New Medium-Term Business PlanINNOVATION 25(2021 to 2025)

NICCA Chemical Co., Ltd.
(Securities code: 4463)

Yasumasa Emori
President
February 26, 2021

1. General overview of INNOVATION 19,
the previous medium-term business plan--- P. 3

2. Review of FY2020--- P. 12

3. The INNOVATION 25 medium-term business plan--- P. 14

4. Appendix--- P. 29

SDGs icons are used in this material.

2General Overview of INNOVATION 19,
the Previous Medium-term Business Plan

3

Previous Medium- and Long-term Business Plan (2017 to 2025)
The three-year period of the previous medium-term business plan (2017 to 2019) was positioned as a reform
phase for the construction of a solid business foundation to ensure growth from 2020.
The medium- and long-term business plan previously announced

Long-term business plan2017 to 2025

Previous mediumterm business plan
Phase 1

Phase 2Phase 3Growth phase2020 to 2022

Explosion phase2023 to 2025

Achieving
the longterm
businessplan

Reform phase2017 to 2019

2017

2020

2023

2025
4

Previous Medium-term Business Plan: Outline of INNOVATION 19

SloganCompany-wide Management Strategy⚫ Promoting innovation
Open Innovation and Reform

Take the opportunity of the beginning of operations at the NICCA
Innovation Center to promote open innovation and accelerate new
product development and the creation of new businesses.

⚫ Strengthening and expanding the global network
Strengthen and expand the global network by building solid
partnerships with customers, mainly in Asia, and aggressively
expanding business in new areas such as emerging countries.

Goals (Consolidated) Net sales:

JPY 50.0 billion

 Operating profit:

JPY 2.5 billion

 EBITDA:

JPY 5.0 billion or more

 ROE (Net income):

5% or higher

 Amount of growthinvestment during
the three years:
JPY 14.0 billion
EBITDA = Operating profit + depreciation cost (including the amortization of goodwill)⚫ Establishing a business foundation that will
enable us to keep on winning
Improve management efficiency to transform our business structureso that it is unaffected by environmental changes and build abusiness foundation that will enable us to keep on winning.
⁃ Integrate the Kashima Factory and the Kanto Factory to consolidate production⁃ Integrate bases in China (Zhejiang and Shanghai) to improve businessefficiency.
⁃ Strategically leverage the Group’s IT infrastructure to improve profitability⁃ Effectively use the Group’s cash to invest, etc.
⁃ Take thorough cost reduction measures.
⁃ Reform the personnel system.

5

Previous Medium-term Business Plan: Consolidated Performance (Net Sales)
We achieved JPY 50.0 billion in 2018, a year earlier than planned, which resulted in steady growth of the threeyear net sales average.
Net sales

Highlights of the previous plan2017 to 2019

(Billion yen)

⚫ Overseas textile chemicals business expanded steadily,mainly in Vietnam and other Asian countries.

Average net sales

2014 to 2016
Average net
sales

2009 to 2013

JPY 43.0
billionAverage net sales

JPY 31.0 billion

44.2

JPY 48.0
billion

48.4

50.1

50.0

46.1

⚫ The cosmetics ODM business grew significantly as thesecond pillar of the cosmetics business.
⚫ Ohtomo Chemical Ins., Corp., which we acquired in 2015,
achieved a greater than 30% increase in sales.
⚫ On the other hand, large-scale contract manufacturing
projects expanded rapidly in both chemicals and cosmetics,
which resulted in an unbalanced business portfolio.

33.5⚫ Sales decreased significantly in 2019, resulting in a failure toachieve the medium-term goal, mainly reflecting theintensified U.S.-China trade conflict, two consecutive warm
winters, and the reduction of the number of large-scale
contract manufacturing projects.

29.32009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Goal

Long-Term Vision 2016

INNOVATION 19

6

Previous Medium-term Business Plan:

Consolidated Performance (Operating Profit & EBITDA)
However, profitability issues remained due to an increase in fixed costs including depreciation cost for large
investments.
Operating profit & EBITDA

Highlights of the previous plan

(Billion yen)

⚫ Intensive growth investment.

40

5.0
Operating profit

35

50

4.5

Depreciation cost

4.0

30

4.2
3.6

EBITDA

2.9

40

2.5

25

3.1 2.1
20

2.3

30

2.4

2.2
1.7

15

1.4

2.5

1.5

1.9

⚫ Expenses increased in tandem with the increase of sales,leaving fundamental cost improvements half done.
⚫ Profit was also affected significantly by changes in thenumber of large contract-manufacturing projects.

1.9

1.3

⚫ Aggressive investment in R&D to create new businesses, inaddition to large investments such as the establishment of a
new research center, the construction of a new factory, andothers.

20

1.4

10

1.0
10

⚫ Profit decreased in 2019 due to a significant increase indepreciation cost, attributed in part to the large three-year
investment, and also to a decline in net sales.

5

0

0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Goal

Long-Term Vision 2016

INNOVATION 19

7

Previous Medium-term Business Plan: Chemicals Business (Consolidated)
While net sales grew steadily in both core businesses and new businesses, profit from new businesses was
far below the goal, and profit declined due to depreciation cost and aggressive spending. The profitability ofthis segment is an issue to address.
Net sales(Billion yen)Core businesses
基盤事業

35.8
31.9

Segment profit & EBITDA
New businesses
新規事業

35.9

36.2

8.6

8.2

( ) Sales from large contract
manufacturing projects

31.5

34.7

37.0

(Billion yen)
50

45

Segment profit
セグメント利益

7.1

8.1

EBITDA

4.4

4.2

4.0

40

10.0

Depreciation cost
減価償却費

3.4

3.4

1.9

1.9

35

3.2

30

25

2.4

2.3

2.3

20

24.4

27.3

27.9

26.6

（2.4）

（3.5）

（4.1）

（3.6）

27.0

15

0.9

10

1.4

1.4

1.4

2016

2017

2018

5

1.5

2.5

1.7
1.7

0

2014

2015

2016

2017

2018

2019

Goal
目標

2014

2015

Major achievements

Tasks in the next term

⚫ Double-digit growth was achieved in textile chemicals business in Vietnam and Bangladesh.
⚫ Ohtomo Chemical increased net sales by more than 30%, due mainly to new businessdevelopment.
⚫ The special resin business developed greatly as a new growth business.
⚫ The new Kashima Factory was completed, enabling increased production of waterborne
polyurethane resin.
⚫ The new NICCA KOREA factory is completed, and the production of active ingredients forwater repellents, etc. has begun to increase.

