:Paperless60%*
reductionof administrative
working hours

No cost tothe wastegenerator*Research by Asahi Holdings, Inc.

RefLow Carbon Technology Research, Development andDemonstration Program Asahi Pretec Corp. has proposed the "Development of a system for building a green hydrogen supply chain througheffective use of by-products" jointly with FC Development Co., Ltd., X-Scientia Co., Ltd., and Sumitomo Mitsui Trust
Bank, Limited., for the "2021 Low Carbon Technology Research, Development and Demonstration Program," which
was publicly called on by the Global Environment Bureau, Ministry of the Environment. In addition, the system has
been selected for a partially-subsidized project.
 The introduction of a hydrogen generator at the Kitakyushu Plant will be completed in December 2022 and technicaldemonstration testing is scheduled to start from January 2023.
 The possibility for collaboration between local governments and businesses for local production and sale ofhydrogen energy is being considered.

Copyright © Asahi Holdings, Inc. All rights reserved.

14RefSelected as a Constituent of Index

 JPX-NIKKEI 400
We have been selected as a constituent of JPX Nikkei Index 400 for three consecutive years.
The index consists of companies that are highly appealing to investors and that meet therequirements of global investment standards, such as efficient use of capital andmanagement perspectives that are conscious of investors.

 FTSE Blossom Japan Sector Relative Index
We have been selected as a constituent of FTSE Blossom Japan Sector Relative Index (oneof the GPIF's benchmarks), which reflects the performance of Japanese companies that
demonstrate strong environmental, social, and governance (ESG) practices in their respective
sectors, and is designed to be sector-neutral.
Unit:YenCopyright © Asahi Holdings, Inc. All rights reserved.

Progress of Capital Investment

RefInvestment 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

North American Refining Business Launching warehouse business &strengthening existing equipment

FY2023/3

New incinerator in Yokohama Large incinerator in eastern Japan

Unit: ¥billion
Remarks

Mid-term
plan

Results

Mid-term
plan

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 chain

Overseas

1.6

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 process

Total

7.1

8.3

5.4

6.5 No change in total investment for 3 years

PreciousMetals

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RevisedPlan16

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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17

Ref

Trend in Metals Prices (Au, Palladium)

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18

Ref

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

Unit：YenPrecious

Metal Prices(per gram)

Q2

Q2

FY2022/3

FY2023/3

Average priceMid-term

average price

ChangeGold

6,369

7,709

1,340

Palladium

8,770

9,341

571

Platinum

3,729

4,018

289

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