ARE Holdings, Inc.
Financial Results for FY2023

April 25, 2024
These forecast performance figures are based on information currently available to the company’s management and certain assumptions judged rationally.
Accordingly, there might be cases in which actual results materially differ from forecasts of this report.

2

Summary of FY2023 Financial Results

Sales Revenue
Operating Profit
Impact of Palladiumand Rhodium
Other factors
CurrentStatus

Share
Exchange

Accounting¥322.3 bn (YoY +¥48.0 bn）

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

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

Difference since February
Earnings Forecast

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

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3Business Overview of Q4 FY2023 (YoY)
Precious Metals Business (Asahi Pretec Corp., ASAHI METALFINE, Inc., Asahi Refining)
In Japan, precious metal recycling in the jewelry sector was strong on the back of the elevated gold price, whilethat in the catalyst sector struggled due to weak yen. In North America, financial transactions such as tradingand advance trading were strong, while product processing and sales shrank.

Business sector

Dentistry
Jewelry
Catalyst

Electronic

Refining Business inNorth America

Business environment

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

Environmental Preservation Business (Japan Waste Corporation)

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

Items

Business environment

Liquid waste

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

Waste reagents

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

Medical waste
Waste plastics
Other

Overall handling volume increased, while the previous year’s spike in demand related to COVID-19
levelled off.
Handling volume decreased due to demand increase of cement related alternative fuel continuing fromQ2.
Overall handling volume of sludge and wood waste fell due to the business conversion of the Yokohama
Plant.

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4Consolidated Results
Unit：billion yen

FY2022

FY2023Results

FY2024
YoY
ChangeResults

Revised
Forcasst

YoY
ChangeRevenue

274.2

322.3

48.0

370.0

47.7

Operating profit

16.3

12.4

(3.9)

18.0

5.6

Ratio

5.9%

3.8%

(2.1%)

4.9%

1.0%

Profit before tax

12.6

12.4(0.2)

17.6

5.2

Profit※1

10.9

24.5

13.6

13.1(11.4)

Capex

4.9

8.5

3.5

12.9

4.4

Depreciation

3.3

3.6

0.3

3.1

(0.5)

※1 Profit attributable to owners of parent

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5

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

North American refining business

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

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

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

PreciousMetals

FY2022
Results*

FY2023Results

FY2024

YoY Change

Forecast

YoY Change

Revenue

274.2

322.2

48.0

370.0

47.8

Operating Profit

17.2

12.7(4.5)

16.0

3.3

Ratio

6.3%

3.9%

(2.3%)

4.3%

0.4%*The actual achievement in FY2022 was processed retroactively due to the changes in Segment Accounting Standard which became effective
since FY 2023

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6Impact of Gold Collection•Gold share in revenue is increasing on YoY because both collection amount and selling priceincreased.

Breakdown of revenues*
Sales of Au

Breakdown of Au collected
Jewelry sector

Unit: : billion yen

Other sectors

Sales of Others

323.3
233.6

173.9

*FY2021 and FY2022 reflected exclusion of Japan Waste Corporation.
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Unit：kg7••

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

Business
sector・ Jewelry・ Electronic
・ DentistryBusiness
sectorPlanachievementrate
121.0%

・Jewelry・ Catalyst

PdRh

Business
sectorBusiness
sector・ Dentistry
・ Catalyst
・Jewelry

Unit：kgPt

Planachievement
rate
99.3%

・ Catalyst
Planachievement
rate
85.0%

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Planachievement
rate
72.0%

8Rhodium Trend•••

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

Hedge ratio
60%

FY2023

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

2024/3/29
4,500

30%
20%
10%
0%

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

9••

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

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

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10 Environmental Preservation Business
Environmental Preservation Business

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

Discontinued
operationFY2022

FY2023Results①

Results②Revenue

18.7

36.6

Profit before
tax

3.4

23.6

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Share exchange
profit
③

20.4

20.4

Peformance ofJapan Waste
②-③

YoY
②-③-①

16.3

(2.5)

3.3

(0.1)

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

J-STAR No.5-A, LP

ARE Holdings
Stock ownership
32％

Waste System JapanDXE

Stock ownership
100％
SANWA Group
Co., Ltd.

SINCEREHOLDINGS
CO.,LTD.

Renatus Co., Ltd

Harita Metal
Co., Ltd.

SNK HOLDINGS
CO., LTD.

Japan Waste

Ownership structure within the ARE Group is planned
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12 Financial Position
Mar 31,
2023

Current Assets
Trade receivables

Mar 31,2024

Unit：billion yen
Change

238.4

253.8

15.4

154.0

155.3

1.2

Remarks

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

Inventories

40.9

33.9

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

Others

43.5

64.6

21.2

Non-current assets

49.1

64.2

15.2

Total Assets

287.4

318.0

30.5

Liabilities

180.5

191.5

11.0

Bonds and loans

144.4

141.2

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

Others

36.1

50.4

14.2

Capitals

107.0

126.5

19.5

Total equity and liabilities

287.4

318.0

30.5

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13 Cash Flow
Unit：billion yen
FY2023Operating CFRemarks

12.6

Changes in inventories

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

Changes in trade andother receivables

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

Changes in trade andother payables

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

OthersInvestment CF
Financing CF

6.1(28.7) Payments for loans receivable 19.6 billion yen
7.1

Changes in loans andbonds

14.3

Dividends(6.9)

Others(0.3)

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

Changes in cash deposits(11.1)

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14 Sound Financial BaseFinancial Position

Equity Ratio
Unit：billion yen
Excluding NorthMar 31,2024

253.8

120.6

64.264.2

Total Assets

318.0

184.8

Liabilities

191.5

58.3

Capitals

126.5

126.5

318.0

184.8

Current Assets
Non-currentassets

Total equity andliabilities•••America businessMar 31,2024

39.8%
loan for “AdvanceTrading

Excluding North
America business

68.5%

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

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15 Shareholder Return Policy••

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

9090904545454045454540

FY2020

FY2021

FY2022

FY2023(Forecast)

FY2024(Plan)

8565

Unit：Yen

4580403530
FY2019Earnings pershare(yen)125.12326.9

238.11141.19319.5
319.54172.53

Dividend
payout rate(%)

52.0

26.0

37.8

63.7

28.2

46.4

※1:2 stock split was implemented on April 1, 2021, and dividends per share and earnings per share until FY2021/3 are calculated based thepost-split basis
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16 Trend in Precious Metals Prices (Gold, Palladium)（¥/g）

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17Trend in Precious Metals Prices (Platinum), Mid-term Average
PricePreciousMetal Prices(per gram)

Q4

Q4

FY2022

Unit：YenFY2023

Average pricefor the period

Average pricefor the period

Gold

8,058

9,920

1,862

Palladium

6,833

4,717

(2,116)

Platinum

4,307

4,415

108

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