The Story of Value Creation at Daiseki

Daiseki Group’s Performance by Business

Each company within the Daiseki Group is working to create value in the domains of environmental
protection, resource recycling, and the transition away from fossil fuels. In this section, we categorize
our operations into four segments (wastewater, waste oil, and sludge recycling; soil and plasterboard
recycling; lead recycling; oil tank cleaning) and discuss our performance and initiatives for each segment.

Note: Sugimoto Trading Company Co., Ltd. and Sugimoto Paper Industry Co., Ltd., which Daiseki Eco. Solution conducted an
M&A with in March 2023, will be included from next fiscal year.

Consolidated net sales Millions of yen

Consolidated operating profit■ Wastewater, waste oil, and sludge recycling segment ■ Soil and plasterboard recycling segment■ Lead recycling segment ■ Oil tank cleaning segment■ Wastewater, waste oil, and sludge recycling segment ■ Soil and plasterboard recycling segment■ Lead recycling segment ■ Oil tank cleaning segment

34,98933,75331,551

9,739

9,503
8,283

17,082

14,906FY2021

16,411

3,821 4,143

3,230 3,620

2,878 3,143

FY2022

FY2023

Note: Information for wastewater, waste oil and sludge recycling segment is derived from data of DaisekiCo., Ltd and Hokuriku Daiseki Co., Ltd. and information for soil and plasterboard recycling segment
is derived from data of Daiseki Eco. Solution Co., Ltd., Green Arrows Central Co., Ltd. and Green
Arrows Kyushu Co., Ltd. Information for Lead recycling segment is derived data from Daiseki MCR
Co., Ltd. and information of oil tank cleaning segment is derived data from System Kikou Co., Ltd.

1,206

2,102
283 528706 688

FY2021

FY2022

1,373949 710

FY2023

Positive factors

Negative factors◦High profitability due to superior business model◦High recycling rate
◦Contribution to carbon neutrality◦Network spanning all of Japan◦Wide range of products handled◦Knowledge related to the Waste Management andPublic Cleansing Act, which is difficult to interpret◦High-level emergency response in disastersituations◦Contribution to environmental protection bypurifying wastewater and waste oil◦The circular economy is not yet a core business◦Scope of business is Japan only, and has not
yet expanded overseas◦Smaller business scale and limited businessscope compared to major companies outsideJapanStrength

Internal factors

Opportunity

External factors
21Millions of yen◦Increase in customers who demand carbonneutrality◦Growing necessity of the circular economy dueto high resource prices◦Growing interest of the international community
in biodiversity and the water cycle◦High barriers to entering the waste disposal
industry in Japan due to the Waste
Management and Public Cleansing ActWeakness

Threat◦Shrinkage of the Japan industrial waste market
due to stagnation of the Japanesemanufacturing industry◦Increase in energy costs due to tightening ofcarbon-neutrality regulations◦Barriers to expanding business due to the strict
provisions of the Waste Management andPublic Cleansing Act and differinginterpretations of this Act by each local
government

Introduction of Group Companies
Daiseki Eco. Solution
Hiroya Yamamoto

President and Representative Director

Our soil segment cleans and recycles soil contaminated by civilengineering works. Recycled soil is used as a construction material and a
raw material for cement. In the plasterboard field, we collect plasterboard
from demolition sites, separate its components, and recycle it into recycledplasterboard and raw materials for cardboard and recycled paper.
Going forward, we will reliably handle large-scale construction projects in
the Tokyo metropolitan area, the Chubu region, and the Kinki region, andwork to strengthen upstream sales and consulting business. In May 2023,
we augmented treatment facilities at our used plasterboard works. We arepromoting further expansion of the used plasterboard recycling business.

Daiseki MCR
Tadashi Hongo

President and Representative Director

Daiseki MCR collects used batteries and separates, dissolves and smelts theircomponents to recycle them into lead ingots. The lead ingots are used by batterymanufacturers. Daiseki MCR is focusing on reducing greenhouse gas emissions inresponse to customer demand. In consideration of the large amounts of CO2 thatare emitted in the lead smelting process, in 2014 the company adopted the useof LNG instead of coke, resulting in an approximately 60% reduction of emissions.
This was followed in March 2022 by a switch to carbon-neutral LNG.
Looking ahead, we will develop businesses that can contribute both to thecircular economy and carbon neutrality.

System Kikou

Tsuneyasu Tanaka

President and Representative Director

System Kikou carries out cleaning works and similar operations for oiltanks and tankers’internal storage tanks, collecting the crude oil sludge
accumulated inside the tanks. Our cleaning technologies and systems are
considered industry-leading both in Japan and overseas.
Until now, large oil tanks were the main target of the company’s business,but now, in cooperation with Daiseki, tanks located in manufacturing plants
are also targeted. We would like to go forward further strengthening thesynergies of the Group.

Hokuriku Daiseki
Katsuya Mishima

Representative Director

Hokuriku Daiseki manufactures and sells mold release agents for concrete
products; special machine oils, cutting oils, and industrial lubricants; and rustinhibitors to prevent rusting of metal parts and machinery. We also collectwaste oil and recycle it, processing it into process oils or similar products
depending on its composition and properties. Waste oil recycling has been apart of Daiseki’s efforts since the company’s founding, and we consider it tohave been a precursor to what is now known as the circular economy. We
are committed to further revitalizing our business and to cooperation with therest of the Daiseki Group, founded on a philosophy of effectively utilizing theEarth’s finite resources.

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