ANEST IWATA : Integrated Report 2021

ANEST IWATA Corporation Integrated Report

2021

ANEST IWATA will continue to be a company that benefits people and people's lives, while diligently upholding the company's founding motto of being "trustworthy and sincere" and strive to deliver the highest level of quality, technologies and services.

ANEST IWATA Corporate Philosophy

■ Corporate Policy

Corporate

Policy

Brand Policy

Group Management Policy

Group Management Vision	"Makotono kokoro"
(Trustworthy & Sincere)
Basic Policy on	Group Code
Corporate Governance
of Conduct
Basic Investor	Group Guiding
Relations Policy	Principles

CONTENTS

02	ANEST IWATA At a Glance	The Foundations that Support Value Creation
04	History of Growth	30	The Environment
06	Value Creation Process	33	Human Capital
08	Financial and Non-financial Highlights	37	Cooperation with the Regional Communities
09	Message from the President	38	Corporate Governance
10	Interview with the President	43	Executives
			"ANEST IWATA" In the Eyes of Independent

• Brand Policy

The following marks represent our corporate brand.

Corporate brand promise

ANEST IWATA is a development-oriented company that is consistently vibrant and equipped with innovative technologies. We will leverage these qualities and continue to contribute to the achievement of a prosperous society that is safe, reliable and capable of sustained growth.

Corporate slogan

Active & Newest Technology

The corporate slogan represents the basic IWATA principles of "useful technology, beloved products and a bond of trust" and complements the company name and corporate brand.

The meaning of the name ANEST IWATA Our founder, Hatsutaro Iwata, taught us to be "Earnest" and "Sincere," as well as to first and foremost be a person and value our humanity over the company. We coined the name "ANEST" to reflect this teaching and our founding principle, "Makotono kokoro" (Trustworthy & Sincere), which is also our corporate motto.

• Group Management Policy

1. We will build a true relationship of trust by always thinking from the customers' per- spective and meeting the customers' expec- tations.
2. We will maintain a global perspective at all times and strive for research and develop- ment of innovative technologies that antici- pate the changes in the environment.
3. We will provide attractive products and ser- vices that meet customer needs with sin- cerity at appropriate levels of quality and at appropriate prices.
4. We will establish a lively and inclusive cor- porate culture that values the spirit of chal- lenge, upholds the principles of fairness and equality, and brings out the individuality and capabilities of each employee, as well as a robust corporate structure capable of flexibly withstanding changes, and achieve inner happiness and a prosperous lifestyle.
5. All employees of the ANEST IWATA Group shall respect personal and cultural differenc- es, work together with all stakeholders, and establish a corporate culture that maximizes the individual's creativity and teamwork.

• Group Management Vision

To become a company with a 100-year history

1. "We will become a vibrant and innovative development-oriented company capable of providing high-performance and high-qual- ity products and services with sincerity from the customers' perspective."
2. "We will transition from improvement-based product development focused mainly on cutting costs and internal core technologies to a flexible company capable of steadily tapping into market needs and collaborating with various businesses.
3. "All employees of the Group will make a con- certed effort by aiming to become the No.1 in the world, and will strive to become a "True World-class Company" that maximizes cus- tomer satisfaction and continuously creates innovative technology and products.

To become a "True World-class Company" Management slogan

The Group companies will make a concerted effort (ONE ANEST IWATA) to become the Global Number ONE by providing unique (ONLY ONE) products and becoming Number ONE (No.1) in each market.

14	Toward the sustained creation of corporate value	44	Directors
	Operating Results, Financial Condition, and
16	45	Compliance and Risk Management
Future Financial Strategies
18	ESG Management and SDGs	Financial / Corporate Information
The Businesses of ANEST IWATA		Summary of Financial Data for Five Years
		47
20	Business Overview Air Energy Division			48	Consolidated Financial Statements
		54	Global Network
24	Coating Division
		56	Stock Information
	Quality Assurance and Intellectual Property
28			57	Corporate Profile
Management

Editorial Policy

ANEST IWATA has issued its third "Inte-	Period covered by the report	Cautionary note regarding forward-looking statements
grated Report."	The report, basically, covers the fiscal year	Forward-looking statements contained in this report have
The "Integrated Report 2021," intend-	2020 (from April 2020 to March 2021) but	been prepared based on information available at the time
ed for our stakeholders including our	it also includes reports of activities prior	of publication.
Various external factors, including the global economy,
shareholders and investors, covers such	to and after this period.
fluctuations in exchange rates, market conditions of the in-
topics as the value created by the Com-
	dustry and trends in capital expenditures, may impact the
pany, management and financial strat-	Organizations covered
Company's business performance. Accordingly, please be
egies, the strengths of our businesses	The report, basically, covers the ANEST
advised that actual results may differ from the results con-
and a report of operations, as well as ESG	IWATA Group companies including
tained herein.
information including corporate gov-	ANEST IWATA Corporation.
The purpose of this report is to provide information to
ernance and initiatives toward human
Date of publication	our shareholders and is not intended as a solicitation or a
capital, the regional communities and	recommendation to invest in the Company's shares or to
the environment.	November 2021	buy or sell or trade any other securities.

