Value Creation of the Organo Group

Message from the President

At our peak performance,
it is the perfect time for
new challenges andtransformations
Masayuki Yamada
Representative Director and President
President and Executive Officer

In last year’s Group Report, as I became Presidentof Organo Corporation, I announced mycommitment to taking on the challenges of new
ideas and reform.
Discussions are held regularly at the Long-Term
Management Plan Promotion Meeting on the
progress of business development and expansionof development regions in the priority areas set
forth in Long-Term Management Plan ORGANO
2030. At the most recent meeting, we conducted
intensive discussions on how to expand ourelectronics industry sector business focusing on
semiconductor-related industries and the
Performance Products Business Unit including
pharmaceuticals, how to expand overseas
operations in North America and elsewhere, andhow to accelerate the promotion of digitaltransformation (DX), including data usage. This
meeting was extremely valuable, with specific andin-depth discussions on plans of action and issues
to be addressed to realize these objectives. We are

steadily transitioning from discussions on the
direction of the business environment and current
situation analysis to talking about specificmeasures, plans to implement them, and issues
that need to be addressed.
We are feeling positive about our efforts toaugment our management foundation, particularly
with regard to corporate governance. Corporate
governance reinforcement is a material issue to be
tackled by the Group over the long term. At theOrdinary General Meeting of Shareholders held in
June 2023, three Independent Outside
Directors—including one female—were newly
appointed. Independent Outside Directors now
comprise the majority of the Board of Directors.
Since the implementation of the new structure,
opinions from Outside Directors with extensive
management experience and diverse knowledge
have energized the Board of Directors, and I havefelt firsthand increased effectiveness from theBoard.

Results of Our Business Activities and Responding to Challenges

Looking Back after One Year as President
In June of 2023, I was appointed President and I
held discussions with management regardingpressing issues and the Organo Group’s
medium- and long-term strategies.
For our Long-Term Management Vision, the Group
proposed the concept of “proactively contribute toa better tomorrow by cultivating people today who

9will improve upon the way things were done
yesterday, as a company where all employees areenergetic and passionate about their work.” It wasa year in which we laid out the necessary actions
and the areas that required changing in the interestof realizing this vision, and we began to act as anorganization.

We have continued to increase net sales since
FY2018, and for FY2023, we achieved record highs
in orders received, net sales, and operating profit
for the second consecutive year. Expanded
investment in the electronics industry—both
domestically and abroad—greatly contributed toour strong performance. Orders received, a key
indicator of performance, rose ¥37.7 billion year on
year to ¥173.4 billion, sparked by a significant
contribution from increased semiconductor-relatedorders in China.
Both the Water Treatment Engineering Business
Unit and Performance Products Business Unit
continued their robust performance. In the generalindustrial field, there was a recovery in large-scale
investment in pharmaceutical, food, andelectronics-related industries, and growth remained
steady owing to demand for equipment renewal
and the Service Solutions business in areas ofelectric power and water supply and sewage. In theelectric power field—where the Group boasts alarge market share—orders rose for maintenancefor nuclear power plant restarts.
Based on these strong results, ROE stood at
14.5%, surpassing 10% for the fourth straight year,
as well as our medium- to long-term target of 12%.
As demand for Organo technology, products, andservices continues to rise, we are working topromote operational efficiency, one of the mostimportant measures in sustaining this growth. The
key is to promote data usage. This initiative isincorporated into ORGANO 2030 and our
medium-term management plan, and we arepromoting enhanced efficiency and design
operation automation while also considering the
adoption of AI. Improving operational efficiency isalso an integral factor in the effective utilization of
global human resources. At the Global Engineering
Center in Vietnam, established in 2021, locally
hired engineers are a major asset in our design
operations. As securing highly skilled personnel
domestically is becoming increasingly challenging,
it is clear to us that finding personnel overseas is
indispensable to Organo’s growth. We will continue

ORGANO Group Report 2023

10

Value Creation of the Organo Group

Message from the President

to focus on enhancing operational efficiency bothin Japan and abroad while also strengthening andcultivating our human resources.
Moreover, we are closely monitoring the currently
complex business environment. China and Taiwan
account for nearly 70% of our overseas business,
and we recognize the heightened business risk due
to relations between the U.S. and China. Mitigating
dependency on business in Greater China is a key
long-term challenge in our international expansion.

We are also concerned about procurement risk
trends.
While the current situation is within the scope of
the assumptions laid out in our business plan, thecontinued surge in material costs and prolonged
delivery times raise concerns about protracted
supply-demand constraints—particularly for certain
piping materials—and we must be vigilant going
forward. We will continue to reinforce the supply
chain by attempting to source alternative materials
and diversifying our supplier network.

