Medium-Term Business Plan:
DKK-Plan2025
May 20, 2022

Introduction
 Establishment of Medium-Term Business Plan
In March 2021, the Group established a vision to realize our ideal of“Pioneering the Future” by 2030 and a Medium- and Long-Term Management
Strategy, which is our growth strategy.

In addition, we established a Sustainability Basic Policy based on theMedium- and Long-Term Management Strategy, set material issues for us totackle, have worked to achieve key performance indicators, and aim to improve
corporate value over a medium to long term.
This time, we established “DKK-Plan2025,” a medium-term management
plan in order to clearly state the goals and what to focus on and promote forthe three years from FY3/23, as part of the effort to realize the vision of theMedium- and Long-Term Management Strategy.
We hope this document will help deepen your understanding of ourcompany.
1

Table of contents
1

DKK Group’s Ideal
1. History of DKK Group

3. Policy for Realization of Our Ideal

2. DKK Group’s Ideal

2

O v e r v i e w o f M e d i u m - Te r m B u s i n e s s P l a n : D K K - P l a n 2 0 2 5
1. Environment Surrounding DKK Group and Changes

4. Sustainability Management Under DKK-Plan2025

2. Medium-Term Business Plan: DKK-Plan2025

5. Numerical Targets

3. DKK-Plan2025: Basic Policy and Priority Measures3
4

5

Initiatives to Strengthen Business Foundation
1. Initiatives to Strengthen Business Foundation

3. Initiatives for “Workplace culture and work style reforms”(1)-(2)

2. Initiatives for “Enhancing corporate governance” (1)-(4)4. Initiatives for “Promoting environmental management” (1)-(2)Business Strategy
1. Initiatives for Business Strategy

4. Net Sales Targets

7. Segment Targets and Strategies

2. Toward Optimizing Business Portfolio

5. Solutions Business Strategy

8. Structural Reforms

3. Target Business Portfolio

6. Strategy for New Radio Frequency
Areas Business

Capital Strategy
1. Financial Strategy

3. Investment Strategy

2. Enhancement of Shareholder Returns

4. Establishment of ROIC Management

Appendix2

1. DKK GROUP’S IDEAL

3

1-1. History of DKK Group

1950

1955

for daily life that have become common
1965

1975

1989

2000

today, including antennas, mobile phones andtelevision broadcasting.

The DKK Group aims to take on
efforts to make living more
comfortable and create the future forsociety.
DKK Group’s Ideal

2010

2020-

The DKK Group has operated businesses
that use a variety of radio waves for 72 years
since its establishment.
We have been providing essential things

A companythat creates the norm of the future(Pioneering the future)41-2. DKK Group’s Ideal••

We worked out a Medium- and Long-Term Management Strategy in March 2021 and publicly disclosed goals, strategies, etc.
with the deadline set for year ending March 2031.
We aim to improve corporate value of the Group and realize our ideal by carrying out the strategies and achieving the goals.

DKK’s ideal = Pioneering the future
I.
II.

Aim to continue to develop and provide excellent products that can become part of the social or living
infrastructure and seek permanent growth
Contribute to solving social issues and making out society sustainable by providing solutions for improving
efficiency and convenience of social infrastructures

Improve corporate value What we want to realize by FY3/31
Profitability improvement of business / continuous corporate governance reinforcement
Create new businesses (graduate from order-centric business)

Further expansion of existing businesses•

Reform business style•Pursue differentiation•

Develop new markets•

Social contribution through business (telecommunication,
disaster prevention, broadcasting)••Take advantage of radio frequency technologies

Expand business scopeStrengthen business foundation•

Growth investment (R&D/M&A/capital spending)•Financial strategy (optimum capital structure / effective
use of cash and deposits / active use of treasury shares)•

Corporate governance (strengthen corporate governance /promote sustainability initiatives)51-3. Policy for Realization of Our Ideal
 Promotion of DKK Group’s sustainability management and its purpose•••

Contribute to making our society sustainable by promoting sustainability management toward ourideal and the goals for 2031
Maximize our economic value by increasing social and environmental value through businessactivity and aim for realization of sustainable growth even in an age of high uncertainty
Promote initiatives to reinforce the business foundation by promoting sustainability management
and lay a solid foundation required to bring out high performance Establish new revenue business and expand
stable revenue base Strengthen business foundation and reform
corporate strength<Issues surrounding the company>
Workplace culture / corporate strength

Social andenvironmental
issuesCorporate governanceAging employee demography / passing on technologies

Our business

Order-centric industry / business structure, etc.

