Securities Code 5208
https://www.arisawa.co.jp

Medium-Term Business Plan
(FY2020 － FY2024)

Arisawa Mfg. Co., Ltd.

12th May, 2023

Management Policy
On the basis of the motto "Create, Innovate and Challenge,"
we pledge to:Ⅰ. create new values and enhance customer satisfaction;

Ⅱ. discover customer demands and create new businesses
with our creative technologies;

Ⅲ. strengthen corporate structure by improving our quality
and productivity; andⅣ. contribute to solving the social and environmental issues,
and realize the sustainable growth.

Management Policy

1/24

ContentsⅠ. Policy of Medium-Term Business Plan

Ⅱ. Business Strategy

Ⅲ. Financial Strategy
Ⅳ. ESG Strategy

23~12

13~17

18~24

Ⅰ. Policy of Medium-Term Business Plan
Introduce ROIC as benchmark for business management, and maximize
company's value with both business strategy and financial strategy

Businessstrategy

FinancialstrategyStrengthen
profitability

Improve capitalefficiency

 Strengthen earning
management withROIC
 Delve into existingbusiness Create new businessMaximize
company’svalue

 Change non-businessassets into businessassets Enhance shareholder
returns

Contribute to sustainable society
Business Plan

2/24

Contents
Ⅰ. Policy of Medium-Term Business Plan

Ⅱ. Business Strategy

Ⅲ. Financial Strategy
Ⅳ. ESG Strategy

23~12

13~17

17~24

Ⅱ. Business Strategy
Enhance profitability with “Delving into existing business” and“Creating new business”
Delving into existing business

Creating new business Development of differentiatedproducts with unique technology
 Thorough cost reduction
 Improvement of production
capability and efficiency

 External growth by flexible M&A
 Internal growth by new productdevelopment using existingtechnology●Development of new use and fields in cooperation with our group companies

Strengthen profitability
Business Strategy

3/24

Ⅱ-1-1. Electronic Materials Segment
Aim for growth in core business field by two strategies
Delving into existing business

Enhance business in mobile field■ Create customer value with unique products
and grow continuously■ Develop new products in cooperation

with our group companies, and strengthenbusiness foundation in Asian market

As of ’22.5.12

As of ’23.5.12

Sales (Million yen)

Average annual growth rate 4.3% (plan as of ’23.5.12)

Creating new business

Develop business in semiconductor

and automotive fields■ Develop new products and enter new fields■ Expand businesses in growing fields
by enhancing competitiveness ofproduction and technology

Business Strategy

29,76829,768'22/3(Actual)

26,54427,30033,80033,90038,20042,600

'23/3

'24/3

'25/3

(Actual)(Plan)(Plan)

Downturn compared with the figures as of ’22.5.12.
It needs time to recover.

40,000'26/3(Reference)

4/24

Ⅱ-1-2. Industrial Structural Materials andInsulation Materials Segment
Aim for more growth by developing unique products
Delving into existing business

Enhance business in transportation
infrastructure fields■ Automotive: differentiation with unique
technology, new entry into markets■ Aircraft: increase of added value by
anticipating needs

Expand profits in water treatment field■ Creation of new demands by developing
high-performance products

Creating new business

Create business in new energy field■ New entry and development for

creating business in hydrogen energy

and superconducting fields

Business Strategy

As of ’22.5.12

As of ’23.5.12

Sales (Million yen)

Average annual growth rate 13.7%(plan as of ’23.5.12)

9,658
9,658

'22/3

(Actual)11,71013,20014,20010,60012,40013,700'23/3'24/3'25/3(Actual)(Plan)

19,100(Plan)'26/3(Reference)

Materials for aircraft are expected to recover compared with figures
as of ’22.5.12.

5/24

Ⅱ-1-3. Display Materials Segment
Aim for growth by enhancing unique technology
Delving into existing business

Enhance high-definition display businessfor medical use■ Expand market share in endoscope andmicroscope, and acquire overseas customers■ Expand sales channels for telemedicine androbotic use■ Meet needs for higher definition display

Creating new business

Develop business in new fields■ Develop use of 3D filter in non-medical field

Business Strategy

As of ’22.5.12

As of ’23.5.12

Sales (Million yen)

Average annual growth rate 17.7%(plan as of ’23.5.12)

3,253

4,163

4,500

3,253

3,500

4,000

'22/3

'23/3

'24/3

(Actual)(Actual)(Plan)

5,300

5,800

4,800

'25/3
(Plan)'26/3(Reference)

The expansion of application of 3D filters is expected compared withthe figures as of ’22.5.12.