Business Development Goals of the Organo Group
While further advancing our cutting-edge
technologies in separation, purification, andanalysis—our strengths—we will provide customers
with solutions that will aid them in their efforts toconserve energy, labor, and resources not only inthe water treatment field but also in other fields thatinvolve the purification of electronic materials andthe recovery and purification of organic solvents.
Overseas, we are expanding our semiconductorrelated business in Greater China and Malaysia.
We will also explore opportunities to expand toEurope, North America, and India. In 2021, weestablished Organo USA as a business location in

the U.S. In addition to growing our existing
business, one challenge we face is setting thestage for further business expansion in the sizable
U.S. market.
While semiconductor-related business is currently
our primary driver of growth, we recognize thathaving a broad customer base in other industries
and social infrastructure sectors is one of theOrgano Group’s key strengths. As we pursue
semiconductor-related business opportunities, wewill construct a more stable business foundationthat is less susceptible to market conditions andsatisfy our customers’ diverse needs.

To Our Stakeholders
The Organo Group’s reason for existence is toleverage the technologies it has cultivated throughlong experience with water treatment, bycontributing to the industries that create the future,and by playing a key role in the development ofsocietal infrastructure. We promote our businessactivities while taking pride in the knowledge thatour business is playing a key role in the realizationof sustainability in society. We will continue toactively invest management resources instate-of-the-art separation and purification
technologies, analysis technology, and R&D to
support these business activities. Further, we willcontinue to leverage our advanced technologicalcapabilities to resolve issues both in ourcustomers’ businesses and in society.
My single most significant mission as President is
to continually boost corporate value by growing ourcompany through relentless R&D, businessdevelopment, and sustainability management, andto return profits to our various stakeholders—
including shareholders, investors, customers,
employees, and communities. We look forward to
your continued support as the Organo Group fully
leverages its advanced technologies in contributing
to industrial development.

Implementing Sustainability Management, Enhancing Corporate
Value, and Fostering a Rewarding Workplace Environment
The Organo Group is working to raise corporate value
by combining initiatives based on its Sustainability
Policy and the business strategies of Long-Term
Management Plan ORGANO 2030. As the chairpersonof the Sustainability Committee, under the purview of
the Board of Directors, I am in charge of the planning,
formulation, and implementation of sustainability
management promotion measures. In FY2022, we
identified material issues and established specific
KPIs for each material issue. As we move forward, we
will launch full-fledged sustainability management.
We identified two material issues related toachieving continuous business growth and threeconnected with the establishment of a business11

foundation. It is important to update KPIs and otherindicators in line with changes in the businessenvironment and in our business. One material
issue connected with the establishment of abusiness foundation is the creation of a workplace
where diverse human resources can play active,
rewarding roles, and we stress that this initiative
will lead to employee health and happiness as wellas enhanced operational efficiency.
While perspective may differ from one workplace toanother, strengthening communication between
employees and management at each location will
surely lead to the positive transformation of theworkplace environment.

ORGANO Group Report 2023

12

Value Creation of the Organo Group

Organo’s Three Strengths

Development of Analysis Technology

Since its founding, Organo has developed technology to meet its customers’ diverse needs through the useof ion exchange resins—unique materials possessing ion component exchange capability—and equipmentthat effectively utilizes these materials. The accumulation of these efforts has led to the development of
unique practical technologies, and the cultivation of our strengths.

1

Advanced Separation and Purification
Technologies and Analysis Technology

What Are Separation and Purification Technologies?

While Organo’s separation and purification technologies can be found in a wide range of applications—fromultrapure water to wastewater and for various solvents and chemical solutions—the key is the ability to separate andremove unwanted matter and to purify useful substances.

Separating and removing
unwanted matter

While our R&D Center utilizes state-of-the-art analytical equipment
and a host of advanced analyses to confirm equipment performanceand water quality, the impurities in ultrapure water used in advanced
semiconductor manufacturing are at levels so low that they are
undetectable by this analytical equipment. Therefore, we continued
the development of our analysis technology and succeeded in using
a proprietary membrane—the first in the world with the ability tomeasure fine particles as small as 10 nm (1.0E-8 -meters). (Seephoto on the right.) Using the newly developed membrane alongwith filtration and continuous automatic observation technologies,
we have made possible the analysis of fine particles as small as 10
nm, contributing to the improvement of the semiconductor productquality and yield (non-defective rate).

How Separation and Purification Technologies Contribute to Society= Products and technologies= Contribution to resolving social issues (contribution to daily life and industry)

Purifying useful substances

Improvement
in semiconductor
miniaturization
function andyield

SemiconductorplantHigh-purity
hydrofluoric acid

Wastewater containinghydrofluoric acid

Impurity concentration of 1 ppt or lessImpurity concentration in ultrapure water for
semiconductor manufacturing is no higher
than 1 ppt (parts per trillion). This represents
just 2.5 mg in a volume of ultrapure waterequivalent to a 50-m swimming pool (2,500m3) at the Olympic Games.