⚫ Transformation of the business portfolio

2019

Goal
目標

⁃ Improving business profitability⁃ Breaking away from a structure dependent on seasonal fluctuations
and specific factors and industries⚫ Accelerating the creation and development of new businesses ingrowth markets⚫ Optimizing the balance sheet, including inventory assets, andimproving cash flows

Chemicals include other businesses.
In the previous announcement, the operating profit and EBITDA goals were set including some costs, such as the cost for new research facilities, in "Company-wide, etc."8

Previous Medium-term Business Plan: Cosmetics Business (Consolidated)
The growth of the domestic ODM business was achieved through the diversification strategy and the growthof overseas business was achieved through the global expansion strategy, but the domestic businesstargeting beauty salons remained flat. The tasks for the next term will again be to achieve the growth of thedomestic business targeting beauty salons, and also to expand domestic and overseas ODM businesses.
Net sales(Billion yen)Domestic business
国内美容室向け

targeting beauty salons

10.6
8.0

Segment profit & EBITDA
Domestic ODM business
国内ODM事業他

Segment profit
セグメント利益(Billion yen)

Depreciation cost
減価償却費

12.4

1.1

1.3
4.7

13.9
1.5
5.8

13.0
11.3
1.5

2.5
1.6

3.0

2.5
1.9

1.8

1.8

20

15

2.8

2.4

25

1.9

EBITDA

2.7

30

12.6
4.6

Overseas business
海外事業

2.1
2.3
2.0

2.2

2.4

1.6

10

6.8

6.3

6.5

6.7

8.9
5

0.2

0.3

0.4

0.4

0.4

2016

2017

2018

2019

Goal
目標

0

2014

2015

2016

2017

2018

2019

Goal
目標

2014

2015

Major achievements

Tasks in the next term

⚫ FLOWDIA, the mainstay haircare products, became a big brand exceeding JPY 1.0 billion.
⚫ Domestic ODM business expanded significantly thanks in part to large contract
manufacturing projects.
⚫ Overseas business grew mainly in South Korea, exceeding JPY 1.5 billion.
⚫ Acquired Rella Cosmetique K.K., making progress in the building of a system forincreasing production.
⚫ All cosmetics factories acquired ISO 22716 certification, with an improved level ofmanagement.

⚫ Again, achieve growth of domestic business targeting beauty salons⚫ Expand domestic and overseas ODM businesses⚫ Promote the diversification strategy, including alcohol hand sanitizer⚫ Move forward with digital promotion⚫ Improve productivity through manufacturing and operational reforms

In the previous announcement, the operating profit and EBITDA goals were set including some costs, such as the cost for new research facilities, in "Company-wide, etc."9Previous Medium-term Business Plan: General Overview of INNOVATION 19
Steadily implemented major investments necessary for future growth while curbing the increase of interestbearing debt
Major medium-term achievements

Growth investments〇〇⚫ Equipment investment and capital investment

Consolidation of
productionin the new
Kashima Factory

Introductionof a newpersonnel
system⁃ Completion of the NICCA Innovation Center, a new research facility (2017)⁃ Began operations at the new Kashima Factory, enabling an increase of the productionof urethane resin (2019)⁃ Completion of the new NICCA KOREA factory for fluorine chemical products (2019)⁃ Acquisition of Rella Cosmetique K.K. stock (2019)

Investments necessary for future growth were made on the largest-everscale over the three years.

⚫ Growth investment during the three years and interest-bearing
debt〇
Consolidationand integrationof basesin China

Building a businessfoundation thatenables us tokeep on winning〇
Strategic use of
the Group’s
IT infrastructure

Globalfinancialstrategy• Increase of interestbearing debt

We made it possible to invest in growth while curbing debt by improving
the efficiency of fund operations.
⁃ Amount invested in growth during the three years: Approx. JPY 14.0 billion⁃ Outstanding interest-bearing debt
End of 2016: JPY 17.3 billion
End of 2019: JPY 19.5 billion  Up approx. JPY 2.2 billion in the three years

×
Promotion of
cost reduction• Increase of aggressive spending• Profitability decline(From left): NICCA Innovation Center, Kashima Factory No.2, new NICCA KOREA factory

10

Previous Medium-term Business Plan: Status of Achievement of Goals
Company-wide goals

Segment-specific goals

Term of the previous medium-term
management plan
Consolidated

Consolidated

2016(Billion yen)

2016

(Billion yen)

2017

2018

Results

Results

2019

Results

Term of the previous medium-term
management plan

2017

2018

Results

Results

2019
Plan

Results

Net sales

44.2

48.4

50.1

50.0

46.1

Chemicals

31.5

35.9

36.2

37.0

34.7

Domestic

13.8

15.2

15.1

16.5

15.2

Overseas

17.6

20.7

21.0

20.5

19.5

Cosmetics

12.6

12.4

13.9

13.0

11.3

Domestic

11.6

11.2

12.5

10.5

10.0

Overseas

1.0

1.2

1.4

2.5

1.3

Segment profit

1.4

2.1

2.3

2.5

1.3

Chemicals

0.9

1.9

1.9

2.5

1.5

Cosmetics

2.3

2.0

2.2

2.4

1.6

Corporate and eliminations

-1.8

-1.9

-1.9

-2.4

-1.8

EBITDA

3.1

4.0

4.2

5.0

3.6

109.37

Chemicals

2.3

3.4

3.4

4.2

3.2

Chemicals include other businesses.
EBITDA = Operating profit + depreciation cost (including goodwill amortization)
In the previous announcement, the operating profit and EBITDA goals were set including some costs,
such as the cost for new research facilities, in "Company-wide, etc."

