November 8, 2022
Denka Company Limited

Notice of the Formulation of a New Vision and the Next Management Plan “Mission 2030”
Denka Company Limited recently formulated its New Vision and the next Management Plan, “Mission 2030”,
which covers the 8-year period from FY2023 to FY2030.
Denka aims to realize “Mission 2030” through the execution of both non-financial and financial strategies byenhancing human resources value and management value and concentrating on the creation of business value
based on businesses that incorporate all three elements, namely specialty, megatrends, and sustainability.
1. Vision
1-1. Background to Formulation of the New Vision
A period of change beyond our imaginations is approaching for the world. When formulating “Mission 2030”,
Denka started by analyzing various future metrics in order to clarify its raison d’etre from a long-term
perspective.
It based its assumptions on four worlds of the future: “Sustainability”, which relates to global warming, theproblem of marine plastic pollution, air and water pollution, and soil contamination; “Evolving Technology”,
typical examples of which are DX, AI and gene recombination; “Global Population Growth”, which will leadto pandemics and lack of food and water resources; and “Confusion in Social Order”, which will bringeconomic inequality and geopolitical risks.
Sustainability
Global warming
More natural disasters, shift to electricvehiclesMarine plastic pollution
Air and water pollution, soil contamination
Global Population Growth
Pandemics
Food shortages
Lack of water resources

Evolving Technology
Technological innovation
DX, AI, robots, high-speed
telecommunications, gene recombination

Confusion in Social Order
Economic inequality
Limits of globalization
Geopolitical risks

Based on these four worlds of the future, Denka identified megatrends that will lead to business opportunities
in the following three domains: “ICT & Energy”, where there is expected to be an increase in demand forrenewable energy, a revolution in mobility, and increased demand for semiconductors; “Healthcare”, where
there are likely to be increasingly sophisticated medical needs and revolutionary medical technologies; and“Sustainable Living”, which will see increased demand for food & water resources and infrastructure.

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1-2 Conceptual Diagram for the New Vision
Based on these four future worlds and three megatrends, Denka created the new vision based on the candid
views of its younger employees, who will form the core of the company moving forward, while also adding
the thoughts of the executives. Based on Denka’s “Core Value”, which is the Denka’s DNA, and by combining
its “Purpose” - Denka’s guiding principle - with its “Mission” - the duties it aims to fulfill by 2030 - Denka
has set out a new Vision (view of the future) that will go beyond words and allow all employees to make theVision directly relevant to them as individuals.

2. Next Management Plan “Mission 2030”
In order to achieve the Mission set out under its Vision, Denka will promote the creation of three types ofvalue in Mission 2030 - business, human resources and management - and connect these to the enhancementof corporate value.
Three Elements

Growth Strategies

2 / 72-1. Business Value Creation
By 2030, Denka will make 100% of businesses “three-star businesses” that incorporate the three elements ofspecialty, megatrends, and sustainability
In businesses that will be difficult to convert to “three-star businesses”, Denka will undertake a portfolio shift,including the sale of or withdrawal from those businesses. In order to achieve this, Denka will invest ¥360 billion
on strategic investments and ¥180 billion on R&D expenditure over the 8-year period, with the goal of realizing
more than ¥100 billion in operating income by 2030.

(1) Megatrends and Specialty
In the three focus areas that have been defined as megatrends - ICT & Energy, Healthcare, and Sustainable
Living - Denka will create business value through individual policies in each area and by using the unique
technologies and strategies it possesses.
1) ICT & Energy[Policy]
Contribute to the creation of a better society by supplying cutting-edge materials[Technology and Strategy by Area]
Next-generation high-speed
telecommunications
Needs

Energy loss, heat conduction

xEV / Renewable energy
Electroconductivity, superhigh-purity, durability

Precision spheroidization,
high-temperature control,
Technology
precision film formation,
coordination polymerization

Nanoparticles, impurity control,
high-temperature firing

Strategic

Establish top market shareBecome de facto market standard

Products

Spherical silica, sphericalalumina,
electronic packaging, heatdissipation materials, LCP film,
ultra low dielectric materials, etc.

Acetylene black, silicon nitride,electronic circuit boards,
next-generation conductive
material, etc.

