Note : This document has been translated from the Japanese original for reference purposes only. In
the event of any discrepancy between this translated document and the Japanese original, the original
shall prevail.

October 30, 2023

Company name
Representative

Inquiries

RIKEN TECHNOS CORPORATION
Kazuaki Tokiwa, Representative
Director, President & CEO(Securities Code: 4220, TSE Prime)
Junji Irie, Representative Director,
Senior Managing Executive Officer;
Senior General Manager,
Administrative Division(TEL: +81-3-5297-1650)

Notice regarding Action to Implement Management that is
Conscious of Cost of Capital and Stock Price
RIKEN TECHNOS CORPORATION (the “Company”) hereby announces that it has
made a resolution at a meeting of the Board of Directors held today, in accordance withthe request from Tokyo Stock Exchange regarding the “Action to Implement
Management that is Conscious of Cost of Capital and Stock Price,” for the analysis andassessment of the current situation, policies and targets for improvement, and specificinitiatives as follows.

1. Analysis and Assessment of the Current Situation
Our Group has formulated the long-term vision “Aiming to become the leading
provider of comfort for all living spaces,” and has undertaken specific initiatives toachieve management indicators set forth in the current Three-year Medium-term
Business Plan (FY2022–FY2024) “Challenge Now for Change New 2024”. In the firstfiscal year of FY2022, both consolidated net sales and all profit measures set all-timehighs, and in the second fiscal year of FY2023, we have seen outstanding performancethat exceeds our expectations in the second quarter.
In such an environment, while our ROE (return on equity) has steadily improved,
PBR (price book-value ratio) has been constantly below 1x because the stock price did
not increase for the increase of BPS (book-value per share). This is considered to becaused by the fact that, even though our ROE has increased to 7.5% in the latest
FY2022, due to the increase of equity capital, the Company has not achieved
profitability that exceeds its cost of equity, and that shareholders and investors are
not seeing enough growth potential of the Company.

FY2018

FY2019FY2020

FY2021

FY2022

ROE

6.4%

6.2%

6.3%

7.1%

7.5%

PBR

0.60x

0.49x

0.61x

0.50x

0.59x

453 yen

385 yen

516 yen457 yen589 yen753.31 yen

788.77 yen

852.51 yen

914.83 yen

999.00 yen

Stock priceBPS* Stock price indicates the closing price at each fiscal-year end.

2. Policies and Targets for Improvement
The Company will implement management that is conscious of cost of capital andstock price as it advances the four strategies, namely, “Intensify global management
and generate synergies,” “Stay ahead of customers’ expectations,” “Take on thechallenge toward new businesses and products,” and “Contribute to solving
environmental and social issues” in the Three-year Medium-term Business Plan
“Challenge Now for Change New 2024”. Specifically, we will take on prompt measures
to increase profitability through enhanced balance sheet management, andconcentrate our management resources and make proactive investments in growthareas, while reinforcing engagement with shareholders and investors through IR andSR.
Through these initiatives, the Company aims to achieve ROE of 8.0% and PBR
above 1x in the final fiscal year of the Three-year Medium-term Business Plan
(FY2024). Further actions for increasing corporate value beyond the current period
will be considered as we formulate the next Three-year Medium-term Business Plan.