Cosmetics

2.5

2.4

2.7

2.8

2.1

Corporate and eliminations

-1.7

-1.8

-1.8

-2.0

-1.7

Results

Plan

Results

Net sales

44.2

48.4

50.1

50.0

46.1

Operating profit

1.4

2.1

2.3

2.5

1.3

EBITDA

3.1

4.0

4.2

5.0

3.6

ROS (Operating profit)

3.3%

4.4%

4.6%

5.0%

3.0%

ROE (Profit)

2.0%

7.8%

12.6%

5.0%

4.5%

Interest-bearing debt

17.3

19.1

17.8

-

19.5

Exchange rate:
JPY/USD

110.29112.38110.56100.0011

Review of FY2020

12

Review of FY2020
We faced difficult conditions and a drastic change in the business environment. However, many reforms madeprogress during the fiscal year.
Net sales and operating profit
Net sales
売上高(Billion yen)
600

4.0

Operating profit
営業利益

4.2

4.1

48.4

400

50.1

35

46.1

30

41.1
300

2.1

200

25
20

2.3

100

45
40

3.6

500

What we gained in the difficult environment

EBITDA

15

1.3

1.4

2019

2020

10
5

0

0

2017

2018

Results⚫ Decrease in sales and increase in profit
While sales declined 10% year on year, operating profit increased thanks toGroup-wide operations improvement and uncompromising cost reductions.

⚫ A new break-even point was established throughuncompromising cost-cutting activities and a fundamental
review of the cost structure.
⚫ Company-wide introduction of remote working significantly
improved business efficiency, increased frequency ofcommunication with overseas people, diversified
workstyles and prevented infection.
⚫ Interest-bearing debt was reduced due in part to the
optimization of operating funds, reduction of unwanted
assets, and other results of the review of inventory assets.
⚫ Hints and a catalyst for the further evolution of the newtarget management evaluation system for personnel
evaluations were acquired due to the increased utilizationof remote working and working from home.

⚫ Improved financial structure
We posted a record-high cash flows from operating activities of JPY 6.4 billion
and reduced interest-bearing debt by JPY 3.2 billion year on year, due in part tobalance sheet optimization including the reduction of inventory assets.

13

Medium-term Business PlanINNOVATION 25

14

What We Want to Be in the Future
In the long term, our goal is to become the innovation company most trusted by customers all over the world
through three key management strategies.
Company-wide long-term vision

The innovation company most trusted
by customers all over the world
3 key management strategies

Innovation

Efficiency

Sustainability

Innovate to solve new social
issuesAggressively promote
digitalization to uncompromisingly
improve efficiency

Become a strong, vigorous
corporate group contributing to asustainable society
15

Position of the New Medium-term Business Plan (2021 to 2025)
We developed a new five-year medium-term business plan that is not a continuation of the previous plans,
reflecting the significant change in the business environment.
Medium- and long-term business plan previously announced

×Previous mediumterm business plan

COVID-19
pandemic
in 2020

Reform phase2017 to 2019

Acceleratedchanges inbusiness
environment

Phase 2Growth phase2020 to 2022×

Phase 3
Explosion phase2023 to 2025
2025

2021

The new, recently formulated medium-term business plan

New medium-term business plan
Started as Phase 1 of
the nine-year long-termbusiness plan

2021 to 2025
The plan’s main assumptions• COVID-19 will subside to a certain degree, leading to modest recovery of the global
economy.
• However, the business environment in some markets, including the apparel,laundry, and beauty salon markets, will remain difficult.

16

New Medium-term Business Plan: View of the Business Environment
The business environment is experiencing significant, rapid change
View of the business environment

The new normal caused by the pandemic

Climate change and environmental policy⚫ Rising awareness of health and hygiene⚫ Decarbonization and solutions to the marine plastic
problem⚫ Penetration and continuation of
infection control⚫ Changes in consumer behaviors(e-commerce/consumption at home)⚫ Shift to a green society and a circular economy⚫ Momentum increasing globally toward the realizationof a sustainable society (SDGs)⚫ Acceleration of digitalization of society reflecting
teleworking and remote communication

Super-smart society

DX and workstyle reform⚫ Arrival of Society 5.0⚫ Dramatic efficiency improvement using AI, 5G,
robotics, etc.

⚫ Accelerated development of technologies for EVs
and next-generation mobility⚫ Growing demand for semiconductors, opticalproducts, etc. reflecting the shift to next-generation
communication standards and the growing use ofdigital equipment⚫ Declining birth rate, aging population, andimprovement of per-capita productivity⚫ Diversification of workstyles and collapse of
traditional Japanese employment practices⚫ Promotion of diversity
17

New Medium-term Business Plan: Company-Wide Basic Strategies

In the new medium-term business plan, INNOVATION 25, we have laid out five company-wide basic strategies
to achieve transformation and steady growth even in a business environment that is extremely uncertain.
Name of the new plan

INNOVATION 25
Company-wide basic strategies

1

Major transformationof business structure:

Focus efforts on the areas of the Environment,
Health, and Digital (advanced materials).

2

Productivity reform:

Aggressively promote DX.

3

Reinforcement of thefinancial foundation:

4

Promotion of sustainable
Contribute to a sustainable society.
management:

5

Evolution of theextended family policy:

Build a firm financial foundation which enables
stable growth investment.

Promote diversity and improve the job
satisfaction of all employees.

Innovation

Efficiency

Sustainability
18

New Medium-term Business Plan: Three-year Business Performance Goals

Reflecting the uncertain business environment, we have first set quantifiable 3-year business performancegoals to be achieved in FY2023, the final fiscal year of the plan.
3-year business performance goals(FY2023 consolidated business performance targets) Net sales:

JPY 50.0 bn (Chemicals: 37.0 bn./Cosmetics: 13.0 bn)

 Operating profit:

JPY 2.5 bn (Chemicals: 2.1 bn/ Cosmetics: 2.4 bn/ Company-wide, etc.: -2.0 bn)

 EBITDA:

JPY 5.0 bn (Chemicals: 3.9 bn/ Cosmetics: 2.9 bn/ Company-wide, etc.: -1.8 bn)

 ROS (Operating profit):

5% or higher

 ROE (Profit):

5% or higher

 ROA (Operating profit):

4.5% or higher

Assumed exchange rate: JPY 105/USD
Chemicals include other businesses.
EBITDA = Operating profit+ depreciation cost (including amortization of goodwill)

Reference: FY2020 consolidated
business performance Net sales:
JPY 41.1 bn
 Operating profit:
JPY 1.4 bn
 EBITDA:
JPY 4.1 bn
 ROS (Operating profit):
3.4%
 ROE (Profit):
5.1%
 ROA (Operating profit):
2.6%

19

Company-wide Basic Strategy (1): Major Transformation of Business Structure
To contribute to solutions to social issues, we will embark upon a major a major transformation of ourbusiness structure focusing on three business domains, the Environment, Health, and Digital (advanced
materials) (the EHD businesses).
● The themes of all new product development projects in Japan shall be associated with EHD businesses, with efforts
focused on the development of high added-value products and technologies.

