ARE Holdings, Inc.
Financial Results for FY2023 andMid to Long Term Plan & Aspiration

April 26, 2024
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 this report.

2
I.
II.

Financial Results for FY2023(April 1, 2023 ～ March 31, 2024)

ARE Mid to Long Term Plan & Aspiration
Overview of ARE mid long term Plan
Business environment surrounding ARE
Growth strategy
Precious Metal Recycling BusinessNorth American Refining Business
Environmental Preservation Business
ESG

Copyright © ARE Holdings, Inc. All rights reserved.

3

Summary of FY2023 Financial Results

Sales Revenue
Operating Profit
Impact of Palladium
and Rhodium
Other factors
Current
StatusShare
Exchange

Accounting¥322.3 bn (YoY +¥48.0 bn）

Higher gold sales volume and sales price than the previous year. Growth in the North
American refining business were the main reasons for the year-on-year increase.
¥12.4 bn (YoY -¥3.9 bn）
Rhodium prices fell approximately 40% from the end of the previous fiscal year, althoughprices have generally stabilized since July 2023.
Palladium prices fell approximately 20% from the end of the previous fiscal year.
Slow recovery in electronics and catalysts.
Impairment loss of ¥0.8 bn due to decision to close Ehime Plant.

The share exchange between Japan Waste Corporation and Renatus Co., Ltd wascompleted on March 31, 2024.
Japan Waste has been deconsolidated and it has been classified as discontinued
operations. Accordingly, discontinued operations have also been excluded from FY2022.
Discontinued Operations：
Sales Revenue ¥36.6 bn (¥20.4 bn of which is gain on share exchange)
Income before income taxes ¥23.6 bn (¥20.4 bn of which is gain on share exchange)
Net income ¥16.0 bn
Renatus will become an equity-method affiliate from FY2024, and equity in earnings ofaffiliates will be included in operating income.

Difference since February
Earnings Forecast

Higher gold prices, contribution from the North American refining business and theshare exchange gain. As a result of these factors, sales and earnings were higher thanpreviously forecasted.

Copyright © ARE Holdings, Inc. All rights reserved.

4

Business Overview of Q4 FY2023 (YoY)
Precious Metals Business (Asahi Pretec Corp., ASAHI METALFINE, Inc., Asahi Refining)
In Japan, precious metal recycling in the jewelry sector was strong on the back of the elevated gold price, whilethat in the catalyst sector struggled due to weak yen. In North America, financial transactions such as trading
and advance trading were strong, while product processing and sales shrank.

Business sector

Dentistry
Jewelry
Catalyst

Electronic

Refining Business inNorth America

Business environment

Despite the soaring gold prices, collection declined due to market shrinkage caused by switch ofmaterials and leveling off of campaign-driven special demand.
Collection grew to about 1.6 times the previous year due to the increased trading in the recycling market
to take advantage of the ongoing high gold prices.
Collection decreased in Japan due to weak yen and a decline in the market price. Overseas, collection
from some catalyst manufacturers in East Asia decreased.
Collection fell despite continued robust AI-related and EV demand, due to the weak consumer demand
resulting from the weakness in the Chinese market.
Financial transactions such as trading and advance trading were strong, while product processing andsales shrank.

Environmental Preservation Business (Japan Waste Corporation)

Handling volume of waste reagents grew further since 3Q due to withdrawals of competitors. Handling volume of
medical waste showed an increasing trend excluding COVID-19-related orders in the previous year. Handlingvolume of liquid waste grew year on year due to spot transactions. Handling volume of sludge and wood waste fell
due to the business conversion of the Yokohama Plant.

Items

Business environment

Liquid waste

Although there are signs of a turnaround in semiconductor demand, volume decreased in Q4.

Waste reagents

Handling volume rose further due to withdrawals of other companies in the industry that started in Q3.

Medical waste
Waste plastics
Other

Overall handling volume increased, while the previous year’s spike in demand related to COVID-19
levelled off.
Handling volume decreased due to demand increase of cement related alternative fuel continuing from
Q2.
Overall handling volume of sludge and wood waste fell due to the business conversion of the Yokohama
Plant.

Copyright © ARE Holdings, Inc. All rights reserved.

5

Consolidated Results
Unit：billion yen

FY2022

FY2023Results

FY2024
YoY
ChangeResults

Revised
Forcasst

YoY
ChangeRevenue

274.2

322.3

48.0

370.0

47.7

Operating profit

16.3

12.4

(3.9)

18.0

5.6

Ratio

5.9%

3.8%

(2.1%)

4.9%

1.0%

Profit before tax

12.6

12.4

(0.2)

17.6

5.2

Profit※1

10.9

24.5

13.6

13.1

(11.4)

Capex

4.9

8.5

3.5

12.9

4.4

Depreciation

3.3

3.6

0.3

3.1

(0.5)

※1 Profit attributable to owners of parent

Copyright © ARE Holdings, Inc. All rights reserved.

6

Precious Metals Business
Precious metals recycling business(Japan and Asia)

North American refining business

FY2023 Results
As collection amount from jewelry sector increased.
gold sales volume and prices also increased.
On the other hand, there is a prolonged stagnation in
the catalyst and electronics sectors, and it is being
impacted by the decline in the prices of palladium andrhodium.
➡ Increase in revenue and decrease in profit

FY2023 Results
Refining fee, trading and advance trading fee increased.
On the other hand, due to a decrease in demand, productsales and processing have declined.

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

Precious
Metals

FY2022
Results*

FY2023Results

FY2024

YoY Change

Forecast

YoY Change

Revenue

274.2

322.2

48.0

370.0

47.8

Operating Profit

17.2

12.7

(4.5)

16.0

3.3

Ratio

6.3%

3.9%

(2.3%)

4.3%

0.4%*The actual achievement in FY2022 was processed retroactively due to the changes in Segment Accounting Standard which became effective
since FY 2023
Copyright © ARE Holdings, Inc. All rights reserved.

