Initiatives for an Increase in
Sustainable Corporate Value

May 14, 20244092© Nippon Chemical Industrial Co., Ltd.

Forecast of business results and business plans included herein are based on theinformation available for us as of now and certain preconditions, and they provide
no guarantee of our future business results. Actual business results may depend
on a wide variety of factors.

© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Action to Implement Management that is Conscious of Costof Capital and Stock Price■The company recognizes that the cost of shareholders’ equity represents 6% to 8%.

Recognition of current
status and issues■ROE was above the cost of shareholders’ equity at 9.2% for FY 2021 while being significantly
below the cost of shareholders’ equity at 2.0% for FY 2022 and 3.6% for FY 2023.
■PBR now remains low at around 0.5.
■The company recognizes that the challenge is to do the speedy recovery in ROE, to realize astable level above the cost of shareholders’ equity, and to do the improvement in equity
spread through a reduction in the cost of shareholders’ equity.

PolicyThe company will realize the ideal for 2030 and increase in sustainable corporate value.
■Targets for FY 2030: operating profit 6 billion yen, ROE 8%■Targets in Medium-term business plan : operating profit 3.3 billion yen, ROE 6%

initiatives■Increase in ROE: Execution of Medium-term business plan (three measures) andimplementation of capital policy→ROE Targets: 5% for FY 2024, 6% for FY 2026, 8% for FY 2030
■Reduction in cost of shareholders’ equity: Promotion of nonfinancial measures2© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Recognition of Current Status and Issues
・The company recognizes that cost of shareholders equity represents 6-8%.
・ROE has remained low since FY 2022. The challege is to improve equity spread.
・PBR remains low at around 0.5.

(%) 10864

Our recognition basedon CAPM<ROE and cost of shareholders’ equity>

Cost of shareholders’ equity

ROE

６% to ８％

Cost of shareholders’ equity

202017

2018

2019

2021

2022

2023 (fiscal year)<PBR>(multiple) 1.2

10.8
0.6
0.4
0.202020

At end of March, FY2024

PBR

PBR

Around 0.520172018201920202021

2022

2023 (fiscal year)3© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Initiatives for an Increase in Sustainable Corporate Value
Improvement in equity spread through increase in ROE andreduction in the cost of shareholders’ equity
Increase in corporate value and PBR

Improvement in equity spread

Reduction in cost ofshareholders’ equity

Increase in ROE
Increase in return

Control of equity

Promotion of nonfinancial measures

Execution of MediumTerm Business Plan(three measures)

Implementation of capital
policyPromotion of thesustainabilitymanagement■Business expansionand strengthening thebusiness structure■Promotion ofglobalization■New value creation■Efficiency of fundsflow■Securing of financialhealth■Improvement inreturn to shareholders■facilitate
environmental
responses(TCFD, CDP, etc.)■Development of
human resources

Strengthening corporate
governance

Strengthening IR andSR activities■Strengthening ofNomination andRemuneration Committee■Securing of diversity ofthe Board of Directors■Introduction of stockbased remuneration■Evaluation of theeffectiveness of theBoard of Directors■Extension ofinformation
disclosure■Issuance ofintegrated report■Extension of Englishdisclosure© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Positioning of Medium-Term Business Plan
Targets for FY 2030

Operating profit

EBITDAROE

6 billion yen

11 billion yen

8%

Backcasting based on our ideal vision

Our ideal vision
for 2030
Providing products and solutions that
help in solving social issues

Forecasting ofcontinuous issues to deal withMedium-TermBusiness Plan
(FY 2024 to FY 2026)
Promotion of the
成長戦略の推進とGrowth Strategy and
新たな価値の創造

Increasing corporate value anddeveloping trust with stakeholders
Needed by society throughchemical technology andevolving continuously

New Value Creation

Present

Sustainability management
FY2024

FY2026

FY2030© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Policies and Priority Measuresin Medium-Term Business Plan

FY
2030

Policy for medium-term business plan

Promotion of the Growth Strategy andNew Value Creation
FY
2026
Three measures based on the sustainability management
Measure (i) Business expansion andstrengthening the businessstructure■Expand the business in growth fields■Strengthen the business structure of basic fields■Pursue deepening and succession of production technology

Measure (ii) Promotion of globalization■Increase overseas net sales■Strengthen overseas organizations■Pursue new opportunities

Measure (iii) New value creation■Promote development of products withcompetitive advantage■Achieve early research results

