Report of Operations
Consolidated results of operations
Progress and outcome of operations
We are pleased to report results of the operations for the 52 nd term (the period from April 1 st in
2021 to March 31 st in 2022)
The global economies showed a gradual recovery during the period, thanks to economic activities
resumed in combination with epidemic prevention efforts of COVID-19 infection.
If we look at China, the economies improved with a GDP growth rate of 8% in 2021 based on recoveriesof high-value goods consumption and housing demand through Internet and contribution of exports inaccordance with world economies’ recovery. Thanks to relaxation of activity restriction measures in eachcountry and reaction to the negative growth in the previous year, India and Korea improved its GDP
growth rate to 9% and 4% respectively. As for ASEAN, all major countries made a growth based on
recovery of consumer spendings although magnitude and timing were different by country. However,
it is necessary to pay close attention to downside risks such as activity restrictions due to the Zero
Corona policy in China, shortage of semiconductor supply, skyrocketing raw material prices, and the issue
between Ukraine and Russia, and the future remains uncertain.
In Japan economies, recovery of economic activities was seen after cease of the series of emergency
statement in conjunction with high vaccination rate, but the current activity volume is far from the level
before the pandemic, as a matter-of-fact semi-emergency COVID-19 measures were taken. In addition,
the progress of JPY depreciation due to continuation of Japan Bank's monetary easing policy contrary
to shift to exit strategy of monetary easing in Europe and the United States is giving a massive
impact on import purchasing costs, on the top of shortage of parts supply and stagnation of logistics,
which has brought concern that profit structure of many companies represented by manufacturingindustry is getting worse.
Under such an environment, making the most use of the footprint expanded in the Asian region,
AR Brown Group has been trying to build a business structure that can withstand against severe external
environment changes by doing cross entity collaboration such as co-market development and crosssourcing-selling between entities. In addition, based on the management vision of "Contributing tocreation of a prosperous society," not only investment into businesses but also investments intoSDGs and ESG were made with the examples of purchase of a sustainability bond and donation for
an environmental improvement project led by a city utilizing "Regional Revitalization Support Taxation
System".
Consolidated Sales in the term were JPY12,876 million, an increase of 8.3% from the previous term,
driven by Electronics Materials business growth. Consolidated Operating Income increased by 20.5% toJPY911 million by investing in human resources to prepare for business expansion and strengthening
compliance to fulfill social responsibilities, even though sales activities were still restricted. As a result

of recording foreign exchange gains and reducing inventories that have low turnover rates, Consolidated
Ordinary Income became JPY956 million with an increase of 21.6%.
As for AR Brown Co., Ltd., Electronics Materials business grew significantly, which lifted sales toJPY11,067 million by 7.4%. Although sales activities were limited due to the pandemic similarly tothe previous term, as a result of continuous investment into DX (Digital Transformation), Operating
Income was JPY527 million and Ordinary Income became JPY677 million, which were growths of
24.6% and 21.9% respectively.
In the 53rd term, we will strive to increase resilience and to create further values as a company that istrusted by the international community and can fulfill its social responsibilities even if the world
business conditions are unpredictable.

Overview of each of the businesses in this period– Consolidated basis (LY% of Sales/Gross Profit) –Electronics Materials Business
The business grew by 24 % in sales and 20 % in profit, respectively. As for Automotive Electronics
segment, although shortage of various parts represented by semiconductors gave a negative impact,
growth of x-EV related applications brought the segment sales to a level to exceed FY2019 result. As
to Home Appliance & Communication segment, although demand from one of the biggest customers
in China did not recover, the increase in the number of customers in Japan and China helped thesegment sales grow significantly. Regarding Electronics Chemical segment represented by highthermally conductive fillers, sales for key customers started where the segment has reached the pointthat in future the segment can be a core segment although it would take some time. Equipment businessassociated with the materials dealt in slightly grew. From the geographical standpoint, Korea only
grew by a few points because of the significant negative impact of semiconductor shortage, while theother countries grew at double digits. New Coating material made at a Thailand manufacturing partner
started to be sampled and effort was paid to widen type of such products there. As for conventional
Coating materials, together with the other manufacturing partner there, a project to produce moreproduct families started there aiming to make supply chain more diverse. The lockdown in Shanghai
city that occurred at the end of the fiscal year gave a massive impact on supply for China-based
customers where every possible countermeasure was conducted and continues.

