ANNUAL REPORT2014Year Ended March 31, 2014

Gas &Energy

Supplying “Gas & Energy” to meet the needs of society

To Our Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . 1

Business Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Iwatani’s Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

An Interview with the President . . . . . . . . . . . . . . . 5

Performance by Segment . . . . . . . . . . . . . . . . . . . . 8

Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Company Information . . . . . . . . . . . . . . . . . . . . . . . . 10

Disclaimer Regarding Forward-looking Statements:This report contains forward-looking statements regarding the Company’s plans, outlook, strate-gies and results for the future that are based on management’s estimates, assumptions and projections at the time of publication. Certain risks and uncertainties could cause the Company’s actual results to differ materially from any projections presented in this report. These risks and un-certainties include, but are not limited to, the domestic and international economic circumstances surrounding the Company’s businesses, competitive activity, related laws and regulations and exchange rate fluctuations.

Ever since its founding, Iwatani Corporation has grown as a company that supplies

gases and energy—resources that are critical to society—by adhering to our universal

corporate philosophy for all employees: “Become a person needed by society, as those

needed by society can prosper.” In the coming years, we will continue our efforts to

enhance corporate value by operating in wide-ranging business fields. We will focus

mainly on our core businesses—the Energy business, which supports the lifestyles of

3.1 million households nationwide through the supply of LPG, and the Industrial Gases

& Machinery business, which supports every manufacturing industry in Japan by

supplying liquid hydrogen, helium, and other high-pressure gases. At the same time,

we will be developing our Materials and Agri-bio & Foods businesses.

For the coming hydrogen society, a goal now close at hand, we will draw fully on the

knowledge and technologies we have cultivated, over many years as a leading supplier of

industrial hydrogen, to press ahead with infrastructure development and contribute to

popularizing and expanding the use of hydrogen, the ultimate clean energy source.

We will further build on our strengths in our core businesses and work to establish

a solid business foundation that can respond to changes in the business environment.

We ask your continued support in the years to come.

To Our Shareholders

Contents

Chairman and CEO

Akiji Makino

1

Business Overview

Today and...

As a unique trading company

with technological capabilities

rarangngee ofof hhigigh-h pressure gases, including

oxoxoxoxoxygygene , nitrogen, argon, and other

air-separation gases as well as hydrogen

and helium, which offer prospects for

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ininststalallalationn oof f plplanant t fafafafafactctcc ororrieiei s.

Since Iwatani became Japan’s first

nationwide supplier of LPG for household

use in 1953, we have been building an

independent and stable supply

structure that extends end to end from

oil-producing countries to our

customers’ kitchens. We support Japan’s

energy infrastructure by building a

disaster-resilient supply system and

diversifying our supply sources.

InInduduststririalal GGasasa ese & Machinen ryryy

MaMaMaMaMaMaMateteteteteteteririririririalalalalaaa ssssss

AgAgAgAgririr -b-bbioio && FFFFoooooooodssds

Energy

2

Yamaguchi Liquid Hydrogen Corporation

Iwatani Industrial Gases Corporation Chiba Plant

Hydro Edge Co., Ltd. (Osaka)

Strengthening of

supply capabilities for the future

Liquid hydrogen is the critical link

between hydrogen production, and

its transport, storage and use

The Iwatani Group, Japan’s only supplier of liquid hydrogen, oper-

ates three hydrogen liquefaction plants in Japan. Sales volume of

liquid hydrogen is increasing each year, and we are considering

constructing a fourth plant to further boost our supply capabili-

ties. As we move forward, we will also consider large-scale

procurement of hydrogen produced overseas.

As demand for hydrogen increases accompanying the populariza-

tion of hydrogen energy, it will become necessary to transport

large quantities of hydrogen. This will require liquid hydrogen. We

will realize a stable supply of inexpensive hydrogen by leveraging

liquid-hydrogen handling technologies developed over many

years to build a supply chain extending from the production of

hydrogen to its transport, storage and use.