7

Impact of Gold Collection•

Gold share in revenue is increasing on YoY because both collection amount and selling priceincreased.

Breakdown of revenues*
Sales of Au

Breakdown of Au collected
Jewelry sector

Unit: : billion yen

Other sectors

Sales of Others

323.3
233.6

173.9

*FY2021 and FY2022 reflected exclusion of Japan Waste Corporation.
Copyright © ARE Holdings, Inc. All rights reserved.

Unit：kg8••

Ref: Volume of Precious Metals CollectedGold collections increased due to increase the volume in the market as a result of soaring prices andthe reinforcement of the production system at the Bando Plant as part of our green gold strategy.
Collection amount of palladium decreased mainly from catalyst sector.
Au

Business
sector・ Jewelry・ Electronic
・ DentistryBusiness
sectorPlanachievementrate
121.0%

・Jewelry・ Catalyst

Pd

Rh

Business
sectorBusiness
sector・ Dentistry
・ Catalyst
・Jewelry

Unit：kg

Pt

Plan
achievement
rate
99.3%

・ CatalystPlanachievement
rate
85.0%

Copyright © ARE Holdings, Inc. All rights reserved.

Planachievement
rate
72.0%

9

Rhodium Trend•••

Rhodium prices fell in Q1 but stopped falling in Q2 and remained stable thereafter.
On the other hand ,rhodium price fell About 40% from the end of December 2022 and YoY isapproximately ¥2.7 billion which is the negative impact.
The hedging ratio has reached 50 % of the total handling volume as planned.

Hedge ratio
60%

FY2023

FY202250%40%2023/3/31
7,400

2024/3/29
4,500

30%
20%
10%
0%

2023/32023/62023/92023/122024/3※Ref：Metals Week NY Dealer Prices
Copyright © ARE Holdings, Inc. All rights reserved.

10 Palladium Trend••

Palladium prices have been declining throughout the last 18 months, and 20% declined against the endof March 2023.
The decline in the price of palladium and a decrease in the volume of palladium collected contributed toa decrease in profit of approximately 4.5 billion yen for FY 2023 compared with the previous fiscal year.
Unit: yen/gPalladium Price
FY2022

FY20232023/3/31
6,335
2024/3/29
5,010※ref：Nikkei low price

Copyright © ARE Holdings, Inc. All rights reserved.

11 Environmental Preservation Business
Environmental Preservation Business

FY 2023
Although the volume of industrial waste handled and the utilization rate of treatment facilities remained stable, thebusiness was affected by a change in the treatment of new coronavirus infections under the Infectious Disease Control Law,a decline in the unit price of medical waste, and a business conversion (discontinuation of existing business) due to theconstruction of a new incinerator at the Yokohama Plant.
Following the share exchange, Japan Waste‘s business is classified as a discontinued operation and is excluded from theCompany’s revenue and operating income. The difference of 20.4 billion yen between the fair value of Renatus and the bookvalue of Japan Waste is recorded as a gain on exchange of shares in income from discontinued operations and income
before income taxes. The difference represents the results of Japan Waste.
FY 2024
Japan Waste is deconsolidated as it is no longer a subsidiary of the Company. On the other hand, since Renatus has become
an equity method affiliate of the Company, the Company plans to record its share of Renatus' net income (32%) as equity inearnings of affiliates in the Company's operating income.
[Unit: billion yen]

Discontinued
operation

FY2022

FY2023Results①

Results②

Revenue

18.7

36.6

Profit before
tax

3.4

23.6

Copyright © ARE Holdings, Inc. All rights reserved.

Share exchange
profit
③

20.4

20.4

Peformance ofJapan Waste
②-③

YoY
②-③-①

16.3

(2.5)

3.3

(0.1)

12 Ref: Structure after the share exchange••

The share exchange between Japan Waste Corporation and Renatus Co., Ltd was completed on March 31,
2024.
Aiming for IPO as Renatus in the future.

J-STAR No.5-A, LP

ARE Holdings
Stock ownership
32％

Waste System JapanDXE

Stock ownership
100％
SANWA Group
Co., Ltd.

SINCEREHOLDINGS
CO.,LTD.

Renatus Co., Ltd

Harita Metal
Co., Ltd.

SNK HOLDINGS
CO., LTD.

Japan Waste

Ownership structure within the ARE Group is planned
Copyright © ARE Holdings, Inc. All rights reserved.

13 Financial Position
Mar 31,
2023

Current Assets
Trade receivables

Mar 31,2024

Unit：billion yen
Change

238.4

253.8

15.4

154.0

155.3

1.2

Remarks

The greater part of the balance and changes are receivables that constitute borrowings tomatch metal procurement in North American business.

Inventories

40.9

33.9

The majority of inventory balances and changes in inventories are linked to materials, works
in process and products that contain precious metals in the precious metals recycling(7.0)
business. Risks associated with price fluctuations and quality deterioration are limited
because in principle, precious metals prices are hedged at the time of purchase.

Others

43.5

64.6

21.2

Non-current assets

49.1

64.2

15.2

Total Assets

287.4

318.0

30.5

Liabilities

180.5

191.5

11.0

Bonds and loans

144.4

141.2

Borrowings for Advance Trading in North American business constitute a large percentage.
Risks associated with price fluctuations and bad debts are extremely limited because bullion(3.2)
for Adovance Trading is procured through borrowing after receiving raw materials andprecious metal prices are hedged according to the repayment date.

Others

36.1

50.4

14.2

Capitals

107.0

126.5

19.5

Total equity and liabilities

287.4

318.0

30.5

Copyright © ARE Holdings, Inc. All rights reserved.

