ORGANOGROUPREPORT
2023
1-2-8, Shinsuna, Koto-ku, Tokyo 136-8631
https://www.organo.co.jp/english/

The Power of Purification
The Organo Group leverages the technologies it has
cultivated through long experience with water
treatment to contribute to the development ofindustry and societal infrastructure.

1

ORGANO Group Report 2023

2

Management Philosophy

Sustainability Policy

Organo serves as a valuable partner company by leveraging its leading-

Together with our stakeholders, Organo aims to realize aedge technologies cultivated through long experience with water

sustainable society for the future and improve our corporate value

treatment, by contributing to the industries that create the future, andby playing a key role in the development of societal infrastructure.

E

Leveraging its leading-edge
technologies cultivated throughlong experience with water
treatment, Organo provides
environmentally-friendly products
and services that contribute towater environment conservationand prevention of global
warming.*Long-Term Management Vision
At Organo, we seek to expand our business through high value-added
separation and purification as well as analysis and manufacturing technologies,

S

G

We promote a workplace where
human rights, diverse values,
and individuality are respected,
and where every employee isgiven the opportunity to growand play an active role.

We emphasize dialogue andcooperation with all
stakeholders, and we conduct
honest and fair corporate
activities.

and by providing products and services that promote the creation of value andwhich resolve the challenges that confront industry and society.

* “Leveraging its leading-edge technologies cultivated through long experience with water
treatment” refers to our pursuit of water treatment-related separation and purification,
analysis, and engineering technologies, and our provision of optimal systems and services
that meet the needs of society through a combination of these technologies.

We proactively contribute to a better tomorrow by cultivating people today
who will improve upon the way things were done yesterday, as a company
where all employees are energetic and passionate about their work.

●

Contents

Introduction

Management Resources

Introduction

1

Management Philosophy/Long-Term
Management Vision

3

Sustainability Policy

4

About the Organo Group
Business Overview of the Organo Group
History of the Organo GroupIntellectual and Human Capital(R&D and Engineering)

23

Manufacturing Capital

26

Social Capital (Overseas Network)

27

Growth Strategies of the Organo Group5
7

Value Creation of the Organo Group
Message from the President

9

Organo’s Three Strengths

13

TOPICS: Value Creation Case Studies

17

Value Creation Process

19

Value Provided through Organo Group 21
Products and Technology

45

Environment

53

Society57

Corporate Data
Financial/Nonfinancial Information

61

Consolidated Balance Sheet

63
64

Long-Term Management Plan
ORGANO 2030

29

Medium-Term Management Plan
(2023–2025)31

Consolidated Statement of Income/Consolidated Statement ofComprehensive Income

33

Consolidated Statement of
Shareholders’ Equity

65

Financial Strategy

New Customer Value Creation Initiatives 35

Consolidated Statement of Cash Flows

66

Water Treatment Engineering
Business Unit

37

Company Information/Externally
Acclaimed—Incorporated into Indexes

67

Performance Products Business Unit

39

Network (Japan/Overseas)

68

Sustainability and the Organo Group
Sustainability Management

3

Governance41

Editorial policy
Since 2020, the Organo Group has published the “Organo Group
Report” (integrated report), which reports on the financial andnonfinancial activities of the Group. The goal is to provide ourshareholders, investors, and other stakeholders with a better
understanding of our efforts to improve corporate value over the
medium to long term by offering an integrated view of our financial
data, management strategies, the business environment, andenvironmental, social, and governance (ESG) issues.
Based on this report, we will continue to conduct dialogue with our
stakeholders to further improve corporate value.

Reference guidelines“International Integrated Reporting Framework” by theInternational Integrated Reporting Council (IIRC)“Guidance for Collaborative Value Creation” by Japan’s
Ministry of Economy, Trade and Industry“Environmental Reporting Guidelines” (2018 edition) by
Japan’s Ministry of the Environment
ISO 26000:2010 Guidance on Social Responsibility
Disclaimer regarding forward-looking statements
Forward-looking statements included in this report containassumptions and expectations. They are based on
information available at the time of publication, and involverisks and uncertainties. Please note that actual performance
may vary materially from forecasts owing to changes invarious factors impacting the Company’s business.

Origin of the Company Name
Ion exchange resin, one of Organo’s core materials, is called organic zeolite, or “organolite” for short, as
opposed to natural inorganic zeolite. The company name derives from the name of the resin.
EcoCrysta, PURIC, ORBRAID, ORSMART, and MIZUNETSU, which appear in this document, are trademarks or registered trademarks of Organo Corporation.

ORGANO Group Report 2023

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About the Organo Group

Business Overview of the Organo Group
Organo possesses a wide variety of water treatment technologies for ultrapure water, pure water, tap water, industrial wastewater and sewage, and is developing its businesses globally to serve a diverse range ofcustomers while also applying these technologies to non-water fields. In addition, the Company has built a structure that allows it to provide comprehensive solutions by integrating all functions in-house, including
product development, design, construction, sales, post-delivery maintenance, and operational support.
FY2022
Consolidated net sales¥132.4 billion

Organo (Suzhou) Water Treatment Co., Ltd. (China)
ORGANO CORPORATION (Japan)

Operating profit¥15.2 billion

Organo Technology Co., Ltd. (Taiwan)

Organo (Thailand) Co., Ltd.

642

domestic affiliates
Organo USA, Inc.

domestic offices and sales offices

Organo (Vietnam) Co., Ltd.

Overseas sales ratio:

Organo (Asia) Sdn. Bhd. (Malaysia)

37.5 %PT Lautan Organo Water (Indonesia)

Overseas
37.5%

Japan
62.5%

Water Treatment Engineering Business Unit
Net sales:¥111.6

Electronics industry¥75.4 billion(68%)

billionThis business unit provides water
treatment systems used at various
manufacturing plants, power
plants, and water supply andsewage facilities. It undertakes
business as a comprehensive
water treatment engineering
company providing solutions
ranging from the supply ofultrapure water—which boasts the
top level of purity in the world—towater recycling and various
wastewater treatment facilities
that detoxify harmful wastewater.

5

General industry

Electric power/watersupply and sewage

84.3 %¥24.3 billion ¥11.7 billion(22%) (10%)

Plant Business

Providing optimal water treatment systems
based on advanced technology capabilities
cultivated in many industries and countries

Performance Products Business Unit

Net sales ratio:

Service Solutions Business

Providing solutions for customers’
operational support and improvement needs
as well as pure water at our own facilities

Net sales:¥20.8

Water treatment chemicals

Standard equipment and filters

Food products¥8.0 billion(39%)¥7.0 billion(34%)¥5.7 billion(27%)

billionThis business unit provides
performance products such as
water treatment chemicals,
standard equipment, filters, andfood processing materials tovarious manufacturing plants, retailfacilities, and medical and research
institutions. Although the businesshas focused primarily on Japan,
the Company is also working tostrengthen business development
overseas with products such ascompact pure water systems for
medical institutions and water
treatment chemicals for theelectronics industry.

Water treatment
chemicalsStandard equipment
and filters

Providing various water
treatment chemicals used forcooling water treatment, boiler
water treatment, wastewater
treatment, and RO membrane
treatment at factories andcommercial facilities.

Providing compact pure water
systems used at medical andresearch institutions and water
purification filters used atfactories and in vending
machines and coffee machines.

Net sales ratio:

15.7 %
Food products

Providing food additives used as
raw materials for processed
foods and beverages, as well asprocessing technologies for the
raw materials used in health foodproducts and food products fornursing care patients.
ORGANO Group Report 2023

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About the Organo Group2014
Launched energy-saving
service solutions using
water heat utilization
systemHistory of the Organo Group2018

Technology Cultivated Over 75-Plus Years
Since its founding in 1946, Organo has been meeting the needs for water required in industry and daily life.
The history of the Organo Group is also the history of expanding the value of water and its possibilities.
Beginning with the development of a heat-free water distillation system for hospitals, research centers, and otherfacilities, Organo has been involved in a wide range of water treatment systems and technologies. This includes
treatment systems for pure water and wastewater in various industries, water treatment systems for water supply
and sewage and power plants, and ultrapure water systems for the manufacturing of semiconductors and otherdevices in the electronics industry. Organo plays a role in supporting the development of industry and daily life inJapan and overseas.

Expanded overseas business
Enhanced service solutions

2005
1991

1984
Expanded into pharmaceuticalmanufacturing field

Executed full-scale launchof comprehensive service
solutions

Expanded deliveries forsemiconductors

1946

1940

1950

Formulated Sustainability
Policy1953

Expanded into
water supply andsewage field1986

Launched ORSMART CW,
DX-based energy-saving
solutions for cooling water
treatment

Expanded into
special sugar liquid refining field

1959

Completed Central ResearchLaboratory (Toda)

2010

1954

Launched
food productbusiness

Launched
water
treatmentchemicals
business

Delivered Japan’s
first large-scale
pure water system

Launched energy-saving
service solutions featuring
ORBRAID Series coolingwater treatment agent

2022

Established R&D Center(Sagamihara)

1951

2020

Launched ORSMART RO,
energy-saving solutions
for RO membrane
treatment facilities

2005
1959

Formulated new
management philosophy
and long-term
management vision

2021

FoundedDeveloped compact pure water
system (heat-free water
distillation system)

Established Organo (Vietnam) Co., Ltd.

2013
Established joint venture
enterprise PT Lautan Organo
Water (Indonesia)

2003

1966

1957
Delivered Japan’s firstultrapure water systemfor electronics industry

1960

Startup7

2003

Established Organo(Suzhou) Water
Treatment Co., Ltd.

Completedlarge-scalewater treatment
facility for
power plant

1970

1986
Established Organo (Malaysia)(currently Organo (Asia) Sdn.
Bhd.)

1980

Growth1989

Established Organo(Thailand) Co., Ltd.

1990

2000
Maturity

2005
Established Organo
Technology Co., Ltd.
(Taiwan)

2010

2015
Established joint venture enterprise
Murugappa Organo Water Solutions
Private Limited (India) (terminatedthe joint venture in 2021)

2021
Established Organo USA Inc.

2020

Note: The graph indicates the changes in net sales.

Leap

Founding of Japan Organo Co., Ltd.

Becoming a Comprehensive Water Treatment Engineering Company

Innovation and Creation

Further Growth through Expansion of Business Domains and Regions

The Company was founded in Suwa, Nagano Prefecture in
1946. Japan Organo was established as the country’s firstcompany to sell ion exchange equipment as its main
product. In response to requests from industry in the wakeof post-war reconstruction and the rebuilding of theJapanese economy, the Company focused on research anddevelopment of equipment and forged a track record infields such as water treatment and sugar refining.

We completed the world’s first continuous pure water production
system and developed Japan’s first pulse bed sugar liquid decolorizing
equipment. As awareness of pollution issues continued to heighten, theCompany developed water treatment equipment for nuclear power
plants, commercialized a full-scale ultrapure water production system,compiled achievements in the areas of public sewage facilities andcorporate wastewater treatment, and made great strides toward
becoming a comprehensive water treatment engineering company.

In 1988, we established a management policy of“Innovation and Creation” to revamp and revitalize ourcorporate culture, established overseas subsidiaries, andstrengthened our business for the pharmaceuticalindustry. Moreover, we made steady progress inresolving management issues, such as expanding ourbusiness domains, establishing a cooperative structure
as a group, and restructuring our organization to bolster
technological development.

In 2018, we revised our management philosophy. We formulated along-term management vision that conveys our intent to contribute to thedevelopment of industry and the resolution of social issues by expanding
the leading-edge technologies cultivated through our experience withwater treatment into areas other than water and expanding ouroperational sphere. We will contribute to the realization of an affluent andsustainable society through the creation of water value.

ORGANO Group Report 2023

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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

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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

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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

ORGANO Group Report 2023

28

Growth Strategies of the Organo Group

Long-Term Management Plan
ORGANO 2030
We have been discussing how to bring our management philosophy and Long-Term
Management Vision to fruition and how we envision the role of the Group in the future social
environment. Based on these discussions, we are incorporating our Long-Term Management
Plan ORGANO 2030, which we formulated in FY2020, into our medium-term management planand single fiscal year plans, and we are taking action accordingly.

 spire to be a partner of top
Acompanies in the advanced
semiconductor field Aspire to be the company ofchoice for water treatment
chemicals and functional
materials in differentiatedspecific fields
 Achieve sustainability goals

2027:



Expand new businesses
and regionsof operation



2030:

Water

Expand U.S. businessCO2 xpand overseas development ofEchemicals and other performance
products
 nhance and deploy new service
E
solutions

Net sales
Operating profit
Profit margin
ROE

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

Sustainability goals (FY2030)

Aspire to become a global
partner company


Financial performancetargets for FY2030



Sludge2029

Volume of wastewater purified andtreated by Organo equipment anddischarged externally

Total: 60 million m3

Volume of water purified andtreated by Organo equipment andrecovered and recycled

Total: 250 million m3

Rate of reduction of Scope 1 and 2 CO2emissions (rate of reduction of Scope 3
CO2 emissions under review)
Reduction in volume of CO2 throughapplication of Organo technology andproducts

42% reduction
Total: 32,000 t-CO2

Reduction in sludge volume through applicationof Organo technology and products

Total: 10,000 t(Sludge refers to waste generated in wastewater
treatment process.)

2028


2026

2024:
2025



Streamline operations
and create new business
opportunities29

 nhance efficiency andEcapacity in engineering
operations
 ortify development of newFwater treatment, separationand purification technologies,
service solutions, etc.
 xpand business structuresEin each country and region

ORGANO Group Report 2023

30

Growth Strategies of the Organo Group

Medium-Term Management Plan (2023–2025)
Financial Results for Fiscal 2022

Overview of Medium-Term Management Plan (2023–2025)

In our mainstay electronics industry, large semiconductor investments have been made not only in Japan, Taiwan,
and China but also in Malaysia, and in general industry as well. These conditions contributed to orders received of¥173.4 billion and net sales of ¥132.4 billion, both significantly exceeding the previous fiscal year as well as the initialplan. Significant growth in net sales outpaced the increase in selling, general and administrative expenses, resulting
in a substantial increase in operating profit to ¥15.2 billion, with both figures representing new records, continuing
the trend from the preceding fiscal year. ROE, a key business index, grew to 14.5%, marking the fourth consecutive
year it has surpassed the benchmark of 10.0% we set to achieve on a stable and continuous basis.

Streamlining Operations and Creating New Business Opportunities nhance efficiency and capacity in engineeringE
operations
 Expand business structures in each country
and region ortify development of new water treatment,F
separation and purification technologies,
service solutions, etc.

We will promote management by combining our Sustainability Policy (see p. 41) and business policy.

Overview by Business Field
In addition to Japan and Taiwan, we received orders for large-scale projects in China and Malaysia.
Construction progressed smoothly overall, despite certain projects having been impacted by schedule reviews anddelays in raw materials procurement and construction.

GeneralIndustry

Domestically, large-scale investment is recovering in pharmaceutical, food, and electronics-related industries. The
Service Solutions business has also grown steadily.

Expand global business development efforts, including the U.S., Taiwanese, and Chinese markets

Electric Power/
Water Supply
and Sewage

Growth has been steady, centered around equipment renewal demand and the Service Solutions business.
In the electric power field, we received increased orders for maintenance related to nuclear power plant restarts.

requirements.
• In the U.S., where we established a subsidiary in 2021, we
continue to simultaneously respond to projects and develop abusiness infrastructure for future expansion.