Lay a solid foundation
Create new revenue businesses

Expand stable revenue baserequired to ensure permanent development and growth6

2 . O V E RV I E W O F M E D I U M - T E R M
BUSINESS PLAN: DKK-PLAN20257

2-1. Environment Surrounding DKK Group and Changes

Changes andissues insociety at large

Change in the
Company’s
business
environment
and issues

 Information technology revolution
Realization of more convenient society, update of aging social infrastructures,and reinforcement to information security measures associated withadvancement in telecommunication technology
 Change in global environment, increased natural disasters, depletion of
resources
Measures to address climate change (including EV for automobile),development of disaster prevention infrastructure Change in social awareness toward companies
Measures for sustainability, sustainability of society, human rights and ESG
 Impacts of COVID-19 pandemic
Measures need to be taken to address uncertainty caused by prolonged
pandemic
 Slow acceptance of local 5G
Slow startup of new businesses
 Slumping demand due to controlled capital spending by customers
Slumping business performance as a result of being an order-centric business Spike in material prices, large fluctuations in currency market
Measures needed to be taken urgently to reduce costs, optimize selling prices,
reorganization of manufacturing structures, among others

In response to these changes and issues of the social environment, we established and clarified policies
and goals the Group should immediately work on in the Medium-Term Business Plan: “DKK-Plan2025.”8

2-2. Medium-Term Business Plan: DKK-Plan2025

TowardDKK’s Ideal

In order to realize the Company’s ideal of sustainablegrowth through solution of social issues, aim to achievegoals of “DKK-Plan2025,” positioning the three
years to FY3/25 as the period for“laying the foundation for growth.”
DKK-Vision
2031

DKK-Plan2031

DKK-Plan2028
DKK-Plan2025

Toward solving social
issues and sustainablegrowthRealization andacceleration of growth

Lay a solid businessfoundation
for permanent development and growth

★
-2022

Disclosed March
26, 2021

Medium- and Long-Term Management Strategy
2023-2025

2026-2028

2029-2031

2032-

9

2-3. DKK-Plan2025: Basic Policy and Priority Measures
Medium-Term Business Plan: DKK-Plan2025: Basic Policy

Improve corporate value through promotion of sustainability management
Priority measures

1

Strengthen business foundation
 Enhance corporate governance; promote compliance management
 Improve employee engagement
 Promoting environmental management

2

Optimize business portfolio
 Ensure visibility of business profitability of new segments/ROIC Promote structural reforms, including the Group Strengthen business foundation for profit creation

3

Realize new business creation early Capital tie-ups and active investment in M&A
 Launch solution business toward resolving social issues
 Aggressive investment in human resources development10

2-4. Sustainability Management Under DKK-Plan2025
Set five material issues that we should prioritize in addressing for the Group’s business andstakeholders in promoting sustainability management

DKK Group’s Five Material Issues

Workplace culture
and work stylereforms

Contribution to social
infrastructuredevelopment

Enhancing corporate
governance

Creation of new
businesses

Promotingenvironmental
management

Under the Medium-Term Business Plan: DKK-Plan2025,

we aim to promote initiatives for material issues and build a “solid foundation”
needed for us to develop and grow permanently.
Note: In initiatives for material issues, we will work to contribute to helping our society grow sustainably and maintain and improve
corporate value by setting key performance indicators, or KPIs, to assess achievements and ensure steady progress (see Appendix).

