Ebara : Value Creation Structure

VALUE CREATION STRUCTURE

EBARA Group's Purpose and the "EBARA Way"

Our mission is to contribute to society by providing products and services that support society, industry, and daily life. Our mission begins with

the spirit of "Netsu to Makoto" (Passion and Dedication).

EBARA Corporation was founded in 1912 by Issey Hatakeyama with the aim of spreading the use of the Inokuty-type volute pump. Applying the world-renowned volute pump research of Dr. Ariya Inokuty, EBARA sought to contribute to the modernization of Japan by producing the first domestically manufactured waterworks pumps, installing water infrastructure to prepare for natural disasters, and developing the first water purifiers for waterworks manufactured in Japan. Driven by the spirit of "Netsu to Makoto" (Passion and Dedication) to support the modernization of Japan and solve the problems facing society,

EBARA has determined its mission is to contribute to society by providing products­ and services that support society, industry, and our daily lives. Inspired by "Netsu to Makoto,"

our employees seek to continuously cultivate our technological capabilities­ and reliability, which are the sources of our growth.

A Driving Force to Create Value Cultivated Over Many Years

The EBARA Way

Since the EBARA Group's founding, we have continually provided value to society through our business in addition to fulfilling our social responsibilities.

 In conjunction with the 100th anniversary of the Company's founding in 2012, we reflected on the type of company we are and want to be and reorganized those fundamental values and ethics into the EBARA Group Business Ethics Framework, to support our ethical operation over the next 100 years. As part of this undertaking, we redefined the Group's Founding Spirit, corporate philosophy, and CSR Policy as the "EBARA Way," the transcendental value shared across the EBARA Group. The

pursuit­ of the EBARA Way serves as the catalyst for increasing the value of the entire EBARA Group.

 Moving forward, the EBARA Group will honor our Founding Spirit of "Netsu to Makoto" (Passion and Dedication), a philosophy of engaging with work and people with passion and dedication that inspires us to contribute to society in the areas of water, air, and the environment. Guided by this spirit and our CSR Policy, we maintain high ethical standards throughout our business activities and foster relationships of trust with our stakeholders.

EBARA Group Business Ethics Framework

"Netsu to Makoto" (Passion and Dedication)

EBARA founder Issey Hatakeyama acted in accordance with his philosophy of approaching daily tasks with passion, dedication, integri- ty, and ingenuity in order to spur personal and corporate growth, and encouraged employees to adopt the same approach. The founding spirit of "Netsu to Makoto," or Passion and Dedication, forms the basis of all the EBARA Group employees' attitudes, ideas, and work ethic.

Technological Capabilities

The technologies of the EBARA Group originated from the Fluid Machinery & Systems Business, going back to the Company's founding. These technologies gave rise to the technologies of the Environmental Plants Business, and together, they evolved to produce the technologies of the Precision Machinery Business. For more than a century since its founding, the EBARA Group has continued to provide the products and services desired by customers and society, accumulating the technologies necessary to offer support across the entire product lifecycle. Currently, our technological capabilities lie in our diverse accruement of core product technologies from our five main business segments.

 We aim to make our fluid technologies, numerical analysis techniques, materials, analysis, and other foundational technologies the very best in the world. By incorporating advanced techniques and methodologies such as digital transformation applications in data science and design and production technologies nurtured in each business based on these technologies, we will work to further enhance our products and services while developing the technologies for the future.

Reliability

The passion and dedication all employees exercise in their work and the tenacity they exhibit in the face of adversity have won EBARA a strong reputation for reliability among its customers. We continue to build upon this reputation of being

a ­reliable and steadfast partner by remaining true to our spirit of passion and dedication and by proactively solving issues customers may be facing. Strengthening our trust-based relationships with customers and other stakeholders will unlock new possibilities for EBARA.

Elements of the "EBARA Way":

Founding Spirit of Passion and Dedication

Both employees and the Company shall strive for growth with passion and dedication to bring forth originality and ingenuity, rather than simply fulfilling the task at hand.

When working with passion and dedication, there is nothing that cannot be communicated to others.