A new era of hydrogen power pioneered by

Road to a Hydrogen Society2012 Demand for hydrogen for industrial use

140 million m3

2015 Hydrogen stations

100 locations

Produce Deliver

● Bases for liquid hydrogen production

Semiconductors

Optical fibers

Liquid hydrogen container

Iwatani’s Future

Preliminary

construction of

20 hydrogen

stations by 2015

100%Liquid hydrogen

share

3

Liquid hydrogen is the key to popularization

Liquid hydrogenCompressed hydrogen gas

Measures to promote the use and

application of hydrogen

Hydrogen is attracting widespread attention as the ultimate clean energy source.

The market introduction of fuel cell vehicles that use hydrogen as fuel is scheduled

for 2015, and the size of the hydrogen market is expected to increase more than

fifteen-fold by 2025. The Iwatani Group aims to achieve annual hydrogen sales of

600 million m3 by 2025, including hydrogen for industrial use and for household use.

To that end, we are working to further boost our supply capacities and handling

technologies and to create new markets.

Key characteristics of liquid hydrogen

are high-volume transport,

high-volume storage, and high

purity. Liquefaction of hydrogen gas

reduces its volume by about 800

times, making it possible to increase

transport efficiency approximately ten times compared

to compressed hydrogen gas. Liquefaction also makes it

possible to satisfy the requirement for high quality.

Hydrogen liquefaction is an essential technology for the

realization of a hydrogen society.

The development of hydrogen infrastructure is necessary for

popularizing fuel cell vehicles, and Iwatani plans to construct 20

hydrogen stations by 2015. We also leverage our technological

expertise to sell equipment and consult on engineering for

hydrogen stations being built by other companies, and to promote

the use and application of hydrogen energy.

...future2025 Demand for hydrogen

for fuel cell vehicles

2,400 million m3

Hydrogen stations

700 locations

Use

Opening ceremony at Amagasaki Hydrogen Refueling Station

Targeting annual

hydrogen sales

of 600 million m3

by 2025

Transport efficiency

Approx.

10 times

99.9999%High purity

4

Question 1

Answer

An Interview with the President

Business conditions in Japan appear to be headed toward a full-scale recovery. In

this environment, we forecast higher profit, mainly from our two core businesses:

the Energy business and the Industrial Gases & Machinery business. In the Energy

business, we will work to enhance earning power by continuing efforts to increase

the number of LPG consumer households and strive to establish a stable supply

structure by beginning importation of LPG from the U.S., as well as other means. In

the Industrial Gases & Machinery business, we will work for expansion of the business

base by leveraging the Iwatani Group’s strengths. These include helium, for which

we have undertaken all-out strengthening of supply capabilities, and liquid hydrogen,

for which we have a high market share.

We plan to increase net sales by ¥20.9 billion and operating income by ¥1.0

billion through these initiatives.

The year ended March 31, 2014 (fiscal 2013) marked a solid start for the PLAN15 medium-term management plan. In the first year of the plan, Iwatani exceeded the targets for net sales, operating income, ordinary income, and net income announced at the beginning of the term. In fiscal 2014, we will continue efforts to enhance corporate value by enhancing of capacity for sustained growth and strengthening of the financial standing.

What is the outlook for fiscal 2014?

0

200

800

(¥ billion)

¥20.9 billion up

400

600

(FY) ’13 ’14 (Forecast)

¥1.0 billion up

0

5

25

20

10

15

(¥ billion)

(FY)

’13 ’14 (Forecast)

Net Sales Operating Income

■ Energy ■ Industrial Gases & Machinery■ Materials ■ Agri-bio & Foods■ Others

■ Energy ■ Industrial Gases & Machinery■ Materials ■ Agri-bio & Foods■ Others

President Masao Nomura

5

Question 2

Question 3

Answer

Answer

The Iwatani Group began purchasing helium from Qatar in July 2013. Procurement

from Qatar will increase in fiscal 2014, when purchasing will extend throughout the

full year. This, together with procurement from the U.S., will give Iwatani approxi-

mately 8% of world supply capabilities. We will work to ensure stable supply in Japan

while also proceeding with sales expansion in growth markets such as China and

Southeast Asia.