[Budgeting Plan and Strategic Investments/R&D Expenditure]
Over the 8-year period, Denka aims to invest a total of ¥80 billion in strategic investments and ¥40 billion
in R&D expenditure in order to achieve ¥45 billion in operating income by 2030.
3 / 72) Healthcare[Policy]
Contribute to QOL (Quality of Life) improvements for people around the world in the areas of prevention,diagnosis, and treatment.
[Technology and Strategy by Area]
Prevention
Diagnosis
Treatment
Prevention of infectious
Needs
Advancement of vitro diagnostics Cancer treatments
diseases
Production of diverse antibodies Culturing and purification ofCultured andSimultaneous multi-item
viruses
Technology
recombinant proteinsmeasurement
Formulation
Upgrading of manufacturing
Development of new
Entry into next-generation
capabilities andStrategic
vaccines, such as
diagnostic pharmaceuticals anddevelopment of business inmRNA
genetic testing domains
the CDMO(*) domain
Influenza vaccines, new Reagents for automatic analyzers,
Products
Viral products, new products
antigen testing kits, new products
products* CDMO: Contract Development and Manufacturing Organization[Budgeting Plan and Strategic Investments/R&D Expenditure]
Over the 8-year period, Denka aims to invest a total of 80 billion yen in strategic investments and 70
billion yen in R&D expenditure in order to achieve 40 billion yen in operating income by 2030.
3) Sustainable Living[Policy]
Contribute to the realization of safe, secure, and comfortable daily lives[Technology and Strategy by Area]
Foods
Needs

Contribution to fooddemand

High-temperature firing,Technology
humic acid control

Strategic

Overseas expansion

Products

Biostimulants,
environmentally-friendly
fertilizers

Infrastructure
Easing the impact of natural
disasters
Reducing the burden on theenvironment

Daily Necessities
Circular economy

Chemical recycling,development of bio-derived
resins
Early establishment ofTechnology development and technology and social
overseas marketing adapted to implementation,
increasingly sophisticatedCollaboration with local
infrastructure demandcommunities and othercompanies
High-performance
Special cement additives,
styrene-based resins,
LEAF
bio-plastics

High density/denisification,quick hardening, CO2 fixing[Budgeting Plan and Strategic Investments/R&D Expenditure]
Over the 8-year period, Denka aims to invest a total of ¥30 billion in strategic investments and ¥20 billion
in R&D expenditure in order to achieve ¥15 billion in operating income by 2030.
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(2)Pursuit of Sustainability as the Foundation for Business Continuity
Denka will pursue sustainability by making a total of ¥85 billion in environmental investments over the8-year period with the aim of contributing to the Earth and further increasing Denka’s social value.
PolicyMeasures- Execution of portfolio shift, including
establishment of low-carbon acetylene chains- Development and implementation of CO2
Achievement of carbon
capture, storage and utilization technologies
neutrality- Expansion of green energy by increasinghydroelectric power generation and building
new solar power plants

Sustainable cities andfulfilling daily lives- Promotion of circular economy forstyrene-based packaging materials- Establishment of CO2 sequestration technology- Continuation of zero waste emissions
Environmental- Response to natural-related risks, such asconservation andbiodiversity and water resource conservation,
minimization ofbased on the Taskforce on Nature-related
environmental footprint
Financial Disclosures (TNFD)

KPIs (2030 targets)- CO2 emissions: 60% reduction(1.48 million tons) comparedwith FY2013- Achievement of carbon
neutrality (2050)- Maximum output of renewableenergy generation: 150MW- Establishment of consortiumfor social implementation ofchemical recycling- Market launch and sales
expansion of LEAF
- Ultimate waste treatment
volume:zero emissions

2-2. Human Resources Value Creation
Denka will invest in human resources and undertake system reforms with the aim of being a company thatenables each individual employee to achieve self-actualization and feel their own growth.
PolicyStrengthening of HR
development systems
Promotion ofDiversity, Equity &Inclusion

Strategic
Cultivation of future executive manager
candidates, building of company-wide, integrated
education framework, and fostering of aself-directed learning culture
Fostering of workplace environments, systems,and culture that will empower individuals withdiverse ways of thinking to demonstrate theircapabilities

KPIs (2030 targets)
Average training costs: 2x that ofFY2021
Women, foreign nationals, andmid-career hires to account for
50% of managerial positions

Health andPromotion of system reforms to create workplaces
Productivity
Visualization and ongoingthat employees will “want to come to work again
Management and work
improvement of engagement
tomorrow”
style reform

2-3. Management Value Creation
From the perspective of ESG management, Denka will work to strengthen the management foundations on
which its corporate survival is premised.
PolicyStrategic