3. Specific Initiatives(1) Financial Strategies(ⅰ) Strengthening Shareholder Returns (treasury shares and dividends)
The Company will seek for the optimized capital structure that is conscious of
capital efficiency and limit unnecessary increase of equity capital. If the Company,
as a result of these measures, determines that it is appropriate to purchasetreasury shares, it will proceed with the purchase/disposal of treasury shares
promptly and in a timely manner.
* Please refer to the “Notice Concerning Determination of Matters Related to
Acquisition of Own Shares” dated today for the details of the acquisition ofown shares resolved today.
https://www.rikentechnos.co.jp/e/ir/news/
For dividends, the Company has increased the consolidated dividend payout
ratio from about 30% to about 35% from FY2022, and paid a total dividend of
25.00 yen per share for the fiscal year, an increase of 6 yen per share from 19.00
yen for the previous fiscal year. We will continue to strive for an increase of thelevel of dividends and consider reexamining the basic policy for dividends, whennecessary, taking into consideration the future progress of the measures forincreasing corporate value.
(ⅱ) Reducing cross-shareholdings
For cross-shareholdings, the Company has annually reviewed the rationality ofholding each company’s stocks including the cost of equity and the benefits ofholding, and has reduced the ratio of cross-shareholdings. In the future, we willproceed with immediate reduction based on our policy to reduce the balance ofcross-shareholdings to reach less than 10% of consolidated net assets. In addition,
cash generated by the reduction will be utilized for investment in growth so that
we can accelerate future growth by realizing new value creation.
(2) Growth Strategies(ⅰ) Completion of the Three-year Medium-term Business Plan “Challenge Now for
Change New 2024”
As announced in the current Three-year Medium-term Business Plan, we willreinforce our initiatives to achieve the numerical targets (consolidated net salesof 135.0 billion yen and consolidated operating profit of 8.5 billion yen) and the
management indicators (ROS of 6.3%, ROE of 8.0%, and the overseas sales ratio
above 50%).
* For the progress of the current Three-year Medium-term Business Plan,please refer to the material of the “Financial and Management Results
Briefing” posted on the Company’s website.
https://www.rikentechnos.co.jp/e/ir/library/briefing_materials/(ⅱ) Enhancing investment for growthWith a focus on investment in growth, we will implement cash allocation that isbalanced with shareholder returns, and make energetic efforts to study
technological investments, equity investments, and M&A activities, targetingnew businesses. In order to strengthen our competitiveness, we will also
implement capital investments with a sense of urgency that exceeds our plan of
19.5 billion yen in total as stated in the current Three-year Medium-term
Business Plan, making sure to seize business opportunities.
Furthermore, to increase efficiency and profitability, we will strengthen
portfolio management and concentrate our management resources in promisingmarkets where global growth can be expected.

(3) Non-Financial Strategies(ⅰ) Enhancement of IR and SR
We will further enhance the disclosure of both financial and non-financial
information, including disclosure in English, and will accelerate proactive
communication with shareholders and investors to reinforce our engagement.
Moreover, we will further expand disclosure of the implementation status of
dialogues, etc.
The Company will also strive to eliminate information asymmetry withshareholders and investors as much as possible, and enhance the disclosure of
information, including in relation to sustainability, to resolve uncertainty in themid- to long-term. These efforts will lead to reducing the cost of equity andexpanding the equity spread.
* In September 2023, we have published our first Integrated Report with
updated content of our previous Sustainability Report. Please refer to the“Blue Challenge Report 2023” posted on the Company’s website.
https://www.rikentechnos.co.jp/csr/report/ (available only in Japanese)(ⅱ) Strengthening human resource strategy
We will execute a human resource strategy with a focus on succession planning,and build a human resource portfolio that is necessary to execute themanagement strategies by securing, nurturing, and reallocating personnel withhigh growth potential. The Company will also make proactive investments inhuman capital as necessary to that end.
Furthermore, we will study the introduction of a stock-based compensation
plan for our employees, with the aim to raise awareness among employees about
participating in management and about stock price, which is intended tocontribute to increasing corporate value.
(ⅲ) Reexamining compensation plan for officers
We will review the details and weight of performance-linked indicators in thecompensation plan for officers in order to strengthen its functionality as a soundincentive for sustainable growth, which will lead to the enhancement of our
profitability and corporate value. Additionally, the Company will consider the
introduction of a mid- to long-term performance-linked compensation and expand
the use of stock-based compensation.
* Please refer to the attachment titled “Action to Implement Management that is
Conscious of Cost of Capital and Stock Price (supplementary document).”

(Securities code: 4220, TSE Prime)

Note : This document has been translated from the Japanese original forreference purposes only. In the event of any discrepancy between thistranslated document and the Japanese original, the original shall prevail.

RIKEN TECHNOS CORPORATION
Action to Implement Management that is
Conscious of Cost of Capital and Stock Price(supplementary document)
October 30, 2023

Analysis and Assessment of the Current Situation
Although net sales and all profit measures of the fiscal year ended March 2023 set alltime highs, PBR has been constantly below 1x.
[Potential Causes]
・Even though the recent ROE has improved to 7.5%, due to increase of equity capital,
the Company has not achieved profitability that exceeds its cost of equity.
・Shareholders and investors are not seeing enough growth potential of the Company.
(Consolidated) Net Sales/Profitability
140,000

Market Valuation
14,000123,497
120,000
100,000
80,00060,000

6.4

5,761

7.1

5,581

7.5

7,506

6.3

6.2

10,000400

20,0002,000

00FY2018FY2019FY2020
FY2021
FY2022
2019/3⽉期2020/3⽉期2021/3⽉期2022/3⽉期2023/3⽉期(million yen)