14 Cash Flow
Unit：billion yen
FY2023Operating CF

Remarks

12.6

Changes in inventories

The greater part of the changes is the collected raw materials that contain precious materials, works-in-progress andfinished products in precious metalｓ recycling business. Risks associated with price fluctuations and quality
6.6
deterioration remain limited because raw materials are purchased after the precious metal content is analyzed and inprinciple,the precious metalｓ prices are hedged on the futures market at the time of the purchase.

Changes in trade andother receivables

Of the increase/decrease amount, 12.9 billion yen reflects the increase/decrease in receivables commensurate withborrowings for advance delivery transactions, etc. in the North American business. Risks associated with price13.6 fluctuations and bad debts are extremely limited because bullion for Advance Trading in North American business is
procured through borrowing after receiving raw materials and precious metal prices are hedged according to therepayment date.

Changes in trade andother payables

Of the increase/decrease amount, 14.3 billion yen reflects the increase/decrease in borrowings for Advance Trading in
the North American business. Of the increase/decrease amount in borrowings for Advance Trading in the North(13.6)
American business is shown not as CF from financing activities but as increase/decrease in trade receivables in CF fromoperating activities.

OthersInvestment CF

6.1(28.7) Payments for loans receivable 19.6 billion yen

Financing CF

7.1

Changes in loans and
bonds

14.3

Dividends(6.9)

Others(0.3)

Effect of exchange rate change
on cash and cash equivalents(2.0)

Changes in cash deposits(11.1)

Copyright © ARE Holdings, Inc. All rights reserved.

15 Sound Financial BaseFinancial Position

Equity Ratio
Unit：billion yen
Excluding North

Mar 31,
2024

253.8

120.6

64.2

64.2

Total Assets

318.0

184.8

Liabilities

191.5

58.3

Capitals

126.5

126.5

318.0

184.8

Current Assets
Non-current
assetsTotal equity andliabilities•••

America businessMar 31,2024

39.8%
loan for “AdvanceTrading

Excluding North
America business

68.5%

The greater part of the current assets are advance trading related receivables which is based onrefining contracts in North America. These assets are safe backed by real gold.
Ability to raise funds necessary for business expansion at competitive rates.
Equity ratio is 68.5% which is sound if excluding North America business.

Copyright © ARE Holdings, Inc. All rights reserved.

16 Shareholder Return Policy••

The annual dividend for FY2023 will be 90 yen per share, and the payout ratio will be 28.2%, but thisis due to the impact of the share exchange gain, and operating income is expected to be 12.4 billion
yen.
For FY2024, the annual dividend is planned to be 80 yen per share, while share repurchase (up to 1
billion yen or 650 thousand shares) is planned, and the total return ratio is expected to be 54.0%.
Interim dividend
Year-end dividend

90

90

90

45

45

45

40

45

45

45

40

FY2020

FY2021

FY2022

FY2023(Forecast)

FY2024(Plan)

85

65

Unit：Yen

45

80
40

35
30
FY2019Earnings per
share(yen)125.12326.9

238.11141.19319.5
319.54172.53

Dividend
payout rate(%)

52.0

26.0

37.8

63.7

28.2

46.4

※1:2 stock split was implemented on April 1, 2021, and dividends per share and earnings per share until FY2021/3 are calculated based thepost-split basis
Copyright © ARE Holdings, Inc. All rights reserved.

17 Trend in Precious Metals Prices (Gold, Palladium)（¥/g）

Copyright © ARE Holdings, Inc. All rights reserved.

18Trend in Precious Metals Prices (Platinum), Mid-term Average
PricePrecious
Metal Prices(per gram)

Q4

Q4

FY2022

Unit：YenFY2023

Average pricefor the period

Average pricefor the period

Gold

8,058

9,920

1,862

Palladium

6,833

4,717

(2,116)

Platinum

4,307

4,415

108

Copyright © ARE Holdings, Inc. All rights reserved.

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

19
I.
II.

Financial Results for FY2023(April 1, 2023 ～ March 31, 2024)

ARE Mid to Long Term Plan & Aspiration
Overview of ARE mid long term Plan
Business environment surrounding ARE
Growth strategy
Precious Metal Recycling BusinessNorth American Refining Business
Environmental Preservation Business
ESG

Copyright © ARE Holdings, Inc. All rights reserved.

20

Our Purpose
Purpose:Totally Committed to Protecting the Natural
Environment and Preserving

Seek shareholder
valuesHigh
Commercial gain
(economic value)

Simultaneously
Create shared value
Simultaneously
Create shared value

Precious Metals
Precious metals
Businessbusiness

Environmental
Preservation Business
Environmental
preservation
business

Charity(social value)
Low
Copyright © ARE Holdings, Inc. All rights reserved.

High

Contribute to solving social
challenges

21

True Company Value

Social issues
Promptly and simultaneously
achieve circular economy andcarbon neutrality

Inside out

Human issues

Industry issues

Create large-scale solutions
for social issues incl.
digitalization jointly withindustry peers and between
the artery and vein ofindustries

What wecan doCopyright © ARE Holdings, Inc. All rights reserved.

True
value

Empathy and engagement tosolve social issues and togrow business; embark on
activities that contribute tosocietySocialissues

Outside in22

Course of Actions

Backcasting to derive issues

Our Long-Term
VisionTo be a leader in creatinga circular economy thatconnects society to theenvironment

Our mission

Promote resource recycling inconsideration of the global environment
Decarbon-oriented waste management

Strategic Issues
Makeexisting
businesses
Makeexisting
businessesa asolid
solidfoundation
foundation
earnings
forfor earnings
Expand earnings in new fields
Expand earnings in new fields
Expansion of overseas business
Expansion of overseas business
Improvement of the balance sheet
Improvement of the balance sheet
Recruit Human Resources in order toadapt to business changes

Where westand today

Develop human resources in line withbusiness development
Forecasting from our strengths
and business trends

Copyright © ARE Holdings, Inc. All rights reserved.