Corporate Philosophy

We contribute to society through high-quality technologies and services relating to water, air, and the environment.

CSR Policy

We seek to foster trust with our valued stakeholders by ­conducting our business with a strong sense of ethics.

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VALUE CREATION STRUCTURE

The History of the EBARA Group

History of Growing While Addressing the Social Issues of Every Era with Technologies and Reliability

Over the years, the EBARA Group has continued to grow by responding to the needs of society through businesses

­supporting social and industrial infrastructure. Behind this growth has been the constant enhancement of the Group's technologies and reliability through the exercise of its Founding Spirit of "Netsu to Makoto." By applying, evolving, and combining the core technologies that originate from the Inokuty-type volute pump, we have developed products and

services­ that meet the needs of every era. Going forward, we will pursue future growth by further honing our ­technological prowess to deliver new products and solutions.

EBARA's History

1912-

Development of the EBARA Group's Foundations

EBARA was founded by Issey Hatakeyama with the goal of supplying products based on

Dr. Ariya Inokuty's world-renowned volute pump research. In the years that followed, EBARA

continued­ to contribute to the modernization of Japan by producing the first domestically manufactured waterworks pumps, installing water

infrastructure­to prepare for natural disasters, developing the first water purifiers for waterworks manufactured in Japan, and undertaking­

other initiatives ahead of its time.

1945-

EBARA Technologies Responding to Social Demand

EBARA contributed to the stabilization of the lives of people in Japan after World War II by mass producing pumps for increasing food ­production and for farmland reclamation. In addition, we delivered the first domestically manufactured feed water pump for supercritical pressure power plants to help address power shortages. At the same time, the Group began exporting plant equipment and establishing overseas bases to lay the groundwork for its overseas expansion.

1980-

EBARA Technologies

Permeating Society

It was during this time that the Group succeeded in developing and realizing practical application of a gasification and ash melting furnace for use as a next-generation waste treatment facility capable of completely decomposing dioxins and

recycling residue­ . In addition, technologies

accumulated­thus far were applied to the

development­of dry vacuum pumps, resulting in the start of the Precision Machinery Business.

2000-

Frameworks for Future Growth

Energy-efficient,high-efficiency pumps and chillers were developed to help reduce environmental impacts while pump technologies were created for urban rainwater drainage systems. The Group also developed sophisticated, ultra-precise, high productivity CMP and plating systems.

2010-

Centennial Anniversary and Pursuit of Future Growth

The Group began investing in its global competi- tiveness, following its success in improving its financial base through the selection and concentration of businesses. These investments include strength-

ening corporate­ governance, implementing new human resource systems, bolstering our overseas­ service and support (S&S) bases, introducing

automated­ assembly lines powered by Internet of Things (IoT) and artificial intelligence (AI) technol- ogies, and other environmental, social, and

governance­ (ESG) management initiatives.

2020-

Continue to Contribute to Society and Become a Globally Excellent Company

Under the slogan of "Technology. Passion. Support Our Globe," over the next decade, we will make sustainable contributions to society through ESG management and to the achievement of the SDGs, and enhance our corporate value by simultaneously improving the social, environmental, and economic value.

Changes in Business and Business Structure

Plating systems

1990 Delivered first

plating system

CMP systems

1992 Delivered first

CMP system

1912 Founded as Inokuty Type Machinery Office

Gas abatement systems

1987 Commenced sales of gas abatement systems

Dry vacuum pumps

Pumps

1986 Delivered first roots-type dry vacuum pump

1982 Began to sell cryogenic pumps developed and produced in-house

1930 Completed first

domestically produced turbo chiller

1958 Began promoting sales of standard pumps

1921

1963 Received first order for absorption chiller

Started fan production

Chillers

Fans

Compressors and turbines

1968 Began a technical alliance for compressors

2000 Elliott Company becomes a wholly owned subsidiary

1938 Completed first large-scale compressor

with Elliott Company of the United States

Water treatment plants

Stoker-type refuse incinerators

1931 Completed first domestically produced

1961 Delivered first stoker-type refuse incinerator

2010 Ebara Engineering Service Co., Ltd.

rapid filter for

waterworks

(currently Swing Corporation),

Salt production plants

Chemical processing plants

Fluidized bed incinerators

a joint venture water business

company­

established by three

1977 Delivered first fluidized bed incinerator for city refuse

companies,­

becomes an affiliate

1912

1920

1930

1940

1950

1960

1970

Note : The above graph indicates changes in net sales. As FY2017 was an irregular nine-month accounting period due to the change in settlement date, figures for this period have been restated to encompass the period from January to December 2017.