EcoCrysta(fluorine recovery
equipment)
Treatedwater

Recoveredfluorine (CaF2)

Fluorite(CaF2)

Removalof substancesfrom a distilled
spirit thatcause people
to feel sickHydrofluoric acidmanufacturing
plantTechnology to increase the purity of specific substances is used inapplications such as the recovery of valuable resources in wastewater.
(The above is an example of calcium fluoride recovery from wastewater)

Rare sugar
production(bleaching)

Non-Aqueous Separation and Purification

13

Removal ofunwanted
substancesfrom potablealcohol

Sweetener
production
technologies

Water supply
and sewage
treatment

Separationandpurification
Small watersoftener andpurification
technologies

Improvement inquality of kitchens,vending machines,
and coffee
machines

Lifecycle CO2 emissions

Wastewater
systems for
power plants

Stableoperationof power
infrastructure

Small- andmedium-sized
Increase ingeneral-purpose added value
pure waterof testing andsystems

Pure water
systems forsterilization

research toward
key industry
development

Maintenance ofquality inpharmaceuticalmanufacturing(t-CO2/t-treated volume)
GHG emissions (t-CO2/t-NMP refined volume)

Organo entered the non-aqueous separation and purification
field in 1953. We are developing technologies for therefinement and decolorization of sugar, the removal of
substances from a distilled spirit that cause people to feel
sick, and more recently, to recover N-methylpyrrolidone(NMP) used in large quantities in the manufacture ofcathode materials for rechargeable lithium-ion batteries
found in electric vehicles (EVs). Whereas mainstream
distillation methods are energy intensive, our membrane
separation method reduces costs to one-seventh that ofconventional methods and reduces lifecycle CO2 emissions
by nearly 75%, contributing to resource and energy savings.

Ultrapurewater production
technologies

Maintenanceand advancementof waterinfrastructure

2.5
2.0

Total reduction effect1.5

Approx. 75%

1.0
0.5
0.0

On-site Organo method

Off-site distillation method

Improvement of water quality
Improvement of treatment efficiency
Reduction in labor
Extension of useful life

Recovery and recycling of fluorinerare metals

Promotion of energy conservation
through effective recovery of heatfrom low-temperature water

Water treatment chemicals

Recovery of valuable resources

Recovery of water heat (energy)

ORGANO Group Report 2023

14

Value Creation of the Organo Group

Organo’s Three Strengths

2Comprehensive Water Treatment
Engineering

3

Organo continues to evolve the broad range of separation and purification technologies—
including water treatment—developed over the years to meet our customers’ needs.

Extensive Track Record in Industry
and Daily LifeThe breadth of our customer base accumulated from our wide-ranging delivery record is one ofour most valuable assets for meeting our customers’ future needs.

Wide Range of Supporting Technologies

Water purification
plantsElectronics industry

The Organo Group supports a vast range of processing
capacities, from ultrapure water production systems used
at research institutions that require a single drop of water
to ultrapure water production systems used in cleaning
applications at large-scale semiconductor manufacturing
plants that supply 1,000 tons of water per hour—more
water than in an Olympic-size swimming pool. The scaleof production determines the equipment technology
required, even when producing the same ultrapure water.
In addition, water before treatment—also known as raw
water—varies depending on the location, such asseawater, river water, well water, industrial water, andwastewater, and there is also a variance in customer uses.
As such, we provide water treatment facilities and services
in line with the characteristics and uses of raw water.

Pharmaceuticals
and cosmetics

Capacity

Manufacturing water
and water treatment
systems

From a single drop
to large-scale plants
Water quality

Applications

Support for everythingfrom the purification ofpure and ultrapureindustrial process water
to wastewater, recovery,
and recycling

Support for fields ranging
from societal infrastructure—such as power plants andwater supply and sewage—to
manufacturing and testing
and research centers

Medical and research
institutions

On-siteconstruction

Electric power/
water supply
and sewage

Replacementof expendable
items
Renovation
proposals

Periodic
inspections

Operational
supportKnow-How and Support Capabilities
The source of the Organo Group’s customer support capabilities is the accumulation of know-how throughaccurately responding to customer needs based on individual experiences. This includes the development oftechnology and installation of equipment related to separation and purification for more than 75 years as well as theability to respond to issues that arise during operation and maintenance.

15

Convenience
stores/restaurants
Coffee machine andvending machine filters

Sewage treatment
plantsSewage treatment facilities

Water Treatment Engineering Business Unit

Generalindustry

Consistent customer support

Cleaning/boiler
water and water
treatment systems

Aquariums, fisheries
facilities, researchfacilities, etc.

Thermal and nuclear
power plants

DeliveryAnalysis

Manufacturing water
and water treatment
systems

Other

Analysis pure and ultrapure
water systems

Electronics
industry

Development

Foods/beverages

Cooling water treatment
chemicals, etc.

Water for power generation
turbines, various water
treatment systems

We internally share customer needs and new insight gained at each phase to improve our technology and services.

