Yuasa Trading : Integrated Report 2021（YUASA GROWING REPORT）

"SUMIYA Ukeainashi"

―Service With Good Products and Well-Thought-Out Advertising―

SUMIYA (VI) Shichizaemon (1758-1836),

the sixth owner of the SUMIYA and brilliant salesman,

inscribed "SUMIYA* Ukeainashi" (meaning quality not guaranteed) on his razor that had excellent cutting capabilities.

He distributed this as sample to barber shops in towns along the Tokaido Road.

Users were surprised by the cutting ability and wondered how amazing the guaranteed razors would be if

the SUMIYA's not guaranteed razors were this good. The razors gained a reputation and the name of the SUMIYA spread across Japan.

* Company name of YUASA TRADING during the Edo era

Ideals Passed Down the Generations

Spirt of Service With Good Products

CONTENTS

Ideals to Pass Down the Generations

Realize a sustainable society through "TSUNAGU" value creation

that connects people with people, people with products,

and people with information and technology.

Top Message

2. Progress of Med-term Management Plan "Growing Together 2023"

Realizing a sustainable society through "TSUNAGU" value creation

YUASA VISION 360

We established "YUASA VISION 360" as our 2026 vision for the 360th anniversary of the founding of the Company. This plan established numeric targets of consolidated net sales of ¥600.0 billion, ordinary profit of ¥20.0 billion, ordinary profit to net sales ratio of 3.3%, ROE of at least 11.7%, and shareholder return ratio of at least 33.0% for the fiscal year ending March 31, 2026. It also aims for the group to grow into a "TSUNAGU Service Integrated Shosha Group" with an industry leading profit structure.

In April 2020, we announced the Mid-term Management Plan "Growing Together 2023," which ends in the fiscal year ending March 31, 2023, as the second stage of "YUASA VISION 360."

The quantitative targets of the Mid-term Management Plan are as follows: The pie chart on the right shows the goals for 2026. The pie chart of the left shows the goals for Growing Together 2023. By strengthening the Existing Core businesses and increasing the ratio of the nine Growth businesses, we aim for future consolidated net sales of ¥600.0 billion and ordinary profit of ¥20.0 billion.

Representative Director, President & CEO

Hiroyuki Tamura

Numeric targets (consolidated)

▶Net sales

¥432.1 billion ¥545.0 billion ¥600.0 billion

1. Direction the Company's Group seeks

Growth business strategy

▶Ordinary profit

¥10.0 billion ¥16.4 billion ¥20.0 billion

▶Ordinary profit to net sales ratio

2.3% 3.0% 3.3%

▶ROE

Contribute to society through manufacturing, home building, environment building, and

began to enter foreign markets in the 1990s. By connecting the manufacturing sites in Japan and the

8.1% 11.4% or more 11.7% or more

▶Shareholder return ratio

town building

world, we have contributed to manufacturing across the world.

• Overseas ■ Robot (AI) & IoT ■ Eco & Energy Solution ■ New Distribution ■ Resilience & Security
• Agriculture Process ■ Long-term Care & Medical ■ Food Equipment ■ Sharing ■ Existing Core businesses

31.9% 33.0% or more 33.0% or more

Since our founding, the Company had held a corporate philosophy based on three elements, "Honesty and Trust," "Enterprise and Innovation" and "Regard for the Individual." "Honesty and Trust" and "Regard for the Individual" are part of a core philosophy that sustains our business and company organization. "Enterprise and Innovation" is meant to consistently develop and operate businesses based on the needs of society and the times. In other terms, we have maintained our business over 350 years based on a corporate philosophy of making "change" a constant part of our company.

Resolving social issues through business is a role that the society and stakeholders demand of us. I am proud to say that the history of YUASA TRADING is one that faced social issues in Japan and the world head on. I believe that our societal value lies in creating new value by connecting ("TSUNAGU") people with people, people with manufacturing, and people with information/ technology.

In the field of manufacturing, we have operated hubs in countries in Southeast Asia since Japanese companies

In the field of home building, we have expanded out lineup of solar power generation systems and high performance energy-saving housing equipment. We proposed environmentally-friendly, pleasant home building by connecting these products and systems.

In the field of environment building, we established the YES (YUASA Environment Solution) Division, a specialized department for Eco & Energy Solutions in 2009, pioneering this area in the industry. We have supported the ESG management of our clients by connecting the know-how we gained from environmental consulting for hundreds of companies.

In the field of town building, we started a resilience business from 2014 with "disaster prevention, disaster mitigation, and BCP" as our keywords. We generated new solutions that contribute to safe and secure town-building by connecting the technology of affiliated manufacturing companies.

We will continue to take efforts to resolve social issues through business with "TSUNAGU" value creation.