112-5. Numerical Targets
 DKK-Plan2025: numerical targets
By working to maximize profit and carrying out more flexible capital strategies,
we aim to achieve ROE of 5% a year ahead of the target date*.
* In comparison with the target at the time of Medium- and Long-Term Management Strategy

FY3/22
results

FY3/25targets

Net sales

33.9 billion yen

43.0 billion yen

Net income

0.7 billion yen

2.0 billion yen

D/E ratio

0.01

0.2-0.3

ROE

1.5%

5.0%
12

3. INITIATIVES TO STRENGTHEN
BUSINESS FOUNDATION

13

3-1. Initiatives to Strengthen Business Foundation
DKK Group’s Five Material Issues

Workplace culture
and work stylereforms

Contribution to social
infrastructuredevelopment

Enhancing corporate
governance

Creation of new
businesses

Promotingenvironmental
management

Initiatives to strengthen business foundation under DKK-Plan2025
Enhancing corporate governance⇒Top priority issue that need addressing urgently

Workplace culture and work style reforms⇒

Promote initiatives for improving employee engagement

Promoting environmental management⇒

Responsibility for a company toward sustainable growth of society

143-2. Initiatives for “Enhancing corporate governance” (1)In practicing sustainability management, work out a Sustainability Basic Policy and set “Enhancing corporate
governance” as a key issue. Initiatives begun as the top priority matter for the entire company.
Note: Details disclosed on May 12, 2022
Described in Corporate Governance Report

In the DKK-Plan2025, corporate governance improvement and compliance management are promoted in
the aspects of both the Board of Directors (management/supervision) and organization (execution).

Board ofDirectors
Ensuresoundness,
effectiveness, andtransparencyof Board of Directors

Organization
Develop organization forenhancing corporate
governanceandpromoting compliancemanagement

 Other initiatives to enhance
corporate governance•

Promote complianceprograms•

Strengthen communication
with stakeholders•

Reduce cross-held shares15

3-2. Initiatives for “Enhancing corporate governance” (2)Board of Directors: Ensure soundness, effectiveness, and transparency of Board of Directors
Term to be shortened to one year
Change of Directors’ term

In order to clarify the management responsibilities and quickly respond to changes in the management
environment, we plan to partially amend the Articles of Incorporation to change the term of office of
Directors to one year from the current two years, pending the 2022 General Meeting of Shareholders
approval.

Chairman to be served by independent outside director; promotion of revitalization
Functional reinforcement
to Nomination andCompensation Committee

Regarding personnel decisions, compensation, etc. of the management layer, which plays the role of
ensuring sustainable growth and enhancing reliability of the Company, we established Nomination
Committee and Compensation Committee in each of which independent outside directors represent the
majority, as advisory bodies for the Board of Directors to provide a function to enhance objectivity andtransparency of the decision-making process. We appoint independent outside director as chairperson ofeach committee, work on revitalization and enhance functions of the committees.

Promotion of “pay for performance”
Revision in Directors’compensation system

Practicing effectivenessevaluation and enhancing
disclosure content

The shares of Directors’ compensation types will be set to “70 fixed : 30 variable” as a short-term plan,and thereafter the system will be reviewed with an aim to expand the variable portion in steps.
Note: [Currently] The shares of compensation types are set at “85 fixed : 15 variable” when performance-linked compensation (Directors’
bonuses) is paid in full.

In addition, a Directors’ compensation system that contributes to improving corporate value will be
developed by reviewing the evaluation content for the variable portion and considering to introduce
malus and clawback provisions in the internal rules related to the Company’s share awards.

Disclosure of effectiveness evaluation results
Utilize effectiveness evaluation as a measure to improve effectiveness of the Board of Directors. We
disclose effectiveness evaluation results and identified issues and work hard on initiatives to resolve
them.

16

3-2. Initiatives for “Enhancing corporate governance” (3)Organization: Develop organization for enhancing corporate governanceand promoting management prioritizing compliance
Establish three-line model
Development ofdefense lines

Organizational
structure change
to enhancecompliance
Enhance
information
security structure

Adopt three-line model for a corporate governance structure including Group
companies. Make the control function by the three-layer defense lines with
Audit Office at the end more solid, clarify roles and carry out audit ormonitoring powerfully.

