MATSUDA SANGYO : Fiscal Year Ended March 31, 2022

BUSINESS REPORT

Year ended March 31, 2022

For Prosperity and

a Beautiful Earth

Matsuda Sangyo at a Glance

The Matsuda Sangyo Group's corporate philosophy is "Making effective use of the limited earth resources and contributing to society through business"

The Matsuda Sangyo Group operates (1) the precious metals business-which combines the precious metal business focusing on recycling and effective use of precious metals, a limited resource, and the environmental business aiming at passing on a clean environment to the next generation; and (2) the food business-which concentrates on tapping nature's resources and providing stable supplies of food to enrich human life.

With both the precious metals and food business segments as growth drivers, we will develop a cycle that enables sustainable and mutual development of our business and society.

Precious Metals	VISION "Become a leading company that creates resource circulation (utilization)" No. of segment employees 1,140	Food Business
Business Segment	Segment
	As of March 31, 2022

		ss	Hi			Roots: In 1935, the Company started the	Silver production developed to the gold and PGM* precious metal busi-
	ine	st
us			or
B
					y	recovery and refining of silver from film and	ness, as well as to the environmental business due to the involvement in
						other photosensitive materials.	the treatment of fixing and developing solutions. * Platinum group metals

VISION		"Become the best partner for customers in product development" No. of segment employees 259
						As of March 31, 2022
	ine	ss	Hi		Roots: In 1948, the Company started to sell egg whites discarded	Expanded into the handling of marine products
us		st	or
B
				y	during mayonnaise production at food processing companies to	such as surimi fish paste, as well as agricultural
					manufacturers of boiled fish paste products.	and livestock products.

Value creation flow

	Purification	Intermediate waste treatment
Analysis/Pre-processing/Refining/

Collection			Processing and sales
Trading company, etc.

Precious metal	Vehicles for collection	Precious metal chemicals	Thin-film forming materials
recovery devices	and transportation

Precious metal bullion

Semiconductor and electronic parts sector

and other industries

Overview of the precious metals business

• Engaging in recovery and refining of precious metals, manufacturing and selling of precious metal materials and products, and cleaning of thin-film deposition system parts.
• Our key customers are in the electronics, jewelry, dental, and catalyst industries, etc.

Strengths of the precious metals business

1. Cyclical business model contributing to stable supply chains, advanced technology to refine high-purity precious metals and consistent precious metal recycling system
2. Network in East Asia for collection of precious metal materials and supply of precious metal materials and products
3. Trust in the precious metal bullion brand born from our advanced recycling technology
4. Precision cleaning that recycles jigs as well as recovers and recycles precious metals

Overview of the environmental business

• Engaging in collection, transportation, detoxification, and recycling of indus- trial wastes including waste acids, alkalis, oil, plastic, and polluted mud.
• Our key customers are in the electronics, chemical/pharmaceutical indus- tries, and medical institutions, etc.

Strengths of the environmental business

1. Detoxification technology and effective use of industrial wastes contribute to efficient recycling that enables customers to achieve zero emission
2. One of the best nationwide network to collect and transport industrial waste

For Prosperity and a Beautiful Earth

Value creation flow

Product	Quality assurance	Food materials distribution
purchasing

Quality control	Product sales
Technical guidance
Suppliers/Products handled	Quality assurance
	Food proposals
	Distribution service
Marine products

Livestock products
	Customers
	Manufacturers of	Manufacturers of	Frozen food
	boiled fish paste
	ham and sausages	manufacturers
	products

Overview of the food business segment

• The food business procures safe and reliable food materi- als (including marine, livestock and agricultural products) via an extensive worldwide network that encompasses such regions as Europe, North America, Asia and South America.
• Our key customers include manufacturers of boiled fish paste products, ham and sausages, frozen food, confec- tionaries and bread, and in the ready-made meal and food service sectors.

