December 16, 2021
Company name
Representative

Nitta Gelatin Inc.

Koichi Ogata,
Representative Director and President(Stock code: 4977; First Section of Tokyo Stock Exchange)
Norifumi Nagaoka,
Contact
Director and Executive Officer
General Manager of General Management Division
Phone Number+81-72-949-5381

Plan for Conformance with the Continued-Listing Criteria
for the New Market Segments
Nitta Gelatin Inc. (hereinafter “Nitta Gelatin”) hereby announces that in response to thereorganization of market segments by Tokyo Stock Exchange, Inc. (“TSE”) scheduled in April 2022,
it has submitted its application today to select for listing in the Prime Market. As Nitta Gelatin did notmeet the continued-listing criteria for the Prime Market at the time of the base date for the transition(June 30, 2021), it has formulated its plan for conformance with the continued-listing criteria for the
new market segments as described below.

1. Nitta Gelatin’s status of conformance with the continued-listing criteria and theplanning period
Nitta Gelatin’s status of conformance with the continued-listing criteria for the Prime Market on thebase date for the transition was as described below, and its tradable share market capital and average
daily trading value did not meet the criteria. Nitta Gelatin is proceeding with initiatives to meet thecontinued-listing criteria by March 31, 2025, the end of fiscal 2024, in which the results of themedium-term management plan (fiscal 2021 to fiscal 2023), announced on May 13, 2021, will beannounced.

Status of conformance with the continued-listing criteria for the Prime Market
No. ofShareholders

No. ofTradable
SharesTradable
Share Market
Capital(Per unit)(Billions of yen)

Tradable
Share Ratio(%)

Average
Daily Trading
Value(Billions of yen)

Nitta Gelatin’s Status(Transition base date)

9,893

97,419 units

6.31 billion yen

53.0%

9 million yen

Continued-listing Criteria—

20,000 units

10.0 billion yen

35%

20 million yen

Listed in Plan

—

—

Yes

—

Yes

Note: Nitta Gelatin’s status of conformance was calculated based on the distribution of shares, etc. of Nitta Gelatin’s
shares, etc. ascertained by TSE on the base date.

-1-2. Basic policy, issues and detailed actions of initiatives to achieve conformance with thecontinued-listing criteria
Specific details of the initiatives to raise the tradable share market capital and the average daily
trading value to achieve conformance with the continued-listing criteria for the Prime Market arepresented in the attached “Plan for Conformance of Prime Market Continued-Listing Criteria.”-2-

December 16, 2021

0

Contents

1. Status of Conformance and the Planning Period

2. Basic Policy
3. Issues and Detailed Actions of Initiatives
4. Evaluation of Measures

1

1. Status of Conformance and the Planning Period(1) Status of conformance with the continued-listing criteria
Nitta Gelatin

Continued-Listing Criteriaz Tradable Share Market Capital¥ 6.3 billion¥ 10.0 billionz Average Daily Trading Value¥ 9 million¥ 20 million(2) Planning Period
Until March 31, 2025, the end of fiscal 2024, in which the results of themedium-term management plan (fiscal 2021 to fiscal 2023) will be announced22. Basic Policy

Basic Policy(i) Enhanced profitability and steady growth through theachievement of the medium-term management plan(ii) Enhanced name recognition through PR and IR
activities(iii) Enhanced liquidity through an increase in tradable
shares3

3. Issues and Detailed Actions of Initiatives(1) Increasing market capital through enhanced corporate valueA) Steady implementation of the medium-term management planB) Enhanced promotion of sustainability activities
C) Enhanced shareholder return(2) Revitalizing stock trading, enhancing name recognition,enhancing liquidity
A) Enhancing name recognition by strengthening PR and IRB) Enhancing liquidity by reviewing cross-holdings

43. Issues and Detailed Actions of Initiatives(1) Enhancing Corporate ValueA) Steady implementation of the medium-term management plan
Implementing following the medium-term management plan (fiscal 2021 to fiscal 2023)

Policies

Strategies

1. Strategically allocate
management resources
to key markets to growas a high-profit
enterprise

Targets
z FS
z HS
z BM

Strategy bybusiness
category

2. Strengthenorganizationalfoundation to facechallenges positively

Strengthenbusinessfoundation

Strengthen
managementfoundationz Production
z R&D

z Human resourcesz Finance* Key markets(1) Professional-use market(2) New needs in food market(3) Collagen peptide overseas
markets(4) Direct sales business(5) Biomedical market