Design andpurchasing

Municipal water supply system

Buildings andcommercial facilities

Chemicals/
machinery

Comprehensive Structure

Sales andplanning

Cleaning water and water
treatment closed systems

Main areas: Semiconductors, panels, electronic parts, etc.
Main equipment: Ultrapure water production systems, water treatment systems, wastewater
recovery systems, valuable resource recovery systems
Main areas: Pharmaceuticals and cosmetics, foods and beverages, mechanical and chemical uses
 ltrapure water production systems, water treatment systems, wastewater recovery
Main equipment: U
systems, refining facilities for sugar solutions, refining facilities for distilled spirits
Main areas: Thermal and nuclear power plants, water supply and sewage
Main equipment: Pure water production systems, water treatment systems, condensate treatment
systems, water treatment facilities, sewage treatment facilities

Performance Products Business Unit
Water
treatmentchemicalsStandard
equipment
and filters

Food products

Main areas: Various manufacturing industries, buildings, and commercial facilities
Main products: Wastewater, cooling water, boiler water, and RO membrane treatment chemicals
Main areas: Medical and research institutions, convenience stores/restaurants
Main products: Compact pure water/ultrapure water systems, water purification filters
Main areas: Food/beverages, food products for nursing care patients/health food products
Main products: Food additives and processing agents, food ingredients

ORGANO Group Report 2023

16

Value Creation of the Organo Group

TOPICS: Value Creation Case Studies
Ultrapure Water for Semiconductor Manufacturing Plants
In semiconductor manufacturing—for which demand remains strong—the cleaning process to remove contaminants
and deposits from the surface of semiconductors accounts for more than 30% of the entire manufacturing process,and is key to ensuring product quality. This process requires large volumes of ultrapure water, in addition to chemicalsolutions and gases. Organo has delivered ultrapure water production systems to numerous semiconductor
manufacturing plants both domestically and abroad, helping improve their yields.

Supplying Ultrapure Water to Super-Kamiokande
We supply ultrapure water to Super-Kamiokande, the world’s largest water Cherenkov detector. Masatoshi Koshiba
and Takaaki Kajita won the Nobel prize in 2002 and 2015, respectively, for their research on neutrinos. Moreover, in
2020, we succeeded in removing ions while retaining gadolinium ions (Gd3+) using special ion exchange resin jointly
developed by the University of Tokyo and Organo. This contributed to increasing the sensitivity of neutrino
observations with the introduction of gadolinium.

Conventional semiconductor manufacturing processes
Development and design

Front-end process(manufacturing)

Back-end process(assembly and inspection)

3

UV sterilizer

2

Ion exchange resin tower

5

1

2

Wafer manufacturing

3

4

Cleaning

Deposition

4

5
Cleaning

Vacuumdegasifier
tower

Resist coating

Cross
sectionAssembly andinspection

Purified water tank

6

Power andcontrol panel

UF condensationwater tank

UF unitUltrapure water

10

Cartridge polisher

98
Cleaning

7

Ultrapure water

7
Resist stripping

Ultrapure water

Ultrapure water

6
Etching

Exposure andprocessing

Primarysafety filter

A
ActivatedcarbonfilterBabycompressor

Secondarysafety filter
Return water
filterB

Ultrapure water

Dehumidifier andCO2 removal
equipment

These processes are repeated for semiconductor circuit formation.

A portion of the large volumes of ultrapure water used is treated prior to discharge so as not to impact theenvironment, while most of the water is recovered and reused. Organo also provides wastewater recovery systems
to contribute to efficient water resource use.

Air tankA

B

Low-radon-concentration air
production system

Raw water

Air with radon gas removed to the parts per million(ppm) level is sent to the top of the SuperKamiokande test water tank. This prevents radongas from dissolving from the air into the water.

Underground waterfrom Kamioka Mine
starts out extremely
pure.

(Circulation rate
= 70 tons/hour)

1Secondary highpressure pump

RO unitExample of wastewater treatment

Cleaning

Wastewater

17

Ultrapure water
system2

3

4

RO membrane equipment

Ion exchange equipment

UV light-based
sterilization equipment

Vacuum degasifier
equipment

UV light eliminates bacteriasuch as E. coli

Removes gases such asradon and oxygen

Eliminates substances such as ions, bacteria, andcontaminants larger than one ten-millionth of amillimeter

Ultrapure water

Raw water, etc.

1

Wastewater
recovery system

Water treatment
systemEffluent

Eliminates a range of ions,
including calcium anduranium

7

6

Raw water

Super-Kamiokande

UF membrane equipment

Underground waterfrom Kamioka Mine
starts out
extremely pure

1,000 meters underground;holds 50,000 tons ofultrapure water

Eliminates contaminants onemillionth of a millimeter or larger(corresponding to a molecularweight of approximately 10,000)

5
Cartridge polisher
Specially purified ion
exchange equipment thatremoves virtually all ionsfrom water

ORGANO Group Report 2023

18

Value Creation of the Organo Group

Value Creation Process

With the Water Treatment Engineering Business Unit remaining at
the core, Organo will further expand its role by leveraging its
separation and purification, analysis, and manufacturing
technologies. The Company will also expand the scope and regionsof its businesses—including those beyond water—and constantly
provide products and services that promote the creation of value
and resolve the challenges that confront industry and society.