6/24

Ⅱ-2. Priority Fields for Differentiated Products
Priority fields Develop differentiated products with focus on fields where growthis expected

InformationdeviceInnovation for IoT
society

Nextgeneration
mobility

Contribution tonext-generationtransportation
machines

Life science

Initiatives to newenvironmental
changes

Business Strategy

7/24

Ⅱ-2-1. Information Device Field

2,000

Source:the Company’s estimate

4G

1,500

5G

60,00050,000Demand forecast for
semiconductor device
LogicMemoryRFSource: Fuji Chimera
Research Institute, Inc.

Sensor

40,00030,0001,000

20,0005000(Billion yen)～

Demand forecast for
smartphone(Million units)～

Change in business environment

10,0002021

2022

High speed broadband

2023

2024

2025

Increase insensor and camera

202602021

Semiconductor
performance increase

2024

2027

Expansion ofIoT society

Promotion of development of differentiated products
FPC materials forhigh frequency wave (5G)

Insulation film forsemiconductor substrate

FPC materials for
micro wiring

Protection film forsemiconductor fabrication

Business Strategy

8/24

Ⅱ-2-2. Next-generation Mobility Field
Change in business environment
Conventional

HVPHV

EV

FCV

(Billion units)

1.5

0.5

0.5

0.0

0.0

2021

2022

Electric2025

～

1.0～

1.0

2030

Lightweight

Autonomous driving
level forecast
Level02021

Level12022

Level2Autonomous driving

Source:the Company’s estimate

Level32025～

1.5

Source:the Company’s estimate

Car powertrain forecast～(Billion units)

Level42030

Connected

Promotion of development of differentiated products
Carbon fiber structuralmaterials

FPC materials forhigh speed transmission

Battery-related materials

Hydrogen energyrelated materials

Business Strategy

H29/24Ⅱ-2-3. Life Science Field
Noticeable environment change
Fields where we can take advantage of our technologies

Water treatment

Disastercountermeasures

MedicalPromotion of development of differentiated products
Materials for high pressure
water treatment

High-definition display for
medical use

Reinforcing materials forinfrastructure equipment

Application product offilament winding

Business Strategy

10/24

Ⅱ-3. Research and Development Investment
R&D expenditure

Increase R&D expenditure to promote
development of differentiated products

3,000

Industrial・Insulation

Electronic(Million yen)
4,000

2,100

1,926

1,992

1,000

273
453

300
500

1,186

1,2660

4.5

'22/3

2,000

263
477

(Actual)

Display

R&D/Sales ratio(Right axis)

2,400

2,450

600700(%)

40.0
30.0

350

350

1,300

1,450

1,400

10.0

4.7

4.64.5

3.8

0.0

'23/3

'24/3'25/3(Actual)(Plan)(Plan)

20.0

'26/3

(Reference)

Priority products to be developed
Electronic materials

Industrial structural materials
Electrical insulating materials■ FPC materials for high speed transmission■ FPC materials for high frequency wave (5G)
■ FPC materials for micro wiring■ Materials for semiconductor■ Hydrogen energy-related materials■ Carbon fiber structural materials■ Materials for high-pressure water
treatment

Business Strategy

Display materials■ High-definition display for medical use■ In-car screen materials■ Functional film materials

11/24

Ⅱ-4. Target Figures to be Achieved Within Periodof Medium-Term Business Plan
Promote aforementioned business strategy andset following figures as target

ROIC over 6.0% (FY25/3)(Million yen)

100,000
80,00060,00040,00020,0000’23/3 WACC 5.87% ＊1
Sales of existing products

Sales of new products

Average annual growth rate 7.5% (plan as of’23.5.12)

’22/3

’23/3

’24/3

’25/3

Sales (Million yen)

43,08942,72245,30053,60065,200Operating Profit (Million yen)

3,320

2,228

2,100

4,100

6,300

Operating Margin (%)

7.7

5.2

4.6

4.9

9.7

NOPLAT (Million yen)

2,424

1,627

1,533

2,993

4,595

Equity + Interest-bearing debt

56,85957,29755,75058,40061,650

4.4

2.8

2.7

5.2

7.7

(Actual)ROIC (%) ＊2＊1 By our own calculation based on third party organization’s calculated value

Business Strategy(Actual)(Plan)(Plan)’26/3(Reference)＊2 NOPLAT (Net Operating Profit Less Adjusted Tax) / (Equity + Interest-bearing debt)

12/24

Contents
Ⅰ. Policy of Medium-Term Business Plan
Ⅱ. Business Strategy

Ⅲ. Financial Strategy
Ⅳ. ESG Strategy

2

3~1213~1718~24

Ⅲ. Financial Strategy
Improve capital efficiency by making effective use of cash-flow,

promoting change from non-business assets to business assets andimplementing aggressive shareholder return(1) Capital investment(2) Shareholder return(3) Strategic investment

Delving into ofexisting business

Aggressive returnM&A and New business Keeping / Expansionof revenue base
 Development of newuse

 Total return ratio: Over80%

The dividend ratio is to be 80%,and stock buy-back will beconsidered appropriately bytaking finance needs into
consideration.