Stakeholders
3. Strengthen ties withstakeholders to be avaluable company

Customers

1. Net sales: ¥33.5 billion
Operating income: ¥2.0 billion
2. Key markets*
10% or more of consolidated net
sales
20 % or more of consolidated
operating income
3. Design and operate a newassessment and remuneration
system
4. Improve employee engagement

Shareholders

Employees
FS: Food solutions HS: Health support BM: Biomedical

5

3. Issues and Detailed Actions of Initiatives(1)-A) Medium-Term Management Plan Key Markets(i) Professional-use market
Market data

Envisioned customer needs

Domestic demand in the food services industry(¥ trillion)

26.0

25.7

20

18.5

20.3

10

 Responding to the diversification in consumer foods
and increased health awareness Realizing labor saving against the backdrop of
structural personnel shortages (easy to prepare, premade foods, etc.)
 Improving consumer food experiences through newtastes and textures Accommodating new lifestyles with COVID-19

1LWWD*HODWLQ¶Vstrengths

0

'19

'20
E

'21
P

'25
P

E: Expectation; P: Prediction
Source: Mizuho )LQDQFLDO*URXS¶V2QHThink Tank 5HSRUW1R³0HGLXP-term
Outlook for the Foreign and Domestic Economy and Japanese ,QGXVWU\´ The market is expected to gradually recover fromCOVID-19
 Increasing our share of professional-use products

 9DULRXVSURFHVVHVDUHSRVVLEOHDV-DSDQ¶VRQO\gelatin manufacturer
 Providing menus through different texture proposals
that use not only animal-based gelatin as the raw
ingredients, but that also combine plant-based raw
ingredients Providing cutting edge food needs and menus
through networks with popular chefs in Japan6

3. Issues and Detailed Actions of Initiatives(1)-A) Medium-Term Management Plan Key Markets(ii) New needs in food market
Market data

Envisioned customer needs
 Responding to increased awareness of theimportance of protein consumption in maintaining
health Capturing the muscular repair and recovery needs ofathletes and the needs of young people to build
beautiful muscles
 Responding to the growing market for plant-based
ingredients
 Accommodating new lifestyles with COVID-19

Protein supplement domestic market scale(¥100 million)
3,000

2,000

Others1,000

Supplement
0

'14

'15

'16

'17

'18

'19

'20

1LWWD*HODWLQ¶Vstrengths'21E'22 '23 '24 '25 '26
P
P
P
P
P
E: Expectation; P: Prediction
Source: FUJI .(,=$,³Increasing Product Development Competition andChannel Competition Caused by the Protein Boom in the 2021
3URWHLQ6XSSOHPHQW0DUNHW´ This is a new market for the Company, but themarket scale is rapidly expanding Collagen is a high-quality protein source and iseasily ingested due to its excellent dissolvability
 Our knowledge related to collagen based on ourlongstanding research Our product development capabilities to meet any
customer desires7

3. Issues and Detailed Actions of Initiatives(1)-A) Medium-Term Management Plan Key Markets(iii) Collagen peptide overseas markets
Market data

Envisioned customer needs

Global collagen peptide market

 Expanded interest in the anti-aging properties ofcollagen in North America
 Responding to increased collagen demand in Asia
backed by increased beauty awareness Increasing needs for safe, reliable products andensuring functionality($100 million)

20
15
10
5

1LWWD*HODWLQ¶Vstrengths
0

'17

'18

'19

'20
E

'21
P

'22
P

'23
P

'24
P

'25
P

'26
P

E: Expectation; P: Prediction
Source: The Insight Partners ³*OREDO&ROODJHQ3HSWLGH0DUNHWWR´'27
P Accumulation of data related to collagen peptides
from our longstanding research
 2XUWUXVWDV-DSDQ¶VWRSFROODJHQPDQXIDFWXUHU The global market is expected to continue
growing strongly
 The &RPSDQ\¶VSROLF\LVWRH[SDQGVDOHV
centered on North America and Asia8

3. Issues and Detailed Actions of Initiatives(1)-A) Medium-Term Management Plan Key Markets(iv) Direct sales business
Market data

Envisioned customer needs
 Maintaining health and youthful beauty
 Prolonging healthy lives by preventing frailty
 Growth in sports nutrition

Health food direct marketing sales
market scale(¥100 million)

6,000

4,000

2,000

1LWWD*HODWLQ¶Vstrengths
0'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
E