● Increase the ratio of sales from EHD businesses to consolidated net sales from the current 25% to 50% by 2025.

2019⚫ Environment: E⚫ Health: H⚫ Digital (advanced
materials): D⚫ Other existing
businesses• EHD businesses
are alreadygrowing.

Approx.
25%⚫ EHD sales ratio: Approx. 25%(Approx. JPY 11.0 billion)⚫ EHD profit ratio: Approx. 30%(Approx. JPY 400 million)

2025• Current products will be replaced.
• Cater to needs in new fields.

E
H

50%

Aim for 100% in the future.

D
Increase the ratio of sales
from EHD businesses to
50% (sales and profit).
20

Area of Focus (1): Environment
Basic policy, technology base, and specific initiatives

Environment

Net sales
2019 to 2023

⚫ Focus efforts on businesses which solve social issues related to the global environment to contribute to therealization of a sustainable society and a circular economy.
⚫ Apply technologies related to (low molecular and high molecular) synthesis and manufacturing processes andtechnologies for anti-aging and cosmetic formulations.
⚫ Focus efforts on the development of products using natural ingredients, natural materials, or biomaterials andproducts which contribute to the reduction of CO2 emissions. Proactively promote the use of environmentally friendly
containers and packaging materials.

Waterborne polyurethane
for artificial leather

Fluorine-free water
repellent agents

EraL Beauty & Sustainable

EVAFANOL series
Car seats, sofas, shoes, medical gloves

NEOSEED seriesHigh functional apparel and sports
brand clothing, etc.

Comprehensive rebranding of EraL
Cosmetics sold exclusively
at beauty salons

CAGR: 21.3%(Billion yen)

6.5

3.0

2019

2023

⚫ Reducing environmental impact andswitching to very safe substances⚫ Selected for inclusion in the Ministry of
Economy, Trade and Industry’s 2020 Global
Niche Top Companies Selection 100⚫ Environmentally friendly water repellent agents for
textile processing⚫ Won U.S. R&D World Magazine’s 2020 R&D 100
Award.
⚫ Won the Ministry of Education, Culture, Sports,
Science and Technology award program’s Minister of
Education, Culture, Sports, Science and Technology
award recognizing inventions in Kinki area

⚫ Environmentally friendly containers andmaterials⚫ Functional formulations using plants andscience⚫ Leading-edge research into aging care
⚫ Contributing to the future of beauty salons21

Area of Focus (2): Health
Basic policy, technology base, and specific initiatives

Health⚫ Quickly advance development and commercialization of hygiene products, for which social needs have been
increasing due to the COVID-19 pandemic. Specify next-generation medicine and infection control as areas of focus,
to contribute to the health and prosperity of people all over the world.
⚫ Apply antibacterial and antiviral research and technology for pathological and cell examinations, including precisionorganic synthesis and precision polymerization technologies.
⚫ Established the Life and Environmental Hygiene Business Development Division in 2020 to powerfully promotebusinesses related to life, the environment, and hygiene under an organizational structure beyond the boundaries ofthe business divisions.

Net sales

Antibacterial and antiviral
agentsHair science for healthy,
beautiful hair

Next-generation in-vitro
diagnostic kit

2019 to 2023

NICCANON and ORRIS series
Textile products, films, coating materials,
and laundry

FLOWDIA, UTAU, etc.
Hair care, scalp care, and styling⚫ Develop an in-vitro diagnostic kit that uses
functional artificial nucleic acid, for nextgeneration customized medicine.

CAGR: 15.0%

Expanding the area ofcleaning in the field of
medicine(Billion yen)

7.0

⚫ Accelerate business expansion from theareas of medical equipment cleaning andsterilization at the Central Material Office tospecimen tests, dialysis, etc.

4.0
Hand sanitizer containing
moisturizing ingredients
2019

2023

⚫ 99.9% reduction of viruses⚫ Antiviral effects ensured for any material⚫ Business expansion to films, coating materials,
and other areas⚫ Expand applications riding on the strengths of
its quick effect and transparency.

⚫ Repairing damaged hair efficiently with aninnovative technology developed from a
medical perspective⚫ Keeping skin and hair healthy andbeautiful using plant-derived ingredients

⚫
⚫
⚫
⚫

A quasi-drug, which means it is reliable
Use of natural ethanol made in Japan
Containing four moisturizing ingredients
Smooth, non-greasy texture

22

Area of Focus (3): Digital (Advanced Materials)
Basic policy, technology base, and specific initiatives

Digital(Advanced Materials)⚫ Create and develop new businesses in the domains of technologies and materials that are necessary in the area ofadvanced information technologies and transform the business related to advanced materials into the third pillar
while the demand for digital devices and semiconductors continues to grow due to the acceleration of thedigitalization of society.
⚫ Apply monomer derivation technology, polymer synthesis technology, AO addition technology, fluorine-relatedsynthesis and manufacturing process technologies, and other technologies that are our strengths.
⚫ Established the Specialty Chemicals Division as a new division in 2021 to powerfully promote business related toadvanced materials.

Net sales

Highly functional, fluorinatedpolymer materials

Chemicals for processing
silicon wafers forsemiconductors

Special resin materials

2019 to 2023

Low-dielectric, high-frequency materials fornext-generation communication, fluorinatedmaterials, capacitor materials, etc.

Water-soluble coolant for cutting
silicon wafers for semiconductors, etc.

Optical parts, sensing devices,
drones, next-generation mobility, etc.