Develop structure prioritizing compliance
Change organizational structure to promote compliance management throughmeasures including introduction of a president’s office, promotion of corporate
governance divisions, and introduction of a legal affairs section to bolster
compliance and a crisis management office to bolster risk management
measures. Strengthen structures including the Compliance Committee.

Develop solid information security structure
Establish an information security committee and maintain its operation,
accelerate the expansion of a ISO 27001 certification acquisition division,and strengthen the information security structure.

17

3-2. Initiatives for “Enhancing corporate governance” (4)Other initiatives to enhance corporate governanceRaise awareness about compliance of all employees and executives
Promotion ofcompliance programs

Raise awareness about compliance of all employees and executives, including Directors andManaging Officers, and work out compliance programs incorporating initiatives aimed atenhancing a mutual deterrent function and eradicating harassment. Improve compliancelevels across the entire company by updating programs according to the stage.

Promote dialogue for improved corporate value
Strengthencommunication withstakeholders

Strengthen communication with stakeholders, including investors, business partners andemployees, to help improve governance through dialogue. Include internal as well as outside
directors in communication, actively collect external views, and consider them as
management deliberation matters.

Significantly reduce cross-held shares
Reduction incross-held shares

Acceleration ofmanagement decisions;deepening measures toensure transparency

We have established a policy to reduce cross-held shares and been working to reduce themunder the basic policy of not holding them unless there is a viable purpose of holding. Set atarget for the end of March 2025 of at least halving the amount from the end of March 2021, in
addition to a target in terms of the number of issues, and actively work on the reduction.

Optimize corporate governance model
Consider a corporate governance model, including transition to a company with audit andsupervisory committee, in order to develop a speedy management structure, improvetransparency and fairness of management and strengthen supervisory functions.

18

3-3. Initiatives for “Workplace culture and work style reforms” (1)A working group set up in 2021 to promote “workplace culture and work style reforms”
The working group is participated mainly by personnel affairs-related divisions, as well as individuals fromoffices other than the headquarters as group members and its full-fledged activity began in FY2022.
 Key measures under DKK-Plan2025

Employee satisfaction
Higher degrees ofsatisfaction by a continuous
cycle of execution,
analysis andimprovement

Diversity andinclusion

Work environment
improvement through DX

Workplaces where all
employees can feel
comfortable working

Workplaces that makework effective andimprove productivity

Increase employee engagement
by promoting the initiatives of “workplace culture and work style reforms”
19

3-3. Initiatives for “Workplace culture and work style reforms” (2)Realize working environment in which all employees can maximize their abilities
Monitor throughsatisfaction survey

Toward developing a better working environment
For a company to develop and grow, finding issues for the organization and take measures for
improvement is important and can have impacts on retention of human resources. Develop a betterworking environment by conducting employee satisfaction survey, analyzing and improving.

Create working environment that maximizes diversity

Development ofstructure forpromoting diversity
and inclusion

Under the belief that a working environment with diversity in human resources forms the basis for thedevelopment of a company, set the target of increasing female representation in managerial positions
to at least 15%, work toward hiring people with disabilities totaling more than the legally required
minimum, and carry out system reforms to enable employment until age 70. In addition, engage inaggressive hiring activities, including mid-career hiring, and conduct career training.

Personnel system reform to realize pursuit of diverse expertiseand treatment
Develop career paths by area of expertise, etc., and evaluation and wage systems suited to them sothat diverse employees can continue to maximize their abilities.

Digitalization of work processes; introduction of smart factories

Using DX to
improve productivity

Improving work processes through digital transformation will help change the existing ways of workand secure more creative time of work. We will consider and promote digital transformation of wideranging work processes, including at plants.