Management Philosophy
Organo serves as a valuable partner company by leveraging its leading-edge technologies cultivated through long experience with water
treatment, by contributing to the industries that create the future, and by playing a key role in the development of societal infrastructure.
Social issues

Globalsustainable
development
and growth- Responding to climatechange- Declining populations
in developed countries- Advancements intechnology

Business model

Products and services

Value provided

EquityLong-Term Management Plan ORGANO 2030

Social value¥86,170 million

Medium-Term Management Plan 2023–2025

Developing the Information andCommunications Technologies(ICT) infrastructure(semiconductor) industry

Management resources
Financial foundation

Total shareholder’s equity ratio

52.3%
Production technology
capabilities[FY2025 Goals] Net sales: ¥170 billion, operating profit: ¥18.5 billion

Water Treatment
Engineering Business
Unit

Performance
Products Business
Unit

Standard pure andultrapure waterproduction systems
Reducing environmental impact
and improving water utilization

Water treatment system

Production bases
Development
and growth inemerging anddeveloping
countries

Iwaki Factory, Tsukuba Factory
Organo Food Tech Corporation(Food Products Division)
HOSTEC (Performance
Products Business Unit)- Deepening of
globalization- Growing populations
and urbanization in
emerging countries

Number of employees- Further exploration ofadvanced medical
technologies- Developing medical
structures in emerging
countries- Implementing infection
prevention measures

Advanced
separation andpurification
technologies andanalysistechnology

2,506
Domestic affiliates:
Domestic offices
and sales offices:
Overseas sites:6

Comprehensive
water treatment
engineering

42
7Proprietarystrengths

Contributing to improving water
quality and treatment efficiency,
reducing labor, extending usefullife, and reducing waste
Extensive trackrecord in industry
and daily life

Material issues

R&D expenses¥2,615 million
Number of R&D personnel

Number of patents andutility models (Japan)

785

Customer value- Contributing to technologicalinnovation (electronics industry,
life sciences, and energy)- Creating new added value(providing digital-based services)

Contributing to asustainable society

Water treatment
chemicals and services

Shareholder value

1 Contribute to a sustainable

3 Strengthen governance and2 Provide high value-added

4 Create a workplace where

Employee value

5 Strengthen supply chain- Fulfilling place to work; energetic
company- Achieving diversity

products and services byleveraging technologicalcapabilities

diverse human resources canplay an active and rewarding role
management

Aspire to Becomea Global Partner
CompanyAspire to be a partner for top
companies in the advanced
semiconductor field 
Aspire to be the company ofchoice for water treatment
chemicals and functional
materials in differentiatedspecified fields
 Achieve sustainability goalsProfit margin
ROE

¥200 billion¥30 billion
15%
stable at
12% or more

- Stable ROE of 12% or more- Continuously increasing
shareholder returns

Establish a business foundation

ensure compliance

Goal

Net sales
Operating profit

Achieve continuous business growth

global environment

ORGANO 2030

Financial performancetargets for FY2030

Maintaining quality inpharmaceutical manufacturing

Water production andsupply systems forpharmaceuticals

R&D

158

19

Energy-saving service
solutions

Network

Domestic sites
Advancementand developmentof medical andhealthtechnologies

Contributing to a reduction inenergy consumption- Providing water required inindustry and daily life
- Developing technologies for
reducing environmental impact(energy-saving and recycling
technologies)

Corporate governance

ORGANO Group Report 2023

20

Value Creation of the Organo Group

Value Provided through Organo Group
Products and Technology
There is a Japanese proverb that says, “When the wind blows, the barrel maker gets rich.”
The blowing wind creates dust, which gets in people’s eyes and causes them to lose their eyesight. People who lose
their eyesight try to make a living playing the shamisen, leading to an increased demand for shamisen. Because theshamisen is covered in cat skin, the number of cats decreases. As the number of cats decreases, the number ofmice increases, resulting in more barrels being gnawed by mice.
Therefore, the barrel maker profits from selling more barrels.
While this is an extreme example, in the world in which we live, seemingly unrelated things can actually be connected.
Pure water purified using Organo’s state-of-the-art technology is used in pharmaceutical manufacturing, and thesepharmaceuticals help people to regain their health. Our technology to purify industrial wastewater beyond legal
requirements protects river and ocean ecosystems, thereby preserving marine resources. Ultrapure water withminimal impurities is essential for semiconductor manufacturing. These semiconductors support the core elementsof societal infrastructure, including bank ATMs, train operations, and the Internet. Moreover, our technology toenhance air conditioning energy efficiency not only reduces energy consumption but also mitigates CO2 emissions.

Our Businesses, Services, Initiatives, and Social Issues to be SolvedStandard pure and ultrapure
water production systems
Develop the ICT infrastructure(semiconductor) industry

Organo products and technologies support industry and people’s daily lives behind the scenes through a process ofintake, use, and discharge of water. Behind this are our strengths—our advanced technologies in separation andpurification, analysis, and manufacturing.
Our technology contributes to both environmental conservation and economic development by building small water
reclamation circulation loops used in daily life and industry within the larger global water cycle. This is the value that
we proudly provide to society. By pursuing this value, we support semiconductor, pharmaceutical, and othercutting-edge technologies while realizing climate change measures and the Sustainable Development Goals (SDGs).
Taking full advantage of the cutting-edge technology we have cultivated through long experience with water
treatment, Organo will continue to serve as a valuable partner company by contributing to the industries that create
the future, and by playing a key role in the development of societal infrastructure.

