For Confidence and Infinite Challenges

Mid-Term Management Plan

Challenge 2024

Grow Up Plan 2024

©Carlit Holdings Co., Ltd. All rights reserved.

16

For Confidence and Infinite Challenges

Review of Business Environment: Changes in the Environment◆ Environmental changes in 2023~2024
Social and EconomicEnvironment✓ Destabilization global situation affected by the prolonged invasion of Ukraine andradicalization of Middle East conflicts.
✓ Fluctuations in transportation costs due to “the 2024 bug” in the Japan’s logistics
Industry.
✓ Ongoing slump in demand for electronic materials and semiconductor materials.

Requests for Listed
Companies✓ Requests to improve Return on Capital and Market Valuation for the purpose ofincreasing PBR.
→ Further progress expected after March 2023.

◆ Our situation in 2023-2024•

Forecast of record profit. Achieved ”Challenge2024” operating income target
ahead of schedule.

•Halfway to improving Return on Capital as stated in “Rolling Plan 2023”

Formulation of "Glow Up Plan 2024" for further growth©Carlit Holdings Co., Ltd. All rights reserved.

17

For Confidence and Infinite Challenges

Carlit Group‘s roadmap toward 2030
◆ Update operation profit goals in roadmap
2022 ～ 2024

～ 2027

Mid-Term Management Plan

Stage2～ 2021
Roadmap for Operating Incomeand ROE towards 2030

Challenge2024

Stage1 : Strengthen the foundation

Investment
Promotion

4,000

2,000

Stage3

Harvest and Take off

ROE 12%～5,000（百万円）

3,800

3,352

3,000

～ 2030

2,506

2,640

2,700

3,000

ROE 10%1,574

Considering further highoperating profit goal for2030※FY2031 goal：5,000M(Plan at FY2023)

1,000

ROE 7%

0

FY2021

FY2022

FY2023

FY2024

ROE 8%FY2025

FY2031©Carlit Holdings Co., Ltd. All rights reserved.

18

For Confidence and Infinite Challenges

Matrix analysis on Return on Capital and Market Valuation◆ Confirm our position in the matrix on Return on Capital and Market Valuation◆ Considering further improvement measures to be added to Medium-Term Management
Plan ”Challenge2024” and “Rolling Plan 2024”
High(shareholder) cost of capital

5.5～8.5%

Marketvaluation（PBR）

Our future position

PBR：１～
ROE：10～12%

Our current position

PBR：0.68～0.75
ROE：7.4%✓Gaining market recognition
for future business growth.
✓Improved Return on Capitalbeyond Costs of Equity.

P/B ratio of 1x✓P/B ratio does not reach 1x, market valuation low.
✓ROE is within range of Cost of Capital.

LowLow

Profitability（ROE）

High©Carlit Holdings Co., Ltd. All rights reserved.

19

For Confidence and Infinite Challenges

Policy on Cross-held shares
ＲＯＥ！

Total asset turnoverOff-balance sheet

Sale of cross-held shares

Return on sales

EPS upGrowth investments◆ Balance sheet aware management to achieve further growth of the group from a financial
perspective◆ Proceeding reduction of sale of cross-held shares and streamlining of assets
Balance of stocks(To compare the number of stocks, we converted thestock price to the market price at the end of FY2021

40.0%

Consolidated net asset ratio(%)

Balance of cross-shareholdings at end of period / Net
assets at end of period (Consolidated)

External Environment✓ Increase of consolidated net assets ratio due torecent stock market rally

30.0%

24.1%

Policy on Cross-held shares

21.1%
20.0%

18.6%
Consolidated net asset ratio

10.0%

Goal：Less than 15%✓ Reducing sale of cross-held shares based oncomprehensive, mid- and long-term
consideration of Cost of Capital and otherindicators✓ Reducing consolidated net assets ratio to thegoal of under 15％ by the end of FY2027

0.0%
FY2022

FY2023

FY2024FY2025

FY2027©Carlit Holdings Co., Ltd. All rights reserved.