20

3-4. Initiatives for “Promoting environmental management” (1)A working group set up in 2021 to promote environmental management
Step up initiatives for social contribution through efforts coordinated across the entire
Group, with members from affiliates in Japan and overseas participating.
 Key measures under DKK-Plan2025

Information disclosurecompliant with TCFD
recommendations

Contribution to theenvironment throughoperation of business

Promotion of
investment that can help
conserve the environment

Sort out and disclose
climate-relatedrisks/opportunities

Resolve social issues
through products/
services

Contribute to theenvironment throughinvestment

Fulfill the responsibility as a company to help maintain sustainable growth of society
by promoting environmental management under coordinated efforts across the Group
21

3-4. Initiatives for “Promoting environmental management” (2)Promotion of environmental management under coordinated efforts across Group

Information disclosurecompliant with TCFD
recommendations

Support of TCFD recommendations and information disclosurecompliant with them
Support recommendations by the Task Force on Climate-Related Financial Disclosures (TCFD),
analyze risks and opportunities brought on by climate change, and appropriately disclose the progressin securities reports, etc.

Reduce environmental impacts by expanding environmentallyfriendly products
Contribution to theenvironment throughoperation of business

Take the entire life cycle from the design and development phase to production, use and disposal into
consideration, and work to reduce environmental impacts through such measures as energy saving,
downsizing/weight-saving, and simplification of classification.

Resolve social issues through products/services
Promote shift from the heat-treatment method using fossil fuels to one using induction heating
equipment, which has low environmental impacts. Mitigate climate change impacts and contribute toefforts to create a low-carbon society through business expansion using fuel cells and superheatedsteam.

Promotion of
investment that canhelp conserve theenvironment

Contribute to the environment through investment
Promote investment projects to help realize a decarbonized society by introducing equipment toexpand use of renewable energy sources for the Company’s power, including solar power equipment,
and expanding use of electric vehicles for Company-use vehicles.

22

4. BUSINESS STRATEGY23

4-1. Initiatives for Business Strategy
DKK Group’s Five Material Issues

Workplace culture
and work stylereforms

Contribution to social
infrastructuredevelopment

Enhancing corporate
governance

Creation of new
businesses

Promotingenvironmental
management

Initiatives for business strategy under DKK -Plan2025

Contribution to social
infrastructure development
Creation of new businesses⇒

Use of the Company’s technology for therealization of a safe, secure andcomfortable society; growth of business⇒

Sustainable increase in corporate value
through establishment of new businessfoundation24

4-2. Toward Optimizing Business Portfolio••

Change the Group’s business segmentation description in response to change in the businessenvironment and the business structure
Work on business style reforms, development of new markets, and application of radio frequency
technologies under group-wide effort toward an optimum business portfolio composition

Former segments

Telecommunication
Business

Consolidated: 2 divisions /Nonconsolidated: 5 segments

New segments

M obileCommunications

Mobile phone base stations;antennas, construction work, steel
towers, etc.

MobileCommunications

Mobile phone base station antennas, construction
work and steel towers, radio equipment, etc.

Fixed
Wireless

Disaster-prevention radio systems
for government offices and firefighting wireless systems,
telecommunication antennas andequipment for defense use, etc.

Fixed WirelessDisaster-prevention radio systems for government
offices and fire-fighting wireless systems,
telecommunication antennas and equipment for
defense use, etc.

Broadcasting

Transmitter station equipment for TV and radio
broadcasting, maintenance, etc.

Broadcasting

Other
Businesses

Radio Frequency
Business

Radio
Frequency

Transmitter station equipment for
TV and radio broadcasting,
maintenance, etc.
Aviation obstacle lights, LED
lights, renewable energy-related,
etc.

Manufacture and sale of highfrequency induction heating
equipment for automotive
components, contract heat
treating service, etc.

Consolidated: 8 segments

Solutions

Network-related business, including services (local
5G, etc.)

Other Businesses

Steel structure manufacturing and plating, aviation
obstacle lights, LED lights, renewable energy-related,
etc.