SDG contributions and targets for FY2030
Goal 9Build resilient infrastructure, promote inclusive andsustainable industrialization and foster innovation

Goal 6
Ensure availability and sustainable management ofwater and sanitation for all

We use our equipment to provide pure and ultrapure
water, thereby contributing to the manufacture ofsemiconductors, a key element of ICT infrastructure.

Goal 14
Conserve and sustainably use the oceans, seas, andmarine resources for sustainable development

Wastewater treatment systems
Reduce the environmental impact ofwastewater
Improve water use

Goal 7
Ensure access to affordable, reliable, sustainable, andmodern energy for all

Energy-saving service solutions

Goal 9Build resilient infrastructure, promote inclusive andsustainable industrialization and foster innovation

Reduce energy consumption
Promote the introduction ofenvironmentally friendly industrial
processes such as CO2 reduction

Goal 13
Take urgent action to combat climate change and its
impacts

Reduce CO2 emissions

We use our services to improve customer energy
efficiency, thereby contributing to the reduction of CO2
emissions.

Water treatment chemicals
and services[Goal for FY2030]
Total CO2 emissions reduction volume: 32,000 t-CO2

Reduce waste

Water production and supply
systems for pharmaceuticals
Maintain pharmaceutical manufacturing
quality

Activities to raise awarenessof water environment
conservation technologies

We use our systems to reduce substances in customers’
industrial wastewater to below the legally mandated
levels in each country, thereby contributing toappropriate, transparent industrial wastewater treatment.
[Goals for FY2030]
Total wastewater volume: 60 million m3
Total recovered and reused water volume: 250 million m3

Goal 12
Ensure sustainable consumption and production
patterns
We use our services to reduce the amount of sludge
generated at customers’ wastewater facilities.
[Goal for FY2030]
Total sludge reduction volume: 10,000 t

Goal 3To ensure healthy lives and promote well-being for all at
all ages

Goal 6
Ensure availability and sustainable management ofwater and sanitation for all

We use our systems to provide a stable supply ofpharmaceutical water, thereby contributing to the stablesupply of safe, quality pharmaceuticals to customers.

Goal 12
Ensure sustainable consumption and production
patterns
We educate stakeholders on water environment
conservation technologies.

Raise water awareness21

ORGANO Group Report 2023

22

Value Creation of the Organo GroupManagement Resources (Intellectual and Human Capital)

Engineering Center
Overview

R&D and Engineering

Driving Our Separation and
Purification Technologies
Forward to Help Build theIndustries Creating the FutureManaging Director and Executive Officer

Nobuyoshi Suda President of R&D and Engineering

Energyno

Ultrapure
water

In

Create new businesses

va

tio

n

Futuresociety

Ion exchange resin

AdvancedanalysisCore
technologies

Digitalapplications
Membraneseparation
Chemicals
Biology

Functional
materials

Solid-liquid separation
Crystallization

Resource
recovery

Water recovery

Strengthen and expand core businesses

23

Trends in R&D Expenses
R&D expenses

 R&D expenses/net sales ratio

2.6Robust capital investment in the electronics industry eed for purification and recovery of chemicals andN
solvents as customer products become increasingly
sophisticatedIntroduction of design automation tools anddevelopment of construction robots to boost
engineering capacity eed for reduction of environmental impact, reuseNof resources, and recovery of valuable resources trengthening of overseas engineering locations
Sand cooperation trengthening of cooperation with partnerS
companies

FY2021Risks
Inability to meet demand for robust capital
investment due to lack of resourcesIncreasingly prolonged project construction periods
caused by supply chain disruptions

3.0

Strengths of Organo Engineering

2.1
1.9%

Managing Executive Officer
General Manager of Engineering Center(Billions of yen)

2.0%

2.0%

FY2022

FY2023 (Planned)

Development of Technical Personnel

Biopharmaceuticals

Chromatography
separationachieve constant innovation, and provide technologies,
products, and services to promote value creation andproblem solving in industry and society.

Shin Asano

Responses

Opportunities



Organo’s Policy for R&D and Engineering
In recent years, demand has grown for efforts to realize asustainable society as the future social situation
becomes increasingly unpredictable due to the impactsof abnormal weather patterns as a result of global
warming, as well as geopolitical risks. Since its founding
in 1946, the Organo Group has evolved over more than
75 years into a comprehensive water treatment
engineering company. We will continue to deepen anddevelop our high value-added separation and purification
technologies, and develop and provide advanced
technologies to contribute to a sustainable future society.
At our core Plant Engineering Business Unit, we
accurately grasp changes in the business environment,

The Engineering Center is a technical group with expertise in separation andpurification technologies in a host of fields. The Center applies numerous Organo
Group specialized optimization technologies and functional materials to all liquid
separation and purification use scenarios, such as water, solvents, and chemicals,
contributing to the stabilization and yield improvement of our customers’ products.
We currently have two engineering locations in Southeast Asia (Thailand andVietnam), and by incorporating new ideas and pushing forward with ourtechnological innovation through the merging of diverse human resources, we
continue to lead the industry by refining our optimization technology, andcontribute to the development of industrial fields.