0.59
0.50

0.49

ROE (%)
ROE（％）

200

0.7
0.6
0.5

6,000

5,313

Operating profit
営業利益（百万円）

0.61

0.60

8,000

4,000

Net sales(million yen)

0.8

300

6,292

40,000

売上⾼（百万円）

0.9

500

98,80888,224600

12,000109,923
97,813

1.0

453

516
385

589
457

0.4
0.3
0.2

100

0.1
0.0

0
FY2018FY2019FY2020
FY2021
FY2022
2019/3⽉期
2020/3⽉期
2021/3⽉期
2022/3⽉期
2023/3⽉期
Stock price at fiscal
期末株価（円）year end (yen)

期末PBR（倍）PBR at fiscal year end (x)1Policies and Targets for Improvement
Implement management that is conscious of cost of capital and stock price, along with the Threeyear Medium-term Business Plan
・Improve profitability through enhanced balance sheet management and make proactive
investments in growth areas
・Reinforce engagement with shareholders and investors through IR and SRCapital Efficiency/Profitability
Stock price

PBR

Shareholders’equity per share

Optimization offinancial leverage
Improvementof ROE

Enhancementof PER＝

ROE

Basic earnings
per share
Shareholders’equity per share

Company’s Growth Potential
1

×

PER

Cost of equity

Strengthening
shareholder returns(purchase of treasury shares and dividends)

Improvement ofefficiency

Reduction of cross-shareholdings

Enhancement of
profitability(Three-year Medium-term Business Plan) Human resource

Growth strategy

Enhancementof IR and SR
strategy

Reduction of
cost of equity

Portfolio management
Reducing performance volatility

Strengtheningof governanceNurturing the
growth potential

Investments for growth and M&A
focused on promising markets–

Expected
growth rate

Increasing
Corporate
Value
Target for
FY2024
ROE 8.0%
PBR 1.0x

Further actions for increasing corporate value will be considered in theformulation process of the next Three-year Medium-term Business Plan 2

Specific Initiatives (Financial Strategies)
Implement balance sheet management focused on strengthening shareholder returns
and reducing cross-shareholdings⇒ Cash generated by the reduction of cross-shareholdings will be utilized
for investment in growth, leading to new value creation(Consolidated)
Current assets and Liabilities
・Reduction of net cash
(enhancement of investment
in growth and shareholder
returns)
・Reduction of tradereceivables
Non-current assets
・Reduction ofcross-shareholdings(less than 10% ofconsolidated net assets)
Net assets
・Strengthening shareholder
returns (treasury shares anddividends)

FY2022 Balance Sheet
Current assets
71.7 billion yen

Liabilities
39.8 billion yen

Cash and deposits
23.4 billion yen

Interest-bearing debt

10.0 billion yen

Ideal Balance Sheet
Reduction of
total assets
Current assets

Liabilities
Appropriate
financialleverage

Reduction

Cash and deposits

Trade receivables
28.4 billion yen

Reduction

Net assets
72.1 billion yen
Non-current assets

40.3 billion yen
Investment securities

8.8 billion yen

Share capital
8.5 billion yen
Capital surplus
6.5 billion yen
Retained earnings
41.4 billion yen
Treasury shares(400 million yen)

Total assets
112.0 billion yen
Financial leverage
1.77x
ROE
7.5%

Interest-bearing debt

Trade receivables

Non-current
assetsReduction

Investment securities

Reduction of
net assets

Net assets
Share capital
Capital surplus
Retained earnings(Treasury shares)

Seek for optimized capital
structure that is consciousof capital efficiency
Keep ROE above 8.0%

Limitedincrease of
equity capital3

Specific Initiatives (Growth Strategies)(1) Completion of the Three-year Medium-term Business Plan “Challenge Now for Change
New 2024”
7.5%

7.1%

6.6%

(Unit: 100 million yen)

1,500

6.1%

5.7%

1,234

1,200

7.9%

1,280

8.0%
(Unit: 100 million yen)

6.3%

1,350

150

900

90

52

45

39

85

84

75

62

300

50

30
0

Net
売上⾼
sales

FY2022
2023年
actual3月期
実績

OperatingOperating
営業利益
profitprofitLong-term
visionAiming to become the leading provider of comfort for all living spaces

60

0
FY2021
2022年
actual3月期
実績

We are a challenger that harnesses the power of science toimprove the quality of life and create a safe, affluent society.
We continuously provide new value and satisfaction to people,
companies and society through our original and superior
formulations and manufacturing technologies of multiple resins.