1980

1990

2000

2010

2020

Fluid Machinery & Systems Business  Environmental Plants Business  Precision Machinery Business

Pressing Social Issues

1912-

Modernization of Japan

• Installation of water infrastructure
• Lack of arable land
• Reconstruction after the Great Kanto Earthquake
• Widespread industrialization

1945-

Post-World War II Reconstruction and Japanese Postwar Economic Miracle

• Lack of food and other basic necessities for people of Japan
• Power shortages
• Advancement of heavy and chemical industries
• Increased construction of plants overseas

1980-

Development of the Information Society

• Ozone depletion, desertification, and
  advancement­of climate change
• Lack of waste disposal sites
• Need to realize recycling-oriented society
• Growth of semiconductor market and increased semiconductor demand

2000-

Search for Path to Sustainability

• Increased concern for environmental issues

and acceleration of global warming

countermeasures

• Rising demand for energy-saving and highly

efficient technologies

• Extreme rain resulting from urban heat

island phenomenon

• Development of information and communi-

cation technologies (ICT) and accelerated

advancement of semiconductor technologies

2010-

Toward a More Diverse and Inclusive Society

• Digitization driven by proliferation of the IoT and AI
• Social pressure for workstyle reform
• Increasing expectation for companies to contribute to realizing a sustainable society due to rising interest in climate change and ESG issues and the adoption of the United Nations Sustainable Development Goals
• Raising awareness of climate change measures and ESG issues

2020-

Towards the Realization of a Sustainable Society

• Accelerating efforts to achieve carbon neutrality
• Growing demand for social and econom- ic change during and after the COVID-19 pandemic
• Increasing importance of human capital management that views human resources as capital

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VALUE CREATION STRUCTURE

Value Creation Story

"Technology. Passion. Support

Our Globe."-A Mission to Be Fulfilled Based on the "EBARA Way"

Guided by the core of the "EBARA Way" and the Founding Spirit of "Netsu to Makoto" (Passion and Dedication), the EBARA Group has continued to contribute to the resolution of social issues with the strengths of its technological capabilities and reliability throughout its 110-year history. We will further build on these strengths while advancing ­business activities based on our desired vision for EBARA. This is the approach we will take in supporting the globe into the future and ensuring that EBARA can continue to grow over the next century.

Key Points of the EBARA Group's Value Creation Story

Medium- to Long-Term Strategies for Realizing Vision

Looking ahead to the next 100 years of human society and the changing global environment, lifestyles are expected to undergo profound transformations. Factors driving this transformation will include more severe weather abnormalities and natural disasters stemming from global warming; depletion of food, water, and other resources; and the evolution of the information society. Given this operating environment outlook, our long-term vision, E-Vision 2030, was created based on the belief that meeting this moment in an effective way requires a clear vision for the future with straightforward policies and strategies for realizing that vision. Based on the slogan­ "Technology. Passion. Support Our Globe," E-Vision 2030 is oriented around augmenting and leveraging the EBARA Group's strengths to address five issues determined to be material to our business.

 Meanwhile, E-Plan 2022 is a medium-term management plan formulated through the identification of issues remaining from the

previous­ medium-term management plan in addition to backcasting from E-Vision 2030. We aim to generate a cycle of improvement in social, environmental, and economic value and ultimately achieve greater corporate value through the implementation of the basic ­policies laid out in this plan.

INPUT

	As of December 31, 2021
Financial Capital
Total capital:	¥321.6 billion
Interest-bearing debt:	¥112.0 billion
Credit rating:	R&I Issuer Rating A
Intellectual Capital
	¥40

OUTCOME

	As of December 31, 2021
Financial Capital
Revenue:	¥603.2 billion
Operating profit:	¥61.3 billion
ROIC:	10.7%
ROE:	14.5%
Total dividends:	¥15.1 billion

EBARA's Vision

"Technology. Passion. Support Our Globe."