Promotion of theSustainability Management

FY2024■Effectively allocate managerial resources■Strengthen supply-chain management■Improve employee satisfaction■Strengthen and complete corporate governance and compliance■Facilitate environmental responses■Promote contribution to local communities and society6© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Numerical Targets■Net sales■Operating profit(hundred millions of yen)
FY 2024（1st year in Medium-termbusiness plan）

Forecast

7060385 400

50Medium-termbusiness plan430

460 490

400

300

2024
vs Medium-termbusiness plan

Profitincrease

30

23

29

33
24252023

2024

2024

2025

200

100

100500Sales
decrease

40

20Targets ofthe final
fiscal year

02026（fiscal year）

Medium-term business plan
(2024-2026)

7© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Measure (i) Business Expansion and Strengthening
Business Structure
Focus on strengthening and expansion of earning capacity
Expand the Business in Growth Fields■Obtain business opportunities by continuously
making strategic investments in electronic
ceramic materials■Realize business expansion by pursuingefficient and stable production of organic
electronic materials

Strengthen the Business Structure ofBasic Fields■Expand the lineup of differentiated products
satisfying the diversifying customer needs■Implement measures to increase profitabilityof low profitable products and businesses

Pursue Deepening and Succession ofProduction Technology■Clarify core technologies and implement
succession of production technologies andexpertise■Increase profitability and safety by making
production efficient and stable<Products in growth fields and their major uses>
Electronic CeramicMaterials
High-Purity Electronic
Materials

Dielectrics for MLCC and dielectric materials(Barium titanate / High-purity barium carbonate)

Semiconductor materials and organic
electronic materials(High-purity phosphine gas / High-purity red
Phosphorus, etc.)

Phosphoric Acid for LCDs andSemiconductors

Etching agents

Phosphorus Materials for
Quantum Dot

Materials for Quantum Dot display(Phosphoric acid)(Phosphine derivatives including TMSP)<Products in basic fields and their major uses>
Chromium Compounds

Hard chromium plating (automobiles)
Refractory bricks (metallurgical furnace)
Electromagnetic steel sheet plating(electronic vehicles)

Silicates and Silica

Deinking of used papers (papermanufacturing)
Soil hardening agent (construction)

Inorganic Phosphorus
Compounds

Food additives
Optical glass materials

8© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Growth Fields
Increase net sales in growth fields to more than 20 billion yen<Ratio of growth fields in net sales>■ Total (billion yen)
■ Growth fields (billion yen)
Ratio of growth fields in consolidated sales

34%

Targets of products in growth fields for FY 2026

40%

Growth fields
net sales

Growth fields
sales ratio

20 billion yen

40%

32%

<Capital investments, etc.>
20
Other

24%

213

Growth fields
net sales

Electronic ceramicmaterials net sales
in growth fields

12.5

8.6

6.5

7.6

8.5

Growth

6.5
Investment
amount(cumulative totalfor three years
20 billion yen

Maintenance andreplacement

11.5

Growth investment
Investment in a medium- tolong-term perspective leading toan increase in corporate value■For electronic ceramic materials■Phosphine derivatives■For semiconductors, and others

2018 2022 2023 2024 2025 2026 (fiscal year)(Forecast)9© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Measure (ii) Promotion of globalization
Expand the business leveraging strength
Increase overseas net sales■Expand overseas with products satisfying local
needs
Strengthen overseas organizations■Increase the organizational strength to improveoverseas presence※Establishment of overseas subsidiary
in R.O.C (Taiwan) (scheduled)
100
Overview of Overseas Subsidiary

Overseasnet salesOverseassales ratio

7 billion yen

14%< Ratio of overseas in net sales >■ overseas net sales (billion yen)

Ratio of overseas in consolidated sales 14%
13%80◆ Company nameTaiwan Nippon Chemical Industrial Co., Ltd.