23

Performance Objective(Revenue and Operating profit)

Unit: bn yen

FY2023

FY2024FY2030Results

Forecast

Goals

Revenue
Operating
Profit(Operating profit trend) 40

322.3

370.0

540.0

12.4

18.0

38.0

Unit: bn yen

35

Environmental Preservation

30
25

North America Refining business

20
15

Precious Recycle business

10
5(Assumptions）

0
FY2023

FY2024FY2025Gold

11,800 yen/g
Copyright © ARE Holdings, Inc. All rights reserved.

FY2026
Palladium

5,000 yen/g

FY2027

FY2028

Platinum

4,700 yen/g

FY2029FY2030Rhodium

4,600 $/toz

24

Financial Policy
FY2023

FY2030

ROE

9.4％※

13％

Equity ratio

39.8％

50％～60％Cash generation
through growthpolicies(Sustained expansion)Operating
CF CF
Operating
160.0 billion
yen
160.0
billionyen

ROE: Calculated by excluding the effect of share exchange gain.
Copyright © ARE Holdings, Inc. All rights reserved.

Improve
profitability
Reduce total
assetsRepayment ofborrowings
40.0 billion yen

Use free cash flow for
repayment ofborrowings

Investment
50.0~60.0
billion yen

Active capital
investment
Consider M&As byseizing the opportunity

Shareholder
returns60.0~70.0
billion yen

Top priority toshareholder returns(Payout ratio of 40%)

25

Capex・M&A
Precious metals
warehouse(2nd phase)

Total cumulative

Bando Plant

Investment

1st,2ndApprox. 60.0 billion
yenElectronics/
Semiconductor industryrelated

North American mint
facilities

FY2026FY2024FY2024FY2025

FY2030

FY2026

Unit：bn yen

Total

Precious Metals

12.9

8.6

9.0

30.5

Domestic

6.9

5.2

2.0

14.0

Overseas

6.0

3.4

7.1

16.5

2.5

3.4

4.1

10.0

Depreciation
Copyright © ARE Holdings, Inc. All rights reserved.

26 Shareholder Return Policy
Basic policy：

We aim to maintain a dividend payout ratio of approximately 40%, while retaining sufficient internal
reserves for capital investment and M&A for future growth.

FY2024：

We plan to pay an annual dividend of 80 yen per share (payout ratio 46.4%) in FY2024. The total
return ratio* is expected to be 54.0%.
Unit：yenInterim dividend

Year-end dividend

90

90

45

45

45

45

40

FY2022

FY2023(Forecast)

FY2024(Plan)

80
40

FY2030(Plan)*This estimate includes dividends for FY2024 and planned own share acquisition amount (up to 1 billion yen).
Copyright © ARE Holdings, Inc. All rights reserved.

27
I.
II.

Financial Results for FY2023(April 1, 2023 ～ March 31, 2024)

ARE Mid to Long Term Plan & Aspiration
Overview of ARE mid long term Plan
Business environment surrounding ARE
Growth strategy
Precious Metal Recycling BusinessNorth American Refining Business
Environmental Preservation Business
ESG

Copyright © ARE Holdings, Inc. All rights reserved.

28

Circular Economy - New civilizational values

・Japan ： “Proposed Act on Advancement of Recycling Business, etc. for Promotion of Resources Recycling” (MOE)“Growth-Oriented, Resource-Autonomous Circular Economy Strategy” (METI)

Circular Partners Launch・Global trend: Environmental concerns (CO₂ emissions, etc.) of jewelry brands, etc. and the spread of recycling premiums

Company
TiffanyApple••

Commitments- Use 50% or more recycled precious metalmaterials by 2025
- Aim to manufacture products using only recycled
or recyclable materials- Eight products were made of 20% or morerecycled materials as of 2021; promoting the useof recycled materials for 14 items that account for
90% of products (18% of materials used wererecycled materials as of 2021)

Microsoft- Aim to have zero waste by 2030 and to maketheir devices 100% recyclable by 2030

BMW

- Announced the use of plastics made of approx.
30% recycled materials from fishing equipment for
the interiors/exteriors of their new model, Neue
Klasse, scheduled to be launched in 2025

From jewelry to other industries
From gold to other resources

Copyright © ARE Holdings, Inc. All rights reserved.

CO₂ emissions from gold collection(t-Co2)

About 1/10

From Mines

From Recycling

Growing consensus on recycled value
Sources: Company websites and sustainability reports

29 Superiority of Recycle
Gold production
Our production approx. 30 t

1,144 tEquivalent to
the productionof the world
top 5th mine

3,612 tPrimary
Secondary

23%

24.8
Primary

Secondary

5.4％ ofworldwide

Our production 5.5 t

204 t

Production
by country

40％ 40.0

34.0

37％

RussiaMuruntau60.5トン

2

Gasberg

55.9トン

3

Carlin48.9トン

4

Olimpiada

32.5トン5

Boddington

24.8トン

6

Cortez23.8トン

7

Kibali23.3トン

8

Pueblo Vjejo

22.2トン9

Lihir

21.8トン

10

Detour Lake

21.8トン

Platinum production

Palladium production
101 t

1

47 t

Our production 6.1 t

Production
by country

18％
181 t

11％

12.8％ ofworldwide

71％

South Africa Others

Copyright © ARE Holdings, Inc. All rights reserved.