R&D investment:			billion
	(3 years of E-Plan 2022)
Social and Relationship Capital
Start-ups funded:	4 companies
			(cumulative)
Social contribution		¥867 million
expenditures:
Manufactured Capital
Capital investments:			¥100 billion
	(3 years of E-Plan 2022)
Domestic manufacturing bases:		5
Overseas manufacturing bases:		20
Human Capital
Employees (consolidated):			18,372
Of these, at overseas consolidated	10,332
subsidiaries:
Training investment per employee: ¥41,799
Natural Capital
Electricity usage:	178,434 MWh
Water consumption:		1,088 km3

Dividend payout ratio:	35.2%
Operating cash flow:	¥72.8 billion
Free cash flow:	¥41.4 billion
Total shareholder	+433.1% (10 years)
return (TSR):
	+18.2% (annual)

Intellectual Capital

Number of patent applications (annual): 289 Domestic:

 Overseas:450

Human Capital

Female employees:			15.6%
Female managers:				8.8%
Foreign employees (EBARA and		1.7%
domestic Group companies):
Local employees in global key positions	22%
at overseas offices:
Engagement Index in the Global		79%
Engagement Survey:
Manufactured Capital, Social and Relationship Capital
Chemical mechanical
polishing (CMP)		3,000 units shipped
systems:
	(cumulative as of January 2022)
Dry vacuum	200,000 units shipped
pumps:
		(cumulative as of July 2022)
Natural Capital
Scope 1 + 2 GHG		104,000 tons
emissions:
Water discharge:			726 km3
Total waste discharge:	17,608 tons
Material recycling rate:		96.9%

	strategies
	vision
	long-term
	realizing
	to-
	for
INPUT	Medium

5 Material Issues (Materiality)

1. Contribute to the creation of a sustainable society
2. Elevate standards of living and
   support­ abundant lifestyles for all
3. Conduct comprehensive environmental management
4. Promote working environments that encourage challenge
5. Enhance corporate governance

Management

Strategies

Long-term vision,

medium-term

management plan

Business Activities

Business Process

Capitals

Corporate Governance

Increase Corporate Value

Sustainable growth

Sustainable contributions

to society

Driving Force
behind the Group's
Creation of Value
Technological
Capabilities
	Increase Social
				and
Passion		Environmental	Economic
		Value
								Increase
and								Value
Dedication

Reliability

Outcomes

Realize abundant lifestyles for all

Support a sustainable society

Support industry

Outputs

Products Services

Outcomes	OUTCOME
value
corporate
toleading
increased

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VALUE CREATION STRUCTURE

Social Value Created by EBARA

EBARA products are used under a variety of circumstances, supporting social infrastructure around the world.

We contribute to safe, secure, and fulfilling lifestyles.

1 Water Supply Units

Supplying water for everyday use to buildings and condominiums

Water supply units are a crucial element of the facilities of buildings, condominiums, factories, and other structures for realizing a stable supply of water for everyday use.

2 Agricultural Pumps

Water

Wide-ranging support for society and infrastructure ensuring stable water ­supplies and preventing water damage

E-Vision 2030

Solutions for material issues

Safeand reliable living

Watering crops in fields

Agricultural pumps reliably supply water for agricultural purposes as an important component of irrigation equipment. These pumps are also used to drain water to prevent damage from flooding due to heavy rains.

3 Water Drainage Pumps

Protecting against typhoons and concentrated heavy rains

Water drainage pumps are used to protect residential areas, agricultural land, and other areas against flood damage from heavy rains by redirecting rainwater into rivers with less risk of flooding or the ocean.

4 Seawater Circulation Pumps

Crop Fields

2AgriculturalPumps

Tunnels

5 Fans

Buildings and Condominiums

1 WaterSupply Units

Efficiently transporting seawater

Equipped with thermosetting resins, EBARA's

seawater­ circulation pumps boast superior anti-­ corrosion properties, enabling them to be used with fluids that would even erode stainless steel articles, such as acid and seawater. They are thus ideal for circulating seawater inside of aquarium tanks. Our sea-

water circulation­ pumps can also be used for transporting and circulating hot spring water and chemicals.