Performance Chemical Business
Sales increased by 6% while profit decreased by 1%. 1) Disinfectant sales, that had been a contributor
in last fiscal year in China, had no record, 2) delay in deliveries, allocations and price adjustments fromsuppliers required much time and 3) hard economic condition due to the sharp JPY depreciation from the 4thquarter made the quarter a tough period, however through the year, 1) Tire・Adhesive･Paint & Ink segments
kept a similar level to last fiscal year and 2) Biocide･Lubricant･Chemical･Chemical Intermediate･Aerospace
Chemical segments made dynamic recoveries. As a result, the business in the above numbers finallyarrived. From the viewpoint of geographies, due to no sales with disinfectant, China declined, while all theother countries grew. As for Personal Care segment, many new products started to be used by several
customers, which lifted the segment sales following last fiscal year. Synergistic sourcing and selling
amongst the entities in Asia in an organic manner is the fundamental strategy for the business. To contribute
more diversification in supply chains, in addition to Japan, China, Thailand, India and Singapore, a decision
was made to deploy a dedicated resource in Korea and more resources in India.

Fine Chemical Business
Sales and profit declined by 19% and 12% respectively. This was due to temporary demand decreaseof a specific Intermediate used for a new medicine although this had been already considered before
this fiscal year commenced. This made New Medicine segment negatively grew, while Generic
Medicine segment grew significantly. As for New Medicine segment, a newly sourced Intermediate
was sold for process validation purposes where the Intermediate business has reached the point thatits commercial use at the customer is expected to start from FY2023. As to Generic Medicine
segment, the highlights are following: 1) API (Active Pharmaceutical Ingredient) businesses sourced
from several Indian suppliers contributed, 2) an API to be used for a cancer medicine went through
GMP compliance inspection successfully, which made it ready for the API to be used at commercial
scale, and 3) an Intermediate and API business associated with a German supplier moved to the phasethat commercialization would start from FY2022. Regarding Biomedicine segment, ADC(Antibody-Drug Conjugate) contract manufacturing project proceeded nicely where every kind ofpreparation started to aim supplying from FY2023. From geographical expansion standpoint, sales in
Taiwan took place firstly following Japan, Korea, Vietnam, and Indonesia.

Life Science Business
The business showed 4% of growth in sales and 5% of growth in profit. Bioresearch segment increased
sales of research enzyme reagents and consumables based on increase in demand for genomic medicine(RNA medicine) research. In addition, against global supply constrain of plastic consumables due toCOVID-19 pandemic, AR Brown’s global network helped the supply issue minimized, which led to gaining
the trust from the market. In Sterilization segment, the number of new customers for pharmaceutical field
increased, however, in medical device field, orders were postponed to next fiscal year due to customer
manufacturing adjustments that made sales sluggish. Regarding Nano Membrane business, a certain numberof projects have restarted, and sales have grown more than planned. Deal of sgRNA started newly, thatwould lead to one-stop Genome Editing business, and sales result met the plan completely. Preparing a newcGMP compliant reagent product, a decision was made to expand the business to industrial field.

Hu-Vet Business
The business showed 12% of growth in sales and 5% of growth in profit. Affected by customer-sideconfusion towards commence of insurance coverage from April 2022, PGT equipment(Preimplantation Genetic Testing equipment for IVF; In Vitro Fertilization) business struggled until
the end of 3 rd quarter, but a considerable number of orders were placed in the last quarter and in addition,
sales from relevant consumables helped the segment sales exceed to the last fiscal year. As for Livestock
milk inspection kit business, demand recovered in the first half and sales grew, while demand started
to decline from the end of the 3 rd quarter due to impact from surplus raw milk issue. As a result,the segment sales increased in even to last fiscal year. As to Food Safety inspection kit business, Japan
gained a momentum, while no order for organophosphate and carbamate pesticide residues’ detection
kit was placed from Asian area due to COVID-19. In Water quality monitoring machine business,orders related to marine aquaculture projects increased, while land-based aquaculture businessdevelopment struggled because restriction on sales activities prevented from executing demonstrations andmarket surveys. Demand for special connectors used in medical devices continues to increase wheresupply structure was strengthened to make sales expansion ready.

Test & Measurement Business
The business showed negative growths of 7% and 7% in sales and profit respectively. If delivery of a few
equipment to Japan were on time, and if March sales in China were able to be recorded under Shanghai
city lockdown situation, the business sales would have exceeded last fiscal year. As for Automotive segment,a certain number of ADAS (Advanced Driver Assistance System) related testing systems and pressure
mapping sensors for LiB (Lithium Ion Battery) were supplied to automotive customers and automotive
parts customers in Japan. In China demand for ADAS related testing systems kept high. To meet market
needs, rental business for ADAS related testing systems started and generated some level of sales.
Strain gauge business in China, that had started in last fiscal year, expanded its customer base to not only
Japanese customers but also Chinese customers, that helped the product sales grew in this fiscal year too.
Shock testing equipment developed targeting at Electronics and Aviation & Aerospace segments started
to be sold for multiple customers in Japan in the last quarter. Regarding Medical Equipment
segment, Automated Medicine Packaging Machine had no sales in this fiscal year because large
hospitals in China were obliged to get pandemic countermeasures budgeted as priority. Decision
was made to deal in Fiber-Optic Sensing system. Marketing activities started in Japan and China.