Air Water : Integrated Report 2021 (Year Ended March 31, 2021)

Contents

About the Air Water Group

1. Management Philosophy

1. History

1. Business Overview

1. Management Resources

Air Water's Value Creation Story

09 Value Creation Model

1. Pillars to Success (Materialities)

1. CEO Message

Growth Strategy for Value Creation

1. COO Message

1. Regional Strategy

1. Global Strategy

1. Technology Strategy

The Air Water Group's Businesses

1. Industrial Gas Business
2. Chemical Business
3. Medical Business
4. Energy Business
5. Agriculture and Food Products Business
6. Logistics Business
7. Seawater Business
8. Aerosol Business
9. Other Businesses
10. Business Concept for 2030

ESG Report

Environment

1. Air Water Group 2050 Environmental Vision
2. Environmental Management System and Basic Environmental Policy
3. Material Balance / Decarbonized Society

41 Resource Recycling Society /

A Society in Which Humanity and Nature Coexist

Social

42 Workforce Diversity

1. Health Management / Human Rights
2. Creating a Rewarding Workplace
3. Offering Safe and Secure Products and Services Fair Business Practices across the Supply Chain
4. Promoting Social Contribution Activities
5. Workstyle Innovation Project

Governance

1. Basic Approach / System Summary
2. Board of Directors and Business Execution System / Board of Director Skillset
3. Officers' Remuneration / Gauging the Board's Efficacy
4. Enforcing Compliance / Reinforcing Risk Management
5. Directors and Auditors

Basic Information

1. Financial Data (10-Year)

1. Financial Information

1. Major Group Companies
2. Corporate Profile / Stock Information

Editorial Policy

In the Air Water Report 2021, to clearly convey the continued growth of the Air Water Group conglomerate, as well as its efforts in a diverse range of fields, the content centers on the social value the Group creates through its business.

In addition to formulating our Sustainability Vision for the year 2050, we have positioned the year 2030 as a milestone to coincide with the final year of the Sustainable Development Goals. The specific links between our ESG-based materialities (key challenges) and our SDG contributions can be seen in our Value Creation Model.

In putting together this report, we have referred to the International Integrated Reporting Framework of the International Integrated Reporting Council (IIRC).*

*The IIRC merged with the Sustainability Accounting Standards Board (SASB) in June 2021 to establish the Value Reporting Foundation (VRF).

*Throughout this report, "ton," or its abbreviation "t," refers to a metric ton, i.e. 1,000 kilograms.

Forward-looking Statements (Business Risk Factors, etc.)

The forward-looking statements in this Report regarding estimates of business performance and predictions of future developments reflect Air Water's judgments based on currently available information but do involve potential risks and uncertainties. Actual business performance could be significantly different from the projections made herein due to changes in various factors.

1993

Before Air Water

1929 Hokkaido Sanso Co., Ltd. is established

(Company renamed Hoxan Corporation in 1966)

Aiming to save lives and help develop local industries

In the years before the war, a certain individual passed away due to poor transportation conditions and the inability to receive sufficient oxygen inhalation. The deceased's elder brother, the then head of the Chamber of Commerce

and Industry of Sapporo City, poured his efforts into founding Hokkaido Sanso Co., Ltd.

1933 Daido Sanso Co., Ltd. is established

Founded with a desire for collaboration and a united front

At the time, the military-support industry was given priority access to oxygen and acetylene, and so both were difficult for small businesses to obtain. Daido Sanso was established when oxygen-using businesses decided to take matters

into their own hands, and band together and produce it themselves.

1962 Kyodo Oxygen Co., Ltd. is established

Supporting Japan's rapid economic growth with oxygen

Kyodo Oxygen was established in the midst of the Japanese economic miracle. Sumitomo Metal Industries established Kyodo Oxygen inside its Wakayama Ironworks to meet rapidly increasing steel demand, and the

supply of oxygen for converter steelmaking began.

03 | AIR WATER REPORT 2021

Sales of LPG begin

To improve the quality of lifestyles that were centered on firewood- and coal-based cooking, the company began selling LPG for residential use in Hokkaido.

1983

V1 high-purity nitrogen gas generator is developed

At the time, demand for high-purity nitrogen- essential for semiconductor production-was rapidly rising. The company thus developed a unique production plant that could cool air using ultra-low temperature nitrogen. The mold-breaking technology was welcomed by the industry as an optimal gas supply system.

2005

Active Merger-Based Expansion Strategy

1988

Industrial-use magnesia business is launched through investment in Tateho Chemical Industries

Air Water's investment in Tateho Chemical Industries-which produces various types of magnesia using bittern and mineral-basedmagnesia-was not only its first M&A; it also marked the launch of its seawater business.

1995

Unified and joint management begins

In addition to unified management, whereby the company established sales companies in each region to offer tailored sales and services and strengthen its downstream operations, the company also promoted joint management by emphasizing tie-ups with other companies. This unified management was the start of the regional business company system in the Air Water Group today.

Reinforcing the All-Weather

Management System

Upon inheriting the Hayakita Factory (in Abira Town, Hokkaido) from Snow Brand Foods, the company entered the ham and deli foods business and launched Saveur SS. This drove the rapid growth of the company's agriculture and food products business.

Having welcomed Kawasaki Kasei Chemicals, a comprehensive quinone manufacturer, into the Group, Air Water sought to utilize the new company's wide-ranging lineup of products and advanced, proprietary technologies to achieve synergy in the functional chemicals business.

In 2016, the Air Water Group acquired Kawamoto Corporation and launched the sanitary products business. The Group's lifestyle medical segment began in earnest with the expansion of the dental care business. Thus began the Group's new, two-pronged medical business, comprising the advanced medical and lifestyle medical segments.

2004

No. 1 VSU unit (high-efficiency, compact liquefied oxygen/nitrogen production plant) begins operations

In establishing compact VSUs, which are regional liquefied gas plants unique to Air Water, the company achieved stable energy supplies, reduced energy use, lower CO2 emissions, and improved business continuity. Unlike conventional methods, in which industrial gas mass-produced at large-scale plants would be transported long distances to areas of demand, this was a revolutionary gas supply model.

2015

Power generation business using woody biomass begins

Air Water began its power generation business to secure its own power and ensure business continuity. Self-sufficiency also ensured a stable supply of industrial gas, which uses a huge amount of power when produced. Through Feed-in Tariffs, the power generation business will be a stable source of revenue for 20 years.

2019

Industrial gas business begins in India to enhance business foundation

Air Water entered the Indian market in 2013 with capital participation in a local Indian industrial gas company. Later, in 2019, it acquired industrial gas businesses in the east and south of India, establishing a firm business foundation in the country. Currently, the business in India caters to growing industrial gas demand from, among others, steel and automotive industries.

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