5 Fans

Ventilating tunnels

EBARA fans are delivered for installation in tunnel ventilation equipment. By achieving highly precise ventilation control, these fans help appropriately maintain the air environments of tunnels while securing ­evacuation routes in the event of a tunnel fire.

6 Chillers

Maintaining comfortable temperatures in buildings, large-scale commercial facilities, and factories

Aquariums

4 Seawater

	Circulation	Pumping Stations
	Pumps
	3 Water Drainage Pumps
Air		Sports Arenas
	6 Chillers
Creation of Comfortable
Environments while combating
climate change

7 Gas Abatement Systems

Detoxifying hazardous gases

LNG Terminals		8Boiler Feed Pumps
10 Cryogenic Pumps	E-Vision 2030
	Solutions for material issues		Offering "behind-the-
	Reduced GHG
		scenes" support for
	emissions		power generation
		Thermal power plants generate electricity
		through generators directly attached to
		turbines,­	which are rotated using high-pressure
		steam. Boiler feed pumps supply high-­
Thermal Power Plants		temperature water to boilers to create this
	high-pressure steam.
8 BoilerFeed Pumps
	OilRefineries and	Petrochemical Plants

9 Compressors

Environment

			Contributions to
	Waste Treatment Plants		a sustainable society by
		promoting effective
	11 Waste Treatment		energy and
	Plants		resource usage
Solar Cell and LED Factories
7 Gas Abatement Systems
13 Dry Vacuum Pumps
	Biomass PowerGeneration Plants
		12 Biomass Power GenerationPlants
13	Dry Vacuum Pumps		Digital
Semiconductor Factories
7	Gas Abatement Systems	Technologies
15	Precision Chillers
14	CMP Systems
			Support for the evolution of
			lifestyles with cutting-
			edge technologies
	E-Vision2030
	Solutionsfor material issues	15 Precision Chillers
	Smarter
	living		Efficient Use of
			Sub-Fab Space

9 Compressors

Playing a central role in power plants and oil refineries worldwide

Compressors play a central role in oil refineries and petrochemical plants by compressing the gases ­produced from crude oil and natural gas.

10 Cryogenic Pumps

Safely transporting LNG

Cryogenic pumps are used to transport and store LNG at temperatures of -162°C and thus require superior technologies and impeccable safety.

11 Waste Treatment Plants

Supporting safe and reliable plant operation

We provide one-stop service for waste treatment plants ranging from engineering to construction, operation, management, and maintenance to

support­ reliable operation. We also contribute to the local production and consumption of energy by returning the power generated through waste

incineration­ to the surrounding communities.

12 Biomass Power Generation Plants

Generating power using woody biomass

We offer construction, operation, and management services for biomass power generation plants that leverage the characteristics of internally circulating ­fluidized-bed boilers designed to use woody biomass as fuel and capable of achieving reliable combustion of a diverse range of fuel sources. Through these services, we are contributing to the popularization of renewable energy and the prevention of climate change.

13 Dry Vacuum Pumps

Realizing the optimal clean environments necessary for semiconductor production

Dry vacuum pumps are used to create the vacuums needed in the semiconductor production process.

14 CMP Systems

Supporting semiconductor production with nano-level precision polishing technologies

Our chillers supply cold water for use in the air-­ conditioning equipment of large-scale commercial facilities and factories to be utilized for cooling or heating entire structures. Other benefits of our chillers include reduced costs through optimization of cooling and heating equipment as well as lower energy consumption and CO2 emissions.

Gas abatement systems prevent pollution by detoxifying the hazardous gases used in semiconductor manufacturing and other processes.

This chiller is installed in the sub-fab space of the	CMP systems polish the surface of semiconductor
semiconductor manufacturing plant and is used to	wafers with nano-level precision using
control the temperature of semiconductor	polishing solutions.
manufacturing equipment.

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