Air Water : Consolidated Financial Results (Under IFRS) For the Fisical Year Ended March 31, 2023

Date: May 10, 2023

FY 2022 Consolidated Financial Results (Under IFRS)

AIR WATER INC.

Head Office: 12-8, Minami semba 2-chome,

Chuo-ku, Osaka, Japan

Qualitative Information on Financial Results for the Period under Review

(1) Explanation of Operating Results

1) Operating results for the current period

During the consolidated fiscal year, there was a trend toward a recovery in personal consumption in the Japanese economy due to the normalization of social and economic activity, which has been impacted by the COVID-19 pandemic. However, the Japanese economy was seriously impacted by soaring energy prices, the disruption of global supply chains and rising prices caused by the weakening of the yen. In the second half of the year, the situation continued to be unstable and affected by concerns regarding a global economic slowdown due to inflation in other countries, a rapid decline in demand for semiconductors and other factors.

In these circumstances, the Company and its affiliates (the "Group") established the "terrAWell 30" long-term vision towards 2030 to enable the Company to contribute to solutions to social issues through its business activities in line with its two foundations for growth, the "global environment" and "wellness (healthy life)", with an aim to achieve sustainable growth and an increase in corporate value. The Company has also established the "terrAWell 30 1st Stage medium-term management plan" for the three years from FY2022 to FY2024. In addition, as a step toward achieving its goals, the Group aims to maximize the synergy created leveraging the Group's strengths, specifically its diverse businesses, human resources and technologies, so the Group introduced a new unit system to shift to a group management system which has integrated the Company's head office organization and the Group companies.

Under the new management strategy and organizational structure, the Group aspires to achieve revenue of ¥1 trillion, a goal of the entire Group since 2010, while establishing a foundation for electronics-related businesses which we position as a growth area, enhancing the revenue structure of domestic businesses through the creation of Group synergy and the optimal allocation of management resources, and promoting the creation of new businesses for the next stage of growth leveraging ideas that transcend the conventional boundaries between businesses and proactive technology development.

In overseas business, the Group promoted the establishment of production and logistics infrastructure in India where a series of integrated blast furnace steel mills have been constructed in succession, while it entered the industrial gas sales business through M&A activities in North America. The electronics-related businesses took on the task of reinforcing their relationships with

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customers leveraging their ability to develop materials that can meet advanced needs and the Group's comprehensive strengths under the new business operation system that combines the industrial gas and chemical businesses, in addition to capital investments in gas supply plants in response to the strengthening of the production capabilities of domestic semiconductor device manufacturers.

In existing domestic businesses, we worked to ensure profitability by reducing costs through the streamlining of production and logistics and the review of procurement to address soaring energy prices and the rising cost of raw materials and distribution, and by correcting sales prices to shift the increased costs that cannot be covered by our own efforts. We also proceeded with the transformation to a business structure that can flexibly respond to changes in the environment by integrating and reorganizing the Group companies in each business segment and starting capital and business alliances with other companies in the agricultural segment.

Regarding new businesses that contribute to solving social issues, in the global environment segment, we focused on the realization of decarbonization solutions in society by developing compact CO2 recovery equipment and constructing a energy supply model featuring local production for local consumption including the production of liquified biomethane derived from livestock manure. In the wellness segment, the construction of the Air Water in KENTO open innovation promotion facility progressed steadily with the goals of strengthening cooperation with universities and local governments and creating new businesses by combining the Group's technologies and business models.

Regarding its sustainability initiatives, the Group has reviewed its targets for the reduction of CO2 emissions and promoted the reduction of energy consumption and the improvement of production processes in accordance with the newly set goal of reducing GHG emissions 30% by FY2030 (compared with FY2020). Also, the Group bolstered its diversity and inclusion efforts including the improvement of the environment enabling the Group's personnel in charge of diverse businesses can work energetically and actively, and strengthened its human capital who play central roles in value creation by reforming its personnel system to encourage autonomous career development.

Performance during the consolidated fiscal year grew robustly through the steady capturing of demand through the reinforcement of supply infrastructure through proactive capital investments in electronics-related businesses and industrial gas supply businesses in India. After increasing the Group's synergy in its adaptation to change in the business environment following the pandemic, the Health & Safety segment exhibited strong performance on the whole, driving the results of the Company as a whole.

Consequently, all operating segments achieved revenue growth due to the revision of prices and rising sales prices linked to market trends and also due to our pursuit of Group synergy leveraging the Group's unit system.

In terms of profits, the feed-in tariff ("FIT") system for renewable energy which is used in the electric power business prevented the Company from transferring an increase in the cost of power

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generation fuels and marine transportation to the selling price. This significantly affected its business result throughout the fiscal year.

As a result, for the consolidated fiscal year, the Group's revenue was ¥1,004,914 million (113.1% that of the previous year), operating profit was ¥62,181 million (95.4%), and profit attributable to owners of parent was ¥40,137 million (92.9%).

2) Consolidated results by segment for this period

(Note) The adjustment to operating profit is due to costs incurred at the company's headquarters division which was not allocated to any reporting segment.

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