Strengths of the food business segment

1. Offers a myriad of products including surimi fish paste, shrimp, squid, octopus, shellfish, eggs, chicken, pork, beef, and dried and frozen vegetables. Deploys a global procurement network utilizing local subsidiaries
2. Proposes appropriate locations for food processing together with production areas that meet customers' needs, and offers primary processing of food materials into optimum forms and volumes for customers. Provides high-quality,low-cost products manufactured on-site from fresh ingredients using optimal technologies
3. Offers distinctive services for ensuring safety and reliability such as guidance for suppliers in producing regions through the Quality Assurance Department, quality standard documentation and traceability
4. Stable supply of food through total supply chain management

		Our contributions to
Precious metal containing scrap	Waste acids and alkalis, etc.	social issues: SDGs

	Manufacturers of	Ready-made meal
Agricultural products	confectionaries/	and food service	Our contributions to
bread	sectors	social issues: SDGs

MATSUDA SANGYO CO., LTD.

IR HANDBOOK 1

Interview with the President

Under the new Medium-term Management Plan,

we will provide high added value contributing to solving

Please explain results and

Q dividends for the fiscal year ended March 31, 2022.

During the fiscal year ended March 31, 2022, while the global economy was on a recovering trend overall with a rise in COVID-19 vaccination rates, the outlook remained uncertain due to factors including supply chain disruptions caused by China's zero- COVID policy, rising prices of energy and raw materials against the backdrop of the Ukraine crisis, and the rapid weakening of yen.

As we achieved a new record high profit, we further increased the amount of year-end dividend which was upwardly revised in November 2021 by ¥2 to ¥24 per share, resulting in a full-year dividend including interim dividend of ¥46 per share. Full-year dividend per share for the fiscal year ending March 31, 2023 is expected to be ¥48, an increase of ¥2 year on year.

Please tell us about the achievement Q in the previous Medium-term

Management Plan and a general

Precious Metals	Highlights for the period
Business Segment
Joined Battery Association	April 1, 2021 to April 30, 2022
for Supply Chain

2021

Apr.Jun.Nov.

Management	Precious Metals	Management
Business Segment
Established "Health	Launched operation in a Korean	Issued "Matsuda Sangyo
Management Declaration"	subsidiary (established in April)	Report 2021"

Management

Transitioned to Prime Market in TSE

2022

Apr.

Precious Metals/

Food Business Segments

Opened Shizuoka Sales Office/ Satellite Office

customers' problems and social issues.

Yoshiaki Matsuda

President and Representative Director

First, I would like to thank all our shareholders for their support in the past year. I hope we can count on your continued support in the year ahead. Please take the time to read this Business Report for the fiscal year ended March 2022 (April 1, 2021 to March 31, 2022), which provides a more in-depth view of what we do at Matsuda Sangyo.

Amid such situation, the precious metals business segment worked to expand sales in each business domain through sales development taking advantage of the customers' and market growth and establishment and enhancement of production sites. As a result, the volume of precious metal recycling, industrial waste treatment outsourcing and sales of precious metal products all increased, and coupled with the rise in precious metal prices, both segment sales and profit increased.

The food business segment fulfilled its responsibility to ensure stable supply by dealing with rising logistics costs and supply chain disruptions flexibly and appropriately while working to develop and offer products meeting customer needs and expand sales. As a result, the sales volume of marine, live- stock, and agricultural products increased, and both segment sales and profit increased.

As a result, consolidated net sales for the fiscal year ended March 31, 2022 increased 17.6% year on year to ¥272,292 million, and operating profit increased 57.8% to ¥12,681 million. Ordinary profit increased 64.1% to ¥13,734 million, and profit attributable to owners of parent increase 56.7% to ¥9,558 million.

outline of the new Plan.

The Group has launched the new Medium-term Management Plan covering four years (FY2022-2025).

In the previous Medium-term Management Plan with FY2021 as the final year, with both the precious metals and food business segments as growth drivers, we focused on promotion of management strategy in each business and reinforcement of management foundation. As a result, we were able to successfully achieve targets for consolidated net sales, operating profit, operating margin and ROE.