Our strategy for the distribution system is to work to strengthen the supply

structure and increase profitability by making continuous investments in helium

containers and developing distribution bases.

We will also undertake long-term reinforcement of our supply capabilities by

working to secure new procurement sources.

What is Iwatani’s sales strategy for helium?

Iwatani will import LPG sourced from shale gas from the U.S. beginning in fiscal

2014, and plans to import approximately 88,000 tons in the first year. Since this is a

small portion of the volume we handle, we expect the impact on our business

performance to be slight.

Since we currently rely heavily on LPG imports from the Middle East, we will

work to reinforce a stable supply structure by diversifying supply sources.

What is the plan for importing LPG from the U.S.?

LPG export terminal (Houston)

Volumehandled:

Approximately 8% of

world supply capabilities

The U.S.

Qatar

● Bases for helium distribution

6

Question 4

Question 5

Answer

AnswerThe Iwatani Group has a basic policy of reliably paying stable dividends. Our goal is

to provide appropriate shareholder returns, paying careful consideration to the

outlook for business results and the business environment. We paid a dividend of ¥7

per share for fiscal 2013. We plan to pay a dividend of ¥7 per share for fiscal 2014.

Iwatani will continue efforts to enhance corporate value as a company needed

by society. I request the continued understanding and support of our shareholders

in the coming years.

What is Iwatani’s dividend policy?

Iwatani aims to construct 20 hydrogen stations by fiscal 2015. The first of these,

Japan’s first commercial hydrogen station, opened for business within the Iwatani

R&D Center in Amagasaki City in July 2014. Since this station is supplied with liquid

hydrogen, it has the supply capacity to support high-volume consumption. In

addition, we plan to build a hydrogen station within Kansai International Airport to

supply buses and work vehicles. With the Tokyo Olympics fast approaching, we will

also proceed with construction of a hydrogen station in central Tokyo, where early

uptake of fuel cell vehicles is expected.

What is the current status of hydrogen station construction anticipating the market introduction of fuel cell vehicles?

Dispenser at commercial hydrogen station

An Interview with the President

7

Operating Income

Operating Income

Operating Income

Operating Income

Net Sales

Net Sales

Net Sales

Net Sales

Despite the impact of a decline in the per-unit con-

sumption of residential and commercial customers

and a review of less-profitable wholesale trading,

Iwatani strove to boost earning power through

continued expansion of the number of LPG con-

sumer households and operating cost reductions. In

addition, sales of LPG emergency power genera-

tors, photovoltaic power generation equipment,

and other energy-related equipment increased. As

a result, operating income rose by approximately

¥1,000 million.

Despite the continued impact of increases in electric-

ity charges, sales of industrial gases were stable,

thanks to a trend toward recovery in plant opera-

tion at domestic manufacturers and higher demand

overseas and other reasons. Sales of helium greatly

increased as supply from Qatar began. In the hydro-

gen business, the sales volume of liquid hydrogen

increased. In the machinery and facility business,

sales of hydrogen-related facilities increased as well.

As a result, operating income rose by approximately

¥800 million.

Sales of functional films for smartphones in the

electronic materials business were strong. Profit

improved in the resources and new materials busi-

ness due to factors including recovery in the mineral

resource raw materials business in Western Australia.

Sales of stainless steel increased in the metals busi-

ness. In the functional plastics business, profitability

of plastics products declined due to soaring raw

materials prices, despite strong sales of PET resin

and other resin raw materials. As a result, operating

income rose by ¥800 million.

Although profitability in the foods business de-

creased due to factors including the impact of cost

increases in producing countries and exchange

rates, sales of frozen vegetables and marine products

increased. In the agriculture and livestock business,

sales of plant factories, livestock raising facilities, and

other products were favorable. As a result, operating

income rose by approximately ¥68 million.