Performance
Products

Looking at water treatment chemicals, sales of various treatment agents for the electronics industry increased. In
standard equipment and filters, sales of compact pure water systems such as PURIC μ were robust. Concerning
food products, sales of processing agents increased and price pass-through continued.

• While current market conditions are uncertain, strong capital
investment is expected to continue both domestically andoverseas.
• In Taiwan, development of technology and equipment isaccelerating to satisfy major foundry customers’ advanced

Water treatment chemicals

Functional materials

FY2025, the final year of our new medium-term management plan, is the halfway point of ORGANO 2030,
established in FY2020 as part of our 10-year plan, and we have positioned the next three years as an important
period for transitioning the Company to a new stage by reinforcing our business foundation and developing ourservice solutions, new technologies that are fully developed, and new products. We look forward to further enhancing
the efficiency and expanding the capacity of engineering business operations, creating new business for our water
treatment and separation and purification technologies and service solutions, and extending our geographic reach.
Trends in net sales, operating profit, and ROE
Net sales Operating profit / Operating profit ratio
ROEPerformance Products Service Solutions
PlantElectronics Industry[+15.3%]

112.0

132.4

100.6

11.1

12.6
15.2

9.5

[9.5%]FY202010.8[11.5%]

16.0[10.7%]

12.7
17.2[10.8%]

12.6
18.5[10.9%][9.7%]FY2021

100.6
18.2
43.3
47.6

FY2023 FY2024 FY2025(Planned) (Planned) (Planned)

19.3

50.0

45.6

75.4

67.0

[+34.0%]Enhance overseas expansion and service lineup

107.0

58.2

47.0

61.5

FY2020 FY2021 FY2022• We will steadily grow our Service Solutions business byintroducing service solutions products we developed inJapan to overseas markets and by augmenting our service
solutions product lineup.

Expand the sales ofService Solutions andPerformance Products,
both stable revenue
sources, to¥91.0 billion[+41.7%]

79.0

39.0
FY2022

112.0

20.8

• We will build a stable supply system from a global
perspective to secure functional materials to support the
expansion of the Water Treatment Engineering Business Unit.
• In addition to incorporating differentiated products into oursystems, we will also commercialize them and enter
markets with an eye on external sales.

Improve and enhance structure

Service solutions

132.4

12.9

• We will expand business through synergistic strategy with
the Engineering Business Unit.
• We will bolster expansion to the Chinese, Taiwanese,
Vietnamese, and U.S. markets.

• We will improve efficiency with the use of design automation
tools, reinforce our overseas engineering bases, and enhance(Billions of yen, %)

170.0
24.0

14.5

Reinforce supply chain and enhance differentiatedproducts

Promote automation and enhanced efficiency, expand capacity[+28.3%]

Expand sales in
the Plant businessas well on the backof high orderbacklogs

FY2025(Final fiscal year)

Material issue(s)

150.0

170.0

Strengthen cooperation with the Water Treatment
Engineering Business Unit and development
overseas

Engineering

Net sales by segment(Billions of yen, %)160.0

Electronics industry

Medium-Term Management Plan

Positioning the Medium-Term Management Plan (2023–2025)

31

Key Business Fields

Electronics
Industry

operations through changes to our project delivery systemwith the aim of expanding engineering capacity.

R&D
Reinforce development foundation and create new
businesses• We are promoting efforts to boost our technology marketing
capabilities and improve functions for creating new themes.
At the same time, we are promoting open innovation andeffectively leveraging outside technology and ideas.

Achieve continuous business growthEstablish a business foundation

Contribute to a sustainable global environment

Strengthen governance and ensure compliance

Leverage technological capabilities to provide highvalue-added products and services

Create a workplace where diverse human resources
can play active, rewarding roles
Reinforce supply chain management

ORGANO Group Report 2023

32

Growth Strategies of the Organo Group

Financial Strategy
Financial Strategy

Increasing Investment toRealize Our Medium- andLong-Term Growth Strategies
and Boost Shareholder Returns
Tetsushi Honda

Director and Managing Executive Officer
President of Corporate Management andPlanning

Assessment of Current Situation
In our mainstay electronics industry, semiconductor-related capital investment remained high both in Japan andabroad, and our performance continues to expand. Amidst these conditions, Organo worked to improve its
management foundation by expanding its owned-facility water treatment services for major customers in Japan,
expanding its structure in the U.S. as a new development area, and reinforcing the Global Engineering Centerestablished in Vietnam. Meanwhile, in an effort to develop next-generation technologies and create digital service
solutions, we accelerated investment to realize medium- to long-term growth through R&D activities, plans to expand
human resources through hiring and training, and exploration of M&A opportunities.

Basic Policy on Financial Strategy
Our performance is affected by trends in equipment investment levels in markets—particularly in the electronics
industry—and the profitability of projects we have secured. In the past, we experienced a sharp decrease in orders
and a decline in order prices due to market trends as well as a deterioration in profit margins resulting from additionalcosts incurred in construction and equipment delivery. Progress in construction on large contracted projects andAnalysis of ROE

FY2022

14.5%=

Uses and Sources of CapitalWith regard to investment for growth, we will allocate ourcapital resources to constructing a business foundation byenhancing the engineering and service solutions systems,
strengthening R&D and expanding water treatment
chemical and functional material business, targeting theelectronics industry and the U.S. and elsewhere as our
key business areas and markets.
We generally recognize our cost of equity to be around
7% based on past performance. While investment
profitability is evaluated based on a level above 7%, wedetermine the profitability of each project based on factors
including the payback period and individual risks.
As for fund procurement, we will basically use our own
funds and borrowings from banks, and will also consider
procuring funds from market sources such as throughcorporate bonds as necessary. We will also work toenhance capital efficiency and generate funds by
disposing of assets such as real estate and stock
holdings, shortening collection periods on accounts
receivable, reducing inventories, and enhancing
operational efficiency.

Performance trends and cash flows
Operating CF Investing CF
Financing CF
EBITDA (operating profit + depreciation)(Billions of yen)

22.00
17.03

12.18
15.78

14.70

(2.58)(6.52)

18.00(4.03)(5.00)(13.00)(15.80)
FY2021

FY2022

FY2023 (Forecast)Investment in owned-facility services• Investments in owned-facility services are recorded underlease investment assets (work in progress during
construction) in the balance sheet and included in current
assets, so the statement of cash flows indicates theinvestment as cash flow from operating activities.
• In the graph above, investments in owned-facility services(¥5.0 billion in FY2021, ¥14.5 billion in FY2022, and ¥11.0
billion in FY2023) are reclassified from cash flow fromoperating activities to cash flow from investing activities.

Approach to Shareholder Returns
Profitability

Efficiency

Leverage

Profit ratio

Asset turnover ratio

Financial leverage

FY2022ROE

payment collection schedules are factors in a cash flow lag of six to twelve months. Meanwhile, as part of our Service
Solutions business, we are expanding owned-facility services under which we construct water treatment facilities atour customers’ plants and sites. We are currently making progress with cashing out facility construction expenses.
For this reason, the Organo Group is working to stabilize its earnings base by expanding the Service Solutions andPerformance Products businesses—steady sources of revenue—while carefully managing project earnings.
Moreover, it is important to ensure a stable, sound financial foundation that can withstand unforeseen circumstances,such as a sudden decrease in orders or deterioration in project profitability, as well as fluctuations in cash flow, andto achieve the optimal balance between capital efficiency and shareholder returns.

8.9%

FY20220.90

FY2022

1.82

Improve profitability

Improve efficiency

Utilize financial leverage

We are working to improve
the profit margin of plant
projects through measures
such as cost reductions. At
the same time, we areendeavoring to stabilize
earnings by expanding theService Solutions andPerformance Products
businesses, which haverelatively high profit margins.

In addition to raising
efficiency by reviewing ourreal estate and stock
holdings, we are redoubling
efforts to improve the cash
conversion cycle (CCC) by
improving the turnover ratioof accounts receivable andinventories.

Financial leverage is within
an appropriate range.
We utilize financial leverage
to expand investments while
ensuring sufficient financial
stability.

××

The Organo Group regards the return of profits toshareholders as one of its most important management
issues. The Company’s basic policy is to provide stable,
continuous dividends, and it strives to distribute profits
while taking into account the status of earnings. The
medium-term management plan, which runs through thefiscal year ending March 31, 2026, aims for both an
expansion of growth investment and continued dividend
increases while raising the dividend payout ratio to 30%
or higher as soon as possible.

Dividend trendsOrdinary dividend

Payout ratio (consolidated) (%)

24.2
16.6

18.5

19.9

62.0
26.0

28.5

26.9

82.0

(Yen)

30.0

Continue toincrease
dividends andachieve a dividend
payout ratio of
30% or more assoon as possible

40.0

FY2019 FY2020 FY2021 FY2022 FY2023(Forecast)Medium-Term
Management Plan
(FY2025)* Dividends per share are listed on a post share-split basis, which went into
effect as of October 1, 2022.

33

ORGANO Group Report 2023

34

Growth Strategies of the Organo GroupNew Customer Value Creation Initiatives
DX

Data and Digital Technology are
Key Tools for Enhancing
Customer Value and Sustainability
Satoshi Kasahara

Opportunities

Executive Officer
General Manager of Data &Solution Promotion Dept.

Shift in customer needs to social conformity mergence of new customer needs associatedEwith increased uncertainty in the future businessenvironment otential to provide online services for the significant
P
number of customer contacts cultivated offline roactive implementation of scenario planningP
methods to gain insight into potential customer issues evelopment of various services utilizing a remoteDmonitoring system ore data requiring security and increased leakMrisk

 onstruction of a foundation for employeeCsecurity training and secure data utilization ack of digital promotion personnel and training
L
delays uman resource strategies including efficientHdevelopment programs and incentive redesign uilding of a company-wide data utilizationB
infrastructure and control by a working groupspecializing in alignment

Risks






 ervasion of disconnected department strategiesP
due to digitalization

CustomerissuesCompany
strengths

Service solutions

Business
opportunities

Customer value

Corporate revenue

Understanding Our Customers and Identifying Issues
To create customer value, we must first accurately ascertain the issues our customers face. While we have contact
with customers in various industries, much of the contact is offline, so we gain insight into customer issues throughdaily sales activities and physical activities such as operations and maintenance. Currently, in certain areas such as
the compact equipment and chemicals sectors, we employ marketing automation tools to analyze customer needs,
but we plan to proactively implement digital marketing and gain insight into customer requirements, even in the Plant
Business Unit.
In addition, in today’s business environment of high volatility, uncertainty, complexity, and ambiguity (VUCA) theability to gain insight into the future of customer issues is also important. Since 2020, the Company has implemented
a scenario planning method to gain insight into customer issues. Currently, there is a marketer utilizing this method
to develop solutions to future customer issues in various scenarios assigned to each business unit.

Responses

Creating Customer Value by Utilizing Data and Digital Technology evelopment of service solution models thatD
contribute to customer sustainability
transformation (SX) promotion

Promoting Digital Measures and Improving Literacy
The Company is improving operations and creating new business opportunities through the use of digital technology.
To accelerate these efforts, each employee must understand digital technology and the effects of its application andimprove their ability to use it to solve problems and engage in creative activities.
By July 2023, all employees had completed training to obtain basic digital literacy, including security. We are
currently defining the personnel requirements and number of personnel needed to promote various digital measures,and have entered the rank-specific training stage. Looking forward, we are aiming to create a virtuous cycle to raise
digital literacy through digital measures and accelerate DX throughout the organization.

Enhancing and Creating Service Solution Models
Stable operation of the manufacturing process is at the core of customer issues. To respond, we provide service
solutions including water treatment facility functional maintenance and functional restoration of aging facilities. And,in response to recent societal issues such as SX promotion, we offer ion exchange resin recycling, switching fromtime-based to condition-based maintenance, and streamlining facility operations to reduce consumables.
Enhancing these services requires the visualization of facility operation status and highly accurate predictions ofequipment and component condition. While we have already begun offering services including the use of AI to
optimize chemical injection volumes and operational management of reverse osmosis (RO) membrane equipment,
we are urgently building the data utilization infrastructure outlined below to enhance our service solutions in response
to a vast range of SX issues.
Moreover, we are creating and commercializing new service solution models to address new issues accompanying
changes in our customers’ business environments.

Building a Data Utilization and Digital Technology Environment
To maximize the effectiveness of data and digital technology, the internal environment must be such that eachorganization in the Company’s business system can mutually leverage that data. We are building a co-creation
platform comprising a data warehouse that allows centralized management of all company data and an AI andanalysis infrastructure to utilize the data. In this way, marketing data dispersed across various departments and data
held in business efficiency applications and various systems employed in business operations can be securely
managed, creating an environment where the entire Organo Group can leverage data. Furthermore, we establishedalignment working groups to address concerns about siloed digital measures, and we launched control of thesemeasures in October 2023.
Co-creation platform
Application
Data warehouse

Macroenvironment data

35

Customer data

Engineering

Operational
data

Business data

AI infrastructure

Analysis infrastructure

ORGANO Group Report 2023

36

Growth Strategies of the Organo Group

Water Treatment Engineering Business Unit

Yasutoshi Nakayama
Director and Managing Executive Officer
President of Industrial Plant Business
Senior General Manager of Electronics Division

In our mainstay electronics industry and other related sectors,
medium- to long-term growth is expected in the semiconductor andelectronic component markets due to demand for businesses utilizing
new communication technologies such as 5G, as well as healthcare,education, entertainment, and DX investment. Water treatment
equipment—which affects semiconductor manufacturing plant productyield rates—requires high purity, high flow, and stable operations ofcomplex systems over the long term. It must also be adaptable given
the annual advances being made in manufacturing processes. We arefurther developing our separation and purification technologies for therefining market for solutions and solvents used in the semiconductor
manufacturing process, and for nucleic acid drugs, which are expected
to be used as a treatment for COVID-19 infections. Organo will continue
to propose and supply systems and services in various industries
including electric power and water supply and sewage, which comprisethe infrastructure that is indispensable in people’s lives, as well as thechemical and food and beverage sectors. To solve problems facing ourcustomers and society and to support shared value creation initiatives
we will contribute to the proposal of technologies for addressing climatechange, more effective use of water resources, and conserving energy
through our business activities.

Major Initiatives for Fiscal 2022
Plant BusinessIn addition to bolstering marketing activities and expanding the mainstay electronics industry, we are promoting
strategic business development by honing our ability to analyze markets, industries, technology, and competitive
trends in all fields, including the electronic peripheral, life sciences, and infrastructure business fields. We are also
working to enhance our technical tools such as energy-saving systems and an array of sensors and monitors.

Service Solutions BusinessIn addition to the maintenance and operational management of facilities delivered to our customers, we are also
engaged in the Service Solutions business, where we own facilities and supply ultrapure water and other services.
Moreover, in addition to promoting efforts in the electronics industry—including the development of advanced water
quality analysis technology and the valuable material recovery business—in order to transform our business model in
China, we are increasing the number of locations and further raising the level of our technology and service toexpand the Service Solutions business. In the pharmaceutical manufacturing field, we introduced a risk prediction
system and are working to ensure stable operation of equipment while exposing risks and sharing information withour customers.