E: Expectation
6RXUFH73&0DUNHWLQJ5HVHDUFK³+HDOWK)RRG'irect Marketing Sales
Business Strategy Survey´ The market is expected to grow gradually. The
projected market scale of the collagen-related
market is ¥60.0 billion
 The Company also focuses on BtoC from thisfiscal year Deep knowledge related to collagen Top results in collagen peptide functionality (51patents, 33 documents)
 Customer-focused services (77% come-back rate
among existing customers)

9

3. Issues and Detailed Actions of Initiatives(1)-A) Medium-Term Management Plan Key Markets(v) Biomedical market
Market data

Envisioned customer needs

Projected market scale growth for the regenerative
medicine related industry (Japan)(¥ trillion)

1.0

Services

0.5

Consumables Safety that meets strict medical standards
 Biomaterials that can be processed into various
shapes Efficient cell transport Effective cell cultivation

Devices

0.0

'12

'15

'20

'25

'30

'35

'40

'45

'50

Projected market scale growth for the regenerative
medicine related industry (global)(¥ trillion)

15
10
5
0

'12

'20

'30

'40

Other
Japan
EuropeU.S.
'50

Source: METI ³2YHUYLHZRI0XOWL-issue Programs in the Development of CoreTechnologies for the Commercialization of Regenerative Medicine andGene Therapy´ Market with large growth expected in the medium
to long term Establishing a solid foothold as a niche player

1LWWD*HODWLQ¶Vstrengths
 The superiority of collagen, a biologically derived
material (biological compatibility, biologicalabsorbability)
 7UXVWLQRXUVDIHW\DV-DSDQ¶VWRSJHODWLQ
manufacturer
 Our accumulation of knowledge throughlongstanding collagen and gelatin research103. Issues and Detailed Actions of Initiatives(1)-A) Medium-Term Management Plan Key Markets(vi) Performance targets in the medium-term management plan
Net sales

Operating income(¥100 million)

Operating income ratio(¥100 million)( ): Key markets/consolidated( ): Key markets/consolidated

Consolidated

350

335

ConsolidatedKeymarketsKey
markets

45
(13%)

300

285

Key
markets

20.0

20

14.7
1.5
(10%)

15

21
(7%)

4.5
(22%)

10.0%
10%

7.0%

6.0%
5.2%

10

Existing
products

Existing
products

250

13.2

290

264

5%

Existing
products

5.0%

15.5

5

200

5.3%

0

Fiscal 2020
Actual results

Consolidated

Fiscal 2023
Plan

0%

Fiscal 2020
Actual results

Fiscal 2023
Plan

Fiscal 2020
Actual results

Fiscal 2023
Plan

*Fiscal 2020 excludes our adhesives business as it was transferred (February 2021)

11

3. Issues and Detailed Actions of Initiatives(1) Enhancing Corporate ValueB) Enhanced promotion of sustainability activities
Sustainability Initiatives

Details of initiatives

Towardresolvingsocial issues

The Environmentz Evaluating environmental impact
and setting targets to reduce theenvironmental burden.
z Complying with related laws
and regulations and working
to preserve the environment.

Community
Involvement
and Development

Fair Operating
PracticesCore
Subjects

Related SDGs

Resolving issues in an aging society

Maintaining and improving humanhealthƔ Resolving issues in foodƔ Resolving issues in the medical fieldƔConsumerIssuesz Prioritizing safety andreliability, working to improve
the quality of products,
services, and distribution, andliving up to the expectations andtrust of our customers.
z Contributing to the resolutionof social issues in the fieldsof health, food, and medicine.

Human Rights &Labor Practicesz Respecting human rights anddiversity and preventingz In addition to complying withhuman rights violations.
related laws and regulations,z Respecting diversity and working
while cooperating with ourto realize a safe and healthytransaction partners, weworking environment.
pursue socially responsiblez Working toward humanprocurement activities.
resources development
Organizational
and to improve theGovernancedesire and abilityof employees
z Strengthening and improving
to work.
corporate governance andincreasing the transparency
and efficiency ofmanagement.

Details of initiatives

Focus
Activities

z As a local citizen, we
promote activities that
contribute to the sustainable
development of local
communities.