Energy

Industrial Gases & Machinery

Materials

Agri-bio & Foods

● LPG for household, commercial and industrial use

● LPG-supply equipment and facilities● LNG● Petroleum products● Household kitchen appliances● Home energy components● Daily necessities● Portable cooking stoves● Gas canisters● Mineral water, etc.

● Air-separation gases ● Hydrogen● Helium ● Other specialty gases● Gas-supply facilities ● Welding materials● Welding and cutting equipment● Industrial machinery and facilities● Industrial robots● Pumps and compressors● Disaster prevention equipment● High-pressure gas equipment● Semiconductor manufacturing equipment● Electronic-component manufacturing equipment● Factory automation systems● Medicine and food packing machinery● Environmental equipment, etc.

● Stainless steel● Non-ferrous metals● Functional plastic products● Electronic display materials● Mineral sand● Rare earth metals, etc.

● Frozen vegetables and fruits● Health foods● Livestock-related products● Agri-bio related goods● Food plant sanitation management, etc.

Segment Performance Review

Percentage of Net Sales

■ Energy ■ Industrial Gases & Machinery

■ Materials ■ Agri-bio & Foods ■ Others

Performance by Segment

0

100,000

200,000

300,000

400,000

0

3,000

6,000

9,000

15,000

12,000

386,718386,718

12,075

’12 ’13 ’12 ’13

(¥ million) (¥ million)

(FY) (FY)

0

40,000

80,000

120,000

160,000

0

1,000

2,000

3,000

5,000

4,000

151,474 4,753

’12 ’13 ’12 ’13

(¥ million) (¥ million)

(FY) (FY)

0

50,000

100,000

150,000

0

1,000

3,000

2,000

126,885 2,683

’12 ’13 ’12 ’13

(¥ million) (¥ million)

(FY) (FY)

0

10,000

20,000

30,000

0

200

600

400

26,378573

’12 ’13 ’12 ’13

(¥ million) (¥ million)

(FY) (FY)

54.9%21.5%

18.0%3.8%

1.8%

(Years ended March 31)

8

2010 2011 2012 2013 2014 2014

For the year ¥ million US$ thousand

Net sales ¥ 555,477 ¥ 618,844 ¥ 661,185 ¥ 657,006 ¥ 703,923 $ 6,839,516

Gross profit 133,204 138,608 144,432 139,763 146,792 1,426,272

Operating income 13,732 14,868 19,171 16,709 18,518 179,926

Ordinary income 13,448 15,590 19,528 17,406 19,258 187,116

Income before income taxes and minority interests 12,903 12,850 19,535 15,465 18,302 177,827

Net income 5,539 6,193 10,543 8,026 10,466 101,690

Comprehensive income 4,888 10,508 13,691 16,384 159,191

R&D expenses 751 611 572 683 1,368 13,291

Ratios % %

Net income to net sales 1.0 1.0 1.6 1.2 1.5 1.5

ROE (net income to net assets) 9.6 10.0 15.7 10.4 11.6 11.6

ROA (ordinary income to total assets) 3.7 4.2 5.1 4.5 4.8 4.8

Equity ratio 16.6 16.9 18.4 21.5 23.2 23.2

Per share data Yen U.S. dollars

Net income 22.22 25.21 43.24 32.88 42.53 0.41

Shareholders’ equity 248.03 257.80 292.28 337.74 393.15 3.81

Cash dividend applicable to the period 8.00 6.00 7.00 7.00 7.00 0.06

At year-end ¥ million US$ thousand

Total assets 366,110 373,940 386,127 386,302 416,219 4,044,102

Fixed assets 198,971 197,811 200,354 207,523 214,724 2,086,319

Interest-bearing debt 158,998 166,108 159,398 151,378 161,099 1,565,283

Net assets 67,999 71,249 79,551 90,903 105,058 1,020,773

* The U.S. dollar amounts have been translated at the prevailing exchange rate as of March 31, 2014, which was ¥102.92 to US$1.00.