Financial Results for Fiscal 2022
Responses

Opportunities iversification of investments from a concentrationDin Greater China to other regions (U.S., Japan,
Southeast Asia, Europe) rowth of markets compatible with SDGs (energyG
conservation, CO2 reduction, water recovery) xpansion of pandemic-response subsidy
Esystems (Ministry of Economy, Trade andIndustry: “Developing Biopharmaceutical
Manufacturing Sites to Strengthen Vaccine
Production” project)

The Plant business performed well in terms of orders and sales as a result of steady progress with new domestic
projects and backlog projects, chiefly in the electronics industry, as well as continued large-scale capital investment
in China, Taiwan, Malaysia, and elsewhere overseas. The Service Solutions business—which encompasses
proposals for equipment modification and improvement as well as maintenance, including the general industry andelectric power and water supply and sewage fields—also enjoyed steady growth, with sales surpassing thepreceding year’s level. We achieved record profit through higher revenue as well as our efforts to reduce costs.

 onversion or change of focus area (GreaterC
China)

 evelopment of energy-saving systems andDhigh-recovery-rate systems onversion or change of business model inCGreater China

 ocus on customers via customer productsF
through reinforced marketingReview of system configuration and supply chain

Outlook for Fiscal 2023

Risks


Declining growth in Greater China

Temporary semiconductor market stagnationRise in global prices

Orders/Net sales

Operating profit(Billions of yen)

Orders received(Billions of yen)
Net sales
152.4
116.1

12.9

13.5

Net sales by segment

Net sales by industry

 Service solutions(Billions of yen)
 Plant
 Service solutions ratioElectronics industry (Billions of yen)General industry
Electric power/water supply
10.0
and sewage

128.2 128.2
111.6

72.2

9.0

92.7

61.5
47.0
49.2%

FY202137

FY2022

FY2023(Forecast)

FY2021

FY2022

FY2023(Forecast)

11.7
11.4

26.7

24.3

22.9
44.8%

43.7%

45.6

50.0

56.0

FY2021

FY2022

FY2023(Forecast)

58.2

FY202175.4

FY2022

91.5

While the semiconductor market—memory devices in particular—has been sluggish amid uncertainty about the
global economy, we expect domestic and semiconductor-related investment to remain robust due to global supply
chain restructuring and the outlook for long-term semiconductor demand growth. In general industry, capital
investment is recovering in Japan, and maintenance and other aspects of the Service Solutions business remainrobust, even in social infrastructure which includes electric power and water supply and sewage. In FY2023, we planfor sales to exceed ¥120 billion due to progress on domestic and overseas electronics industry projects for which
orders have already been received. In terms of profits, although part and material prices remain high due to the yen’s
depreciation, Organo will work to improve profit margins by implementing various cost-reducing measures andmaking proposals to customers.

Business Strategies for Medium-Term Management Plan
In addition to continuing our focus on receiving orders for and delivering large-scale projects both in Japan andoverseas starting with the electronics industry, we intend to continue to invest in large owned-equipment contracts,
execute a business strategy in the U.S., improve the R&D system in Taiwan, and augment our solutions system in
China. Moreover, we are focusing on activities to create new Service Solutions business based on customer issues,
such as a new electricity supply model, a clean material supply model in which impurities are thoroughly removed
from solvents, and a monitoring business model integrating the semiconductor process and ultra-trace analysis
technology.

FY2023(Forecast)

ORGANO Group Report 2023

38

Growth Strategies of the Organo Group

Performance Products Business Unit
The Performance Products Business Unit handles functional materials
that are key components of separation and purification technologies,
as well as water treatment chemicals, standard equipment and filters,
and food products.
In addition to providing equipment and functional materials to ensurethat water quantity and quality satisfy customer requirements, in recent
years, we have continued to launch new differentiated products andmaterials with the aim of further adding value and realizing the SDGs.
Our system that automatically optimizes the volume of water treatment
chemicals injected using sensors and their obtained data, for instance,
can reduce costs and enable effective use of resources. Moreover, ourproprietary RO membrane treatment agent, which can reduce clogging
due to the organic matter of the RO membrane, reduces pump power
consumption, thereby contributing to reduced CO2 emissions.
We will establish a business structure that can withstand changes inthe external environment, and the Performance Products Business
Unit will become a stable earnings source for the entire Group,
providing new products and services as a partner company that
supports society in terms of both industry and daily life.

Makoto Kukizaki
Managing Executive Officer
President of Performance Products Business
Senior General Manager of Performance
Products Business Division

Opportunities

Responses

 eturn to domestic manufacturing represented byR
the electronics industry eclining birthrate and aging population drivingD
increased need for labor efficiency

Increased momentum for effective use of water
resources ealization of labor savings through DX promotionR
as represented by the ORSMART series evelopment and launch of technology andDproducts to increase water utilization

Review of business development areas and structure ebuilding and strengthening of the manufacturingR
structure ecuring of global procurement network andS
manufacturing management using DX



Risks
 Heightening of various geopolitical risks
Insufficient supply capacity due to rapidly
increasing demand upply chain disruption (price hikes, longer
S
delivery times, etc.)Net sales evelopment of unique service proposals toDmaximize synergy with the Water Treatment
Engineering Business Unit

Operating profit(Billions of yen)
2.5

18.2

19.3

20.8

21.8
1.7

39

FY2021

FY2022

FY2023(Forecast)(Billions of yen)

2.2

FY2020

20.8

21.8

4.9

5.7

6.0

6.2

6.7

7.0

7.3

6.9

7.7

8.0

8.5

FY2020

FY2021

FY2022

FY2023(Forecast)

18.2
5.0

1.1

FY2020Food products
Standard equipment and filters
Water treatment chemicals

FY2021

FY2022

FY2023(Forecast)

19.3

Standard Water Treatment Equipment and Filters

ORSMART CW achieves a significant reduction in
power consumed by cooling equipment. It received
praise, garnering the Director-General Prize of the
Agency of Natural Resources and Energy of the FY2022
Energy Conservation Grand Prize.

The PURIC μ desktop-type ultrapure water system
employs an innovative replaceable cartridge mechanism
for improved
maintenance andease of use. Thissystem was wellreceived, garnering
the Nippon Brand
Award in the Best 10
New Products Award
sponsored by Nikkan
Kogyo Shimbun.

 See p. 56 for details.

Organodedicated cloudIoT infrastructureRule-based AI

Rule setting

Obtain heatexchanger andcoolant conditions
in real time

Chemicalconcentration

Condition-based
operation
Heat exchanger
temperature

Operation
instruction

Conductivity

Food Processing Materials

Functional Materials

We are restructuring and strengthening our granulationequipment for the nursing care food market, enhancing
our contract manufacturing capabilities, and promoting
various development with the aim of expanding
plant-based food products.

We are reinforcing purification facilities at our Tsukuba
Factory (see p. 26) to ensure a stable supply of highly
purified ion exchange resins—a functional material
used in ultrapure water systems for the electronics
industry—and to achieve even higher purity.

Although we were forced to respond to prolonged supply chain disruption, we saw robust sales of compact water
treatment systems, industrial filters, and water treatment chemicals for the electronics industry and other industries,
which are driving the global economy. In addition, sales were also strong for cooling water treatment agents forbuilding air conditioning, wastewater treatment agents for general industry, pure water systems for medical andtesting institutions, compact ultrapure water systems for laboratories, and purification and softener filters forbeverage dispensers and other products. In the Food Products business, sales and profit increased due toappropriate pass-through of rising raw material costs to prices.
As a result, sales increased 7.6% year on year, and operating profit rose 27.4%, achieving a record for the
Performance Products Business Unit.

Outlook for Fiscal 2023

Net sales by segment(Billions of yen)

Water Treatment Chemicals

Financial Results for Fiscal 2022



Major Initiatives for Fiscal 2022

While certain overseas markets remain stagnant due toheightened geopolitical risks, conditions in our mainstay
domestic market are rapidly recovering.
Water treatment chemicals and functional materials forthe electronics industry in particular, where active
production and investment continue, remained strong,and demand for cooling water treatment agents increased
owing to extreme heat. Sales of standard water treatment
equipment for laboratories positioned as focus areas andnew purification and softener filters that accurately caught
up with customer demand are also strong. In the Food
Products business, although sales expansion of someproducts has been sluggish, we expect an increase due
to expanded sales of other products, and we anticipate
overall sales of the Performance Products Business Unit
to increase over the preceding year.

Strategy to Achieve the MediumTerm Management Plan
Unprecedented changes are evident in the businessenvironment due to the outbreak of COVID-19 andvarious increased geopolitical risks. Amidst thisbusiness environment, the Performance Products
Business Unit is undergoing bold, unconventionalchanges. First, as part of our DX promotion, we
launched an e-commerce site and digital marketing
initiatives. Next, we restructured key businessdevelopment areas and promoted collaboration withvarious partner companies. Moreover, to realize
workstyle reforms, labor savings, and productivity
improvements, we are considering expanding andrelocating key plants and automating production lines toexpand business and improve profitability.

ORGANO Group Report 2023

40

Sustainability and the Organo Group

Sustainability Management
Sustainability Policy

Material Issues

Leveraging its leading-edge technologies
cultivated through long experience withwater treatment, Organo provides
environmentally-friendly products andservices that contribute to water
environment conservation andprevention of global warming.*

S

We promote a workplace where humanrights, diverse values, and individuality
are respected, and where every
employee is given the opportunity togrow and play an active role.

G

Identification Process
Keyword extraction

Extracted candidates for material issues from management philosophy, Long-Term Management
Vision, ORGANO 2030 (long-term management plan), medium-term management plan, businessstrategies, business environment, ESG valuation standards, GRI Standards (internationalguidelines related to sustainability)

Assessment ofimportance

Organized the extracted material issue candidates by “achieving continuous business growth”
and “establishing a business foundation,” in accordance with the framework of ORGANO 2030,
assessed these in terms of the importance to the Company based on the relationship withstakeholders, risks and opportunities, value of providing products and services, and contribution
to social issues, and hypothesized material issues

Assessmentof validity

Assessed validity through discussions with the Sustainability Implementation Meeting andSustainability Committee and through interviews with outside experts

We emphasize dialogue and cooperation
with all stakeholders, and we conduct
honest and fair corporate activities.

* “Leveraging its leading-edge technologies cultivated through long experience with water treatment” refers to our pursuit of water
treatment-related separation and purification, analysis, and engineering technologies, and our provision of optimal systems and services thatmeet the needs of society through a combination of these technologies.

Sustainability Promotion System
The Group established the Sustainability Committee as an organization to plan, propose, and implement measures topromote sustainability management. We also established the Sustainability Implementation Meeting, which promotes
specific measures as the implementation organization of the Committee.
The Sustainability Implementation Meeting creates working groups in response to prevailing sustainability issues,
and working group members are assembled from relevant business units and group companies to work on resolving
issues.
As of October 2023, the Sustainability Implementation Meeting had five working groups, with each one focused on
separate initiatives (measures to calculate and reduce GHG emissions, measures to achieve SDGs, promotion of
CSR procurement, and response to TCFD recommendations).
Board of Directors
The progress status of the measures implemented by the Sustainability
Supervision
Reporting
Implementation Meeting are reported to the Sustainability Committee,
and approval
which discusses and deliberates on issues and reports to the Board of
Sustainability Committee
Directors, the supervisory and approval authority.
Reporting andSupervision
proposaland direction
The Sustainability Committee is required to meet at least twice a year,(working
groups)Sustainability
Implementation
Meeting
and it may meet on an ad hoc basis when there are urgent matters to be
Secretariat
considered. In FY2022, the Committee met a total of seven times,(Sustainability Group)
including two written deliberations.
Business units and group companies

41

Board of Directors determined the material issues

Identified Material Issues
Items related to value creation through businessactivities and global environmental conservation
essential for daily life, industry, and business

Very important

Importance to stakeholders

The Organo Group established the Sustainability Policy in 2022. To enhance the sustainability of the businessactivities of the Organo Group and contribute to achieving a sustainable society and global government, we areintegrating our medium- and long-term management plans with this policy to promote management that links
business activities to ESG initiatives.
We will provide products and services that contribute to our customers’ sustainability, water environment
conservation, and global warming prevention by solidifying the foundation of our business through comprehensive
compliance and strengthened governance, and by sustainably developing cutting-edge technologies cultivatedthrough long experience with water treatment.

Identification ofmaterial issues

Important

Importance to Company

Very importantAchieve continuous
business growthE

We evaluated trends in international society and social issues closely related to our business in terms of theimportance to our stakeholders and to our Company, and extracted key issues. We discussed these issues in aninternal meeting that included the Board of Directors, and identified material issues of high importance.

1) Contribute to a sustainable global environment• Address water resource issues• Respond to climate change• Expand environmentally friendly products and services• Promote the 3Rs (Reuse, Reduce, Recycle)• Protect biodiversity
2) Leverage technological capabilities to provide highvalue-added products and services

Establish a businessfoundation

Together with its stakeholders, Organo aims to realize a sustainable society for the future and improve ourcorporate value3) Strengthen governance and ensure compliance• Promote occupational safety and health• Respect human rights• Strengthen compliance• Strengthen risk management4) Create a workplace where diverse humanresources can play an active and rewarding role5) Strengthen supply chain management

The foundation enabling continued business
operations while fulfilling social responsibilities

ORGANO Group Report 2023

42

Sustainability and the Organo Group

Sustainability Management

List of Material Issues
Material issueAddress water

resource issues

Achieve continuous business growthProtectbiodiversity

1) Contribute to a
Respond to climate
sustainable globalchangeenvironment

Reference year
(initiative start year)

Goals for
FY2030Results for FY2022

Referencepage• Contribute to the preservation of healthy water cycles and secure water resources throughwater use in industry and daily life by providing wastewater treatment and recovery
technology.

Amount of wastewater treated by newly delivered
Organo systems and discharged by plants

2023

Total
60 million m3(There is no actual value for
FY2022, as the initiative began
in FY2023)–• Contribute to the protection of biodiversity through corporate initiatives on material issues
including wastewater treatment, products and services that save energy and resources, andwaste reduction.

Amount of water collected and reused by newly
delivered Organo systems

2023

Total
250 million m3(There is no actual value for
FY2022, as the initiative began
in FY2023)–

42% reduction

CO2 emissions: 11,566 t-CO2(12% increase from FY2021),
includes domestic and overseas
group companies

p. 55

p. 55

Contribute to realizing a sustainable society by optimizing energy usage related to businessactivities and providing products and services that contribute to mitigating climate change.

Rate of reduction of Scope 1 and 2 CO2 emissions
according to science-based target (SBT) presentation
method*1

2021

2021

Under review

CO2 emissions: 893,606 t-CO2(37% increase from FY2021),
not including domestic andoverseas group companies

Volume of CO2 reduced by applying Organo
technology and products

2023

Total
32,000 t-CO2(There is no actual value for
FY2022, as the initiative began
in FY2023)–

Volume of sludge reduced by applying Organo
technology and products

2023

Total
10,000 t(There is no actual value for
FY2022, as the initiative began
in FY2023)–

Continually develop and provide new technology and services that solve customer’ssustainability issues.

Number of developed environmentally-friendly
products and services that add value by solving
customer’s sustainability issues

2023

Two per year

(There is no actual value for
FY2022, as the initiative began
in FY2023)–

Improve in-house guidance and training to ensure safety and health in business activities withthe aim of eliminating serious lost-time injuries.

Number of serious lost-time injuries*2

2022

Zero per year

Number of serious lost-time
injuries: 7

p. 57

Strengthen
compliance

Maintain appropriate transactions based on fair and free competition, and promote thestrengthening of compliance to continue to be useful to society at large.

