Air Water : Who we are

Our Purpose

Meeting society's needs with nature's blessings.

Since the original company was founded in 1929, the Air Water Group has evolved into a stable supplier of essentials that support both people's lives and industry by drawing upon the resources of the planet, as represented by our name.

With the same unlimited potential as air and water, our aim as a corporate entity is to become even more indispensable going forward as we work to enrich the lives of people around the world.

We will continue to meet society's needs into the future, aligning with people and communities to provide products, services, and solutions that are integral to living and the industries that support society.

Management Philosophy

Backed by an entrepreneurial spirit, we dedicate ourselves and our resources to the creation and development of businesses linking air, water and the earth.

The origins of the Air Water Group's business can be found in its name, which consists of two words: "air" and "water."

We make use of the resources of our precious earth to create businesses and contribute to society and everyday life.

Amid a business environment that continues to change at a dizzying pace, we will continue to leverage the Group's collective capacities to tackle problems faced by our customers and society, and will rise to the challenge of creating new value.

Table of Contents

Editorial Policy

We have established "terrAWell30," our vision for the year 2030. As such, we intend to maximize our corporate value that combines economic and social value by achieving the "creation of new corporate value through solving social issues." We will achieve this through synergies generated by a creative combination of "diverse businesses, human resources, and technologies" and in line with our two growth axes: "Global Environment" and "Wellness." We have therefore edited the AIR WATER Integrated Report 2022 with a focus on this vision. Specifically, we have sought to provide easy-to-understand expla-nations so that readers can gain a deeper understanding of "terrAWell30 1st stage," our Medium-Term Management Plan with a three-year implementation period from FY2022 to FY2024. In putting together this report, we have referred to the International Integrated Reporting Framework of the International Integrated Reporting Council (IIRC)*.

*The Value Reporting Foundation (VRF), which was established in June 2021 through a merger between the

International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB), was consolidated in August 2022 into the IFRS Foundation, the organization tasked with developing international disclosure standards for ESG information.

Establishment of three predecessors

Air Water Inc. was established in 2000 through the consolidation of three companies-Hoxan Corporation, Daido Sanso Co., Ltd., and Kyodo Oxygen Co., Ltd.-each with different histories and cultures, but possessing a fresh purpose and sense of mission to contribute to innovation in industry and society through "air and water."

1929 Hokkaido Sanso Co., Ltd. is established

(Renamed Hoxan Corporation in 1966)

Devoted to saving lives and developing local industries

In the years before the war, a certain individual passed away due to the inability to receive sufficient oxygen inhalation. The deceased's elder brother, the head of the Chamber of Commerce and Industry of Sapporo City then, focused all of his energy on founding Hokkaido Sanso. Later, the company started developing LPG and frozen food products in an effort to support the livelihoods and industries of Hokkaido.

1933 Daido Sanso Co., Ltd. is established

Founded with a desire for collaboration and a united front

1962 Kyodo Oxygen Co., Ltd. is established

Supporting Japan's rapid economic growth with oxygen

Kyodo Oxygen was established during Japan's

period of high economic growth when the

country's heavy manufacturing industries were

achieving remarkable growth. Sumitomo Metal

Industries (now Nippon Steel) established

Kyodo Oxygen at its Wakayama Ironworks to

meet rapidly increasing demand for iron and

steel, and the supply of oxygen for converter

steelmaking thus began.

Transition to tenacious industrial gas manufacturer following two mergers

1993 Daido Hoxan Inc. is established through a merger between Hoxan Corporation and Daido Sanso

• • The business area for industrial and medical gas was expanded to all of Japan

• • Sales companies in each region were established and a local community-based business structure was developed

• • Hoxan had diversified its operations in Hokkaido, where the buildup of industries was limited compared to Japan's main island (Honshu); this mixed business management of Hoxan Corporation was the starting point of diversification, beginning with industrial gas

2000 Air Water Inc. is established through a merger with Kyodo Oxygen

Establishing a dominant position as an industrial gas manufacturer, and expanding business domains through M&As

• • Carbon dioxide gas and hydrogen gas business started

• • Large-scale cryogenic air separation plant fabrication technology was acquired through a partnership with Kobe Steel

• • Highly efficient and compact liquefied oxygen/nitrogen co-production plants (VSUs) were deployed nationwide, environmental impacts were minimized through short-distance transportation, and a stable supply system was established based on a decentralized manufacturing network

• • Comprehensive business services for hospitals were established centering on the construction of hospital facilities, contract steril-ization, and SPD operations

  • • Along with the addition of a large-scale on-site gas supply business for blast furnaces, the company realized the vertical integration of upstream and downstream processes in its industrial gas business, thereby putting in place a business foundation to support a whole host of industries

  2000

• • After taking over a factory from the former Snow Brand Foods, an agriculture and food products business platform was set up to launch a ham and deli foods business in Hokkaido, as well as a greenhouse farming business

• • Chemical, salt production (Nihonkaisui Co., Ltd.), and electronics materials businesses were started

• • A corporate vision to achieve net sales of one trillion yen was announced and an M&A strategy was ramped up

• • The lifestyle medical segment was expanded to provide home health-care, dental services, and sanitary materials

  Alongside business services for hospitals, Air Water provides value to support lives and livelihoods even during the COVID-19 pandemic

• • Value chain supporting the food products industry was established by expanding into such fields as agricultural and processed foods, vegetable retail, beverages, and confectionery

• • The functional chemicals business was expanded, centering on elec-tronics materials, with the aim of restructuring the chemical business

• • All-weather business portfolio was established with an optimal balance of industrial and lifestyle-related businesses

• • Businesses centering on industrial gas and engineering were launched in India and North America with a view to future growth

FY2021

Revenue*1

888.7 billion yen

Operating profit*2

65.2 billion yen

Net income attributable to owners of the parent*3

43.2 billion yen

* International Financial Reporting Standards apply from FY2019 onward *1 "Net sales" until FY2018

(Japanese Accounting Standards) *2 "Ordinary income" until FY2018

(Japanese Accounting Standards) *3 "Profit attributable" until FY2018

(Japanese Accounting Standards)

2021

(FY)

17%

LogisticsSeawaterOther

17%

7%

Who we areAir Water Group's Management Resources

"Diverse businesses, human resources, and technologies" coupled with a "community-based business platform," the strengths of the Air Water Group honed over the course of our history

Ever since the founding of the Air Water Group, we have never stopped innovating and evolving to keep up with the ever-changing business environment. At the same time, we have continued to stably provide, in a sustainable manner, invaluable products like industrial and medical gas that have become essential to people's lives and industry. We have also established a community-based business platform and we have leveraged M&As and other means to expand into diverse business domains and secure the necessary human resources and technologies.The management resourceswe have honed over the course of this history are the strengths of the Air Water Group and thesource of our value creation.

In line with the Air Water Group's purpose, "Meeting society's needs with nature's blessings," we integrated the growth vectors of our diverse business domains into the two axes of "Global Environment" and "Wellness" in light of global social issues. By generating synergies through the creative combination of our biggest strengths, namely, our "diverse businesses, human resources, and technologies," we will aim to create new corporate value by solving social issues and realize our Sustainability Vision of "achieving a recycling-oriented society through coexistence with society and the earth."

Management resourcesp7

Establish growth axes and generate synergies by combining management resourcesp23

Creating new corporate value by solving social issues

• • Continuously provide economic and social value by flexibly responding to environmental and social changes

• • Achieve a resource recycling society, leave zero envi-ronmental impact, and revive the global environment through our corporate activities

• • Continue to be chosen by our local communities and customers, and ensure the well-being* of our employees