Human resources are the most important andindispensable foundation in implementing ourmanagement philosophy and Long-Term Management
Vision. To proactively contribute to a better tomorrowby cultivating people today who will improve upon theway things were done yesterday, we constantly review
how we have done business in the past and accelerate
improvements.
One such example is the creation of the Planning
Department of the R&D and Engineering’s Engineering
Center. This department continues to take on thechallenge of transformation by fundamentally
restructuring engineering operations to optimize thevalue chain through the use of digital technology,
visualizing the expertise and skills of our engineers, andpromoting the appointment of global human resources.
In addition to the R&D Center’s various areas ofexpertise, we encourage cooperation with outside
institutions and aim to create new value from a varietyof viewpoints, including management and futureoriented thinking and from a higher perspective.

The strengths of our engineering lie in our diverse application technologies and distinctive functional materials that
support them, as well as our experience and expertise in separation and purification technologies for all types ofliquids—including water, solvents, and chemicals. Moreover, we have also accumulated manufacturing know-how as
Japan’s lone manufacturer that develops, designs, and manufactures electrodeionization (EDI) systems, anext-generation technology. We are also building a new manufacturing line incorporating DX and robotic technology
with the aim of dramatically improving manufacturing efficiency.

Strengthening of the Engineering Structure
We are building a data-driven engineering structure and reorganizing to create an efficient delivery system for various
project sizes to improve productivity and reinforce our structure. We aim to bolster our production system over the
medium term by enhancing the development of human resources. This entails a change in mindset as well as
business reform. At the same time, we will invest resources to enter new separation and purification fields,
strengthen our Service Solutions business, and further advance EDI technology.
Engineering
Initial data input
Client meeting, proposal

Procurement

Construction

Design data

Purchasing data

Design requirements, system, safety factor, footprint,delivery costs, profit

Data integration system

Construction data
Planning

Operation & Maintenance
Data analysis
Data management

Supplier, quality, delivery,
actual price, CO2

Automatic engineering optimization Operational data

Supplier, scheme, construction period actual price, CO2

Water quality, water volume, electricity fees,chemical fees, number of operators andmaintenance frequency, renovation costs, CO2

Data scientist

Data analysis and utilization

Data-driven engineering

ORGANO Group Report 2023

24

Value Creation of the Organo GroupManagement Resources (Intellectual and Human Capital)

Management Resources (Manufacturing Capital)

R&D Center

Production Technology Capabilities

Overview

Tsukuba Factory

In addition to the development of separation and purification technologies andadvanced analytical technologies that have evolved over the more than 75 years
since its establishment based on the theme of “creating value for the society of
tomorrow through the development of advanced technologies,” the Organo
Group will promote the development of technologies that contribute to asustainable society through solutions utilizing advanced digital technologies,
and by pushing forward open innovation with advanced research institutions.
To strengthen the foundation for creating new value, we continually invest in
R&D, augment our human resources training programs, and create
future-oriented development topics.
Opportunities

World-leading ion exchange resin refinery

Masahiro Eguchi
Executive Officer
Senior General Manager of R&D
CenterResponses

Increased demand for purification due tosemiconductor miniaturization ccelerated purification of ultrapure water usingA
new dedicated research facilities

Expanded sustainability activities trengthened development of environmentallyS
friendly technologies

Increased and strengthened cooperation with
cutting-edge research facilities and companies forjoint research, startups, etc.

 romotion of the creation of new future-oriented
P
topicsRisks hanges in customer requirements that are difficult
C
to satisfy with in-house technologyContraction in existing business due to market changes

Ion exchange resin is one of our key technologies, and the level of quality required varies depending on its use, withsemiconductor manufacturing plants and power plants using very high-quality resin. We condition our ion exchange
resins in facilities with cutting-edge technology to meet and accommodate a wide range of quality requirements. We
also recycle used ion exchange resins.

Development Examples and Topics
In 2022, we began operation of a research facility
dedicated to next-generation ultrapure water systems forthe purpose of satisfying growing demand for purificationin the semiconductor industry. This facility is equippedwith the latest actual scale water treatment unit. And, in
addition to pursuing ever higher purity of ultrapure water,
we are developing technology to improve the water
recovery rate and reduce CO2 emissions.
Moreover, we are promoting the development of
separation and purification technologies for chemicals andsolvents by applying ultrapure water production
technology. We aim to create new value to contribute toadvanced semiconductor manufacturing processes.