⚫ Enables miniaturization and lamination ofsemiconductors⚫ Grease with high radiation performance and endface processing agent⚫ High antifouling performance⚫ Our strengths in superior surface control
technology⚫ Growing demand for silicon wafers forsemiconductors⚫ Environmentally friendly, water-soluble agent⚫ Implementation of a resource-recycling businessmodel⚫ Have supplied an agent to a world-class siliconwafer manufacturer⚫ Growing demand for optical products⚫ Anchoring agent and antifoulant for opticalfilms⚫ Development of highly functional special
resin material⚫ AO addition technology (AO modification)

CAGR: 9.6%

(Billion yen)

6.5

4.5

2019

2023

23

Company-wide Basic Strategy (2): Productivity Reform
Improve per-capita productivity significantly by aggressively promoting digitalization in all operations.
⚫ Aggressively invest in digitalization technologies such as AI and RPA to improve per-capita productivity(added value) 30% or more (compared to the FY2020 level) by 2025.
⚫ Drastically improve the efficiency of existing operations to work on new operations for the promotion of EHD
businesses.
⚫ Accelerate innovation through significant quality improvement and the increase of communications
with customers.
⚫ Improve by setting related key indicators on a department-by-department basis.
E.g., R&D: Research and development efficiency, ratio of development projects related to EHD businesses, etc.

24Company-wide Basic Strategy (3): Reinforcement of the Financial Foundation
Agilely invest in growth, even in a highly uncertain environment, while maintaining the financial standing thatwas improved in 2020.
Basic policies⚫ Strengthen financial standing and foundation.
Stabilize financial foundation by improving profitability andshrinking balance sheet.

⁃
⁃
⁃
⁃

⚫ Amount to be invested in growth (2021 to 2023): Approx.
JPY 6.0 billion

Improve business profitability by promoting EHD businesses.
Continue to improve per-capita productivity and optimize cost.
Optimize operating fund and reduce interest-bearing debt.
Integrate and consolidate overseas bases in accordance with businessstrategies.

⚫ Invest in growth⁃ Investments related to EHD businesses: Approx. JPY 3.0 billion⁃ Investments to improve efficiency through DX: Approx. JPY 1.0 billion

1.3

14.0
(Billion yen)

12.0

Transition from the large investment phase to the phase
recovering investments through earnings⁃ Invest in growth related to EHD businesses (R&D, equipment, etc.).
⁃ Invest to promote DX to improve efficiency.
⁃ Conduct M&A activities and establish bases, aiming for synergy between
businesses.

6.0
3-year business performance goals

Investments in 2020

(FY2023 consolidated businessperformance targets)⚫ Improving profitability: ROS and ROE at 5% or higher⚫ Reinforcing financial foundation: ROA at 4.5% or higher

2011-2013
Results- New Yamada Pharmaceutical Co.,
Ltd. factory- Acquisition of subsidiary Ohtomo
Chemical Ins. Corp.
- Acquisition of subsidiary EmoriEngineering- Expansion of production equipment
in South Korea- NICAA Innovation Center- New Kashima Factory No.2
- New factory in South Korea- Acquisition of a cosmetics
manufacturer subsidiary

2014-2016
Results

2017-2020
Results

CapitalSomething
investment,
extra

M&A, etc.

6.0

Investments in
EHD+
Investments inefficiency
improvement2021-2023
Plan

25

Company-wide Basic Strategy (4): Promotion of Sustainable Management
Add the new goal of Reducing brake-specific CO2 emissions of the overall Group by 30% (compared to the 2018
level) by 2030 to contribute to the realization of a sustainable society.

Specific initiatives
Environment
For a cleaner global environment

Life For better lives

Society For a wealthier society

External evaluations

Major initiatives taken so far⚫ Joined ZDHC (first in Japan)⚫ Certified bluesign® system partner (first textile processing chemical
manufacturer in Japan)⚫ NICCA Innovation Center certified as a project leading sustainablearchitecture, etc. (project leading CO2 reduction) in a Ministry of Land,
Infrastructure, Transport and Tourism subsidy program⚫ Promoted acquisition of ISO 14001 certification⚫ Contributed to infection control using antibacterial and antiviralproducts⚫ Provided products that contribute to healthy, clean living, such as theprocessing of sports apparel products to add functionality andlaundry agents⚫ Developed an innovative cosmetic product in pursuit of the healthand beauty of hair
⚫ Promoted acquisition of ISO 9001 and ISO 22716 certifications⚫ Donated to aid the development of the textile industry in Bangladesh⚫ Held a seminar on drainage measures in Indonesia⚫ Carried out activities to make towns more comfortable to live in,including neighborhood cleaning and a private fire brigade⚫ Supported international students from emerging countries and helped
people with physical disabilities receive education⚫ Acquired ISO 45001 certification (occupational health and safety)

Initiatives to advance further
Reducing brake-specific CO2
emissions by 30%- Reducing power consumption- Switching to renewable energy- Developing products with low environmental impact

Achieving the growth of EHD
businesses- Providing environmentally friendly dyeing solutions
to the apparel industry- Developing products for hygienic living
environments- Promoting sustainable packaging- Using raw materials which are friendly to the global
environment

Promoting diversity- Creating opportunities and systems for the active
participation of female employees and local
employees in emerging countries- Creating diverse workstyles enabling the active
participation of senior employees- Reforming workstyles to enable employees to workwithout time and space constraints

26

Company-wide Basic Strategy (5): Evolution of the Extended Family Policy
Enable the extended family policy to evolve to attract diverse human resources and give them theopportunities and motivation to fully display their abilities.
Increase diversity

Improve employees’ job satisfaction⚫ Diversity of human resources⚫ Improve job satisfaction in 3 ways

– Women: Give highly motivated and talented
women the opportunities to proactively develop theircareers.

Motivation of all
employees– Seniors: Give them workstyle options.
– Talented foreigners: Select and develop
candidates for the next-generation local
management team members.

⚫ Diversity of workstyles– Place: Continue to proactively promote remote

Extendedfamily policythat is strict
but warm

Satisfaction of
employees that
contribute significantly– EHD businesses
featuring a high levelof social contribution– Many incentive award
programs– Fair evaluation andreward allocation

working. Significantly improve efficiency.