*Gol：Gold Focus 2023, palladium・platinum：Johnson Matthey 「PGM Market Report May 2023」

30 Long-term price increases• With the rise in gold prices, our collection volume has increased byapproximately 2.3 times compared to FY2015• Higher gold prices lead to more recycling opportunities
Unit：yen/g

Unit：kg

11,000Gold Quote frommining company

10,000ARE Collection

9,000

8,000

7,000

6,000

5,000

4,000
2014/3

2015/3

2016/3Copyright © ARE Holdings, Inc. All rights reserved.

2017/3

2018/3

2019/32020/32021/32022/32023/32024/3

31 New Recycle market
xEV-related :Increase sales of domestic electricvehiclesElectric vechicle
電気自動車

4,000

ガソリン(ディーゼル)車Gasoline(diesel) car

3,000

80

FY2022

FY2023

FY2024FY2025 ~ FY2030

Hydrogen production-related : expand
hydrogen production capacity in global
Production capacity
生産能力

60

0

($100M)

FY2022

FY2023

FY2024FY2025 ～ FY2030

AI・Semiconductor-related : Expand global market
of AI chips
2,500

AIチップ世界市場規模
Artificial Intelligence Chips

1,500
1,000

20
(GW/Year)

Synthetic drugs
合成医薬品他

2,000

40

0

Bio-pharmaceuticals
バイオ医薬品

1,000

1,000

(1,000 units)

3,000
2,000

2,000

0

Synthetic Pharmaceutical-related : Expand global
market of pharmaceutical500
FY2022

FY2023

FY2024

Copyright © ARE Holdings, Inc. All rights reserved.

FY2025 ~ FY2030

0(billion US dollar) FY2022

FY2023

FY2024FY2025 ~ FY2030

AI・Semiconductor-related Source: Estimated by ARE Holdings based on data from Gartner Press Release and newspapers
Synthetic Pharmaceutical-related Source: Estimates by ARE Holdings based on data provided by Evaluate Pharma®
xEV-related Source: Estimates by ARE Holdings based on data provided by the Japan Automobile Dealers Association
Hydrogen production-related Source: Estimate by ARE Holdings based on data from Global Hydrogen Review 2022 by IEA

32

Growth of India・ASEAN（World Economic Growth Outlook）
2022

2023

(Unit:%)
2024

2025

2026

2029

World

3.5

3.2

3.2

3.2

3.2

3.1

USA

1.9

2.5

2.7

1.9

2

2.1

Japan

1

1.9

0.9

1

0.8

0.4

China

3

5.2

4.6

4.1

3.8

3.3

India

7

7.8

6.8

6.5

6.5

6.5

5.5

4.1

4.5

4.6

4.6

4.6

ASEAN-5*Created by ARE Holdings based on data from IMF documents.

(Trend of semiconductor production)
700
600

USA

EuropeJapan(bn dollar)

Asia・Pacific

500
400
300
200
100
0

2017

2018

2019

2020

2021

2022

2023

2024

Ref： World Semiconductor Trade Statistics （WSTS）*Created by ARE Holdings based on “WSTS Semiconductor Market Forecast Fall 2023”.
Copyright © ARE Holdings, Inc. All rights reserved.

33•

Importance of economic security
Precious metal recycling is a buffer against the risk of an uneven distribution of resources.

(Uneven distribution of precious metal resources）
Element

Recycling Source (Urban Mines)

Major country of origin (mine)

Platinum

Chemical Catalysts, Fuel Cells, Semiconductors

South Africa, Russia

Palladium

Automotive Catalysts, Pharmaceuticals, Dental

Russia, South Africa

Rhodium

Automotive Catalysts, Thermocouple, Reed Switch

South Africa

Ruthenium

Semiconductors (MRAM), HD, Ammonia Production

RussiaIridium

Hydrogen production (electrode for electrolysis of Ｈ2O)South Africa（Semiconductor production returns to Japan）
Location ofsemiconductor plants

ARE Plant

Copyright © ARE Holdings, Inc. All rights reserved.

Ref： World Semiconductor Trade Statistics （WSTS）*Created by ARE Holdings based on “WSTS Semiconductor Market Forecast Fall 2023”.

34
I.
II.

Financial Results for FY2023(April 1, 2023 ～ March 31, 2024)

ARE Mid to Long Term Plan & Aspiration
Overview of ARE mid long term Plan
Business environment surrounding ARE
Growth strategy
Precious Metal Recycling BusinessNorth American Refining Business
Environmental Preservation Business
ESG

Copyright © ARE Holdings, Inc. All rights reserved.

35

Upstream and Downstream Strategies(Precious Metal Recycling Business)

Upstream (Metal Collection)••••

DentalJewelry
Catalysts
Electronics①Expansion into overseas
and new fields
Domestic: Maintain existing market
share and expand into new areas(pharmaceuticals, hydrogen,semiconductors)②Overseas: Expansion in
Asian markets
Thailand (jewelry), India (automotive
catalysts)

Copyright © ARE Holdings, Inc. All rights reserved.

Precious Metal
Recycling

Downstream (Sales)
・Green (recycled) gold
・Corporate and Retail

Trading③Strengthen production
capacity

2022: Bando Plant (I) in operation
2025: Construction of new Bando
Plant (II) completed④Sales enhancement•••

Expansion of green precious
metals→Developing new customer ofgreen precious metals→Expand from Au to PGM
Promote retail business
Strengthen trading

36

Exploring New Fields

AI・Semiconductor-related
Au/Pd/Ru/Ir

ｘEV-related
Au/Pd/Pt

Existing field

Synthetic
Pharmaceutical-related
Pd

Copyright © ARE Holdings, Inc. All rights reserved.