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Equipment investment plan & Growth investment
ＲＯＥ

For Confidence and Infinite Challenges

Total asset turnoverOff-balance sheet

Sale of cross-held shares

Return on sales

EPS upGrowth investments！

◆ Prioritize profitable growth investment projects and progress promptly◆ Carry out investments on business in the Base Area (expecting stable earning due to low volatility)Equipment
investment planon Apr. 2022

FocusDevelopAreas
Areas
1.01.0billion yen billion yen

Equipment
investment planfor FY 2024

✓ Expecting high profitability
through investments onFocus and Develop Areas

Base Areas
5.5 billion yen

Focus Areas & Develop Areas
6.0 billion yen
Ammonium perchlorate business：2.5 billion yen
Material assessment service business：2.0 billion yen
Silicon wafers business：1.0 billion yen
R&D：0.5 billion yen✓ Investments on Base Areas are
sufficient on profitability, and expected togenerate stable profit, pursuing ESG as energy-saving

DX Promotion
1.5 billion yen

Base Areas
2.5 billion yen
Explosives business：1.0 billion yen
Energy- and labor-saving equipment： 0.5 billion yen
Others (Investment in renewal and aging equipment)：
1.0 billion yen

DXPromotion
1.0billion yen

Core systems
update, etc.

©Carlit Holdings Co., Ltd. All rights reserved.

21

Fostering growth expectations by expansion of R&DＰＥＲ

Growth rate

Fostering growthexpectations
Non-FinancialStrategies

Review of thegrowth strategy

For Confidence and Infinite Challenges

Intellectual property investment(Reinforcement R&D bases)

Business Portfolio
Management

Enhancement of development
for sustainable products！
！

◆ ” Ideal Carlit Group In 2030 “ in Research and Development
Specialize in chemical and Semiconductor field, and create new products to establish new business
The future to be realized

Efforts in the Final Year of the Medium-Term Management Plan

2. New challenge of Electronic materials technology
Ionic conductor materials、Conductive polymer
3. Expansion of research and development on Optical, Semiconductor field

Further promotion of clean
energy to achieve carbon
neutrality

Electronics

New challenge of Electrodes Technology Business
New energy storage device materials, hydrogen generating
electrode (NEDO joint research), CO2 capture

Lifescience

1.

More advanced electronic
devices such as smart phones

Development of high value-added wafer materials, research of optical materials©Carlit Holdings Co., Ltd. All rights reserved.

22

For Confidence and Infinite Challenges

Stable dividend payments linked to business performance
ＲＯＥ

Expansion of shareholder
returns

Financial leverage

Dividend increase (Stable dividend
payments linked performance-based)！

◆ Control financial leverage appropriately, optimize equity capital level, and maintain soundness◆ Strategically allocate resources from operating cash flow and asset sale, and pursue improvements in
profitability and growth expectations

Sale ofCross-heldshares

Shareholder
Return

3500

3000

33 yenCapitalExpenditure,etc.
9.5 billion yen
Cash out

23.2

2000

1500
1000

Cash in

Forecasts

41.2

2500

R&D
investments

OperatingCash Flow50（yen or ％)4000（Million yen)

500

1812121216.3
1621.230 ％40
Operating profit

30
Net profit

2020

10

Cash dividends
per share
Payout ratio

002018

2019

2020

2021

20222023✓ We will promote growth investment, and work to return profits witha total payout ratio of 30%.
※Total payout ratio ＝(Total dividend payments＋Total share buy-back)/ Profit attributable to owners of parent©Carlit Holdings Co., Ltd. All rights reserved.

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For Confidence and Infinite Challenges

Final year Mid-Term Management Plan “Challenge2024”◆ Aim to achieve PBR over 1.0 and ROE 8.0% by accelerating investment in growth-driving
businesses and further strengthening shareholder returns
HighMarketvaluation（PBR）(shareholder) cost of capital：5.5～8.5%

PBR：1.2～
ROE：10～12%

Achievement of Mid-Term Management Plan

2. Consolidated operating profit margin

PBR：～1.0
ROE：8.0%

Our currentposition

1.

“Challenge2024”

Our goal position

P/B ratio of 1

Mid-Term Management Plan
“Grow up Plan 2024”

Our futureposition

more to 10%
3. Capital optimization and Improved return on
capital

PBR：0.68~0.75
ROE：7.06%

4. Fostering growth expectations by expansion ofR&D

Low
Low

Profitability（ROE）

High

5. Execute appropriate shareholder returns©Carlit Holdings Co., Ltd. All rights reserved.

2424

For Confidence and Infinite Challenges

Giving Shape to Infinite Possibilities©Carlit Holdings Co., Ltd. All rights reserved.

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