– Time: Establish a system that enables employees
to choose when to work according to their lifestyles.

– Self-development opportunities:
Provide employees with opportunities to proactively
improve their business and interpersonal skilloutside
the company as well.

Challenges to be taken
on aggressively byhighly motivatedhuman resources– Offering various posts,
recruiting internal
project members, etc.

27

New Executive Structure
Introduce the chief officer system and implement the company-wide basic strategies to powerfully promote
the new medium-term business plan.
Overall control
Assign chief officers, who
powerfully execute the companywide basic strategies globally in agroup-wide manner.

Management and planning duties

Designing and operating theGroup’s human resource
development and personnel systems

Executing importantcross-sectoral functions
Production duties

Cross-sectoral management offinancial affairs

COO
Cosmetics business

Promoting digital transformation

Overseeing business operations

Chemicals business

Drivers of company-wide
basic strategies

Developing EHD-related technologies
and products

CEO

Previous executive functions

CTO
CIO
CFO
CHO
28

Appendix

29

New Medium-term Business Plan: Three-year Business Performance Goals
3-year business performance goals (Consolidated) FY2023

Consolidated (Billion yen)

2016

2017

2018

2019

2020

2021

2023

Results

Results

Results

Results

Results

Plan

Plan

Increase(decrease)from 2020

Net sales

44.2

48.4

50.1

46.1

41.1

43.5

50.0

+8.9

Operating profit

1.4

2.1

2.3

1.3

1.4

1.5

2.5

+1.1

Profit attributable toowners of parent

0.3

1.3

2.4

0.9

1.0

1.3

1.5

+0.5

EBITDA

3.1

4.0

4.2

3.6

4.1

4.1

5.0

+0.9

ROA (Operating profit)

2.9%

4.0%

4.1%

2.5%

2.6%

-

4.5% or higher-

ROS (Operating profit)

3.3%

4.4%

4.6%

3.0%

3.4%

3.4%

5% or higher-

ROE (Profit)

2.0%

7.8%

12.6%

4.5%

5.1%

-

5% or higher

-

1.7

1.9

1.9

2.2

2.7

2.6

2.5

-0.2

110.29112.38110.56109.37106.67105.00105.00

-

-

-

-

25%

-

-

40%

-

Depreciation cost
(Including goodwill amortization)
Assumed exchange rate (JPY/USD）

Ratio of EHD businesses

30New Medium-term Business Plan: Business Goals by Segment
Business goals by geographical segment (consolidated)

Business goals by business segment (consolidated)
Increase(decrease)
from
2020

2016

2017

2018

2019

2020

2021

2023

Results

Results

Results

Results

Results

Plan

Plan

44.2

48.4

50.1

46.1

41.1

43.5

50.0

8.9

31.5
22.3
6.5

35.9
25.2
7.5

36.2
25.8
7.1

34.7
24.4
6.8

29.0
19.2
6.8

31.5
-

37.0
22.2
10.8

8.0
3.0
4.0

2.3

2.4

2.5

2.5

2.3

-

3.0

0.2
12.6

0.7
12.4

0.7
13.9

0.9
11.3

0.5
12.1

12.0

6.8

6.3

6.5

6.7

6.5

4.6
1.1

4.7
1.3

5.8
1.5

3.0
1.5

Segment profit

1.4

2.1

2.3

Chemicals

0.9
2.3

1.9
2.0

(1.8)

Consolidated(Billion yen)
Net sales
Chemicals
Textile Chemicals

Specialty
Laundry & Infection
Control
OthersCosmetics
Domestic businesstargeting beautysalonsDomestic ODM, etc.
Overseas business

Cosmetics
Corporate andeliminations

EBITDA
Chemicals
Cosmetics
Corporate andeliminations

Segment profit rate
Chemicals
Cosmetics

Increase(decrease)
from
2020

2016

2017

2018

2019

2020

2021

2023

Results

Results

Results

Results

Results

Plan

Plan

44.2

48.4

50.1

46.1

41.1

43.5

50.0

8.9

Domestic Chemicals

13.8

15.2

15.1

15.2

13.1

-

17.6

4.5

0.7

Domestic Cosmetics

11.6

11.2

12.5

10.0

10.8

-

11.4

0.6

1.0
13.0

0.5
0.9

Overseas Chemicals

17.6

20.7

21.0

19.5

15.8

-

19.3

3.5

Overseas Cosmetics

1.0

1.2

1.4

1.3

1.3

-

1.6

0.3

-

7.5

1.0

4.1
1.4

-

3.5
2.0

(0.6)
0.6

Net sales

44.2

48.4

50.1

46.1

41.1

43.5

50.0

8.9

1.3

1.4

1.5

2.5

1.1

1.9
2.2

1.5
1.6

0.8
2.2

1.1
2.1

2.1
2.4

1.3
0.2

Japan

25.4

26.4

27.6

25.2

23.9

-

29.0

5.1

China

5.7

6.3

6.6

6.1

5.3

-

6.1

0.8

(1.9)

(1.9)

(1.8)

(1.7)

(1.7)

(2.0)

(0.3)

3.1

4.0

4.2

3.6

4.1

4.1

5.0

0.9

Korea & Taiwan

7.5

10.0

9.9

8.7

7.1

-

7.9

0.8

2.3
2.5

3.4
2.4

3.4
2.7

3.2
2.1

3.0
2.7

-

3.9
2.9

0.9
0.2

ASEAN

3.7

3.8

4.0

4.1

3.3

-

4.2

0.9

(1.7)

(1.8)

(1.8)

(1.7)

(1.6)

-

(1.8)

(0.2)

Southwest Asia

0.3

0.3

0.3

0.4

0.4

-

1.1

0.7

3.3%

4.4%

4.6%

3.0%

3.4%

3.4%

5%以上

-

North America

1.3

1.4

1.5

1.2

0.9

-

1.5

0.6

3.0%
18.6%

5.4%
16.5%

5.4%
16.4%

4.4%
14.8%

3.1%
18.5%

3.5%
17.5%

5.7%
18.5%

-

Consolidated(Billion yen)

Net sales

Chemicals include other businesses.