In the new Medium-term Management Plan, we aim "to be a company that continuously evolves and adapts to social changes, and which customers and society always need," and aim to achieve consolidated net sales of ¥300 billion, operating profit of ¥13 billion, operating margin of 4.3%, return on equity (ROE) of 9%, and return on assets (ROA) of 10% by providing high added value contributing to solving customers' problems and social issues through effective use of resources and securing of sustainable resources. Under these targets, we continue to expect both business segments to be growth drivers and focus on growth strategies based

on basic policies to "strengthen revenue base and create new revenue sources by continuing proactive investments," "strengthen management foundation to support and accelerate sustainable growth," and "enhance corporate value by promoting ESG management."

In the precious metals business segment, based on the vision of becoming a "leading company that creates resource circulation (utilization)," we aim to differentiate ourselves by increasing our comprehensive capabilities through eco-friendly business and development and sales of high-performance electronic materials and continuing to provide customers with "high environmental value."

In the food business segment, under its vision to "become the best partner for customers in product development," we aim to expand sales domains by accelerating global development through our efforts to enhance procurement network of raw materials and product lineup and reinforce material sales, develop safe, reliable, and sustainable products and establish commercial distribution.

To enhance management foundation that

supports sustainable growth and corporate value enhancement, we will also work to "improve produc- tivity," "promote DX," "create management human resources," "encourage active participation of diverse human resources," "create work environment," and "strengthen governance and risk management."

In addition, to promote these strategies, we plan to invest a cumulative total of ¥30 billion over four years while securing financial soundness and maintaining a balance with shareholder returns. We aim to pay dividends to shareholders with a target dividend on equity ratio of over 1.5%.

In order to promote the new Medium-term Management Plan and achieve both realization of a sustainable society and the Group's growth under the unwavering corporate philosophy, we positioned "striking a balance between reducing environmental burden and business growth," "enhancing customer satisfaction and securing the trust of society," and "accelerating growth through the activities of diverse human resources" as ESG-related material issues.

I hope we can count on your continued support as we implement these initiatives in the year ahead.

2 MATSUDA SANGYO CO., LTD.

IR HANDBOOK 3

Review of Operations/Global Network

Precious Metals

Business Segment

Performance in the fiscal year ended March 31, 2022

The electronics industry, our key customer, experienced a decline in production in automotive market, etc. due to semiconductor shortages, but the production activity began showing signs of recovery, spurred mainly by a recovery in the smartphone market and establishment and enhancement of communication infrastructure in line with the development of 5G communication. Under these conditions, the volume of precious metal recycling, industrial waste treatment outsourcing, and sales of precious metal products increased, and coupled with the rise in precious metal prices, both segment sales and profit increased.

Food Business		Performance in the fiscal year ended March 31, 2022
	The food processing industry, our key customer continued to face tough conditions on the whole due to a rise in raw material prices and
Segment
	logistics costs as well as a growing trend of weak yen. In addition, the global supply chain disruption has escalated, and the situation
		which requires monitoring on stable supplies of food remained. Under these conditions, the sales volume of marine, livestock, and agri-
		cultural products increased, and coupled with the impact of the rising prices in certain products, both segment sales and profit increased.

Net sales	26.0%
	increase year on year
¥192.9billion
Operating profit	51.5%

¥10.3billionincrease year on year

Forecasts and initiatives for the fiscal year ending March 31, 2023

We will steadily carry out the growth strategy set in the new Medium-term Management Plan with an aim to enhance the Group's competitiveness mainly in the

electronics industry, our key customer, increase the volume of precious metal recycling and product sales and increase the volume of industrial waste treatment outsourcing.

Sites

Matsuda Sangyo (Thailand) Co., Ltd.		Matsuda Sangyo (Philippines) Corporation		Matsuda Sangyo (Singapore) Pte. Ltd.

Matsuda Sangyo (Malaysia) Sdn. Bhd.		Matsuda Sangyo (Vietnam) Co., Ltd.		Matsuda Sangyo (Taiwan) Co., Ltd.

Sites

New

Net sales

1.1%

Forecasts and initiatives for the fiscal

¥79.3billion

increase year on year

Matsuda Sangyo

Matsuda Sangyo

Matsuda Sangyo

Matsuda Sangyo

Taiwan

year ending March 31, 2023

Trading (Qingdao)

Trading (Thailand)

Trading (Vietnam)

Trading India

Co., Ltd.

