ARE : Presentations of Financial Results for FY2024.3

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	¥322.3 bn	(YoY +¥48.0 bn）
Higher gold sales volume and sales price than the previous year. Growth in the North
			American refining business were the main reasons for the year-on-year increase.
Operating Profit	¥12.4 bn	(YoY -¥3.9 bn）
Impact of Palladium	Rhodium prices fell approximately 40% from the end of the previous fiscal year, although
prices have generally stabilized since July 2023.
and Rhodium	Palladium prices fell approximately 20% from the end of the previous fiscal year.
Other factors	Slow recovery in electronics and catalysts.
Impairment loss of ¥0.8 bn due to decision to close Ehime Plant.
		Current	The share exchange between Japan Waste Corporation and Renatus Co., Ltd was
		Status	completed 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.
Share		Discontinued Operations：
Exchange	Accounting	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 of
			affiliates will be included in operating income.
Difference since February	Higher gold prices, contribution from the North American refining business and the
share exchange gain. As a result of these factors, sales and earnings were higher than
Earnings Forecast
previously forecasted.

Copyright © ARE Holdings, Inc. All rights reserved.

3 Business 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, while that in the catalyst sector struggled due to weak yen. In North America, financial transactions such as trading and advance trading were strong, while product processing and sales shrank.

Business sector

Dentistry

Jewelry

Catalyst

Electronic

Refining Business in

North America

Business environment

Despite the soaring gold prices, collection declined due to market shrinkage caused by switch of materials 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 and sales 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. Handling volume 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

Liquid waste

Waste reagents

Medical waste

Waste plastics

Other

Business environment

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

Handling volume rose further due to withdrawals of other companies in the industry that started in Q3. 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 from Q2.

Overall handling volume of sludge and wood waste fell due to the business conversion of the Yokohama Plant.

Copyright © ARE Holdings, Inc. All rights reserved.

4 Consolidated Results

FY2022

FY2023

Unit：billion yen

FY2024

				Results
Revenue	274.2
Operating profit	16.3
Ratio	5.9%
Profit before tax	12.6
Profit※1	10.9

Results

322.3

12.4

3.8%

12.4

24.5

YoY

Change

48.0

(3.9)

(2.1%)

(0.2)

13.6

Revised

Forcasst

370.0

18.0

4.9%

17.6

13.1

YoY

Change

47.7

5.6

1.0%

5.2

(11.4)

Capex	4.9
Depreciation	3.3

※1 Profit attributable to owners of parent

8.5	3.5
3.6	0.3

12.9	4.4
3.1	(0.5)

Copyright © ARE Holdings, Inc. All rights reserved.

5 Precious Metals Business

Precious metals recycling business (Japan and Asia)

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 and rhodium.

• Increase in revenue and decrease in profit

North American refining business

FY2023 Results

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

• Increase in revenue and profit

												[Unit: billion yen]
Precious			FY2022			FY2023		FY2024
Metals			Results*			Results		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

Copyright © ARE Holdings, Inc. All rights reserved.

6 Impact of Gold Collection

• Gold share in revenue is increasing on YoY because both collection amount and selling price increased.

Breakdown of revenues*		Breakdown of Au collected
		Sales of Au	Unit: : billion yen				Jewelry sector	Unit：kg
		Sales of Others					Other sectors

323.3

233.6

173.9

*FY2021 and FY2022 reflected exclusion of Japan Waste Corporation.

Copyright © ARE Holdings, Inc. All rights reserved.

7 Ref: Volume of Precious Metals Collected

• Gold collections increased due to increase the volume in the market as a result of soaring prices and the 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		Pt		Unit：kg
Business		Business
	sector
sector
	・Jewelry
・ Jewelry	Plan	・ Catalyst
Plan
・ Electronic	achievement
rate		achievement
・ Dentistry	121.0%		rate
			99.3%

Pd		Rh
Business		Business
sector		sector
・ Dentistry		・ Catalyst
・ Catalyst
Plan
	Plan
・Jewelry
	achievement		achievement
	rate		rate
	85.0%		72.0%

Copyright © ARE Holdings, Inc. All rights reserved.

8 Rhodium 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 is approximately ¥2.7 billion which is the negative impact.
• The hedging ratio has reached 50 % of the total handling volume as planned.

Hedge ratio

FY2022		FY2023	60%
				50%
				40%
		2023/3/31		30%
		7,400	2024/3/29
			4,500	20%

10%

0%

2023/3

2023/6

2023/9

2023/12

2024/3

※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 end of March 2023.
• The decline in the price of palladium and a decrease in the volume of palladium collected contributed to a decrease in profit of approximately 4.5 billion yen for FY 2023 compared with the previous fiscal year.

Unit: yen/g	Palladium Price
	FY2022
	FY2023

2023/3/31

6,335

2024/3/29

5,010

※ref：Nikkei low price

Copyright © ARE Holdings, Inc. All rights reserved.

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, the business 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 the construction 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 the Company's revenue and operating income. The difference of 20.4 billion yen between the fair value of Renatus and the book value 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 in earnings of affiliates in the Company's operating income.

[Unit: billion yen]

Discontinued

FY2022

FY2023

operation

Results

Results

Share exchange

Peformance of

YoY

profit

Japan Waste

①

②

②-③-①

③

②-③

Revenue

18.7

36.6

20.4

16.3

(2.5)

Profit before

3.4

23.6

20.4

3.3

(0.1)

tax

Copyright © ARE Holdings, Inc. All rights reserved.