Status of progress of the Growth business

In the Overseas Business, we are focused on strengthening our transactions with local capital companies. We have positioned Thailand as our highest priority, where we will establish a Construction Division in addition to the Industrial Division and Living Environment Division that are already in place. Our aim is to grow this as the central Southeast Asia site.

In the Robot (AI) & IoT Business, we developed the add-on robot system "Robo Combo" for users who are considering introducing robots. We have started selling this product this fiscal year. By connecting robot and tool manufacturers with ROBOT ENGINEERING CO., LTD., the systems integrator of the Company's Group, we are able to realize automation of production facilities at low costs and in a short time.

In the Eco & Energy Solution Business, we promote the total support of the ESG management of companies. We

recently provided support for Kanazu Murata Manufacturing Co., Ltd. from the Murata Manufacturing Group to create a factory wholly powered by renewable energy. In addition to providing equipment such as solar power generation modules, power conditioners, and carports, we conducted the prime construction work of the project, assisted customers in achieving carbon neutrality, and reduced the burden on customers for power supply networks that are part of the social infrastructure.

Kanazu Murata Manufacturing Co., Ltd. (Fukui Prefecture), where the Company supported efforts to create a factory wholly powered by renewable energy

Top Message

In the Resilience & Security Business, we promoted development of original projects that address social issues based on themes of disaster prevention, disaster mitigation, and BCP. We developed aluminum privacy fence Yachibei® used for improving concrete walls in a joint product with our business partners. This product is being adopted more and more as it uses the pillars and foundation of the existing concrete wall while reducing costs, shrinking construction time, and constraining the emission of industrial waste.

In the Long-term Care & Medical Business, our group subsidiary FUJI QUALITY HOUSE CO., LTD. developed the container house, Infection Reduction House, which was developed as a simple examination room for COVID-19 or for receiving outpatients who contracted the virus. This product has been used in a wide array of COVID-19 immunization venues and hospital facilities nationwide. Medical container houses have gained attention from overseas developing nations. In the future, we will expand this business overseas.

In the Agriculture Process Business, we have been successful in promoting proposals for fluorescent lighting that invigorates the immune capabilities of strawberries with UV-B (ultraviolet rays).

In the Food Equipment Business, we exercised engineering functions on the theme of "food safety" and made total proposals for the automated production line for food product factories.

In the Sharing Business, we started a driver and agriculture machine sharing service to be used through agriculture corporations.

Core business

- Strengthen functions of trade business

In the Core businesses, we strove to strengthen IT/ logistics functions in the trade business to "deliver needed products at the needed times."

In the e-commerce site "Growing Navi" the Company operates, we started operating a B-to-B-to-U (User) system that connects the Company, sales partners, and users from this fiscal year. We are promoting the use of this system as a digital sales tool in the COVID-19 era for sales partners who are limited in visiting their users.

Concept of Growing Navi B to B to U

For logistics functions required for e-commerce, we are focused on processing logistics to shrink delivery times. In our Kanto Distribution Center (Kashiwa City, Chiba Prefecture), we manufacture and assemble automatic valves and chain slings. From this fiscal year, this center began providing services for air conditioning renovation work and cleaning of oil from products before shipping. We will support these efforts to further shrink delivery times.

October 2021 in order to further advance the management foundation we have passed down over more than 350 years.

We aim to be carbon neutral* across the entire YUASA TRADING Group by the fiscal year 2030 to achieve "harmony with the global environment." We also aim to realize a sustainable society through "business activities for Service with good products" and "management that respects humanity." To realize our Sustainability Declaration, we established the Sustainability Promotion Committee, chaired by the Representative Director, and the Sustainability Promotion Office in the Corporate Planning Department, as our promote structure. We will develop an action plan and execute upon it.

Recognizing climate change as an important management issue, the Company's Group plans to declare support for the TCFD (Task Force on Climate-Related Financial Disclosures). We are taking a proactive approach to information disclosure on how climate change affects our Group business activities based on the recommendations of the TCFD.

• Scope of businesses subject to carbon neutrality: [Scope 1] Direct CO2 emissions from YUASA TRADING and group companies, [Scope 2] Indirect CO2 emissions corresponding to generation of energy used by each company

Initiatives to strengthen corporate governance

We are conducting initiatives to strengthen governance and risk management based on the application of the Revised Version of Japan's Corporate Governance Code. We elected three Outside Directors at the 142nd Ordinary General Meeting of Shareholders held in June

2021 in order to increase the transparency of corporate governance, raising the percentage of Independent Outside Directors in the Board of Directors. We are also selling shares based on guidelines for holding standards in order to reduce the strategic shareholdings on an ongoing basis. In addition, we are executing initiatives to improve the effectiveness and transparency of the Board of Directors, such as disclosing the skill matrix of Director candidates and changing the decision-making process for individual Director remuneration.