Co., Ltd.

Co., Ltd.

Pvt. Ltd.

Branch Office

While dealing with changes in the business environ-

ment such as concerns over raw materials supply

Operating profit

93.5%

and increasing logistics costs, we will work to increase sales

volume and secure earnings through sales activities aimed at

¥2.3billion

increase year on year

accurately meeting customer needs with the use of overseas

business sites and the differentiation by developing and providing

products as a stable supplier of safe and reliable food products.

• Net sales ■ Operating prot

[¥ Billion]			192.9
132.7		153.0	10.3
130.7
		6.8
	4.9
3.4
2019/3	2020/3	2021/3	2022/3

Net sales by item

We see quite a few	Q& A
reportson "semiconduct

shortages," what is the impact on the precious metals business segment?

While the semiconductor demand has continued increasing against the background of increased use of teleworking, accelerating shift to EVs, and expansion of demand for power device related to decar- bonization, the supply cannot keep up with it, and the resulting "semiconductor short-

Matsuda Sangyo (Korea) Co., Ltd.

Recovery of

precious metal

materials

	■ Net sales ■ Operating prot				Q
Network-Suppliers-	[¥ Billion]				How is the new	& A
	80.2	78.4	79.3
Surimi fish paste/frozen	75.5	geopolitical risk, such
vegetables/dried potatoes/					the Ukraine crisis, affecting
dried eggs/pork/beef					the food business segment?
Pork/beef/dried eggs				2.3	In the food business segment, as we
	1.5	1.3
	1.2		have a raw material procurement network
					around the world, the Ukraine crisis has
	2019/3	2020/3	2021/3	2022/3	a serious impact on us. Specifically, there
	are supply shortages in certain raw mate-
Surimi fish paste/
				rials and price fluctuations are disrupting
shrimp/squid/octopus/	Net sales by item
		the supply-demand balance of certain
clams/crab/chicken/

■ Gold ■ Silver ■ PGM* ■ Other	* Platinum group metals
[¥ Billion]	192.9

153.0

132.7 130.7

2019/3

2020/3

2021/3

2022/3

ages" have been causing various impacts including a delay in delivery of new cars. However, the market is still expanding, which has a positive

impact on us as it is contributing to an increase in precious m e t a l r e c y c l i n g

materials.	Semiconductor demand will
	continue to grow * An image

East

7

business

in East Asia

• Our Chinese subsidiary Matsuda Resource Recycling (Suzhou) Co., Ltd. is currently under liquidation proceedings.

Network

precious chemicals and

materials

frozen vegetables/dried

■ Marine products ■ Livestock products

■ Agricultural products ■ Other

products. Amid such circumstances, we

eggs/dried potatoes

[¥ Billion]

will continue "stable supply of safe and

75.5

80.2

78.4

79.3

reliable products" by closely monitoring

America

the situation and

t a k i n g f l e x i b l e

Oceania

m e a s u r e s s u c h

a s d i v e r s i f y i n g

suppliers.

Beef/frozen vegetables

Chicken/pork/squid

2019/3

2020/3

2021/3

2022/3

4 MATSUDA SANGYO CO., LTD.

IR HANDBOOK 5

Matsuda Sangyo Group Topics

TOPIC 1IR/SR

We enhanced and improved the former IR Dept. and started as "CSR IR Dept."

Report of	TOPIC 2	IR/SR
Thank you for participating in our shareholder survey.
Surve	y Re
sults

Shizuoka City, Shizuoka Prefecture

TOPIC 3	Precious Metals	Food Business
Business Segment	Segment

We are upgrading and expanding domestic production sites to enhance sales and production/logistics functions.

We have recently changed the name and improved the functions of "IR Dept." and restarted as "CSR IR Dept." in April 2022. In response to the recent global trends to address themes such as "sustainability" and "decarbonization," we identified "achieving both environmental load reduction and business growth," "improving customer satisfaction and securing social trust," and "accelerating growth through active participation of diverse human resources" as

We would like to thank the shareholders that participated in our survey that accompanied the notification of the 72nd Ordinary General Meeting of Shareholders for the fiscal year ended March 31, 2021.