Iwaki Factory
Water treatment system unit assembly factory
At our advanced factory for manufacturing water treatment systems, we standardize equipment units that compriselarge-scale water treatment plants within transportable range and ship them as assembled products. Assemblingthese at the plant enables us to provide improved and stable product quality, and it simplifies assembly work on site.
This allows us to shorten the on-site construction period and reduce costs. In addition to the general assembly line,
we provide a clean assembly room for semiconductor and pharmaceutical users.

Future Initiatives
Through cooperation with state-of-the-art research institutes and startups in Japan and abroad, we are looking tocreate new value by integrating advanced technology with our core technologies.
Moreover, to realize a sustainable society, we will strengthen technology development to recycle water andresources as well as to mitigate environmental impact, such as by reducing energy and chemicals, through theapplication of digital technology.

25

ORGANO Group Report 2023

26

Value Creation of the Organo GroupManagement Resources (Social Capital)
Overseas Network

Taiwan Market

Interconnecting Regional
Networks to Expand the Group
Network and Drive Further GrowthManaging Executive Officer

of Global Management
Makoto Tomizawa President
and Planning

The Organo Group aims to grow as a partner company that contributes to the development of societal infrastructure
while valuing our relationship with all of our stakeholders based on our management philosophy.
Since its founding, Organo has developed its water treatment technology and expanded its business throughrelationships with its many customers and business partners. The strong support from our customers and trust in the
Organo Group have made this possible.
To reward the trust of our stakeholders and meet their expectations for the future, we have actively expanded ouroverseas network since the 1980s, deepening our connections with industry and society in regions around the world.
By leveraging existing regional networks in China, Taiwan, Vietnam, Thailand, Malaysia, Indonesia, and the U.S., weare working to bolster our group network. These efforts contribute significantly to the Group’s growth withinformation on business, technology, customers, materials and procurement, resources, and risks as potent capitalthat supports our business.

Taiwan is a huge market, boasting a share of over 60% of
the world’s semiconductor production. Its manufacture ofadvanced semiconductors in particular is far ahead of allother countries. Organo boasts a top share with its deliveryof ultrapure water production systems, which are essential
to advanced semiconductor manufacturing. We also offer
comprehensive equipment services post-delivery andcontribute significantly to stable operations at plants over
the years, earning us a high level of trust from ourcustomers. Through these efforts, we have constructed
networks not only with our customers and suppliers but
also with many other stakeholders around the world,
thereby generating a host of business opportunities. We willcontinue to enhance our technology, quality, and services
to satisfy customer demand and aim for further growth.

Trends in sales of local subsidiaries
Net sales(Millions of Taiwan dollars)
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2005

2010

2015

2020

2022

Leveraging our network cultivated in Taiwan to expand business

Overview of Overseas Businesses
The Group’s overseas business is now evolving into a worldwide network that transcends borders, and we arebuilding relationships with numerous customers and business partners, both Japanese and those from othercountries. In Taiwan in particular, we have expanded business together with local customers since the electronics
industry’s initial growth phase. We are now cultivating a global network that extends beyond borders, and seizing
this opportunity to achieve further growth. As one example, in 2021, we opened a location in the U.S. and are
expanding business focusing on the semiconductor industry.
Our strength lies in our ability to foster connections with regions underpinned by our technology and trust. We willcontinue to expand our connections with more customers and business partners, thereby further growing our global
network.

Opportunities ontinued investment in the electronics industry at key locationsCin China, Taiwan, Malaysia, and the U.S.

 lant and Service Solutions
Pbusiness expansion

Active global investment in semiconductor-related industries xpanded geographic reach andEcreation of business in the same
region isk assumption and fullRcomplement of countermeasures equential updates regarding all
Srisks through monitoring

Risks

27

ResponsesTrade and geopolitical risks

Area-specific risks

U.S. Market
In line with the entry of one of the world’s largest semiconductor foundry companies into the U.S. market, Organo
established a local U.S. subsidiary in September 2021. As evidenced by the passage of the CHIPS Act*, the U.S. islooking forward to reconstructing its semiconductor ecosystem and creating jobs. Organo will use its advanced
water treatment technology cultivated through its experience in cutting-edge semiconductors as well as its solutions
technology and experience in resolving customer issues to contribute to the U.S. semiconductor industry andregional economic development.
Moreover, the electronics industry has a broad base of
Investment in Semiconductor Manufacturing
related businesses, and our separation and purification
Companies in the U.S. through 2032
technologies that use ion exchange resin—one of ourcore technologies—will be applied to the purification ofchemicals used in the semiconductor manufacturing
process. We see strong potential in the U.S. market, andare currently conducting market research as we launchsales in certain areas.
Expansion into the U.S. market also serves to strengthen
our regional portfolio in an increasingly complex global
business while minimizing risk and creating a steppingstone to the next region for development.
* The purpose of the Creating Helpful Incentives to Produce Semiconductors(CHIPS) and Science Act is to support the development of semiconductors in
the U.S. and investment in mass production, AI, quantum computers,
telecommunications technology, and more.

Source: “Semiconductor manufacturing investments in the next 10 years,”
Semiconductor Industry Association

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