ANEST IWATA Integrated Report 2021 01

ANEST IWATA AtaGlance

ANEST IWATA is an industrial machinery manufacturer headquartered in Yokohama City, Kanagawa Prefecture. The Group's businesses consist of the Coating Business, which deals in "coating equipment" and "coating systems" based on its core technology to atomize liquids (mainly paint) into a mist, and the Air Energy Business, which deals in "air compressors" and "vacuum equipment" based on its core technology to compress gases (mainly air). With manufacturing and sales bases in 21 countries and regions worldwide, we contribute to manufacturing around the world by engaging in business activities on a global scale.

Air Energy Division

Percentage of net sales
20,866million yen	58.6%
Air compressors 54.2%
Percentage of operating income
1,821million yen	52.9%
Air compressors		Vacuum equipment
Air compressors are machines that compress gases, mainly air.	Vacuum equipment refers to a machine that creates a vacu-
They play a vital role in various fields, including serving as a power	um by gas suction and pressure reduction. Vacuum equipment
source for machines in factories, controlling the opening/closing	contributes to the development of various industries based on
of doors in trains and being used in hospital facilities.	its track record of being adopted in a wide range of fields, from
	cutting-edge research facilities to automotive and food factories.

Factories		Trains and buses		General industries		Semiconductor manufacturing
Driving source of air blowers and	Driving source of automatic doors	Suction transport and defoaming	Inspection devices
pneumatic equipment	and brakes

Medical settings		Foods			Foods		Research facilities
Driving gas supply to hospital	Generating nitrogen gas for pack-	Vacuum	packing and vacuum	Accelerators and radiation light
rooms and dental implements	aging, etc.	cooking

Oil-free scroll air compressor

Oil-free scroll vacuum pump

Consolidated Performance

(Fiscal year ended March 31, 2021)

operating income 3,444

net sales

35,588

Consolidated

million yen

Consolidated

million yen

Coating Division

Percentage of net sales

14,722million yen

41.4%

equipment 4.4% Coating equipment 32.3%

Coating systems 9.1%

Vacuum

Percentage of operating income

1,623million yen

47.1%

Coating equipment

Coating systems

Coating is applied to various products for the purpose of "im-

With the ability to make proposals by taking advantage of our

proving the aesthetic appearance" and "protecting the surface,"

experience as a leading manufacturer of coating equipment, we

among others. By utilizing the technology to atomize liquids

design and sell coating lines to provide customers with the fin-

into a mist, we provide a wide range of products related to coat-

ish tailored to their requests.

ing and spraying.

Automobiles		Electrical appliances		Automobile parts		Railway vehicles

Woodwork, metal and plastic products		Arts and hobbies		Woodwork and electrical appliances		Construction machinery and heavy machinery

Automotive refinishing	Revolving coating robots
spray guns

02

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HistoryofGrowth

In 1926, the Company was founded under the name, "Iwata Seisakusho," and in 1927 developed the first domestically produced spray gun and next year the air compressor, which would become the driving source of coating equipment. Subsequently, the Company continued to grow along with spray gun and air compressor, and entered the coating system and vacuum pump markets by leveraging its technology for handling liquids and gases. In 1996, on the 70th anniversary of its founding, the Company, in conjunction with management reforms, changed the company name to "ANEST IWATA." Cur- rently, the Group companies are engaged in initiatives to realize the Group Management Vision and are steadily following the path toward becoming "a company with a 100-year history."

1926

1930

1940

1950

1960

1970

FY2020

Consolidated net sales

35,000

million yen

100

周年

1980

1990

2000

2010

2020

2026

1926	1957
"Iwata Seisakusho,"	Established Iwata Air Com-
the Company's	pressor Mfg. Co., Ltd.

predecessor, was	1961
established in Toyo-
sawa-cho, Shibuya-	Listed its stocks in the Sec-
ku, Tokyo
ond Section of the Tokyo
	Stock Exchange.
	Four Iwata brothers including the founder

1971

Listed its stocks in the First Section of the Tokyo Stock Exchange

1987

Commenced full-scale overseas expansion of manufacturing and sales bases of coating system starting with Taiwan

19962020

Changed company name to	Revised the corporate slogan
"ANEST IWATA"

2009

Commenced full-scale overseas expansion of manufacturing and sales bases of air compressors, mainly in China

Coating Division

Coating equipment

Coating systems

1927	1948
Commenced manufac-	Released the "Type S
ture and sales of the first	and B Spray Guns," which
domestically-produced	were suited for Japanese
spray gun modeled after	hands, and established its
an imported spray gun	reputation in the coating
First domestically-produced spray gun	industry.
Origins of ANEST IWATA

1962

Made full-scale entry into the coating system market.

1957

Released the "W-57 Spray gun," and won the support of the automotive coating field.