Completion rate of compliance-related training forparticipants enrolled at the end of the previous fiscal
year

2022

100%

Of the 18 required courses,
13 courses had a 100%
completion rate;
5 courses had less than a 100%
completion ratep. 50

Respect humanrights

Maintain and respect international standards for human rights, and promote initiatives on
respect for human rights to fulfill our corporate social responsibility.

Completion rate of human-rights-related training forparticipants enrolled at the end of the previous fiscal
year

2022

100%

Launched human rights
e-learning course(course ends FY2023)

p. 58

Strengthen risk
management

In order to realize our management philosophy, we will enhance our risk management
capabilities to recognize and appropriately address risks in our Long-Term Management Vision.

PDCA implementation rate for key risks identified by
the Company

2022

100%

100% implementation

p. 49

Ensure diversity (in terms of standpoint and approach) in various decision-making.

Number of females in managerial positions(domestic group companies)

2022

50

22

p. 59

We consider the improvement and exercising of diverse abilities by our employees to be asource of job satisfaction, and we will work to cultivate human resources and enhance oursystems to achieve this goal.

Training expense per employee(all group employees including those overseas)

2022¥100,000 perperson¥58,309 per person

p. 60

Provide a rewarding work environment where employees are mentally and physically healthy.

Number of employees exceeding the annual legal
overtime limit* Domestic group companies only

2022

Employees with
600 hours per
year: Zero

Employees with 600 hours per
year: 53

p. 59

Support the efforts of suppliers based on the Organo Group Supply Chain CSR Promotion
Guidebook, and improve CSR awareness and compliance across the group supply chain.

Number of main suppliers in compliance with Organo
Group Supply Chain CSR Promotion Guidebook

2022

Number ofcompanies incompliance:
300 or more

Number of companies surveyed:
41

p. 58



Expansion ofenvironmentallyfriendly products
and services• Reduction of the environmental burden of corporate activities, including those of ourcustomers, through the creation, commercialization, and provision of products and services
that contribute to resource and energy conservation.

• Promotion of the 3Rs for waste generated by corporate activities, including those of ourPromotion of the 3Rs customers, through Organo’s technology and services.

Promoteoccupational safety
and health3) Strengthen
governance andensurecomplianceIndex (KPI)

Rate of reduction of Scope 3 CO2 emissions
according to science-based target (SBT) presentation
method*1

2) Leverage technological capabilities toprovide high value-added products andservices

Establish a business foundation

Approach4) Create a workplace where diverse
human resources can play an active
and rewarding role5) Strengthen supply chain management*1: Criteria for calculating carbon dioxide emissions set forth by the Science Based Targets initiative (SBTi), an initiative requiring companies to set science-based carbon
emission reduction targets.
*2: Four or more days out of work

43

ORGANO Group Report 2023

44

Sustainability and the Organo Group

Governance
Basic Views on Corporate GovernanceTransition toward Stronger Corporate Governance
Main initiatives for corporate governance(1) The Company will respect the rights of shareholders and ensure equality.
(2) The Company will take into account the benefits for a wide range of stakeholders including shareholders/investors, consumers/customers, business partners, employees, and local communities, and cooperatewith these stakeholders appropriately.
(3) The Company will disclose information in a timely and proper way, and ensure transparency.
(4) The Directors, Audit and Supervisory Board Members, and Executive Officers will recognize their fiduciary
responsibilities, and will effectively fulfill their expected roles and duties.
(5) The Company will hold constructive dialogue with shareholders.
Organo Corporate Governance Guidelines https://www.organo.co.jp/english/company/governance/guidance/

General Meeting of Shareholders
Election/Dismissal

Election/Dismissal

Board of Directors
Audit

9 members (5 Independent Outside Directors)

Nomination and Remuneration
Advisory Committee

Independent
Outside Director

Election/
Dismissal

2022

EstablishedSpecialCommittee

2023

Board of Directors
comprised of a majority
of Independent Outside
Directors; appointed
female Director

1

2

3

3

5

Number of Directors

10

9

10

9

9

June 2019 June 2020

The Company conducts a survey for all Directors andAudit and Supervisory Board Members every year.
Based on the results of the survey, the Board of
Directors analyzes and assesses its overall effectivenessand discusses measures to maintain and improve thefunction of the Board.

Representative Director and President

Cooperation

Management
decision-making/Supervision

Main issues
Cooperation

Financial
audit

June 2023

Method of Implementation• Scope: A total of 12 people including Directors of theCompany (nine) and Audit and Supervisory Board
Members of the Company (three)• Period: FY2022 (April 2022 to March 2023)• Implementation timing: March 2023 to May 2023
• Implementation method: Survey by third-party
organization

Internal Auditing Dept.

Independent Outside
Audit and Supervisory
Board Member

Sustainability Committee
Management Meeting

Independent Outside Directors comprise the majority of the Board of
Directors. (June 2023)

Establish measures to ensure diversity on the Board of
Directors

One female Outside Director was appointed. (June 2023)

Clarify policies and methods for developing director
candidates

Continuing from FY2022, the Company will provide opportunities for
Executive Officers and general managers to explain and report on proposals
at Board of Directors’ meetings, as well as promote discussions on thepolicy for developing candidates for Directors.

Strengthen group governance• A new compliance group was established to foster Group-wide
compliance awareness. (June 2023)• We will raise awareness in the workplace—the key to governance and firstline of defense—by disseminating messages from management to employees
and promoting awareness through means such as signage and posters.
• We will reinforce the Organo Group’s auditing system, including
subsidiaries overseas, and promote awareness of the whistleblowing
system to build a system to strengthen the governance of the entire Group.

Promote sustainability management

Based on the basic policy for sustainability management, material issues, and
KPIs established in FY2022, we will promote sustainability management todeepen discussions at Board of Directors’ meetings on issues such ascompliance with Task Force on Climate-related Financial Disclosures (TCFD)
recommendations.

Enhance discussion of issues to be addressed,
including management strategies with an awareness of
profitability and capital efficiency, etc., and humancapital investments

We will discuss issues to be addressed, including management plans with
an awareness of profitability and capital efficiency and human capital
investments primarily through the Long-Term Management Plan Promotion
Meeting, and monitor the effectiveness of these plans through the Board of
Directors as appropriate.

Internal
audit

Various departments/divisions

Nomination and Remuneration Advisory Committee

Special Committee

The Company established the Nomination andRemuneration Advisory Committee as a non-statutory
advisory body to the Board of Directors. The committee
reviews matters relating to the selection of officers
including the election and dismissal of Directors andExecutive Officers as well as remuneration for
executives, and reports the results to the Board of
Directors.

A special committee was established as a non-statutory
advisory body to the Board of Directors, and when an
important transaction, etc. is conducted between the
Company and Tosoh Corporation, the controllingshareholder of the Company, or one of its subsidiaries,
the Committee will deliberate on such transaction, etc.
from the standpoint of protecting the interests ofminority shareholders and report the resulting
recommendation to the Board of Directors.

Status of response

Strengthen the supervision function related to businessexecution of the Board of Directors

Monthly Business Conference

45

2021

Appointed female
Audit and Supervisory
Board Member
Created Directors’skill matrix

Independent Auditor

Compliance Committee
Audit andSupervisory
Board Member

2020

Board of Directors
comprised of
one-third
Independent
Outside Directors

Number of Independent
Outside Directors

Cooperation

6 members (5 Independent Outside Directors)

Executive
Director

3 members (2 Independent Outside Audit
and Supervisory Board Members)

ReportAppointment

Special Committee
5 members (5 Independent Outside Directors)

Audit and Supervisory Board Members(Audit and Supervisory Board)

Audit

Consultation

2019

Established
Nomination
and Remuneration
Advisory Committee

Assessment of the Overall Effectiveness of the Board of Directors

Corporate Governance Structure

Report2018

Introduced
stock-based
remuneration system

June 2014 June 2015

Corporate Governance Structure

Consultation

2016

Established
Remuneration
Advisory
Committee

ORGANO Group Report 2023

46

Sustainability and the Organo Group

Governance

Composition of Board of Directors and Skill Matrix

Connection with Stakeholders

The Company believes that ensuring the diversity of the Board of Directors is useful for its deliberation to be made ina multifaceted and effective manner, and shall select in a balanced way persons with diverse knowledge, experienceand ability. The Company’s skill matrix is displayed below. It considers the Board of Directors as a whole to be wellbalanced and well diversified and of an appropriate size.
Name

Corporate
Management/
Management
Strategy

Finance/
Accounting

Legal Affairs
and RiskManagement

Global◎◎Sales andMarketingTechnology

Human
Resource
Strategy◎

Sustainability

Masayuki Yamada◎

Yasutoshi Nakayama◎

Nobuyoshi Suda◎

Tetsushi Honda◎

Keikou Terui (Outside)

◎

◎

◎

◎

◎

Kenji Hirai (Outside)

◎

◎

◎

◎

◎

Morifumi Wada (Outside)

◎

◎

◎

◎

Daisaku Abe (Outside)

◎

◎

◎
◎

◎

◎
◎

◎

◎

◎

◎

◎

◎

◎

◎

◎

Note: Skills through which each director is especially expected to demonstrate their expertise and experience are marked with a “◎.”Remuneration for Directors and Other Officers
Basic Policy
The remuneration system for Executive Directors, in addition to the fixed remuneration (cash), encourages businessexecution in line with management policies and management targets and establishes a remuneration framework andremuneration standards which provide strong incentive for the achievement of short-term as well as medium- tolong-term management targets in order to achieve sustainable growth and improve the corporate value of the Group.
The remuneration system for Non-Executive Directors, including Outside Directors, shall be fixed remuneration (cash)
only, for the purpose of ensuring the effective functioning of their supervisory and oversight roles. The Company has
established the Nomination and Remuneration Advisory Committee as a non-statutory advisory body to the Board of
Directors, in order to ensure objectivity and transparency in the process of determining remuneration.
Remuneration composition ratio of Executive Directors
50%

25%

25%

1. Fixed

2. Short-term incentive

3. Medium- and long-term incentive* In the case of the Representative Director and President

Overview of remuneration system of Executive Directors
Remuneration

Engagement

Appropriate disclosure, stable and appropriate
dividends, and sustainable improvement ofcorporate value

IR activities (financial results presentations, IR
meetings), general meeting of shareholders,
Organo’s website

Customers

Provision of high-quality products that are usefulfor society at reasonable prices

Communication through sales activities

Suppliers

Fair and impartial transactions

Communication through purchasing activities

Employees

Stable employment, cultivation of humanresources, appropriate compensation, sharing of
information and issues

Employee meetings, labor-management
consultations, various training programs, intranet,
intra-group announcements, health consultation
officeCommunity,society, andgovernment

Appropriate payment of taxes, stable and fair
employment, dialogue with local communities

Organo’s website, Organo Group Report

Dialogue with Shareholders and Investors
To achieve sustainable growth and improve corporate value over the medium and long term, the Company promotes
constructive dialogue with shareholders and investors. We place an emphasis on providing fair and accurate
information, and we report opinions and requests obtained through dialogue at Board of Directors meetings to
improve management.
Main IR activities of FY2022
Main activities

NumberFinancial results presentations for analysts andinstitutional investors

2 (Main speaker: President)

Small meetings

1 (Main speaker: President)

Individual IR meetings

180

Corporate briefings for individual investors

1 (Main speaker: President)

Issuance of shareholder newsletters

2

Overview

1. Fixed• Determined according to position
remuneration • Monetary remuneration• From the perspective of clarifying the relationship between business performance and remuneration, the Company
2. Short-term
shall use consolidated operating profit, an important management index of the Group, in performance evaluation.
incentives• Varies in the range of 0% to 170% depending on the amount of consolidated operating profit
remuneration• Monetary remuneration• From the perspective of improving corporate values over the medium to long term and aligning the interests with
3. Mid- andthose of shareholders, the Company shall use consolidated return on equity (ROE), which is an important
long-term
management indicator of the Group and indicates capital efficiency, as the performance evaluation indicator.
incentives• Varies in the range of 0% to 200% depending on the consolidated ROE
remuneration• Stock-based remuneration plan using a trust

47

Organo’s role and mission

Shareholders andinvestors◎◎

Nobuko Hanano (Outside)

Stakeholders◎◎◎

The Organo Group fulfills its corporate social responsibility to the five types of stakeholders with whom it is closely
connected in order to achieve sustainable growth.

ORGANO Group Report 2023

48

Sustainability and the Organo Group

GovernanceRisk Management

Compliance

Determining Risk and the PDCA Cycle
In executing management plans and strategies, the Board of Directors identifies major risks by performing evaluation
based on two evaluation criteria: “possibility of occurrence” and “level of impact” extracted from various departments
and divisions as well as Group companies. For those major risks, the Company determines the responsible department
or division, formulates a risk management plan, and carries out risk mitigation measures based on the plan. Next, theBoard of Directors monitors the progress of the risk management plan andActionPlanprovides instructions to the responsible department or division regarding
Identification and evaluation of
Risk identification andimprovement activities and risks
formulation of measures
improvements, as needed. Moreover, the Internal Auditing Office evaluates
the operational status of the risk management process and risk
management plan progress from an independent viewpoint to increase theAPeffectiveness of risk management. By continuously repeating the PDCA
PDCA
Check
cycle in this way, we increase the effectiveness of risk management.
cycle
Evaluation and monitoringof the process and progress
Do
Improving our risk management capabilities is a material issue for theC
D Execution of the risk
Group. As such, we have established “100% PDCA implementation rate
management planfor key risks identified by the Company” as a KPI to gauge the progress of
our efforts. In FY2022, this implementation rate was 100%.
• Formulation and execution of improvement measuresby the supervising department/division• Identification, review, and quantificationof risks by various departments/
divisions and group companies• Evaluation of the operational
status of the risk management
process and risk management
plan progress by the Internal
Auditing Office• Monitoring by the Board of Directors• Risk identification by
the Board of Directors• Formulation of the risk
management plan by
the supervising
department/division• Implementation of measuresand activities by the supervising
department/division

Major risks of the Organo Group
Risk category(1) Market
andbusiness
risks

Item

Description

Responses

Over-reliance on
specific markets
and customers• Risk with increased impact from deterioration of businessperformance in the event of decline in market conditions or lossof important customers or impact from incurred loses such ascompensation for damages, due to a concentration on specificmarkets and customers• Reduce the impact of plant-related received order fluctuations by strengthening
service solutions• Automate and streamline operations and use outsourcing to create deliveredresources• Augment marketing for the electronics industry market• Accelerate R&D based on the technology development roadmap• Reinforce safety measures

Overseasbusiness•C ountry-specific risks such as political and economic turmoil andlegal restrictions in countries and regions where we do business,
including export and import restrictions due to U.S.-China
conflict and restrictions on business activities due to the Taiwan
contingency and rising tensions between China and Taiwan• Strengthen the supply chain by establishing differentiated technologies andsecuring and proposing alternative products• Diversify concentration in specific regions by accelerating expansion into new
regions and markets

Securing criticalmaterials
Digitization anddata utilization

Technology andR&D

Sustainability(2) Other risks
related tobusinessfoundation• Maintain stable relationships with key suppliers, consider multiple procurement
sources and alternative products, and invest in augmenting supply capacity• Plan and promote DX strategies, develop elemental technologies, and train andsecure digital human resources focused on department dedicated to DX
promotion• Strengthen technology infrastructure, introduce virus detection andcountermeasure tools, and bolster security education

Prioritizing the safety of human life
Human life comes first, and our top priority is to confirm the safety and well-being of officers, employees, and their families.