KPIs (2030 targets)

Process reforms

Transformation of business model andorganization, productivity improvements, anddevelopment of in-house digital workforce

Investment in process reforms:¥50 billion over 8 years(¥14.6 billion during the 5 years ofDVU)

Respect for humanrights

Establishment of human rights policy andthorough respect for human rights based on theUnited Nations Guiding Principles on Businessand Human Rights and the Global Compact

Identification of human rights
risks in the Denka Group supply
chain and establishment ofresponse processes
5 / 7Group-wide efforts toward essential safety,
establishment of rules, and promotion of safe
workplace environments
Sustained improvement of added value acrossentire supply chain

Place the utmost
priority on safety
Supply chain
management

Rate of lost-worktime injuries:
reduce from 1.1 in 2021 to 0.2 orless
No high-risk suppliers

Product safety

Integration of quality control
Contribution to sustained growth of society andsystems, raising of control
environment through provision of trusted products
standards
and services
No serious quality accidents

Enhancement ofcorporate governance

Building of highly sophisticated and effective
corporate governance structure that ensurestransparency and fairness based on high ethicalstandardsNo serious compliance violations
thanks to thorough risk management
achieved as a result of ongoing
improvements in the effectiveness of
the Board of Directors

3. Financial Strategy

Improve ROE (Return on Equity) and ROIC (Return on Invested Capital) and increase corporate
value
FY2018-FY2022
average
ROE

9%

ROIC

7%

FY2030 target

Measures- Improvement of profitability and efficiency withcreation of three types of value- Selection and concentration of businesses throughevaluation of ROIC
10% or higher- Pursuit of optimal capital structure (use of financialleveraging)

15% or higher<Cash Allocation>
Make effective use of operating cash flows and liabilities to create cash of ¥740 billion in total over the 8-year
period, and allocate this to ¥570 billion in investments and ¥170 billion in shareholders’ returns (Total
Shareholder Return Ratio level of 50%)
(Billion yen)
Total Cash inflow (annual average)

Mission2030
8 years

DVU
5 years
Cash flowfromoperatingactivities
Sale ofassets
Borrowing
Total

Total Cash Outflow (annual average)

1,80.8(36.2)

650(81.3)

10.8

105080241.6(48.3)

740(92.5)DVU
5 years
71.9(14.4)
109.9(22)181.8(36.4)

Mission2030
8 years360(45)210(26.3)
570(71.3)

Shareholder Returns(Total ShareholderReturn Ratio level:50%)

59.8(12)170(21.3)

Total

241.6(48.3)

740(92.5)Cash flowfrominvestingactivities

StrategicGeneral
Sub-total

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<Human Resources and R&D Expenditure>
The plan is for annual averages significantly higher than Denka Value-Up for both human resources and R&D
expenditures. In addition to external investments, Denka will focus on internal investments with the aim ofachieving sustainable growth.
(Billion yen)
Denka Value-Up

Mission 2030

Annualaverage

8-year total

5-year total

Annual average

260.4

52.1

500

62.5

73.6

14.7

180

22.5

334

66.8

680

85

Human
Resources
R&DTotal

4.Major Financial/ Non-financial KPIs

Financial

The major financial and non-financial KPIs for Mission 2030 are as follows.
Denka Value-Up(Financial figures are
Mission 2030
Item
FY2022 actual,(FY2030 target)
non-financial figures areFY2021 results)
Operating income¥43 billion

Operating incomeratio

9.3% (FY2018 – FY2022average)
8.8% (FY2018 – FY2022average)
6.9% (FY2018 – FY2022average)

ROEROIC¥100 billion or more
15% or higher
15% or higher
10% or higher

Investment¥260.9 billion (5 years)¥540 billion (8 years)

Total Shareholder
Return Ratio

52.1% (FY2018 – FY2022average)

50% level

CO2 emissions

2.13 million tons

1 million tons
(60% reduction compared with FY2013)

Non-financial

Maximum output ofrenewable energy
133MW
150MW
power
Managerial positions
occupied by women,
19%50%
foreign nationals, andmid-career hiresRate oflost-worktime
1.1
0.2 or lessinjuries
Based on the above plans, the Denka Group will work together to promote Mission 2030 in order to “Makethe world a better place as specialists in chemistry”.

[For Inquiries from Media]
Corporate Communications Dept. Tel: +81-3-5290-5511

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