31

Business Strategies by Segment:

Textile Chemicals BusinessTextile Chemicals

View of the business environment⚫ Mass production, mass consumption, and mass disposal in the apparel industry have been a social problem, and have led to
growing demand for environmental considerations and resource recycling.
⚫ Apparel consumption decreased due to a drastic change in lifestyles attributed to COVID-19, which has accelerated the shift
from purchases at brick-and-mortar stores to online shopping.

Basic strategies(1) Expand development and sale of products which contribute to reducing the environmental impact of the entire apparel industry.
(2) Expand business in new overseas areas and reinforce the global development system.
(3) Expand business in new business domains (non-apparel domains and domains adjacent to textiles).

Priority measures
Net sales2020 to 2023

(1) Expand sale of products that help to reduce impact on humans and the environment.
⚫ Fluorine-free water repellent agents used by a global high functional sports apparel manufacturer⚫ Agent for antibacterial/antiviral textiles which reduces SARS-CoV-2 and other enveloped viruses on fibers by 99.9%⚫ Smart Dying Process, our proposed unique environmental solution that contributes to the creation of a sustainable society

CAGR: 5.0%
(Billion yen)

19.2

2020

22.2

2023

(2) Expand business in new overseas areas and reinforce the global development system.
⚫ Expand business in the Southwest Asian market and improve approach to global brands in Europe and United States, building
on a new company in India.
⚫ A system for prompt development matching the markets in Japan (new functional processing), China (synthetic fiber), andIndonesia (cotton)(3) Expand business in new business domains (non-apparel domains and domains adjacent to textiles).
⚫ Expand applications for waterborne urethane resins, which are very safe for humans and the environment, to industrial materials
including artificial leather and PVC.
⚫ Establish the Materials Development Department to promote business in new domains and develop businesses related to
nonwoven cloth, urethanes, and films.

32

Business Strategies by Segment:

Specialty Chemicals BusinessSpecialty Chemicals

View of the business environment⚫
⚫

Explosive increase of digital sensing devices has led to growing demand for advanced materials related to semiconductors andoptical products.
Demand for polymer materials and special resin materials increased due to the shift to the next generation of communication
standards and the growing use of extremely small, multi-layered semiconductors.

Basic strategies(1) Expand the advance materials business, which is experiencing growing demand in the area of advanced information technologies.
(2) Strengthen technologies which reduce environmental impact.
(3) Create and develop incubation businesses which will be growth drivers in the future.

Priority measures
Net sales2020 to 2023

CAGR: 16.7%(Billion yen)

10.8
6.8

2020

2023

(1) Expand the advance materials business, which is experiencing growing demand in the area of advanced information technologies.
● Expand sales of special resin materials used for digital sensing devices and others.
● Highly functional, fluorinated polymer materials as high-frequency, low-dielectric materials for which demand is growing due tothe shift to the next generation of communication standards(2) Strengthen technologies which reduce environmental impact.
● Aim to increase global market share through water-soluble processing chemicals from Ohtomo Chemical Ins. Corp., whose
product has been adopted by a world-class silicon wafer manufacturer and which has established a resource-recycling systemenabling recycling in the semiconductor processing process.
● Sell sustainable processing chemicals which contribute to the improvement of the productivity of the paper pulping process andreduce energy consumption in the process.
● Aim to have the largest share of the domestic market with the world’s first deinking agent capable of removing UV-curable ink,
which promotes the reuse of resources.
(3) Create and foster incubation businesses which will be growth drivers in the future.
● Developing materials for next-generation mobility: Application of solid dispersion technology, composite materials, coating-related
areas

33

Business Strategies by Segment:

Laundry & Infection Control Businesses
Laundry &Infection Control

View of the business environment⚫
⚫

The hygiene business has expanded rapidly due to rising awareness of health and hygiene and infection control behaviors thathave become habitual.
Demand from inbound tourists declined due to COVID-19. Demand for laundry services decreased due in part to increase ofpeople working from home.

Basic strategies(1) Maintain the largest share of the domestic market, increase the market share, and expand the business into new domestic
markets.
(2) Improve measures for overseas business expansion.
(3) Create and develop businesses in the areas of advanced medicine and next-generation medicine.

Priority measures(Billion yen)

(1) Maintain the largest share of the domestic market, increase the market share, and expand the business into new domestic
markets.
● Increase share of the in-store market among top companies in the areas of home cleaning and linen supply, which have roomfor expansion,● Expand business in the laundromat market, which is a new market, by improving collaborations with machine manufacturers
and franchisers.

2.3(2) Enhance measures for overseas business expansion.
● Cultivate a market in Korea, where our market share is small, through intensive sales activities targeting major home cleaning
companies in the country.
● Start research into the Chinese laundry market, which is expected to grow significantly in the future.

Net sales2020 to 2023

CAGR: 9.3%

3.0

2020

2023

(3) Create and develop businesses in the areas of medicine and welfare.
● Increase development with partners collaborating on highly functional cleaning agents for advanced medical equipment.
● Develop a next-generation diagnostic testing kit for customized medicine applying functional artificial nucleic acid.
● Sell alcohol hand sanitizer, which is expected to be in demand continuously due to infection control behaviors that havebecome habit.

34

Business Strategies by Segment:

Cosmetics Businesses
View of the business environment

Cosmetics⚫
⚫
⚫

Online consumption is increasing while people visit beauty salons less frequently than before due to COVID-19.
New hygiene habits, including the use of alcohol hand sanitizers, have been established.
There is growing concern about climate change, ethical consumption, and similar issues.

Basic strategies(1) Strengthen business targeting beauty salons in Japan (DEMI and EraL).
(2) Strengthen domestic and overseas ODM businesses (diversification and global expansion)(3) Enhance SDG initiatives through business activities.