Ensuring the safety of the community

Rapid restoration of business

Safety• Risk of serious occupational accidents and injuries during
construction and production activities• Establish, operate, and upgrade an occupational safety and health management
system• Implement safety training and information sharing on the status of work-related
accidents and improvement measures

Product quality,etc.

• Risk of serious quality issues with products and services• Upgrade quality management system, strengthen supplier quality surveys,
improve production processes, prevent recurrence through horizontal deploymentof nonconformity information, and upgrade various types of insurance

Infectious
disease• Risk of significant impact on business activities due to major
natural disasters such as earthquakes and typhoons• Risk of restrictions and delays in business activities due toinfectious diseases that are unforeseen or exceed expectations• Formulate business continuity plan (BCP) for major business, expand and broaden
BCP, and strengthen management systems Group-wide• Establish and implement strategies to ensure business continuity based on
experiences with COVID-19

Compliance andinternal control• Risk of detection of legal or compliance violations or significant
deficiencies in internal controls related to financial reporting• Distribute messages from the Representative Director and President and enhance
employee education• Work to disseminate Organo Group Company Code of Conduct• Direct the Compliance Committee to establish a compliance system and education plan
• Work to develop and disseminate a whistleblowing system in Japan and overseas(3) Risks related to shareholders
and stock

Basic Policy• Promote materiality initiatives through the Sustainability Committee andSustainability Implementation Meeting• Promote education for digital human resource development in addition to
rank- and function-specific training• Promote the creation of a workplace where diverse human resources can play anactive and rewarding role

• Risk of infringement of the Group’s intellectual property rights orunintentional infringement of intellectual property rights of othercompanies by the Group• Risk that changes in the capital policy or management strategyof the parent company, Tosoh Corporation, may affect theGroup’s business development or stock priceIn addition to formulating a BCP to minimize damage and ensure business continuity in the event of a large-scaledisaster such as a major earthquake, we are working to improve the effectiveness of our BCP by preparing for
emergency situations and implementing education and training. Our basic policy for business continuity is as follows.

We prioritize safety at company facilities and the surrounding areas as well as the prevention of secondary disasters
while coexisting with the community.

• Risk of long-term decline in competitiveness of the Group in theevent of a failure to secure and train human resources

DisasterBusiness Continuity Plan (BCP)• Expand R&D Center, plan for R&D based on technology development roadmap ofcustomers, and promote open innovation

Securing humanresources

Intellectual
property rights

49• Risk of price hikes, procurement difficulties, and longer key
material delivery times dependent on specific suppliers• Risk of deteriorating business performance due to delays indevelopment of digital services and measures to improve
operational efficiency, and risk of information system
malfunction due to factors including system failure and leakageof confidential information• Risk of difficulty in implementing growth strategies due tofactors including delays in technological development requiredby the market and customers and delays in the introduction of
ICT and AI technologies• Risk of difficulty in addressing sustainability issues due todelays in the development of products and services to mitigate
environmental impact

The Group conducts business activities based on the idea that safety and compliance are necessary for the survivalof the business. In addition, the Company has established the Organo Group Company Code of Conduct as thebasic action guidelines to be observed by the Group’s employees. In addition to Japanese and English versions, it
has prepared local company versions in Malaysia, China, Taiwan, Thailand, and Vietnam and shared them with
officers and employees of the Group in Japan and overseas. The Company also conducts a biennial survey for its
officers and employees to confirm the degree of implementation and observance of the Company Code of Conduct.
The results are reported to the Board of Directors and employees in an effort to foster compliance awareness.
A special committee established as an organization for promoting compliance is responsible for formulating andimplementing a compliance education plan, investigating compliance issues, and considering corrective measures.
Moreover, the Company established a whistleblowing system to ensure the effectiveness of compliance through theearly detection and correction of improper acts. And, in addition to the Company’s internal contact point, it hasestablished contact points with Audit and Supervisory Board Members and external lawyers to receive reports andrequests for consultations. The Company is also promoting the development of local whistleblowing hotlines
overseas, and it is launching operation of an internal whistleblowing system in Malaysia, China, Taiwan, Thailand,
and Vietnam.
As a material issue indicator (KPI), the completion rate for compliance-related training was 100%. In FY2022,
however, 5 out of 18 required courses did not reach this target. Those who have not completed the courses are
required to take them the following year, and a follow-up system has been established to prevent incompletion.

• Protect intellectual property through proactive filing of patent applications inJapan and overseas, and regularly monitor the status of applications filed by othercompanies, including those overseas• Mitigate the impact of changes in the capital policy, etc. of Tosoh Corporation bycontinuing to communicate appropriately with the parent company

We will swiftly assess the damage to our facilities and offices as well as built properties or those under construction,
and we will take prompt recovery action to minimize adverse effects on business and reputational risk associated witha suspension of operations. We will work to continue infrastructure-related businesses in particular whose suspensionof operations would threaten human life, those that support societal infrastructure, and those that are considered
important in each business unit. We will contribute to our customers’ business continuity by thinking and acting inaccordance with our own business continuity.

Review of BCP
We regularly conduct training and education and continuously review and improve the BCP with the aim of becoming acompany resilient to risks such as disasters.

Initiatives to Prepare for Large-scale Disasters
To quickly and efficiently confirm the safety of employees in the event of a disaster, we have introduced a safety
confirmation system that sends safety confirmation emails to employees in affected areas according to disaster
information. To ensure the effectiveness of the system, in September 2023, all employees were trained to respond to
the safety confirmation system.
Emergency supplies such as rations, drinking water, blankets, medicine, and toilets are provided at major locations toensure the health and safety of employees and office hygiene in the event of a disaster.

ORGANO Group Report 2023

50

Sustainability and the Organo Group

Governance

Officers (as of June 29, 2023)
Directors

Audit and Supervisory Board Members

Masayuki Yamada

Yasutoshi Nakayama

Nobuyoshi Suda

Yoshihiro Tajitsu

Wataru Higuchi

Hirohito Kodama

President
Representative Director
President and Executive
OfficerManaging Director andExecutive Officer
President of Industrial
Plant Business
Senior General Manager
of Electronics Division

Managing Director andExecutive Officer
President of R&D andEngineering

Audit and Supervisory
Board Member(Full-time)

Outside Audit andSupervisory Board Member
LawyerCertified Public Accountant

Outside Audit andSupervisory Board
MemberApr. 1985	Joined Toyo Soda Manufacturing Co., Ltd.
(currently Tosoh Corporation)
Jun. 2019	Director and Executive Vice President, General
Manager of Research and Development Planning,
President of Specialty Group, and President ofEngineering Group of Tosoh Corporation
Director of the Company
Jun. 2021 Senior Managing Director and Executive Officer
Jun. 2022	Director and President (Representative Director)
President and Executive Officer (current position)

Apr. 1984 Joined the Company
Jan. 2014	Managing Director of Organo (Asia) Sdn. Bhd.
Jun. 2016	Executive Officer of the Company
Jun. 2018	Director and Executive Officer, Deputy President ofIndustrial Plant Business, and Senior General
Manager of Plant DivisionJun. 2021	Managing Director and Executive Officer, Presidentof Industrial Plant Business, and Senior General
Manager of Electronics Division (current position)

Apr. 1984 Joined the Company
Jan. 2013	Representative Director and General Manager ofOrgano (Suzhou) Water Treatment Co., Ltd.
Jun. 2017	Executive Officer, General Manager of Corporate
Strategy and Planning Dept., Corporate
Management and Planning of the Company
Chairman of Organo (Vietnam) Co., Ltd.
Jun. 2019	Director and Executive Officer, President ofCorporate Management and Planning and General
Manager of Corporate Strategy and Planning Dept.
Jun. 2021	Managing Director and Executive Officer, Presidentof R&D and Engineering, and Senior General
Manager of R&D Center
Jun. 2023	Director and Managing Executive Officer, Presidentof R&D and Engineering (current position)

Apr. 1985	Joined Toyo Soda Manufacturing Co., Ltd.
(currently Tosoh Corporation)
Apr. 1995	Corporate Control & Accounting
Dec. 2005	Corporate Control & Accounting and New System
Project Team
Jan. 2008	Corporate Control & Accounting
Jun. 2010	Outside Corporate Auditor of PLAS-TECH
CORPORATION
	Outside Corporate Auditor of TOHO ACETYLENE
Co., Ltd.
Corporate Strategy of Tosoh Corporation
Feb. 2013	General Manager of Audit & Supervisory Board
Secretariat
Jun. 2019	General Manager of Auditing
May 2022	Vice President, General Manager of Auditing
Jun. 2022	Executive Officer, Deputy President of Corporate
Management and Planning of the Company
Jun. 2023	Audit and Supervisory Board Member (Full-time)(current position)

Oct. 1993	Joined Deloitte Touche Tohmatsu (currently
Deloitte Touche Tohmatsu LLC)
Apr. 1997	Registered as Certified Public Accountant(excluding the period of legal training) (current
position)
Oct. 2002	Registered as Lawyer (Dai-Ichi Tokyo Bar
Association) (current position)
	Joined SEIWA KYODO LAW OFFICE (SEIWA
MEITETSU LAW OFFICE)
Oct. 2007	Partner
Jun. 2016	Outside Director (Serving as Audit and Supervisory
Committee Member) of Marubeni Construction
Material Lease Co., Ltd. (current position)
Oct. 2018	Representative Partner of Ootemon Law andAccounting (current position)
Jun. 2019	Outside Audit and Supervisory Board Member of
the Company (current position)
Oct. 2019	Executive Officer of Advance Residence
Investment Corporation (current position)
Mar. 2022	Inspector of The Professional Golfers’ Associationof Japan (current position)

Tetsushi Honda

Keikou Terui

Kenji Hirai

Director and Managing
Executive Officer
President of Corporate
Management andPlanning

Outside Director

Outside Director

Apr. 1986 Joined the Company
Apr. 2012	Managing Director of Organo (Asia) Sdn. Bhd.
Jun. 2018	Executive Officer, Senior General Manager ofPower Plant Division, Industrial Plant Business of
the Company
Jun. 2020	Executive Officer, Senior General Manager of R&D
Center, R&D and Engineering
Jun. 2021	Director and Executive Officer, President ofCorporate Management and Planning and General
Manager of Corporate Strategy and Planning Dept.
Jun. 2023	
Director and Managing Executive Officer, Presidentof Corporate Management and Planning (current
position)

Apr. 1981	Joined Sagami Chemical Research Center(currently Sagami Chemical Research Institute)Apr. 1990	Senior Research Fellow
Apr. 1998	Senior Fellow
Jan. 2002	Vice President
Apr. 2004	Vice Chairman of the Board, President
Dec. 2018	Vice Chairman of the Board (Representative
Director), President
Apr. 2019	Vice Chairman of the Board (Representative
Director), Research Advisor
Jun. 2019 Outside Director of the Company (current position)
Jun. 2021	Research Advisor of Sagami Chemical ResearchInstitute

Daisaku Abe

Nobuko Hanano

Outside Director

Outside Director

Outside Director

Apr. 1980 Joined The Industrial Bank of Japan, Limited
Jun. 2019	Deputy Chairman and Executive Officer, Head ofInternal Audit Group and Officer in Charge ofSpecially Assigned Matters of Mizuho Financial
Group, Inc.
	Director (Audit and Supervisory Committee
Member) of Mizuho Trust & Banking Co., Ltd.
	Director (Audit and Supervisory Committee
Member) of Mizuho Securities Co., Ltd.
	Outside Director of Mizuho Leasing Company,
LimitedApr. 2020	Administrative Officer of Mizuho Financial Group, Inc.
Jun. 2020	Director and Chairman (Outside Director) of Mizuho
Leasing Company, Limited
Jun. 2022	Executive Adviser (current position)
	Outside Director of NIPPON STEEL KOWA REALESTATE CO., LTD. (current position)
Jun. 2023 Outside Director of the Company (current position)

Message from Outside Director

Toward the Future

Morifumi Wada

Mar. 1978 Joined EIKEN CHEMICAL CO., LTD.
Apr. 2005	General Manager of Production Planning & Control
Division, Production Division and General Manager
of Procurement Department
Jun. 2006	Executive Officer, General Manager of Production
Planning & Control Division, Production Division
and General Manager of Procurement Department
Apr. 2007	Executive Officer, General Manager of Nogi Plant,
Production Division
May 2007	Executive Officer, General Manager of Nogi Plant andGeneral Manager of Togane Plant, Production Division
Apr. 2011	Vice President and Executive Officer, General
Manager of Nogi Plant and General Manager ofTogane Plant, Production DivisionJun. 2011	Director, Vice President and Executive Officer,
General Manager of Nogi Plant and Director ofTogane Plant, Production Division
Apr. 2012	Director, Vice President and Executive Officer,
General Manager of Sales DivisionJun. 2014 Director, President and CEO
Jun. 2021 Director, Chairman and CEO
Jun. 2022 Director, Chairman (current position)
Jun. 2023 Outside Director of the Company (current position)

51

Apr. 1979	Joined Ministry of International Trade and Industry(currently Ministry of Economy, Trade and Industry)
Jul. 2008	Deputy Minister for Technical Affairs, Minister’s Secretariat
Jan. 2011	Director-General of Kanto Bureau of Economy,
Trade and Industry
Apr. 2012	Director-General of Regional Economic and Industrial Policy
Aug. 2013	President of Japan Utility Telemetering Association(current position)
Oct. 2013	Senior Research Associate of Chemicals
Evaluation and Research Institute, Japan
Jun. 2014	Director of Union of Japanese Scientists andEngineers (current position)
	Outside Director of Ube Industries, Ltd. (currently
UBE Corporation)
Mar. 2016	Outside Director of Bridgestone Corporation
Jun. 2016	Director of Chemicals Evaluation and Research Institute, Japan
Outside Director of the Company (current position)
Aug. 2018	Director of Japan Industrial Safety Competency
Center (current position)
Jun. 2020	Executive Director of Japan Chemical Innovation
and Inspection Institute (current position)

Apr. 1981	Joined Kagome Co., Ltd.
Jun. 2006	Executive Officer, General Manager, Corporate
Planning Department
Jun. 2008	Director & Executive Officer, General Manager,
Research & Development DivisionJun. 2011	Director & Managing Executive Officer, General
Manager, Research & Development Division
Apr. 2013	Director & Managing Executive Officer, CEO, Asia
Business Company
Oct. 2015	Director & Managing Executive Officer, General
Manager, Shared Service Preparation Office
Apr. 2016	Director & Managing Executive Officer	President & Representative Director of Kagome
Axis Co., Ltd. (Representative Director)
Mar. 2018	Outside Audit & Supervisory Board Member ofDynapac Co., Ltd.
	Director of Kagome Co., Ltd. (Full-time Audit andSupervisory Committee Member) (current position)
Mar. 2020	Outside Director of Dynapac Co., Ltd. (Audit andSupervisory Committee Member) (current position)
Jun. 2023	Outside Audit and Supervisory Board Member of
the Company (current position)

Apr. 1991 Joined Nomura Research Institute, Ltd.
Oct. 2000	Registered as Lawyer (Dai-Ichi Tokyo Bar
Association) (current position)
Joined KOHWA SOHGOH LAW OFFICES
Oct. 2004 Partner (current position)
Mar. 2019	Outside Audit and Supervisory Board Member,
Kanro Inc. (current position)
Apr. 2020	Auditor, Drone Service Promotion Association(current position)
Jun. 2021	Outside Audit and Supervisory Board Member of
the Company
Jun. 2023	Auditor of Japan Hockey Association (current
position)
Outside Director of the Company (current position)

I served as an Outside Audit and Supervisory Board Member for two years
starting in 2021, and I have now been appointed as a Director.
During this time, the General Meeting of Shareholders held in June 2023 madequite an impression on me. With the lifting of self-imposed restrictions due tothe pandemic, many shareholders were in attendance, and questions wereasked about overseas business expansion, women in managerial positions,and our social contributions. This gave me a sense of their expectations for theCompany and again reinforced my understanding of my responsibility for the
future as a director.
We live in times in which not changing is the same as regressing, so we canstrongly sense the need to clearly demonstrate our path to the future andadvance along that path with a sense of urgency. To achieve this, management
must strengthen its ability to respond to long-term risk (TCFD), bolster its
pioneering efforts in an era of change (diversity), and reinforce the structurethat supports and, at times, propels these efforts (governance).
The cutting-edge technologies Organo has cultivated in water treatment willcontinue to expand, and we will work tirelessly to boost our corporate value.