Net Sales (¥ million) Operating Income (¥ million) Net Income (¥ million)

Total Assets (¥ million) Net Assets (¥ million)

Financial Highlights

0

100,000

’10 ’11 ’12 ’13 ’14

700,000

600,000

500,000

400,000

300,000

200,000

0

5,000

20,000

15,000

10,000

’10 ’11 ’12 ’13 ’14

0

100,000

500,000

300,000

400,000

200,000

’10 ’11 ’12 ’13 ’140

30,000

120,000

90,000

60,000

’10 ’11 ’12 ’13 ’14

0

4,000

2,000

12,000

8,000

10,000

6,000

’10 ’11 ’12 ’13 ’14

(Years ended March 31)

9

Share Information

Company Information

Share listing Tokyo, Nagoya Shares of common

stock issued and outstanding

246,385,997 (4,979,031 shares of treasury stock excluded)

Agent to manage

shareholders’ registryMitsubishi UFJ Trust and Banking Corporation

Distribution

of shares by type

Major shareholders*

Change in share price

* In addition to the above, the Company holds 4,979,031 shares of treasury stock.

Individuals and others 32.68% Financial institutions 27.85% Other institutions 25.42% Foreign institutions and others 12.64% Securities companies 1.41%

Share Price (Yen) Trading Volume (Thousand shares)

Name Formal establishment February 2, 1945

Headquarters

Osaka Head Office6-4, Hommachi 3-chome, Chuo-ku, Osaka 541-0053, Japan Tel: 81-6-7637-3310Tokyo Head Office21-8, Nishi-Shimbashi 3-chome, Minato-ku, Tokyo 105-8458, Japan Tel: 81-3-5405-5711

Company directors

and auditors

Paid-in capital 20,096 million yen Number of employees 8,741 (consolidated)

Website http://www.iwatani.co.jp/eng/

Company Information

[2011] [2012] [2013] [2014]

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400

200

0

600

800

0

50,000

100,000

150,000

200,000

22,755shareholders

(As of March 31, 2014)

* An asterisk indicates the holding of concurrent positions as director and executive officer.

(As of June 27, 2014)

Chairman and CEO* Akiji MakinoVice Chairman* Toshio WatanabePresident* Masao NomuraExecutive Vice President* Kazuhiko MinamimotoExecutive Vice President* Hisato UehaSenior Executive Director* Mitsuhiro Tanimoto

Senior Executive Director* Masami MakiseSenior Executive Director* Hirozumi HirotaExecutive Director* Masanori WatanabeExecutive Director* Masaaki MiyashiroExecutive Director* Hiroyuki OnjiExecutive Director* Takashi Funaki

Executive Director* Hiroshi MajimaDirector* Naoki IwataniDirector* Akira OhtaDirector* Katsuya TakemotoCorporate Auditor Toyofumi OhamaCorporate Auditor Yoshiaki Fukuzawa

Corporate Auditor Masahiro HoriiCorporate Auditor Mitsuaki Naitou

Name Number of shares held (Thousands of shares)

Shareholding ratio(%)

The Iwatani Naoji Foundation 20,663 8.39The Master Trust Bank of Japan, Ltd. (Trust Account) 9,756 3.96The Chase Manhattan Bank, N.A. London S.L. Omnibus Account 7,396 3.00Tetsu Iwatani Co. Ltd. 6,870 2.79The Bank of Tokyo-Mitsubishi UFJ, Ltd. 6,680 2.71Japan Trustee Services Bank, Ltd. (Trust Account) 6,120 2.48Resona Bank, Ltd. 5,888 2.39Iwatani Enyukai 5,235 2.12Nippon Life Insurance Company 5,052 2.05Iwatanisangyou Senyukai 4,229 1.72

10

Osaka Head Office6-4, Hommachi 3-chome, Chuo-ku, Osaka 541-0053, Japan

Tel: 81-6-7637-3310 Fax: 81-6-7637-3535

Tokyo Head Office21-8, Nishi-Shimbashi 3-chome, Minato-ku, Tokyo 105-8458, Japan

Tel: 81-3-5405-5711 Fax: 81-3-5405-5640

Corporate Website http://www.iwatani.co.jp/eng/ Printed in Japan

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