1985 Developed the world's first electric, multi-articulated coating robot

1990

Developed a low-pressure spray

gun which cleared the Volatile

Organic Compound (VOC) Emis-

sion Standards of the state of

Spray guns

Atomizing paints into a mist with compressed air

"MRP series," multi-	California, USA, which are known
articulated coating robot	to be the strictest in the world
	Air Energy Division

"LPS-1 series," low- pressure spray gun

Air compressors

Vacuum equipment

Compressors

Proprietary development of compressors for spray gun inspection

1928	air compressors
	"MC series" medium-sized
Commenced manufac-
ture and sales of small-
sized air compressors	Air compressors at the time of founding

1969

Developed the first domestically-producedtwo-stage,air-cooled,medium-sized air compressors and entered the medium-sized air compressor market.

1977

Entered the rotary air compressor market

Body of oil-free

scroll air compressor

1991

Developed the world's first oil-free scroll air compressor

1993

Developed the world's first oil-free scroll vacuum pump and entered the vacuum pump market

"ISP series," oil-free

scroll vacuum pump

04

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Value Creation Process

The Company has been stepping up its mission by diversifying applications and launching customized unique (ONLY ONE) products in markets with the use of its core technologies, i.e., "liquid atomization" and "gas compression." Going forward, the Company, in accordance with the ANEST IWATA Corporate Philosophy, will continue contributing to the achievement of a prosperous society that is safe, reliable, and capable of sustained growth by having each one of our employees act in a "trustworthy and sincere" (Makotono kokoro) way and providing the highest level of quality and technologies as a development-oriented company. Also, by creating value for our various stakeholders through our business activities and reinvesting the acquired resources to reinforce various capital, we will aim to achieve the enhancement of corporate value and sustained growth.

Corporate Policy

"Makotono kokoro" (Trustworthy & Sincere)

ANEST IWATA Corporate Philosophy

The external

environment surrounding the Company

• Intensifying international competition
• Decrease in manpower
• Escalation of climate change and environmental problems
• Growing social demand
• Shift toward new lifestyles
• Increasingly uncertain market environment
• Advancement of digital society
• Risks that may have a signicant impact on the Company's operating results

P.46

Various capital held by the Company

(As of March 31, 2021)

Financial capital

Net assets: 36,133million yen

Shareholders' equity ratio:

65.2％

Manufacturing capital

Capital investments: 1,111million yen Property, plant and equipment: 11,354million yen

Number of factories: 19 factories in 9countries and regions

Human capital

Number of Group employees:

1,748

Ratio of overseas employees:

64.0％

Intellectual capital

Number of Patent applications: over 1,200patents

in Japan and overseas

Research and Development expenses:

1,045million yen

Social and related capital

Number of group companies: 38subsidiaries in

21countries and regions

Natural capital

CO2 emission (non-consolidated)

5,461t-CO2

Business activities and achievements

Core technology

Gas	Air compressor
Vacuum pump
compression
	equipment
P.2	P.20

R&D

Purchasing

Production

Quality management P.28

Core technology

Liquid	Coating equipment
atomization	Coating systems

P.2P.24

applications customized of Expansion	Medium-term
of	Management Plan
products	(From FY2019 to FY2021)
	"ONLY ONE" products
	×
	"NUMBER ONE" share
Sales

products of applications customized of Expansion

P.14

The value that we create

(As of March 31, 2021)

Creating cash

Consolidated net sales 35,588million yen

Free cash ow 3,535million yen

• Enhancing coordination among Group companies by utilizing ICT tools	Becoming
Providing products and services that meet the needs
and are tailored to the needs of countries and regions
• Expanding sales of customized products					a
• Enhancing overseas sales	1.0percentage points year-on-year	"True
Ratio of overseas sales increased
in a wide range of elds					World
Contributing to manufacturing
						-
• Providing industrial machinery playing a vital role in various production factories	class
Supplying highly reliable products
Company"
Airbrushes Global market share around		2	％*
• Gaining support from the market
Spray guns Domestic market share 70% or more*
Global market share ranking			nd*
Small-sized air compressors		30	that
			2
Domestic market share ranking		nd*	tsbene
Building a safe working environment
• Enhancing welfare programs						people
• Stabilizing employment	89.7
Full-time employees account for
% of the workforce
• Promoting health and productivity management Recognized as one of the	and
"White 500" enterprises in the 2021 Certied Health & Productivity
Management Outstanding Organizations Recognition Program
Enhancing relationships with regional communities	people's
• Entered into an ocial partnership agreement with a local soccer club	lives
Contributing to the solution of environmental issues

• Developing environmentally-friendly products

• Rectifying environmental problems through the widespread adoption of our environmentally-friendly products 54

Sales of oil-free models account for % of total sales of air compressors

*According to our research

E	Development of environmentally-friendly products
	S	Respecting human resources fundamental to the company
	and our relationship with society
		G	Enhancement of governance structure

P.30

P.33

P.38

06

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