Nobuko Hanano
Outside Director
LawyerORGANO Group Report 2023

52

Sustainability and the Organo Group

Environment
Environmental Philosophy and Basic Environmental Policy

Addressing Water Resource Issues and Protecting Biodiversity

Environmental Philosophy

Basic Concept

Recognizing that the preservation of the earth’s environment is of the greatest importance for every human being,
Organo contributes to human coexistence and symbiosis with Earth’s beautiful environment in every facet of its
business operations.

Water is the source of life. It circulates around the Earth, nurturing a variety of plants and animals. Protecting ourwater is protecting life. At Organo, we have technology to protect water.
By managing the water used by the Group and providing our customers with technology to protect this precious
resource, we are promoting the sustainable use of water resources and protecting biodiversity.

Basic Environmental Policy
We will be aware of the environment surrounding
all industrial activities and continue to preserveand improve the environment through alltechnical and economic means possible.

Product
environment

We will develop product manufacturing technologies
that will reduce the burden on the environment.

Observance of laws
and establishment of
our own standards

We will observe laws, regulations, and agreements
concerning the environment. We will also establish
our own standards and do our best to preserve theenvironment in accordance with these standards.

Environmental
monitoring

We will inspect the environment within ourcompany and work to improve our environmental
preservation activities.

Production
environment

We will strive to conserve resources and energy, tominimize waste and to recycle the waste producedin every aspect of our business activities.

Comprehensive
involvement

We will educate our staff and encourage in-house
publicity concerning environmental issues to promote
understanding and awareness of the environmentand of our own basic environmental policy.

Continuous
improvement

Management of the water we use

Recently, the use and conservation of water resources has been gaining attention as a global sustainability issue,
and we view the impact on our corporate activities of water resource depletion, river flooding, and water pollution asa risk.
The Organo Group is working to conserve water resources by effectively using water intake and maintaining andimproving the quality of wastewater around its business sites to ensure the sustainable use of water resources. We
will continue to contribute to environmental conservation through our business activities while keeping a close eye onwater-related risks.

Water Usage Volume and Wastewater Volume

Environmental Management

Unit

Environmental Conservation Structure
The Company’s policies, targets, and measures forenvironmental preservation are discussed and decided by
the company-wide Environmental Conservation
Committee. Each business site in Japan appoints an
Environmental Conservation Committee which establishes
the policies, targets, and measures for their own officebased on the Company’s targets and measures—as well
as specific issues—and performs environmental
conservation activities accordingly.

Initiative 1

Officer in charge of environment

FY2018FY2019FY2020

FY2021

FY2022

Water usage volumem3

516,352

542,256

539,185624,755

618,948

Wastewater volumem3

423,922434,603

461,591

538,819587,049* Targets for calculation: Head Office, R&D Center, Tsukuba Factory, and Iwaki Factory of Organo Corporation, and Main Factory of Organo Food Tech
Corporation* The water balance does not include evaporation or sprinkling, or products brought out of or into facilities.

Company-wide Environmental Conservation Committee
Secretariat: Environment, Safety and Quality Assurance Dept.

Initiative 2
Offices

Environmental Management System
Our environmental management system complies with national or public standards. We
conduct environmental conservation operations and activities at our offices in accordancewith the environmental management system, and we also perform internal environmental
audits.
Our Tsukuba Factory, where ion exchange resins are purified as one of our core materials,
has acquired ISO 14001 certification, the international standard for environmental
management systems.

Sustainable use of water resources and promotion of biodiversity conservation

By providing our customers with treatment and recovery technologies for wastewater, our Group contributes tomaintaining a healthy water cycle and securing water resources for industrial and daily water use. In 2022, we
identified “addressing water resource issues” and “protecting biodiversity” as material issues, and in 2023, weestablished two KPIs: the amount of wastewater treated by newly delivered Organo systems and discharged byplants, and the amount of water collected and reused by newly delivered Organo systems.
We will further promote the use of wastewater treatment technologies used to purify industrial wastewater beyond
legal requirements and wastewater recovery technologies used to reduce the amount of wastewater released intorivers, thereby promoting the sustainable use of water resources in society to protect a rich water environment where
diverse organisms thrive and preserve biodiversity.

Environmental Education
As part of the curriculum for new employee training andengineering technology training, the Company offers
courses on pollution prevention laws and regulations. It
also encourages employees to obtain national Pollution
Control Manager certification, increasing the number ofqualified individuals. In this way, the Company is putting
its environmental philosophy into practice.

53

Number of qualified Pollution Control Managers in FY2022*

Cumulative: 210*T otal of water quality-related Classes 1 to 4, air quality-related
Classes 1 to 4, and dioxin-related

ORGANO Group Report 2023

54

Sustainability and the Organo Group

Environment

Promotion of the 3Rs

Basic Concept
Climate change is a threat to the stability of society and the environment on a global scale. As an organization heavily
involved in water resources, Organo considers it a risk it should pay close attention to. Meanwhile, the Company
recognizes the growing demand for environment-friendly products and services as a business opportunity.
We actively work to mitigate and adapt to climate change, and we contribute to realizing a sustainable society by
optimizing energy usage related to our business activities and by providing products and services that contribute tolessening the effects of climate change.

Together with its stakeholders, the Organo Group aims to realize a sustainable society. As part of these efforts, we
identified promotion of the 3Rs as a material issue in 2022, and set the volume of sludge reduced through theapplication of Organo technology and products as a KPI in 2023. We will continue to use our technologies andservices to promote the 3Rs for waste generated through our corporate activities as well as those of our customers,
and make more effective use of resources and reduce our environmental impact to realize a recycling-oriented society.

Recycling Volume and Volume of Waste Generated

Initiatives

Unit

Scope 1 and 2 emissions in FY2022 increased 12% compared with the reference year of FY2021. The main factor
behind the increase was the launch of operations of a new laboratory building at the R&D Center in Sagamihara.
We worked to reduce emissions, however, such as by introducing renewable energy in electricity in January 2023
and in gas in March at the head office. Moreover, we revised our Scope 1 and 2 emission reduction targets for
FY2030 from 37.8% to 42%.
Scope 3 emissions in FY2022 increased 37% compared with the reference year of FY2021. The key factor was ourstrong business performance. This performance led to increased purchase and sales volume, which in turn led toincreased greenhouse gas emissions.
Energy consumption (crude oil equivalent)
We expect to complete the calculations of Scope 3 emissions for(including domestic and overseas group companies)
FY2021 and 2022 for domestic and overseas group companies by
(kL)
6,222
March 2024. This year, we were able to determine the Company’s
5,439
emissions, which gave us a clearer picture of the Scope 3
4,083
3,970
3,824
emission areas (categories) that are at high levels. Moving forward,
we will analyze this information to consider Scope 3 emission
targets.
FY2018Item

TargetResults for FY2021 (reference year)

Scope 1
and 2

42% reduction
Emissions: 10,324 t-CO2 (including domestic and(compared with FY2021
overseas group companies)
levels) by FY2030

Scope 3

Under review

Emissions: 558,991 t-CO2 (not including domestic
and overseas group companies)

Category

FY2020

FY2021

FY2022

Results for FY2022
12% increase (compared with FY2021 levels)• Emissions: 11,566 t-CO2 (including domestic
and overseas group companies)

37% increase (compared with FY2021 levels)• Emissions: 893,606 t-CO2 (not including
domestic and overseas group companies)

FY2021 (t-CO2)

FY2022 (t-CO2)

256,147

358,215

Category 2: Capital goods

8,650

8,454

Category 3: Fuel- and energy-related activities not included in Scope 1 or Scope 2

1,586

1,690

Category 4: Upstream transportation and distribution

6,078

6,179

Category 1: Purchased goods and services

Category 5: Waste generated through operations

1,527

1,309

FY2019
548

486

554

491

Volume of waste generated

t

471

737

679

617

636

* Targets for calculation: Head Office, R&D Center, Tsukuba Factory, and Iwaki Factory of Organo Corporation, and Main Factory of Organo Food Tech
Corporation

Expansion of Environmentally Friendly Products and Services
Organo received the Director-General Prize of the Agency of Natural Resources and Energy of the FY2022 Energy
Conservation Grand Prize for ORSMART CW, a DX-based energy-saving service solution for cooling water treatment.
This marks the fourth time overall and third consecutive year the Company has earned this award.
Cooling water is used in large volumes for applications such as large-scale air conditioning in buildings and factories.
One of the main obstacles in cooling water is microorganism-derived slime. The generation of slime not only leads toelectric power loss, but if it is allowed to rapidly grow due to the ambient environment and temperature, it can cause
high-voltage cuts, forcing operational shutdowns.
ORSMART CW monitors the temperature data of cooling equipment in real-time, and through the use of AI and aremote monitoring system, the service quickly and automatically controls the application of a chemical to inhibit
slime growth. This allows the operating environment to remain at optimal conditions at all times to ensure energy
savings and operation throughout the year. In a case study, electric power loss was reduced by 40.3%.
Cooling water treatment is required at various manufacturing sites—including air conditioning—and this service
contributes to energy savings in a wide range of fields.
Organo will continue taking on the challenge of developing energy-saving solutions to contribute to increased
corporate value.

295

292

Category 8: Upstream leased assets––

Using proprietary AI for optimal chemical
injection control

380

510

–

–

Category 12: End-of-life treatment of sold products

3,238

3,414

Category 13: Downstream leased assets

44,44236,966––

Category 14: Franchises
Category 15: Investments

–

–

6.0

Real-time monitoring of LTD*

Category 7: Employee commuting

476,435

Value provided by ORSMART CW

Features of ORSMART CW

142

236,505

FY2022400

143

Category 11: Use of sold products

FY2021tCategory 6: Business travel

Category 10: Processing of sold products

FY2020Recycling volume

Treatment using the fouling condition of the heat exchanger (LTD)as the index

Category 9: Downstream transportation and distribution

55

FY2019FY2018Optimal chemical injection amount according to heat exchanger
condition

High security centralized management service
From preliminary survey to treatment management

Employs
ORBLADE
series forcooling water
treatment
agent!

Winner of FY2020 Energy
Conservation Grand Prize

ORBLADE seriescooling water treatment agent
Features
Contains our new proprietary bactericidal
ingredients, an industry first
Abundant lineup offering 17 different types
Bactericidal ingredients are inorganic, withzero TOC and low environmental impact

Changes in LTD
Bldg. A conventional treatment (FY2019)
Bldg. A ORSMART CW (FY2021)

5.0

High-voltage cut area

4.0
LTD (°C)

Responding to Climate Change

3.0
2.0
May

1.0
0.0
Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Did not become high-voltage cut area throughout the year

Stable operation of refrigerator
and prevention of production
opportunity loss

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Power loss of refrigerator due to
LTD increase

40.3% reduction* Leaving Temperature Difference (LTD): Fouling index of heat exchanger at “refrigerant
condensation temperature – cooling water outlet temperature” of refrigerator

ORGANO Group Report 2023

56

Sustainability and the Organo Group

Society
Promotion of Occupational Safety and HealthRespect for Human Rights

Basic Concept

Basic Concept

As a company with a large amount of field work, we recognize the risk of serious workplace accidents. Safety is a
top-priority topic, and the Company established promotion of occupational safety and health as a material issue in
2022. It continuously promotes initiatives that enable employees of our group companies and business partners towork with peace of mind.

The Organo Group declares that it shall respect human rights and prohibit discrimination, and accordingly aims toact as a company that respects individuals and diversity, without discrimination based on nationality, gender, creed,
physical condition, or social status. Based on this foundation and as stated in Organo’s Long-Term Management
Vision, the Company is working to “proactively contribute to a better tomorrow by cultivating people today who will
improve upon the way things were done yesterday, as a company where all employees are energetic and passionate
about their work.”

Creating Safe Workplaces
In order to ensure the safety and health of its employees and to promote the creation of a comfortable work
environment, Organo has established a structure for safety and health management under the direct control of the
President and the role of each member pursuant to company regulations on safety and health management. The
Company is committed to properly maintaining safe workplace environments, preventing occupational accidents andtaking appropriate emergency measures, and conducting relevant education and training.
For plant installation work and handling of chemicals, Organo prepares documented instructions, performs safety
checks using checklists, and conducts scheduled safety patrols at construction sites and factories. The Company’ssafety patrols involve providing guidance on immediately taking corrective action when safety concerns are apparent,and ensuring that safety education is properly conducted. Organo further strengthens safety management practices by
providing guidance on voluntary safety activities to prevent accidents including hazard prediction prior to performing
tasks, and risk assessments. In addition, the Company posts safety newsletters on occupational health and safety on
the intranet to disseminate reports on the occurrence of disasters and remedial measures. To heighten health andsafety awareness and stimulate such activities, we present labor safety awards to business partners and internalbusiness offices to convey the message that safety is our highest priority, and we work to create safe workplaces.

Initiatives
The Organo Group Company Code of Conduct sets forth clear guidelines on respecting human rights, prohibiting
discrimination, and forbidding harassment. In 2022, we identified respect for human rights as a material issue. As the
KPI, we established a 100% completion rate of human rights-related training for participants enrolled at the end of
the previous fiscal year. To promote the creation of a workplace where human rights are respected, employees needto have a correct understanding of human rights. To that end, all employees undergo human rights e-learning training
including corporate ethics, compliance, and harassment prevention. Organo maintains and respects international
standards for human rights, and we hold in the highest regard human rights of all employees of the Group, as well as
everyone involved in its corporate activities. Furthermore, Organo continues to promote initiatives on respect forhuman rights to fulfill its corporate social responsibility.

Supply Chain Management

Workplace Accident Prevention Activities
The Organo Group established an occupational safety and health policy in which it places the safety and health ofworkers as the top priority in business activities and promotes the creation of a comfortable work environment. In
particular, we implemented activities to prevent workplace accidents based on the President’s message that “safety
is a higher priority than delivery dates, cost, and profit,” but
Number, frequency rate, and severity rate of
in FY2022, we had eight workplace accidents. Of these,
workplace accidents
seven are subject to the KPI of the material issue set in
FY2022. The increase in the number of accidents over past
FY2020
FY2021
FY2022
years is attributable to the inclusion of those of domestic
Number of workplace accidents*
6
7
8
group companies. Moreover, the causes of the accidents
Frequency rate of workplace accidents (%)*
1.02
0.68
1.36
included irregular work, falls, chemical injuries,
Severity rate of workplace accidents (%)*
0.004
0.004
0.036
complacency, insufficient checks, and inattention. We will*
Figureschangedtoincludedomestic
group
companies.
work to improve the safety level of the entire Group throughCalculation methods:
scheduled employee education and training while also
• Frequency rate: The number of incidents due to workplace accidents per 1 million
total number of hours worked; indicates the frequency of accident occurrence.
fostering employee safety awareness with the aim ofFrequency rate = (Number of incidents ÷ Total number of hours worked) × 1 million•
Severity rate: The number of workdays lost per 1,000 total number of hours worked;
eliminating serious lost time injuries.