Ɣz To realize a sustainable society and environment, we have established six
policies in line with the ISO26000 core subjects
z These policies are fundamental for strengthening relationship with all our
stakeholders (customers, shareholders, local communities and employees)

Environmental
improvement
initiatives

Realizing better
workplaces &human resource
Development

Living with &contributing tolocal
Communities

Related SDGs

Reducing CO2 emissions
䖃 Reducing water use
䖃 Environmental improvements throughbyproducts䖃

Details of initiatives

Related SDGs

 Promoting diversity
 Labor safety and sanitation
 Supporting employee healthmanagement
 Human resources development
 Maintaining work-life balance

Details of initiatives

Related SDGs

Regional cleanups, ground openings
䖃 Factory tours
䖃 Various sports support䖃12

3. Issues and Detailed Actions of Initiatives(1) Enhancing Corporate ValueC) Enhanced shareholder return

Revising our dividend distribution policy)URPRXUH[LVWLQJSROLF\RIVWDEOHGLYLGHQGV«

Targeting a dividend on equity ratio (DOE)of 1.5% or higher

13

3. Issues and Detailed Actions of Initiatives(2) Revitalizing stock trading, enhancing namerecognition, enhancing liquidity
IssuesPR Enhancing namerecognition throughproactive PR and IR
activities

IR

Measures Building a brand image as a company that
FRQWULEXWHVWRLPSURYLQJSHRSOH¶VTXDOLW\RIOLIH
 Increasing the number of convenient briefing
opportunities for investors (holding online
results briefings and investor briefings)
 Approaching a wide range of investors throughparticipation in IR fairs

 Enhancing growthpotential and earningpower

 Strategic allocation of management resources to keymarkets

 Increasing the number of
tradable shares Reviewing cross-holdings of financial institutions andtransaction partners

14

4. Evaluation of Measures(i) PER (price earnings ratio)
Chemicals
Chemicals 5-year average
Food products
Food products 5-year average
The Company(Times)(¥100 million)

PER(Times)

25
23.0

20.0

Nitta Gelatin(21/3)

Fiscal 2020
Net
incomeMarketcapital

16.6

Fiscal 2023
(Targets)
Net
income123

Marketcapital

207

20

(24)

18.3

Chemicals
5-year average

18.3

16.6

Food products
5-year average

23.0

(15)

15
12.7

7.42

135

12.48

170

228
287

10

17/3

18/3

19/3

20/3

21/3

Note: Chemicals and food products use the average value of the TSE First Section
7KH&RPSDQ\¶V3(5YDOXHLVSURGXFHGXVLQJsimple calculation of our net
income and the number of issued shares
15

4. Evaluation of Measures(i) PER (price earnings ratio)
Low compared to theindustry average

Current

3 yearslater

Low growth
expectations

Maintain at minimum
fiscal 2020 levels

SolidgrowthTarget market capital

Current tradable share ratio

Tradable share market capital¥20.7 billion

53%¥10.9 billion

Note: Because earnings per share (EPS) will increase through the achievement of themedium-term management plan even if fiscal 2023 PER is the same as current
levels, tradable share market capital will exceed the continued-listing criteria
16

4. Evaluation of Measures(ii) PBR (price book-value ratio)
Chemicals
Chemicals 5-year average
Food products
Food products 5-year average
The Company(Times)(¥100 million)

PBR

Fiscal 2020

(Times)Net assets
1.5

1.48

Nitta Gelatin

1.0

0.85
0.78
0.71
0.62

0.65

0.5

17/3

18/3

19/3

20/3

21/3

(Targets)
Net assets

Marketcapital

0.65

123

140

PBR target

1.0

188

214

Chemicals
5-year average

1.26

237

270

Food products
5-year average

1.48

279

318

(21/3)

1.26

MarketcapitalFiscal 2023

188

214

Note: Chemicals and food products use the average value of the TSE First Section
The &RPSDQ\¶V3%5YDOXHLVSURGXFHGusing simple calculation of our net
assets and the number of issued shares
17

4. Evaluation of Measures(ii) PBR (price book-value ratio)
Below 1.0ᶣ, less than
the industry average

Current

Low earning poweris the main factor

3 years
later

Increasing PBR
to 1.0ᶣ

Increasing
earning power

Target market capital

Current tradable share ratio

Tradable share market capital¥21.4 billion

53%¥11.3 billion

Note: By increasing PBR to 1.0ᶣ by achieving the medium-term management
plan, tradable share market capital will exceed the continued-listing criteria18

4. Evaluation of Measures(iii) Average daily trading value(g million)
176

Average daily trading value
100

80

Revitalizing trading
through enhanced
corporate value,enhanced namerecognition, andenhanced liquidity
Clears the Prime
Market criteria for
conformance of¥20 million/day

60

40
Criteria for conformance

20

0

17/3

17/9

18/3

18/9

19/3

19/9

20/3

20/9

21/3

22/3

23/3

24/3
(Year/Month)19