Hydrogenproduction-related
Pt/Ru/Ir

37

Exploring Oversea market•

India-Automotive Catalyst in India
Enter the market collaborating with
automaker based on the government led“End-of-Life” vehicle policy.
Indian automotive catalyst scrap market

ASEAN-Electronic Semiconductor

With a Malaysian subsidiary as a foundation Japanese,
European, American and Korean manufacturers
ASEAN electronics andsemiconductor market

South Korea
Asahi

Asahi Pretec•

Thailand-Jewelry Scrap
Respond to recycling needs
Green Gold sales
The volume of Thai jewelry scrap market in 2023
（excluding ingot and mint production ）ASAHI G&S

Production scrap
Au:10.4ｔ/year

Purchased scrap
Au:8.7ｔ/ year

Plans to build a new plant within
ASEAN

Copyright © ARE Holdings, Inc. All rights reserved.

Source：Estimated by ARE Holdings based on data from FOURIN and FORTUNE

38
•
•
•

Improve production efficiency and increase output
Gold production has increased dramatically since the Bando 1st plant started operating in 2022
Demand for green precious metals is strong, especially in the jewelry industry, and production capacity
has been increased by revising production processes
In the Bando 2nd phase, the recycling processes in the electronics and catalyst fields will be newly
consolidated to improve production efficiency
Changes in ARE Holdings.inc
share of the global supply of recycled gold
70

3.0%

60
2.5%
50
2.0%

40

1.5%

1.0%

0.5%

30

Production increased withthe start of operations at
the Bando Plant

0.0%

Copyright © ARE Holdings, Inc. All rights reserved.

20
10
0

The Bando Plant aims to produce gold equivalent to thethird largest mine in the world
Unit: ton

Approx.
38 ton

Bando
Plant

Approx.
30 tonApprox.
18 ton39••

Strengthen sales:
Expand Green (value-added) precious metals
ARE has advantages in CO2 emissions reduction, traceability, and international certification

Expanding into new industries and fields based on the long cultivated trust in our quality, andexpanding green added value

Industries & Fields

Element

JewelryAu

Automobile

Ag
Pd

Electronics

Pt

Industrial
Equipment
Existing flow

Copyright © ARE Holdings, Inc. All rights reserved.

Expansion
opportunity

40 Strengthen sales: Promote retail business• Build a retail business that leverages our strengths, including our affluent
dentist customer base and our integrated collection-to-sale system.
Market Environment

Our Advantages

Rising precious metals prices
From savings to investment①Customer Base
About 70% share ofdental②AMS Customers
20,000Retail product
sales

Asahi
Gold Club

Onlinestore①Technicalcapabilities to support
high-quality products②Integrated
collection-to-salesystem③Green (recycled)
precious metals

Goal

Collaboration
with North
America※AMS：Asahi Metal Account System
Copyright © ARE Holdings, Inc. All rights reserved.

Gold Deposit
Services

Our Advantages

Metal Lease
Total Asset
Reduction
Asset Management
for Individuals
Addressing businessfunding needs

Developing a younger
customer base
Expansion ofcustomer base
Corporate branding41 Strengthen sales : Enhance trading functions•••

Collaborate between trading teams in Japan and Canada to take advantage of global trading markets
Take a leap forward from traditional trading that focusing on physical transactions, and seek to expand
revenues by enhancing various customer services, such as options trading
Traders familiar with market practices in Japan, the U.S., and Europe work together to seek global
arbitrage opportunities

10 traders
Strengthen collaboration throughthe exchange of personnel

Image of physical bullion flow

Copyright © ARE Holdings, Inc. All rights reserved.

42 Road map
FY2024 - FY2026

FY2027 - FY2030

Maintain existing market shares

Maintain existing domestic market shareEnter advanced areas (semiconductor, xEV, pharmaceuticals, hydrogen)
Build plants in ASEAN countries

Exploring Oversea market

Production Capacity Expansion

Expand Green (value-added) precious
metalsPromote retail business
Enhance trading functions
Copyright © ARE Holdings, Inc. All rights reserved.

Cultivate new elements/businesses (Ir, Ru, increase items in cleaning area)
Consolidate production bases in Bando Plant Phases 1st&2nd; raise efficiency
Create a section overseeing
technology development and QCD
Automate production processusing AI, etc.
Obtaincertificationincl. RJC;
marketresearch

Sale for jewelry, electronics, and automotive catalysts
Enhance and expand metals handled (Au, Ag, Pd, Pt)
Create recycling quotation
pricesStart handling other companies’ products for trading

Start retail depositary & salebusiness

Address the investment needs ofindividual assets (e.g. ETF formation)and business funding

43
I.
II.

Financial Results for FY2023(April 1, 2023 ～ March 31, 2024)

ARE Mid to Long Term Plan & Aspiration
Overview of ARE mid long term Plan
Business environment surrounding ARE
Growth strategy
Precious Metal Recycling BusinessNorth American Refining Business
Environmental Preservation Business
ESG

Copyright © ARE Holdings, Inc. All rights reserved.

44
•
•

North America Performance Turnaround
Earnings levels have improved since the 2015 acquisition as the company has diversified its business toinclude products, trading, and precious metal warehousing
Targeting further growth with a view to going public

Warehouse
Started

Unit: Million yen

Enhanced theTrading business
Product Business
Expansion

7,000

4,500

2,000

(500)

FY2023Operating income
Approx. ¥4.2 bn+impairment of
goodwill(7.5) bn yen+impairment of
goodwill(3.8) bn yen

FY2015FY2016FY2017FY2018(3,000)

Copyright © ARE Holdings, Inc. All rights reserved.

FY2019FY2020

FY2021

FY2022

FY2023

FY203045

North American Refining Goal
Business structure that positions the warehouse business as the core
strategy and going public
Expanded earnings
through diversification

Refini
ng

Green
Gold

North America Business
Goal by 2030

Refining

Construction of the
2nd Warehouse

Project
Finance

Trading

Investment for
GrowthWare
house

Products

Copyright © ARE Holdings, Inc. All rights reserved.