CSR Procurement Initiatives
Amid interest from stakeholders on our overall business process as it relates to the creation and provision of
products and services, there was growing demand not only to promote the Organo Group’s CSR, but also topromote the CSR of the entire supply chain.
The Group revised the Organo Group Supply Chain CSR Promotion Guidebook formulated in 2015, and called on
business partners to engage in CSR initiatives and deepen the common understanding of the importance of these
initiatives. In 2022, we identified the strengthening of supply chain management as a material issue, and establishedthe number of main suppliers in compliance with the CSR Promotion Guidebook as the KPI. Our efforts areprogressing smoothly, and in FY2022, we completed surveys for 41 main suppliers. In FY2023 and beyond, theCompany will check the status of its customers’ CSR activities based on the Guidebook and provide support where
needed.

indicates the degree of accident severity.
Severity rate = (Number of workdays lost ÷ Total number of hours worked) × 1,000

Employee Health Initiatives
The Group considers the health of its employees as one of the most valuable management resources in achieving
sustainable growth. We provide lifestyle review counseling based on results of regular health checkups and offer
annual stress level checkups for all employees as mental health measures. Moreover, Organo employees haveaccess to counseling provided by specialists and registered nurses through the Company’s in-house consultation
center for when they have concerns about themselves, their colleagues, or their subordinates.

Engagement with Labor Unions

Organo Group Supply Chain CSR Promotion Guidebook

https://www.organo.co.jp/company/society/collaboration/ (Japanese only)

Organo Group Company Code of Conduct

Policy on the Conflict Minerals Issue

https://www.organo.co.jp/english/company/ecology/

https://www.organo.co.jp/company/society/mineral/(Japanese only)

The Company enters into collective bargaining agreements with Organo’s labor union and maintains harmonious
labor-management relations. Through regularly scheduled labor-management meetings with the participation of top
management, Organo strives to disseminate its management policies to its employees and ensure that opinions ofunion members are reflected in the Company’s management strategies and policies.

57

ORGANO Group Report 2023

58

Sustainability and the Organo Group

Society

Diversity Initiatives
Basic Concept

Basic Concept

The Organo Group prescribes “Ensuring a comfortable workplace where all employees can realize their full potential”
in the Organo Group Company Code of Conduct and declares that it shall respect the human rights, diversity, andindividual personalities of all employees and will not discriminate based on nationality, gender, creed, physicalcondition, or social status.
Moreover, to ensure employee diversity based on the concept that only through a mixing of diverse ideas can werealize innovations to improve the Company’s corporate value, we are working on various measures including
promoting the participation of women, employing people with disabilities, utilizing global human resources,
employing senior citizens, providing childcare support, and promoting workstyle reform.

We are undertaking various measures to develop human resources who can help us expand our business throughhigh value-added separation and purification as well as analysis and manufacturing technologies, and by providing
products and services that promote the creation of value and which resolve the challenges that confront industry andsociety. We are also cultivating people who proactively contribute to a better tomorrow and who will improve upon
the way things were done yesterday.
Our training system is transitioning from the conventional assigned training determined by rank to a system ofelective training, in which each employee performs a self-assessment to find the areas in which they may be lacking
and selects from a menu of training courses that they can take to improve themselves.
The Group has established a target of increasing annual per-employee training costs to ¥100,000 (about double thecurrent amount) by 2030 as a material issue. While actual training costs in FY2022 were half that, at ¥58,309 per
employee, we provide employees with a wide range of learning opportunities.
Moreover, human resource rotation and global personnel exchange are effective ways to promote careerdevelopment and reskilling. Attempts to strengthen psychological safety, such as through one-on-one meetings, areessential in human resource development. We believe that these efforts will lead to an increase in digitally-capabletalent and autonomous employees, and these personnel will transform the way we work.

Initiatives
Promoting theparticipation of
women

We are establishing maternity and childcare-related systems that exceed legal requirements so as toenable female employees of child-rearing age to balance childcare and careers, and we arepromoting the creation of a system that supports flexible workstyles. We established a Group material
issue to increase the number of women in managerial positions to 50 by 2030. (As of November 2023,
there were 26.) In recognition of these efforts, the Minister of Health, Labour and Welfare awarded theCompany with the Eruboshi certification, which is given to companies that promote an environment
where women can demonstrate their abilities and have an active role in the workplace.

Employment ofpeople withdisabilities

Organo is working to expand its employment of people with disabilities who, as of November 30, 2023, accounted
for 2.3% of the Company’s workforce.

Utilizing global
human resources

As Organo expands its operations overseas, it is promoting the employment and training of global humanresources to take advantage of diverse values and experiences in different cultures.

Development of
the internal
environment toensure diversity

Given that Organo’s workforce consists of a diverse range of employees possessing a variety of personalities andbackgrounds, the Company is developing an environment where all employees are able to fulfill their potential and realize
growth. Female employees have been assigned to the departments in charge of construction management, which previously
was staffed mainly by male employees, and consideration is given to diverse backgrounds, such as by augmenting
Japanese-language education for foreign national employees, providing a cafeteria, and establishing a prayer room.

Employingsenior citizens

The Company has introduced a reemployment program whereby it is possible to rehire employees up to the age of
70 so they can continue to work by leveraging the skills and expertise they cultivated even after reaching the
mandatory retirement age of 60.

Work-Life Balance
Organo has established various systems to support flexible workstyles and enhance the work-life balance of its
employees. We promote activities to eliminate long working hours and are working to create a system to support thehealth of the employees.
Reducing the number of employees exceeding the legal overtime limit is one of the Group’s material issues. To
address the issue of long working hours, for instance, we are reviewing the work execution system throughorganizational reform and utilizing DX to improve work efficiency. As a result, the number of employees who worked
more than 600 hours of overtime in FY2022 —thereby exceeding the legal limit—dramatically decreased.
Moreover, we established a childbirth and childcare leave system that exceeds legal requirements. For example,
employees are guaranteed full salary during maternity leave and leave for hospital visits during pregnancy as well as
their terms of prenatal and postnatal leave (six weeks before and eight weeks after childbirth). The rate of childcare
leave taken in FY2022 remained at 100% for female employees, and that for male employees dramatically increased
from 2.3% in FY2018 to 55.3% in FY2022. We also take into consideration employees’ life events, such as byintroducing a reduced working hour system for childcare that covers children up through the third grade of elementary
school, and by establishing a system that enables employees to change career paths and work in limited geographicalareas. Some of Organo’s female employees have even taken on managerial positions after returning from childcare
leave, evidence of the fact that the Company offers a stable environment conducive to women building careers.
In addition, Organo has introduced flextime options without core time, half-day paid leave systems and teleworksystems to enable flexible and efficient work styles, and is promoting the streamlining of operations utilizing ICT. As
part of the measures to improve the rate of use of paid leave, Organo has established paid leave incentive days andencourages employees to take extended vacations by combining paid leave with summer vacation and special paid
leave offered after 15 and 25 years of service.

59

Promotion of Human Resource Development

Programs and Initiatives

Rankspecifictraining

New employee training

During the first half of roughly six months of training, employees acquire general knowledge
as members of society and regarding Organo’s technologies, and then in the second halfthey put into practice the technology and knowledge gained.

DX training

To promote DX, employees are trained to utilize digital technology for business.

Engineering Seminar
Basic Course (ESB)The ESB course involves technology field-specific training concerning Organo’s basic
technologies. Participants are able to equip themselves for future career opportunities by
gaining extensive knowledge on technologies that are not directly related to their work.

Career training

Participants cultivate the ability to independently grow by learning to take a proactive
approach to career development.

Management training

In 2021, we divided management courses into “division supervisory positions,” “expert
positions,” and “supervisory positions” to clarify the role of managers. Participants gainrole-based management skills.

Elective training

Selfdevelopment

Employees assess and identify the areas in which they work and select from a menu of
training courses that they can take to improve themselves.

Qualificationacquisition support
systemTo support employees who learn autonomously, the Company subsidizes a portion of thecost employees incur when acquiring one of approximately 300 different formal
qualifications. This encompasses target qualifications across a wide range of subject areas
such as technology, linguistics, and IT, with certifications that include professional engineer,
assistant professional engineer, and pollution control manager.

Organo University(correspondence
course subsidy system)

Organo University provides the opportunity to study by featuring 181 correspondence
courses across 10 fields of study including technology and sales courses necessary forbusiness, as well as management skills required at different levels of the corporate hierarchy.

Social Contribution Activities
Organo Group places emphasis on cooperation, collaboration, and building trust with communities, and actively
promotes social contribution activities in areas surrounding business locations.

Supporting the Art Para Fukagawa Chatty Art Festival
This unique art festival is a nationwide public art exhibition with the aim of realizing a society in which people withdisabilities and others live together, and it transforms the entire city of Fukagawa in Koto Ward, Tokyo, near our head
office, into an art museum. Since its initial year in 2020, Organo has participated as a supporting partner, and theCompany will continue to contribute to the development of local culture and art and to the promotion of social
participation by people with disabilities.

ORGANO Group Report 2023

60

Corporate Data

Financial Information
FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

Orders (millions of yen)

60,23865,501

77,87376,48574,041

88,049103,838

104,986

94,563

135,698

173,491

Net sales (millions of yen)

66,71862,096

68,74178,71981,114

79,226

92,27396,515

100,638

112,069

132,426

Operating profit (millions of yen)

3,498

833

2,398

3,947

4,114

3,821

6,558

9,908

9,579

10,85015,212

5.2

1.3

3.5

5.0

5.1

4.8

7.1

10.3

9.5

9.7

11.5

Ordinary income (millions of yen)

3,909

1,170

2,465

3,871

4,162

3,933

6,538

9,929

9,900

11,54516,020

Profit attributable to owners of parent

2,564

664

1,085

2,485

2,731

2,780

4,452

7,162

7,074

9,210

11,730

720

358

334

603

903

644

635

965

1,015

3,387

1,466

R&D expenses (millions of yen)

1,655

1,490

1,392

1,407

1,495

1,776

1,823

2,178

2,300

2,146

2,615

Depreciation (millions of yen)

1,159

1,065

999

950

950

972

920

1,189

1,212

1,332

1,824

Net assets (millions of yen)

45,20744,25245,30846,56749,034

51,68154,79560,85767,35776,00486,371

Total assets (millions of yen)

85,30976,852

83,60994,79595,40596,036

101,257

101,448

115,011130,506

164,854

Liabilities with interest (millions of yen)

14,901

10,23012,717

17,412

16,910

15,484

13,6599,740

16,005

15,62833,019

12

8

8

9

11

53

73

104

114

160

62

Book-value per share (BPS)*2, 3 (yen)777.05768.24786.72806.89849.45

4,477.64

4,784.81

5,301.26

5,856.25

6,620.54

1,877.80

Earnings per share (EPS)*2, 3 (yen)

44.52

11.53

18.85

43.17

47.44

241.50388.48626.05616.72802.69255.77

Equity ratio (%)

52.5

57.6

54.2

49.0

51.3

53.7

54.0

59.9

58.4

58.1

52.3

Return on equity (ROE) (%)

5.9

1.5

2.4

5.4

5.7

5.5

8.4

12.4

11.1

12.9

14.5

Return on assets (ROA) (%)

4.6

1.4

3.1

4.3

4.4

4.1

6.6

9.8

9.1

9.4

10.8

Consolidated payout ratio (%)

27.0

69.4

42.4

20.8

23.2

21.9

18.8

16.6

18.5

19.9

24.2

Operating profit ratio (%)(millions of yen)

Capital expenditures*1 (millions of yen)

Annual dividend*2, 3 (yen per share)*1 Capital expenditures in FY2020 and beyond include investments in property, plant and equipment, intangible assets, etc. *2 The Company implemented a reverse stock split on October 1, 2017, consolidating five common shares into one. *3 The Company implemented a share split with an effective date of October 1, 2022, splitting
one common share into four.

Nonfinancial Information (Non-consolidated)
Number of employees(persons)Male

Average years of service(years)Female

1,200
1,000

 Average

16.7
16.1
16.0

888

897

897

880

10

16.2
15.9
15.9

16.6

17.1

16.2
16.0

16.3

16.6

15.2

14.7

25

Rate of childcare leave taken by male employees
(%)

50
24.2

26.2

28.2

27.5

56.8

56.8

51.9

57.6

3.0

59.8
2.5

80

40

2.0
60

20

2.34

2.29

2.13

40
20

10

5

5

10

0

0

0

0
FY2018 FY2019 FY2020 FY2021 FY2022

1.0

28.1
20

0.5
2.3

FY2018 FY2019 FY2020 FY2021 FY2022

2.31

1.5

15

200

FY2018 FY2019 FY2020 FY2021 FY2022

2.45

55.3

30
14.4

Employment rate of people with disabilities
(%)

100

60

30

25

15
870

Rate of use of paid leave*
(%)

32.3

20

600

(hours)35

30
1,072 1,090 1,085
1,023 1,051
193
175
205
163
153

800

400

Average monthly hours of overtime Male  Female0
FY2018 FY2019 FY2020 FY2021 FY2022

10.7

16.2

FY2018 FY2019 FY2020 FY2021 FY2022

0.0
FY2018 FY2019 FY2020 FY2021 FY2022* Aggregated values from January 1 of the previous fiscal year to December 31 of the current fiscal year.
Ex.: FY2022 → Period from January 1, 2022 to December 31, 2022

61

ORGANO Group Report 2023

62

Corporate Data

Consolidated Balance Sheet
Previous fiscal year
(March 31, 2022)

Fiscal year underreview(March 31, 2023)

AssetsPrevious fiscal year
(March 31, 2022)

Net sales

20,19815,558Notes receivable - trade

1,703

1,026

Accounts receivable- tradeElectronically recordedmonetary claims - operating

25,63939,470

1,862

2,826

Contract assets

25,58432,359Lease investment assets

11,293

9,853

Merchandise and finished
goods

5,264

7,165

Work in progress

6,735

21,886

Raw materials andsupplies

1,456

1,744

Other

3,133

4,891

Allowance for doubtful
accounts
Total current assets

(6)

(17)

102,862

136,765

Tangible fixed assets

18,79520,904

5,575

4,640

Short-term borrowings

9,933

29,124

Income taxes payable

1,444

3,014

Contract liabilities

1,820

3,007

Provision for bonuses

1,477

1,594

Provision for productwarranties
Provision for loss on
construction contracts
Provision for stock-based remuneration
for directors (and other officers)

Equity method investment income
Other
Total non-operating income

105

Other

Other

3,559

5,284

Total current liabilities

43,072

68,738

3,895

53

91

5,512

5,511

168

245

11,4299,744

54,501

78,483Retirement benefit
liabilities

6,166

6,078

Other

5,826

6,582

Total fixed liabilities(5,117)(5,452)

709

1,129

Land

12,257

12,296

Construction inprogress

1,115

118

Other

5,346

5,955

(4,601)(4,784)