◆ Location

Taichung City60◆ Date of establishment

June 2024 (scheduled)40◆ Business

Sales of industrial and specialty chemicals◆ Amount of capital

Targets of overseas net sales for FY 2026

16%
14%
12%

10%
8%

710%
8%

20
NTD 27,000,000

0Pursue new opportunities■Pursue and develop new business model throughdeepened cooperation between overseas bases

53

3.76%
4%2%0%

2018 2022 2023 2024 2025 2026 (fiscal year)(Forecast)10© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

11© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Cash Allocation
Effectively allocate of managerial resources
The company will allocate cash generated by expansion of growth fields, optimization ofinventories, and reduction in shares held for strategic purposes to growth fields, managementfoundation, and return to shareholders<Cash allocation for three years of Medium-term business plan (diagram)>

Optimization of working
capitalCash generation byoptimization of inventories

Operating CF:
13 billion yen
or moreGrowthinvestment:
6.5 billion yen* Excluding working capital

Reduction in crossshareholdings
Aim for the followings:
FY 2026:15% or less
FY 2030:10% or less

Optimization ofworking capital:
3 billion yen

Maintenanceand replacement
investment
and others

13.5 billion yen

Reduction in crossshareholdings

Financing

Return toshareholders:
2 billion yen
or moreGrowth investment
Investment from mediumto long-term perspective
leading to increase incorporate value
Return to shareholders
Extension of return toshareholders
・Payout ratio: about 30%
・Acquisition of treasury
shares and others12© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Capital Policy
Effectively allocate of managerial resources andimprovement in return to shareholders
Reduction in cross-shareholdings■Targets for the ratio of cross-shareholdings
to net assets
FY 2026:15% or less
FY 2030:10% or less
150

<Changes in dividends per share>■Annual dividends（yen）
Payout ratio

72％

Efficiency of funds flow
■Efficiency of funds flow through100
maintenance of inventory turnover periodof 3.0 to 3.5 months
Securing of financial health■Securing of financial health throughmaintenance of D/E ratio of 0.4 times

29％

33％

28％

39％
20％

85

50

Improvement in return to shareholders■Extension of sustainable shareholder return0measures in the medium- to long-term
・Payout ratio Around 30 %・Acquisition of treasury shares and others

70

70

70

70

70

-100.02018 2019 2020 2021 2022 2023 (fiscal year)13© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Promotion of the Sustainability ManagementAim for realization of sustainable society
Facilitate environmental responses

External evaluation■TCFD (October 2022 -)The company strengthened initiatives for Climate
Change and set long-term targets of Scopes 1 and 2.
■CDP
The company responded to CDP 2023 Climate Change
Questionnaire as external evaluation of ESG andreceived “B” score for Climate Change, and aims forhigher score.
■Environmental contribution products
The company established a system for certifying
products contributing to solution of environmental
issues as environmental contribution products and aimsfor increasing the ratio of environmental contribution
products in net sales.

TCFD

EcoVadis

CDP（Climate Change）

Keidanren Initiative for Biodiversity
Conservation<CO2 emissions (t)>CO2 emissions (t)23％ reduction
by FY 2030

Development of human resources■Development of human resources using coaching■Extension of the system for encouraging the growth■Promotion of success of female employees
FY 2016

FY 2017

FY 2018

FY 2019

Scope of data collection: Nippon Chemical Industrial GroupFY 2020

FY 2030

14© Nippon Chemical Industrial. Co., Ltd. All rights reserved.

Strengthening Corporate Governance andStrengthening IR and SR activities
Extension of disclosure of nonfinancial information
for reduction in cost of shareholders’ equity
Strengthening corporate governanceInitiatives for strengthening corporate governance■Strengthening of the effectiveness ofStrengthening of the effectiveness of Nomination
Nomination and Remuneration Committee
and Remuneration Committee■Securing of diversity of the Board of Directors ・Chairperson: Selected from among members who are independent
Outside Directors■Introduction of transfer-restricted shares・Activities (examples)
remuneration- Selection of Directors and Executive Officers■Execution of effectiveness evaluation- Selection of Representative Directors- Policy and procedure for determining the remuneration ofof the Board of Directors
Directors and Executive Officers

Strengthening IR and SR activities■Extension of information disclosure■Issuance of integrated report (scheduled tobe issued in 2024)■Extension of English disclosure<Transition to integrated report>

Securing of diversity of the Board of Directors
・ Selection of female Directors
・Three Outside Directors(Ratio of Outside Directors to all Directors: 50%)

Introduction of transfer-restricted shares
remuneration

・Applicable persons: 2 Directors, 16 Executive Officers andadministration officers
・Transfer period: until resigns

Execution of effectiveness evaluation of the Boardof Directors
To 2022
CSR report2023
Sustainabilityreport

2024
Integrated report(scheduled)・Deepening of issues and measures based on results of theevaluation
・Recognition of the necessity to prepare and execute systematictraining programs for Directors and executive officers→Preparation and execution of the training program plan15