3. Build foundation for growth

DX (digital transformation) promotion project begins

In the Mid-term Management Plan "Growing Together 2023," we are promoting a digital transformation across the Group as a means of strengthening our management foundation. We aim to convert all of the knowledge and know-how the Company's Group has amassed into data as well as concentrate data from business partners and the general market. By applying AI to this data, we will develop new services and products that address social issues as we realize a transformation From "Single Item

Business" to "Integrated Product-Service."

In September 2021, we selected 23 DX promotion members in-house and began specific initiatives. In the future, management will take the lead and strive to establish a competitive advantage utilizing data and digital technology.

Sustainability Declaration

The Company's Group announced the "Sustainability Declaration" based on our corporate philosophy in

Fostering a culture based on the keywords "challenge," "comprehensive capabilities," and "communication"

My greatest mission is to build a management foundation that can survive periods of extreme change. I think that the key factors for achieving this are "comprehensive capabilities," "challenges," and "communication." Firmly positioning these elements within our Group corporate culture is the key to shaping the YUASA TRADING Group that will continue into the future and reach the 400th anniversary of the founding of the Company. I will take the lead in promoting this transformation in our corporate culture and focus on building a foundation for sustainable development.

We aim to maintain at least a 33.0% shareholder return ratio, including ongoing and stable dividends, in order for shareholders and investors to hold our shares for a long time. While balancing business investments and return to shareholders, we will maintain financial health as we aim to increase share value by investing profits generated through business activities in growth businesses and new businesses.

We truly appreciate your continued support.

Chapter Two Driving Forces Connecting Us to the Future

Driving 1. Promotion of Sustainability Management

Force

Based on our corporate philosophy of "Honesty and Trust," "Enterprise and Innovation" and "Regard for the Individual," YUASA TRADING Group has contributed to the further development of prosperous, humanitarian societies by valuing

Materiality selection process

We have established the procedures below for important issues (materiality) that we will focus on to preserve sustainable growth.

mutually beneficial, symbiotic relationships in all countries and regions of the world, with a focus on maintaining harmony with the global environment.

In order to further advance our management foundation passed down over 350 years, we enacted a "Sustainability Declaration" based on this corporate philosophy and are proactively contributing to the construction of a sustainable society.

Sustainability Declaration

1. Harmony with the global environment

We aim to be carbon neutral across the entire YUASA TRADING Group by the fiscal year 2030. We will also focus on creating a relationship of mutual benefits, respond to climate change, and strive to reduce our environmental impact across the entire supply chain.

1. Extraction of issues
2. Setting priorities
3. Confirmation of appropriateness
4. Identification of materiality

Based on our corporate philosophy and relationship with stakeholders, we conducted initiatives for ESG (Environment, Social, Governance) and extracted issues needed to achieve the YUASA VISION 360 in each business division.

Through dialogue with external experts, we created a materiality matrix (refer to page 8) after organizing important areas based on sustainability direction.

We conducted discussions in the management meeting attended by Directors and Senior Executive Officers, as well as held hearings with major stakeholders and Outside Directors to confirm the appropriateness of measures.

Materiality was determined by the Board of Directors.

2. Business activities for Service with good products

Based on the mindset of "Service with good products" that has been passed down from the founding of the Company, we conduct fair, honest, and reliable commercial transactions as well as promote the creation of a safe, secure, and rich society with our stakeholders as a "TSUNAGU Service Integrated Shosha Group."

3. Management that respects humanity

We operate diversity management that respects the individuality and human rights of employees. We will develop as the corporate group where each employee can feel their work is meaningful and is able to grow.

Discussions in forming the Sustainability Declaration

We believe sustainability is the resolution of social issues through business as targets in the "YUASA VISION 360." A study team consisting of the Corporate Planning Department of the Company and outside experts considered materiality, Sustainability Declaration details, promotion structure, and the action plan.

We also discussed deploying the energy storing know-how from the Eco & Energy Solutions Business in-house in order to proactively take efforts to calculate and reduce greenhouse gases.

Major opinions and advice received at hearing to stakeholders

• The resilience and environmental solutions as well as SDG initiatives at YUASA TRADING are more forward-thinking, so we hope the company will continue to grow these areas further. (Business partner)
• We hope to see proactive information disclosure about execution processes and specific action plans. (Business partner)
• We are not unfamiliar with the concept of materiality. Resilience is a keyword for Japan and a strength of YUASA TRADING, so this can be utilized in future developments. (Financial institution)

Support for TCFD

Recognizing climate change as an important management issue, the YUASA TRADING Group plans to declare support for the TCFD (Task Force on Climate-Related Financial Disclosures). We are enhancing our information disclosure on how climate change affects our Group business activities based on the recommendations of the TCFD.