745

1,171

Total tangible fixed
assets20,995

20,795Intangible fixed assets

1,082

949

Total liabilities

8,225

8,225

Capital surplus

7,508

7,508

Retained earnings

59,61969,002

(734)

(613)

74,617

84,123

434

539

(0)

(2)

575

1,191

208

317

1,218

2,047

168

201

76,00486,371

130,506

164,854

Investment securities

2,058

2,430

Retirement benefit
assets624

815

Deferred tax assets

2,369

2,673

Other

979

596

Allowance for doubtful
accounts
Total investments andother assets

(464)

(171)

5,566

6,343

Minority interests

27,64428,088

Total net assets

130,506

164,854

Total liabilities and net assets

Income from sales of fixed assets
Income from sales of right to use facilities

Fiscal year under review
from April 1, 2022
to March 31, 2023

112,069
83,55628,512
17,662
10,850132,426
97,44934,976
19,763
15,212

26
33
573
160
129
924

35
44
559
208
130
978

127
92
9
229
11,545

159
–
10
170
16,020

1,150
23
11
1,185

5
40
–
46

–
21
–
13
35
12,696
2,984
485
3,470
9,226
15
9,210

0
28
1
–
31
16,035
4,628
(357)
4,270
11,76434
11,730()

Total extraordinary income
Extraordinary losses
Loss on sales of fixed assets
Loss on abandonment of fixed assets
Loss on sales of investment securities
Loss on sales of right to use facilities
Total extraordinary losses
Income before income taxes

Total income taxes

Capital stock

Previous fiscal year

Extraordinary income

Income taxes - deferred

Shareholders’ equity

Total shareholders’equityAccumulated othercomprehensive income
Valuation difference on
available-for-sale securities
Deferred gains or losses
on hedges
Foreign exchangetranslation adjustment
Accumulated adjustment
for retirement benefits
Total accumulated othercomprehensive income

Total non-operating expenses
Ordinary income

Corporate, inhabitant, and business taxes

Net assets

Treasury stock

Interest expenses

Income from sales of investment securities

5,695

April 1, 2021
( tofromMarch
31, 2022 )Non-operating expenses

123(13,104)

Total assets

Exchange gains

Loss on valuation of derivatives(12,707)

Total fixed assets

Interest income
Dividend income

512Long-term borrowings(millions of yen)

Non-operating profit

46

19,183

Investments and otherassetsOperating income

548

18,873

Other (net)

Selling, general and administrative expenses

296

Deferred tax liabilities

Accumulated
depreciation

Gross income

Trade notes andaccounts payable
Electronically recorded
obligations - operating

Fixed liabilities

Fixed assets

Buildings andstructures
Accumulated
depreciation
Buildings andstructures (net)
Machinery, equipment
and vehicles
Accumulated
depreciation
Machinery, equipment
and vehicles (net)

Cost of sales

Current liabilities

Cash and deposits

Consolidated Statement of Income

Fiscal year underreview(March 31, 2023)

Liabilities

Current assets

63(millions of yen)

ProfitProfit attributable to minority interests
Profit attributable to owners of parent

Consolidated Statement of Comprehensive Income
Previous fiscal year

April 1, 2021
( tofromMarch
31, 2022 )ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign exchange translation adjustment
Adjustment amount for defined benefit plans
Share of other comprehensive income of entities accounted for using equity method
Total other comprehensive income
Comprehensive income
Items
Comprehensive income attributable to owners of parent
Comprehensive income attributable to minority interests(millions of yen)
Fiscal year under review
from April 1, 2022
to March 31, 2023

(

)

9,226

11,764

135
(0)
809
235
(2)
1,178
10,405

104
(2)
625
110
0
837
12,602

10,371
33

12,55943

ORGANO Group Report 2023

64

Corporate Data

Consolidated Statement of Shareholders’ Equity
Previous fiscal year
(from April 1, 2021 to March 31, 2022)

Capital stock

Balance at beginning of current period

8,225

Shareholders’ equity
Capital surplus Retained earnings

7,508

Treasury stock Total shareholders’ equity

51,902

Cumulative effects of changes in accounting
policies
Restated balance

Consolidated Statement of Cash Flows(millions of yen)

(495)

67,139

11
8,225

7,508

(495)

Income before income taxes

67,151

Depreciation

Changes during current period
Dividends of surplus
Profit attributable to owners of parent
Increased amount of retained earnings fromincrease in consolidated subsidiaries(1,541)
9,210(1,541)
9,210

36

36
(354)
115

Acquisition of treasury stock
Disposal of treasury stock

Increase (decrease) in provisions
Increase (decrease) in retirement benefit liabilities
Decrease (increase) in retirement benefit assets
Interest and dividend income

(354)
115

Interest expenses
Foreign exchange losses (gains)

Changes in items other than shareholders’equity (net)Total changes during current period
Balance at end of current period

–
8,225

Valuationdifference on
available-forsale securities
Balance at beginning of current period

301

–
7,508

7,705
59,619

(238)
(734)

–

(201)

Share of loss (profit) of entities accounted for using equity method

7,466
74,617

Accumulated other comprehensive income
Accumulated
Foreign
Deferred gains
adjustment for
exchangeor losses onretirementtranslation
hedgesbenefits
adjustment(25)

Total accumulated
othercomprehensive
income74

Loss (gain) on valuation of derivatives
Loss (gain) on sales of fixed assets
Loss on abandonment of fixed assets
Minority
interests

Total net
assets143

67,357

Cumulative effects of changes in accounting
policies
Restated balance

11
301

–

(201)

(25)

74

143

67,369Changes during current period(1,541)
9,210

Dividends of surplus
Profit attributable to owners of parent
Increased amount of retained earnings fromincrease in consolidated subsidiaries

36
(354)
115

Acquisition of treasury stock
Disposal of treasury stock
Changes in items other than shareholders’equity (net)Total changes during current period
Balance at end of current period

132

(0)

777

234

1,144

25

1,169

132
434

(0)
(0)

777
575

234
208

1,144
1,218

25
168

8,635
76,004(millions of yen)
Fiscal year under review(from April 1, 2022 to March 31, 2023)

Capital stock

Balance at beginning of current period

8,225

7,508

59,61974,617(4)
125(2,347)
11,730
(4)
125

121
(613)

9,505
84,123(2,347)
11,730

Profit attributable to owners of parent
Acquisition of treasury stock0

Disposal of treasury stock

Balance at end of current period

Balance at beginning of current period

SubtotalInterest and dividends received
Interest paid
Insurance income received
Damages paid
Income taxes paid or refunded
Cash flow from operating activities

Cash flow from investing activities
–
8,225

0
7,508

9,383
69,002

Accumulated other comprehensive income
Accumulated
Foreignadjustment for
exchange
retirementtranslation
benefits
adjustment

Valuationdifference on
available-forsale securities

Deferred gains
or losses onhedges

434

(0)

575

208

1,218

Fiscal year under review
from April 1, 2022 toMarch 31, 2023

12,696
1,332
127
150
(250)
(60)
127
(178)
(160)
92
(1,150)
21
(23)
1
(320)
(1,518)(2,244)
5,451
403
14,497
73
(129)
11
(0)
(3,664)
10,787

16,035
1,824
652
171
(211)
(80)
159
(233)
(208)
(5)
(4)
28
(39)
–
(19,954)1,439(17,295)
664
1,672(15,384)
93
(168)
71
–
(3,147)(18,536)(2,492)
1,200
(306)
(8)
65
–
32
(10)
(1,520)(1,205)
5
(247)
(301)
73
300
–
64
(1,309)(5,979)
6,000
(600)
(354)
(1,541)(7)(101)(2,586)398
7,079
12,804314
20,198

19,138–(1,900)(4)(2,347)(10)(170)
14,706500(4,639)20,198–15,558()

Cash flow from financing activities
Net increase (decrease) in short-term borrowings
Income from long-term borrowings

Total accumulated
othercomprehensive
incomePrevious fiscal year

Cash flow from investing activities

Other

Minority
interests

168

Total net
assets

76,004(2,347)
11,730(4)125Acquisition of treasury stock
Disposal of treasury stock

65

Other

Income from sales of right to use facilities

Profit attributable to owners of parent

Balance at end of current period

Increase (decrease) in trade payables

Income from loan collection

Dividends of surplus

Total changes during current period

Decrease (increase) in inventories

Income from sales of investment securities

Changes during current period

Changes in items other than shareholders’equity (net)Decrease (increase) in lease investments

Expenditures on acquisitions of investment securities

Changes in items other than shareholders’ equity(net)
Total changes during current period

Decrease (increase) in trade receivables and contract assets

Expenditures on acquisitions of intangible fixed assets

Changes during current period
Dividends of surplus

Loss (gain) on sales of right to use facilities

Income from sales of tangible fixed assets

Treasury stock Total shareholders’ equity(734)

Loss (gain) on sales of investment securities

Expenditures on acquisitions of tangible fixed assets

Shareholders’ equity
Capital surplus Retained earnings

April 1, 2021 to( fromMarch)
31, 2022

Cash flow from operating activities

11

51,913(millions of yen)

104

(2)

616

109

828

32

861

104
539

(2)
(2)

616
1,191

109
317

828
2,047

32
201

10,36686,371

Repayments of long-term borrowings
Acquisition of treasury stock
Dividends paid
Dividends paid to minority interests
Other
Cash flow from financing activities
Foreign exchange translation adjustments on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of current period
Increase in cash and cash equivalents associated with new consolidation
Cash and cash equivalents at end of current period

ORGANO Group Report 2023

66

Corporate Data

Company Information

Network (Japan/Overseas)

Company Profile (as of March 31, 2023)

Major Offices

Company name ORGANO CORPORATION

Number of employees

2,506 consolidated (1,085 single entity)

Foundation

May 1, 1946

Major businesses

Capital8,225,499,312 yen

Representative

 asayuki Yamada, Representative
M
Director and President

 s a comprehensive water treatment engineeringA
company, the Company is mainly engaged in the
manufacture, sale, and maintenance of various typesof industrial process water and wastewater treatment
systems using ion exchange resin, separation
membranes, activated charcoal, etc., the provision ofwater treatment outsourcing services, and the sale ofvarious chemicals and food processing materials.

Shares (as of March 31, 2023)
Total number of authorized shares:
Total number of issued shares:

Number of shareholders:
Securities companies
1.6%

Major Shareholders (top ten)

101,568,000 shares
46,359,700 shares(including 337,755
treasury shares)
6,913
Treasury shares
0.7%

Individuals
11.6%

Compositionof shareholders
Financial
institutions
17.2%

Domestic
corporations
46.4%

Foreigners
22.5%

Number ofshares held
Holding ratio(Thousands of shares)(%)

Name of shareholder

Tosoh Corporation

20,37944.28

The Master Trust Bank of Japan, Ltd. (Trust account)

4,190

9.11

Custody Bank of Japan, Ltd. (Trust account)

2,317

5.03

DZ PRIVATBANK S.A. RE INVESTMENTFONDS

871

1.89

KBC BANK NV - UCITS CLIENTS NON TREATY

870

1.89

STATE STREET BANK AND TRUST COMPANY 505223

506

1.10

Mizuho Bank, Ltd.

464

1.01

VICTORY TRIVALENT INTERNATIONAL SMALL-CAP FUND

395

0.86

BNYMSANV RE BNYMSANVDUBRE LEGAL (AND)GENERAL UCITS ETF PLC

393

0.85

STATE STREET BANK AND TRUST COMPANY 505253

379

0.82

Notes: 1. The treasury shares (337,755 shares) are excluded in the calculation of theholding ratio shown above.
2. 133,040 shares of the Company held by Custody Bank of Japan, Ltd. (Trustaccount) (shares in the Officer Share Delivery Trust) are not included intreasury shares.

Head Office
1-2-8, Shinsuna, Koto-ku, Tokyo, 136-8631
R&D Center	4-4-1, Nishi-Onuma, Minami-ku, Sagamihara, Kanagawa, 252-0332
Tsukuba Factory	2-3, Midorigahara (Tsukuba TechnoPark Toyosato), Tsukuba City, Ibaraki, 300-2646
Iwaki Factory	1-66, Yoshima Kogyodanchi, Iwaki City, Fukushima, 970-1144
Hokkaido Branch	5-8-37, Kita 7 Jou Higashi (Organo Hokkaido Building), Higashi-ku, Sapporo City,
Hokkaido, 060-0907
Tohoku Branch	1-11-1, Honcho (HF Sendai Honcho Building), Aoba-ku, Sendai City, Miyagi, 980-0014
Kanto Branch	1-2-8, Shinsuna, Koto-ku, Tokyo, 136-8631
Chubu Branch	3-7-3, Uchiyama (NTP Plaza Chikusa-Uchiyama), Chikusa-ku, Nagoya City, Aichi,
464-0075
Kansai Branch	1-6, Enoki Town (Kansai Organo Building), Suita City, Osaka, 564-0053
Chugoku Branch	2-14, Inari Town (Wako-Inarimachi Building), Minami-ku, Hiroshima City, Hiroshima,732-0827
Kyushu Branch	1-4-2, Shirokane (Organo Kyushu Building), Chuo-ku, Fukuoka City, Fukuoka,
810-0012

R&D Center

Domestic Group Companies
ORGANO PLANT SERVICECORPORATIONCORPORATIONORGANO ECO TECHCORPORATIONJPX-Nikkei Index 400

FTSE Blossom Japan Sector
Relative
JPX-Nikkei Mid and Small Cap Index

S&P/JPX Carbon
Efficient Index

CDP

For more information, please refer to our website below:

https://www.organo.co.jp/english/

2100-43, Kamiyoshiba, Satte City, Saitama, 340-0121
1-2-8, Shinsuna, Koto-ku, Tokyo, 136-0075
1-2-8, Shinsuna, Koto-ku, Tokyo, 136-0075

HOSTEC

2-12-28, Osachigosho, Okaya City, Nagano, 394-0082

Tohoku Denki Tekko Co., Ltd.

1-4-57, Ohama, Sakata City, Yamagata, 998-0064

Overseas Group Companies
Organo (Asia) Sdn. Bhd.
Treatment Co., Ltd.
Organo Technology Co., Ltd.
Organo (Thailand) Co., Ltd.
PT Lautan Organo Water
Organo (Vietnam) Co., Ltd.
Organo USA, Inc.

67

1-2-8, Shinsuna, Koto-ku, Tokyo, 136-0075

ORGANO ACTY CORPORATION

Organo (Suzhou) Water

Our website

Tsukuba Factory

Head Office

ORGANO FOOD TECH

External evaluation—Incorporated into indexes

Iwaki FactoryNo. 49, Jalan Bagan Terap 26/11, Seksyen 26, 40400 Shah Alam, Selangor Darul Ehsan, Malaysia
No. 28 Sheng gang Rd. Suzhou Industrial Park, Suzhou 215126, China
10th Floor, No. 158, Sec. 2, Gongdao 5th Rd., Hsinchu City 300, Taiwan R.O.C.
89/1 Kasemsap Building, 6th Floor, Viphavadi Rangsit Rd., Chom Phon, Chatuchak, Bangkok
10900, Thailand
Graha Indramas 5th Floor, Jl. AIP II K.S. Tubun Raya, No.77, Jakarta 11410, Indonesia
Thuy Loi 4 Office Building, 3rd Floor, 102 Nguyen Xi Street, Ward 26, Binh Thanh District, Ho Chi
Minh City, Vietnam
23040 N 11th Avenue, Suite 107 Phoenix, AZ 85027, United States

ORGANO Group Report 2023

68