120

1,099

600

Mission(reason forexistence)

FY2023
2024年
forecast
3月期
予想

当期純利益
Net profit

FY2024
2025年
planned3月期(finalyear of
中計最終年度Medium-term
Business
計画値Plan)
ROS
ROS
ROE
ROE

RIKEN TECHNOS’ strengths and business model The capacity to meet the needs of leading
global customers
 Strong technical capabilities- Formulation design technology- Kneading technology- Film formation and processing technology

Basic strategies of the Medium-term Business Plan
Intensify global management
and generate synergies
・Capture an overwhelming market sharein ASEAN and increase the number offields in which we hold the leading share

Stay ahead of customers’ expectations
・Further reinforce and develop
the Company’s strengths andbusiness model

Strategies to grow strengths of businesses
Take on the challenge toward
new businesses and products
・Build new business pillars that go
beyond geographic expansion andmeeting customer needs

Contribute to solving environmental
and social issues
・Initiatives to achieve carbon neutrality
by 2050

Strategies for future growth
Strategies and measures to support the above strategies
Intellectual property (R&D) investments
DX Investments
GovernanceCapital investments/manufacturing Human resources investments

4

Specific Initiatives (Growth Strategies)(2) Enhancing investment for growth・With a focus on investment in growth, implement cash allocation that is balanced with shareholder returns
・Strengthen the portfolio management and concentrate management resources in promising markets
Out.

Streamlining
Balance Sheet

In
Reducible
amount in cash
and deposits

Strategic
investments

Reduction oftrade
receivables

Purchase oftreasurysharesSelling
sharesDividends
3.1 billion yen

R&D
investment
5.7 billion yen(2.4 billion yen
overseas)

Out.

Dividends
R&D
investment
6.2 billion
yen

Operatingcash flow
26.0 billion
yen(6.7 billion yen Overseas
overseas)
investments□ Make energetic efforts to study technological investments,
equity investments, and M&A activities, targeting new
businesses.
□ Purchase treasury shares for shareholder returns.
□ Increase dividend payout ratio to 35% (from FY2022).
□ Enhance R&D system and reinforce IP strategies.
• Expand R&D Center, adopt state-of-the-art prototype machines,
enhance staffing, etc.
• Generate IP through in-house development; leverage IP
information.

Implement capital investments centered on ASEAN (up 4.3 billion
yen from previous Medium-term Business Plan).

Capitalinvestment
12.4 billion yen

Capital□ Enhance equipment at facilities in ASEAN and North America, etc.
investment Domestic
19.5 billion investments Accelerate capital investments to reduce CO2 emissions from theyen
next year and beyond (up 2.8 billion yen from previous Medium-term
Business Plan).

(10.0 billion yen
in Japan)(12.8 billion
yen in Japan)

Previous Medium-term Business
Plan (FY2019-FY2021)
ActualThis Medium-term Business
Plan (FY2022-FY2024)
Planned□ Invest in equipment enhancement and streamlining.
□ Carbon neutral initiatives□ Computer-system investment, etc.
5Specific Initiatives (Non-Financial Strategies)(1) Enhancement of IR and SR
・Enhance the disclosure of financial and non-financial information,
including disclosure in English
・Engage in proactive IR and SR activities⇒Reduce the cost of equity by eliminating information asymmetry

Our first
Integrated
Reportpublished in
September
2023(2) Strengthening human resource strategy
・Execute human resource strategy with a focus on
succession planning・Make proactive investments in human capital・Study introduction of a stock-based compensation planfor employees⇒Build a human resource portfolio that is necessary to
execute the management strategies(3) Reexamining compensation for officers
・Review the details and weight of performance-linked indicators
・Introduce a mid- to long-term performance-linked compensation
plan and expand use of stock-based compensation⇒Lead to enhancement of profitability and corporate value

6

Disclaimer
・Plans, projections, strategies, and other statements that are not historical facts presented in thisdocument constitute forward-looking statements based on information available at the time of
preparation and involve various risks and uncertainties. Actual results may differ significantly
from these projections due to changes in the business environment and other factors.
Furthermore, information presented in this document concerning companies other than the
Company or its group companies is based on publicly available information. The Company does
not guarantee the accuracy of such information.
・This document is not intended to solicit any investment in the Company. Any investment decision shall bemade only at your own discretion and on your own responsibility.

For inquiries, please contact:
webmaster@rikentechnos.co.jp
Administrative Division/Corporate Planning Division