 Development of newmarket by external
growth Creation of new
business based on
existing technology

Improve capital efficiency
Financial Strategy

13/24

Ⅲ-1. Capital Investment (1)Capital investment for expansion of existing business anddevelopment acceleration(Million yen)

8,000
10,0006,000

Electronic

Industrial・Insulation

4,487
2,268

2,000
1,817

0'22/3(Actual)

5,000

1,562
85
81285

161

2,600

'23/3

(Actual)

1,850

100
200

450

100

309

2,455

8,400

～～

4,000

Basic research・Others

Display

200'24/3(Plan)

3,100'25/3(Plan)

3,000200

1002002,500'26/3(Reference)

15,487 Million yen
Financial Strategy

14/24

Ⅲ-1. Capital Investment (2)Details of major investment plan (3-year period)
Increase inproduction
capacity

Improvement ofproduction
processes
Development of
new products

Financial Strategy

8,100 Million yen••

ThinFlex production facilities (expansion of sales in Chinesemarket)
Production facilities of insulation film for semiconductor
substrate (expansion of existing business)

1,100 Million yen••

Waste heat recovery system and onsite solar power
generation (promotion of carbon neutrality)
Production management system and security measures(promotion of Digital Transformation)

5,900 Million yen••Innovation Center (establishment of base of open innovation)
Small coating machines and test facilities (expansion ofexisting business and creation of new business)
15/24

Ⅲ-2. Shareholder Return
Implemented aggressive return of over 80% of Total return ratio(Million yen)

Dividend

6,000(Left axis)

5,000

488.6

4,000
3,000
2,000
1,0000総還元性向実績
Total return ratio

Stock buy-back(Left axis)～(Right axis)

100.360.160 %Target index of Total return ratio(Right axis)

104.1

150(%)

82.7

10080%

750

50
0

3,204
3,173

997

1,300

'20/3
’20/3 (actual)'21/3’21/3 (actual)

(50)

2,985

'22/3
’22/3 (actual)

(100)

1,490

'23/3
’23/3 (actual)'24/3’24/3 (forecast)

Share price(Yen/Share) *802

1,000957

1,254

ー

Dividend(Yen/Share)

30

39

9590

45 (forecast)

Dividend yield (%)

3.7

3.9

9.9

7.2ー

＊ Closing price at the end of period

Financial Strategy

(150)

16/24

Ⅲ-3. Strategic Investment
M&A
Narrow down target and make capital investment in flexible manner,
while making effective use of cash reserves

Arisawa Innovation Center
Utilize it as base of open innovation for technology fusion between our technology
and technology of other companies and research institutions as well as base where
our employees interact free and easy with each other across their business fields andregional boundaries
Estimated completion date: August 2024
• Three-story building• Design which takes energy-saving into
consideration with earth thermal,
contemporary snow room, waste heat A/C,etc.
Exterior perspective drawing

Financial Strategy

17/24

Contents
Ⅰ. Policy of Medium-Term Business Plan
Ⅱ. Business Strategy

Ⅲ. Financial Strategy
Ⅳ. ESG Strategy

2

3~12

13~17

18~24

Ⅳ-1. Materiality to be Addressed by our Company
Address resolution of following priorities (materiality) andpursue sustainable growthMateriality

KGI (Key Goal Indicator)

Contribution todecarbonized society• Accomplishment of carbon neutrality by FY2030• Promotion of energy conservation and resourcesaving• Substitution of alternative energy• Provision of materials for environmental loadreduction

Development of diverse
human resources /Improvement of job
satisfaction• Development of next-generation human resources• Vigorous work environment for all employees

Promotion of
circular economy• Reduction of emissions• Building of sustainable supply chain

Enhancement ofgovernance• Organization with high ethical standards• Organizational structure having goodcommunication channels

ESG Strategy

Global goals to beexpected to advance18/24

Ⅳ-2. Carbon Neutral Initiatives
Expand efforts for improvement of energy use efficiency andpromote technological development for production of low-carbon
materials and use of renewal energy

Target: to achieve carbon neutrality by FY2030 *(Announced onJun 16, 2021)＊Target: CO2 direct emissions (Scope 1) and indirect emission (Scope 2)
Achievement FY2021: 11.4% FY2022: 20.3%