Priority measures
Net sales2020 to 2023

CAGR: 2.4%
(Billion yen)

12.1

2020

13.1

2023

(1) Strengthen business targeting beauty salons in Japan.
● Strengthen the DEMI brand by accelerating new product development and planning, in addition to expanding sales of
FLOWDIA, the mainstay hair care product.
● Comprehensively rebrand EraL to make it a sustainable brand.
● Enhance e-commerce websites and strengthen digital promotion in response to the diversification of beauty salon channels.
(2) Strengthen domestic and overseas ODM businesses.
● Aggressively expand ODM business, whose strength is unique functional formulations, in Japan and other countries as thesecond mainstay business.
● Expand business in overseas markets such as Korea and China.
(3) Improve SDGs initiatives through business activities.
● Promote SDG-related initiatives, including reduction of environmental impact, support for beauty salons for their futures, andsupport for young people desiring to work in the beauty industry, through the EraL business under the concept, “EraL Beauty &Sustainability.”● Use environmentally friendly packaging, including refill packs using plant-derived materials and containers using biomass PET.

35

Comprehensive Rebranding of EraL
Enable EraL to evolve into brand for beauty and sustainability under the concept of “EraL Beauty &Sustainability”
Environmentally friendly containers
and materials reflecting awarenessof beauty in the world

Supporting the futures of beauty salonsand supporting young people who want towork in the beauty industry

ECO

Digital/Education
Providing Headcure training (EraL’s unique scalp care program)
through an e-learning program
Providing Headcure classes at beauty schools
Establishing an EraL scholarship program

Biomass PET
Smart eco pack
FSC-certified paper

EraL Beauty & Sustainability

Helping solve the problems of each individualwith functional formulations combining
plants and science

Leading-edge aging care researchto keep women bright and beautiful

WELLNESSAGING CARE

Scalp care for the enjoyment of hair design
Ingredients selected to realize a healthy scalp

Controlling the aging of cells
Maintaining youthfulness with Headcure36

Corporate Governance
Organizational chart

Corporate Governance Policy
At the NICCA Chemical Group, we have established a management philosophy that
includes our company motto and guiding principles based on the spirit of our founder. We
strive to ensure that this management philosophy, “Always aim to be a respectable
individual, worthy of being chosen by customers, employees, shareholders, and society,”takes root among our officers and employees in our efforts to improve our medium- andlong-term corporate value and achieve sustainable growth.

Corporate governance structure
General Meeting of Shareholders

Therefore, we have positioned corporate governance as an important management issue
and implement initiatives to improve the speed, transparency, and fairness ofmanagement, such as the building of structures for prompt, appropriate decision-making,the execution of business and appropriate supervision.

Appoint/
Dismiss

ReportCooperate

Governance structure and committees■Committees established voluntarily• Nomination Committee: 4 members including 2 Independent Officers(Outside Director and Audit & Supervisory Board Member)• Compensation Committee: 4 members including 2 Independent Officers(Chaired by an Outside Director)• Compliance Risk Management Committee: Chaired by the President andRepresentative Director• Compliance Risk Management Overseeing Panel: Consists of five panels■Other supervising functions• Annual evaluation of the Board of Directors’ effectiveness and external disclosure of
its results and measures• Regular meetings of the Outside Directors and the Audit & Supervisory Board
members exclusively for the exchange of opinions.
All of the above is as of December 31, 2020.

Audit &
Supervisory
Board

Appoint/
Dismiss

Appoint/ Dismiss

Audit

3 members(2 internal and 2 outside members)

11 Directors

Compensation
Committee

Suggest/ReportInstruct
ReportSelect/Dismiss

Representative
Director
Seek/Give advice on
important matters

Cooperate

Management
Council
Execute/ reporton business

Internal Audit
OfficeAdvise(2 internal and 2 outside members)

ReportDetermine theappropriatenessof accounting
auditsCooperate

Nomination Committee

Board ofDirectors(including 4 Outside
Directors)(including 2 outside
members)

Accounting auditor■Outside Directors and Independent Officers• Number of Outside Directors: 3 (30% of all Directors)• Number of Outside Audit & Supervisory Board Members: 2 (50% of all Audit &Supervisory Board Members)• Number of Independent Officers: 5 (36% of the 14 Directors and Audit & Supervisory
Board Members)

Suggest/ReportAppoint/
Dismiss

Internal
auditsDivisions andGroup companies

Compliance Risk Management
Committee(Chair: President & Representative Director
Members: Management Council members)

Supervise

ReportCompliance Risk Management
Overseeing Panel
Planning and monitoring• Legal Compliance Panel• Environmental Quality and Safety &Health Panel• Information Security Manager Council

Accounting audits and internal
control audits

As of March 31, 2021

37

Shareholder Return Policy
Basic policy on shareholder returns
We continue to pay dividends stably to our shareholders and decide to pay dividends from retained earnings after
comprehensive consideration of our business performance in each fiscal year, the investments necessary for future growth,
future business development and other factors.
Going forward, we will continue to strive to enhance measures for returning profits to shareholders, strengthen our financial
position and effectively and strategically utilize capital to improve profitability in a well-balanced manner.
Dividends paid

Consolidated dividend payout ratio

Dividend per share

Consolidated dividend payout ratio

2015
Acquired 10.8% of sharesas treasury shares

Ordinary dividend (JPY/share)
普通配当（円/株）
Special dividend (JPY/share)
特別配当（円/株）(Billion yen)

Consolidated profit
連結当期純利益
Payout ratio
配当性向

35

100 .0 %

90.5%
90.0%

30

80.0%

4

4

65.9%

25

2

70.0%

60.0%

20

50.0%

35.6%

15

18.3%

2.6
15
10

10

16

16

16

16

16

16

16
10

10

23.4%

2.4

28.3%
30.0%

20.9%

10
5

0.7

27.3%

40.0%

1.2
0.2

0.4

2010

2011

19.5%
10.5%
1.4

15.3%

11.6%

1.1
0.3

1.3

0.9

1.0

2019

2020

0

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

(Plan)

20.0%

10.0%

0.0%

2009

2012

2013

2014

2015

2016

2017

2018

(Plan)

38

Disclaimer Regarding Forward-Looking Statements
All of the statements regarding our future plans, goals, and similar statements thatare included in this document were created based on the information available to theCompany as of the date of publication and any assumptions that the Company
believes are reasonable. Actual results may differ from those in forward-looking
statements due to changes in the economic environment and other uncertain factors.

Inquiries: IR Staff, Corporate Planning Divisionhttps://www.nicca.co.jp

39