Trading Team
Expansion
Productivity andquality improvement
through investment

Expansion of
product lineupEntering the ETF
business

Products

Ware
house

ETF

Finance・Trading
Business portfolio withwarehousing at its core

46

Strategy Focus
Warehousing business, which has a high affinity with therefining and products business, is the source of synergies
Asahi Refining
Canada & USA
Refining
Physical gold and silver
delivered to vault after refining
Annual refining output
Gold: 400 ton
Silver: 2,000 ton

Management of precious
metals ETFs and physicalprecious metals custody

Asahi Refining
ETF business in NA（New）

Copyright © ARE Holdings, Inc. All rights reserved.

Receive storage fees bystoring gold and silver settled
in futures on the COMEX anddistributed to the market

Asahi Depository
NY Warehouse
Business

Trading Team
Toronto, CA
Trading
Trading team can make aforward sale and distributethe physical products inthe market

Store mint products in NY
close to consumption area

Asahi Refining
FloridaMint

47

Road map

FY2024 - FY2026
Prepare for listing

Accelerate growth towards future listing in North
AmericaEnhance products business

Expand retail product lineup and improve quality toincrease orders

Expand financial business

Expand trading team capacity to grow new arbitrage andother business

Downsize balance sheet

Reduce borrowings associated with the refining businessand control financial expenses

Expand precious metal warehouse business

Expand capacity of existing warehouse and promote
construction of a second warehouse

Copyright © ARE Holdings, Inc. All rights reserved.

FY2027 - FY2030

Determine the optimal businessstructure, taking into account listing

Consider listing in North America

Update silver refining/productprocessing facilities

Develop industrial silver products

Improve/expand retail productlineupIncrease orders received forsovereign coins

Enhance thetrading teamEnhance risk management
function

Expand existing businesses, new arbitrage deals, proprietary trading
Downsize balance sheet by
improving refining businessproductivity
Invest in expanding existing
warehouse

Build second warehouse

48
I.
II.

Financial Results for FY2023(April 1, 2023 ～ March 31, 2024)

ARE Mid to Long Term Plan & Aspiration
Overview of ARE mid long term Plan
Business environment surrounding ARE
Growth strategy
Precious Metal Recycling BusinessNorth American Refining Business
Environmental Preservation Business
ESG

Copyright © ARE Holdings, Inc. All rights reserved.

49

Commitment to Environmental Preservation Business• ARE Holdings has been growing side by sidewith the development of Japan’s industrial waste
treatment• The legal system made marked progress in
keeping with the demand of the times andfocused on formulation of circular-type society.
However, it was unable to fully meet thedemands of the society due to the delays inconsolidation of scale in the industrial waste
treatment industry• The market size of the circular economy isforecast to reach 80 trillion yen in 2030, and its
key is the cooperation between the artery andvein of industries• The artery of industries is led by large companies
with a high market share, while leading mediumsized companies and SMEs are the main players
in the vein of industries with the largest
company having a market share below 2%• It is important to create major vein companies
like in the U.S. and Europe for promoting thecooperation between the artery and vein of theindustry.
• Japan Waste’s joining the Renatus Group
provides a foothold for creating a major vein
player in Japan• For ARE also, development of Renatuscontributes to profit
We will continue with our commitment to
the environmental preservation businesseven after the share exchange of Japan
Waste and Renatus
Copyright © ARE Holdings, Inc. All rights reserved.

Our history in the environmental
preservation business

1970
1972
1975
1978
1990

Establishes a facility for detoxifying waste
photographic fluid at the Kobe Plant
Acquires industrial waste disposal licensefrom Kobe City (detoxification ofphotographic effluent containing harmful
substances)
Registers as an environmental measurement
certification officeStarts the environmental preservation
business other than waste photographic fluid

1992

2000
2008
2010
2020
2021
2023
2024

Waste Management andPublic Cleansing Act

Act on Promotion of
Development of Specified
Facilities for the Disposal ofIndustrial Waste

Basic Act on theEnvironment

1993
2007

Law
enactment

Basic Act on Establishing aSound Material-Cycle Society

Asahi Pretec establishes the Kitakyushu Office
Establishes Japan Waste
Japan Waste opens the Yokohama OfficeIntegrates the environmental preservation
business of Asahi Pretec and Japan Waste
Asahi Pretec and Japan Waste merge
Ministry of the Environment adopts hydrogenbusiness as a subsidized project
Establishes DXE, which promotes
environmental DX
Changes name to Japan Waste

Share exchange of Japan Waste and Renatus

Act on Promotion of
Hydrogen Society

50
•
•
•

Formation of a foundation for both resource recycling anddecarbonization
Cabinet Decision on the "Draft Law on the Promotion of Recycling Enterprises for the Promotion of
Resource Recycling"
Industry restructuring in the huge venous industry is slow

Aiming for a management base and presence that evolves the venous market
Industrial Waste
Company

再編の担い手Resource
circulation

Global warming

Approx.
10 million
company

Labor shortage

Digitalization¥5
trillionmarketRevenue(¥bn)

Company A

67.7

Renatus54.4

Company B

34.0

Company C

18.8

Company D

16.4

Company E

7.8

Company F

4.8

Renatus’s revenue is a total of group companys’sales in previous fiscal year and revenueof ARE’s Environmental Preservation Business of FY2022.
Company B and D: Year ended Feb,2023, Company F: year ended Dec. 2022
Other than above, year ended Mar,2023
Copyright © ARE Holdings, Inc. All rights reserved.