Summary of initiatives
 Purchase of renewable energy electricity started (since July, 2021)
 Purchase of carbon neutral gas started (since July, 2021)
 Improvement of energy use efficiency(e.g., waste heat recovery for production equipment, improvement of A/C and steam
equipment)
 Introduction of solar power (onsite PPA) (expected to be operational from June, 2023)
 Development of low carbon materials(e.g., reducing energy in production process, reducing consumption of organicsolvents)

ESG Strategy

19/24

Ⅳ-3. Contribution to Society Through Development
Select themes which influence customers, society and environment andaim for contribution to society through our business
Goals for contribution
to society

Initiatives toclimate change

Prosperous life forall people

Renewable andSafety and life
decarbonized energy science
Important themes
and our contribution
story

Contribute to CO2 emission
control by supplying materials
for FCV and EVContribute to development ofnew decarbonized energy

Contribute to realization ofpeople's health andprosperous life by supplying
materials for autonomous
driving assistance system,
water treatment and medical
fieldsResource circulationand efficiency
Energy saving andresource saving

Contribute to energy saving
and resource saving by
supplying materials for EV,
solar power generation,
reinforcing infrastructure
equipment and aircraft’s
weight saving

Related global goals

ESG Strategy

20/24

Ⅳ-4. Promotion of Human Capital Management
Development of diverse human resources■ Secure diversity (promoting participation of women, people with disabilities, andforeigners)■ Evaluate and treat fairly (ensuring equal opportunities and merit system)■ Promote revitalization of human resources through training programs■ Promote 15% culture system

Creation of pleasant working environment■ Promote employees taking childcare leave and nursing care leave■ Promote employees taking paid leave■ Maintain good working conditions and support health maintenance andenhancement’22/3 (Actual)’23/3 (Actual)’25/3 (Target)

Ratio of women in managerial positions

12.5%

10.6%

20.0%

Ratio of mid-career employees in managerial positions

68.8%

70.5%

70.0%

Ratio of gender wage gaps between men and women

77.6%

80.5%

85.0%

Ratio of male employees taking childcare leave

29.4%

42.1%

60.0%

Percentage of annual paid leave taken

57.2%

65.6%

75.0%

ESG Strategy

21/24

Ⅳ-5. Promotion of Circular Economy andHarmonious Coexistence with Society
Building of sustainable supply chain and reduction of emissions
Engage in CSR activities with suppliers■ Inform suppliers of our CSR Procurement Policy andfollow up with them based on questionnaires••Conduct questionnaires to half of raw material suppliers
Evaluate (identify risks based on) their responses to questionnaires,and request suppliers with low scores for improvement■ Disuse hazardous chemical substances■ Achieve zero emission by 2050

Harmonious coexistence with society
Perform community-based social activities and enhance brand power■ Return 0.5% of net profit of parent company to society•••

Donation of musical instrument to elementary and secondary schools
Donation to health promotion business
Literacy education of Rohingya refugees (Myanmar)•••

Utilization of Innovation CenterCleanup of neighboring rivers
Art classes of local elementary schools using wastes■ Become involved in social contribution activities

ESG Strategy

22/24

Ⅳ-5-1. Corporate GovernanceImprove governance system to execute business plan

Actions for reform (already implemented)
Implemented each action, and proceeded to improve governance Assessment of effectiveness of board of directors by third party
 Increase in outside director ratio Ensuring of diversity including gender Introduction of performance-based director's remuneration
 Establishment of voluntary nomination and compensation committee

Future enhancement points
Further enhance governance system andimplement actions to stimulate board of directors
 Expansion of discussion on subsidiary management
 Enhancement of training for directors and corporate auditors
ESG Strategy

23/24

Ⅳ-5-2. History of Improving Corporate Governance(Unit: person)
Fiscalyear

Item

2015
2016

Board of directors
Inside/Male

Outside/Male• Issuance of the corporate governancereport5• Self-assessment of the effectivenessof the board of directors

Board of auditors
Inside/Male

Outside/Male

Inside/Male2121155212115201752121252018

52121252019• Non-renewal of the anti-takeovermeasures• Establishment of the nomination andcompensation committee (voluntaryadvisory body)42121142020• Assessment of the effectiveness of theboard of directors by the third party• Introduction of the voting by electromagnetic method

43

121142021• Change of stock awards for directors
from Stock Option to Restricted Stock

441

1

2

104

4

4

1

1

2

112022ESG Strategy

Outside/FemaleCorporate officers
Inside/Female1(Served asdirectors)

424/24

This material is based on information available at the time of presentation, andcontains forward-looking statements which involve risks and uncertainties that could
cause actual results to differ materially from those presented in the forward-looking
statements. Therefore, there is no assurance that any forward-looking statements inthis material will be realized. Final investment decisions should be made at yourdiscretion.