Survey period:

June 24 to July 31, 2021

Response rate:

51.0% Highest rate in the last five surveys

		Iruma City,
Kitakyushu City,
	Saitama Prefecture
Fukuoka Prefecture

In April 2021, we established a sales/satellite office in Shizuoka to improve customer service, enhance support system, and improve operational efficiency in both the precious metals and food business segments. Especially in the food business segment, we intend to enhance customer-based sales by taking advantage of the advantageous location of Shizuoka, which is located midway between the Tokyo and Chukyo metropolitan areas and boasts the fishing and canning and processing industries. In addition, the precious metals business segment also acquired land

material issues and established the policy in the new Medium-term Management Plan. We expect this renewed department to oversee specific initiatives to be implemented based on such policy, and we also aim to deepen dialogue with stakeholders through this department.

Message from

Manager of

Shareholder percentages by age group

The ratio of shareholders under 20s, 40s & 50s, and over 70s rose and those who are 30s & 60s decreased compared with the fiscal year ended March 31, 2021.

20s or younger	............................................................................................	2.1%
30s	..........................................................................................................................................	4.2%
40s	.....................................................................................................................................	15.0%
50s	.....................................................................................................................................	18.8%
60s	.....................................................................................................................................	24.4%
70s and older	.............................................................................................	35.5%

and a building in Iruma, Saitama, in April 2022 and land in Kitakyushu, Fukuoka in May 2022, which is the largest project for us since the construction of a factory in Seki. We will continue to make various investments to achieve sustainable growth and increase corporate value while coping with the drastic changes in society and the business environment.

CSR IR Dept.

The CSR activitiesto promote specific initiatives to address sustainability issues and the IR activities aimed at enhancing communications related to the Group's activities and engagement with stakeholders are both important responsibilities that we should fulfill. Going forward, we will further enhance the CSR and IR activities under the new structure.

Yoshinori Tanaka
Executive Officer, General Manager of Corporate	Members of CSR IR Dept.
Management Planning Dept. and CSR IR Dept.

Future plan for holding the Company's shares

Reasons of purchasing Matsuda Sangyo's shares

The ratio of "Buy more and continue holding" and "Sell some and continue holding" rose by 0.5 points and 0.3 points, respectively, and "Continue hold- ing" decreased by 2.0 points.

The ratio of "Future prospects/ growth potential" rose by 2.7 points and "Management philosophy/ business descriptions" increased by 0.3 points. We will continue to put out our best efforts to meet the expectations of shareholders.

Buy more and continue holding	.......................	12.0%
			.................................................................................	77.5%
Continue holding
Sell some and continue holding	...........................	1.8%
Plan to sell	.............................................................................................................	0.7%
Already sold	........................................................................................................	1.7%
	...............................................................................................................	6.3%
Undecided
Future prospects/growth potential	............	23.2%
Stability/dividend yield	..........................................................	22.7%
Financial strength/soundness	...................................	6.4%
Management philosophy/					9.9%
business descriptions	..................................................................
								............................	1.2%
Stock price and technical index
Recommendations from securities		1.2%
firms or information magazines	............................
Shareholders benefit	.................................................................	34.7%
Other	...................................................................................................................................	0.7%

TOPIC 4	Segment
	Food Business

Openeda subsidiary in Indiawith a view to entering the local market.

In overseas, we established Matsuda Sangyo Trading India Pvt. Ltd. in Mumbai, India, in March 2022, as a new subsidiary in the food business segment and started operation in May. India is not only a prospective country for procurement of food materials such as marine and agricultural products, but also a potential sales market as it has the world's second-largest population. Taking advantage of the strong connection we have built with marine and agricultural product suppliers, the Group aims to establish and expand a supply chain with a view to covering from India to Middle East and expand sales of food materials from India to overseas including Japan.

Port and the supplier's factory

6 MATSUDA SANGYO CO., LTD.

IR HANDBOOK 7