Source: “Report on the Market Size and Employment of the Environmental Industry 2021” released by
the Ministry of the Environment, Japan

51

Juxtaposition
Vulnerable to social and market structuralchanges and technological innovation

Selection and Concentration

All directions

Management inefficiency
Financial and resource bottlenecks“Juxtaposition”
Strategically coexisting together
based on common values of the venous industry platform“Totally Committed to Protecting the Natural
Environment and Preserving Resources”
Copyright © ARE Holdings, Inc. All rights reserved.

“We unite several companies for tackling
global environment problems”

52

Industry-leading collaboration: (1) Hydrogen business

The Yokohama Plant (Japan Waste) will install equipment to establish a supply chain in 2025.
This initiative has been certified as a subsidized project by the Ministry of the Environment.
After this system is established, we plan to start external sales to approximately 3,000
incinerators throughout Japan as potential customers.
Japan Waste
Yokohama incinerator

Hydrogen compressor

Water electrolysis machine
Hydrogen

Power

Waste
Asahi Pretec
Bando Plant 2nd

Project to achieve multiple benefits
through waste disposal anddecarbonization

HydrogenHeat utilization hydrogen burner
Copyright © ARE Holdings, Inc. All rights reserved.

HydrogenPower generated by waste

Hydrogen Cylinder
bundleHydrogen53

Industry-leading collaboration: (2) DX promotion projects•

Agency agreement with SmartDrive on April 3, 2024. Accelerating agency development••

Expand product functionality to broaden customer target

Increase customer success 4x by 2030 to maximize customer LTV◆Build a sales and marketing structure
Cumulative number ofcompanies that have signed
up: 1,332*

YoY
YoY
Cancellation rate fell Number of leads acquired
220％
3.5％

KPI

Average sales growth
rate：167.2%（FY2024～FY2030）

Number of contract
companies：1,300◆Product development schedule

Product development from the ERP perspective that enables a single system to manage the entire operation processof waste management
To March 2023
From April 2023
From 2025
Launch DXE Service

Target: Collection &transportation providers- Function to issue electronic
manifests by proxy

Copyright © ARE Holdings, Inc. All rights reserved.

Release DXE Station
Target: + Waste managementcompanies- Workflow function from waste
generation, collection,transportation anddisposal/treatment

Develop additional functions
Target: + Waste generating
businesses- CO2 emissions calculation
function- Matching function to select thebest waste management company*Excerpt from the July-Sept 2024 quarter financial results briefing by SmartDrive Inc.

54
I.
II.

Financial Results for FY2023(April 1, 2023 ～ March 31, 2024)

ARE Mid to Long Term Plan & Aspiration
Overview of ARE mid long term Plan
Business environment surrounding ARE
Growth strategy
Precious Metal Recycling BusinessNorth American Refining Business
Environmental Preservation Business
ESG

Copyright © ARE Holdings, Inc. All rights reserved.

55 ESG Initiatives (Achievements)
Item

Initiatives/Approach• Disclosures based on TCFD

E
(Environmental)• Has set a target of reducing energy-derived CO2 by 50% from the FY2015 level by 2030
FY2022 reduction was 27% compared to FY2015• Has declared that we will achieve carbon neutrality in 2050 (Scope 1 and Scope 2)• Implemented a third-party verification of our Scope 1, 2 and 3 CO2 emissions in FY2022• Disclosure of human rights policy and sustainability procurement policy

S(Social)• Responsible management of precious metals• Promoting workplace diversity including “three-day weekend` model• Enhancement to the engagement survey(to conduct a survey once a year instead of once every three years as in the past)• Company with audit and Supervisory Committee

G(Governance)

Ratio of female directors: 33%• Among the six directors, four are external directors, including two women.
• Responded the request ”Action to Implement Management That is
Conscious of Cost of Capital and Stock Price” of TSE〔Introduction of TSR-linked stock compensation plan etc

Copyright © ARE Holdings, Inc. All rights reserved.

2 women56 ESG Initiatives (Future Initiatives and Approaches)
Item

Future initiatives and approaches• Raise CO2 emission reduction target for 2030 (vs FY2015)

Before: Reduce CO2 emissions from energy sources by 50%

E

After: Reduce Scope 1 and 2 CO2 emissions by 63%(Environment • Commit ourselves to acquire SBT certification within two years)• Aim to achieve carbon neutrality (Scope 1 and 2) in 2050
• Acquire carbon footprint to improve the value of green gold

• Secure human resources that reflect changes in the businesses (especiallynurturing of global human resources)
S(Social)• Strategically strengthen human resources for potential executive candidates• Personnel strategy with focus on personnel composition in 2030

• Further pursuit of diversity (appointing local staff members to management oflocal subsidiaries, and participation of women and people with disabilities)• Development of risk management structure that reflects changes in the businessenvironment and strikes a good balance between offensive and defensive(Governance)
approaches
G

Copyright © ARE Holdings, Inc. All rights reserved.

57

Revision of CO₂ emission reduction targets•

Aiming for carbon neutrality by 2050; 2030 interim target raised(Initial goal) Reduce energy-related CO₂ emissions by 50％(After revision) Reduce Scope 1 and 2 CO₂ emissions by 63%

CO₂ emissions (Scope 1 and 2) reduction plan

Unit：thousand
t-CO2

Reduction Plans:Conversion to ZEBs and ZEVs, including Evs
Use of renewable energy
Use of CO₂-free electricity, etc.

△63%

CO2
排出量
Emission

FY2015

FY202228.2

20.2

FY2023Plan
20.4

FY2024Plan
17.9

FY2026Plan
16.0

FY2030Plan
10.4※ Consolidated subsidiaries as of March 31, 2024 are included. Companies that have been deconsolidated by the end of March 2024
(including Japan Waste) are retroactively treated up to FY2015.
Copyright © ARE Holdings, Inc. All rights reserved.

58

Copyright © ARE Holdings, Inc. All rights reserved.