Induction heating
equipment

Manufacture and maintenance of high-frequency
induction heating equipment for automotive
components

Contract heat
treating service

Contract heat treating service for automotive
components, etc.

New radio frequency
areas

Applied high-frequency business for environmentand food-related use; businesses targeting other new
areas

25

4-3. Target Business Portfolio
Maximize corporate value by optimizing business portfolio to build
a solid business foundation not vulnerable to economic or social climate
Ta r g e t b u s i n e s s p o r t f o l i oSolutions Growth potential ofmarkets/businesses
 Realize growth opportunities bychanneling management
resources

Growthpotential

New segments
New radio frequencyareas Work on selection and consolidation ofbusinesses, focus on Solutions Businessand New Radio Frequency Areas Businessas growth areas, and work to make themgrow into mainstay businesses in the future
through aggressive investment.
 In terms of existing businesses, we will
work to expand market shares and improve
profitability, make social contribution
through social infrastructure construction
and contribute to maximizing corporate
value.

MobileCommunications

Contract heat treating
serviceInduction heating
equipment

Current
situation

Profitability
Advantage
Other Businesses

Sustainability

Broadcasting

Fixed Wireless Profitability improvement
 Share expansion
 Acquiring cash by effective
use of asset holdings

 Social contribution
 Business continuation overmedium to long term

26

4-4. Net Sales Targets
Prioritize profitability for existing businesses;
lay foundation for new businesses as future growth areas(100 million yen)

Solutions500

New radio frequency
areas

400

339
1

300

56
23

200

Aim for about 3.5
billion yen in net
sales for new
businesses

430
15
20
73

Existing
businesses

Induction heating equipment

28

Contract heat treating service

140

Mobile Communications

395 billion yen

133

Fixed Wireless100

Broadcasting

70
55
29

Other Businesses

40

40

43

FY3/22

FY3/25 (F)

0
0

27

4-5. Solutions Business Strategy

Solutions Business(Local 5G, network-related businesses/services, etc.)

Social issues the Company tackles

Vision•Provision of issue solving-style services
using wireless communication technologies••

Provide solutions attached to all communication
systems, centered on local 5G
Example of automated vessel detection system
Illegal fishingmonitoring point

Twin-lens camera

Color

Fisheries
cooperatives

ThermalEquipped with
AI function

Identify customer issues and grasp them as
their needs. Solve issues by combining theCompany’s strengths, including wirelesstechnologies, and partners’ technologies
Out strengths
Partner technologies••••

Wireless LAN

Alert!

Promotion of labor saving in response to aging
population
Elimination of regional disparities
Realization of peaceful, safe society, etc.

Distant
location

Wireless communication •technology•
Area construction•
Construction work
Maintenance, etc.

SoftwareImage, detection systems
AI technology, etc.

Target market

Loudspeaker Floodlights
Warns illegal fishers

LTE router

Internet

Emailnotification

Expand into a broad range of markets by accumulating
issue-solving methods (expansion of lineups)

IT/DX markets of various infrastructures, energy,
industrial machinery, the agriculture, forestry andfisheries industry, educational institutions,
tourism, construction sites, medical institutions,
etc.

28

4-5. Solutions Business Strategy

Solutions Business

Goal(Local 5G, network-related businesses/services, etc.)•

Net sales targets(100 million yen)

50•

Take advantage of wireless communication technology,
the Company’s strength, to expand business into a broad
range of markets including adoption of other wirelesstechnologies, while using local 5G as the pillar
Break away from order-centric industry by establishingissue-solving-style service business

Strategy
•
•

15

•
•

1

FY3/22•

FY3/25 (F)FY3/31 (F)Establish it as a business by the end of theperiod in this Medium-Term Business Planand expand it into a business worth about
5.0 billion yen by 2031 (for a long term)••

Enhance and expand lineups using alliance
Offer one-stop service covering from planning tooperation
Use solution-/network-related technologies in existing
businesses
Expand throughout Japan by establishing dedicatedsales division and reinforce SIer human resources
Expand and enhance support structure by establishingdedicated operational management division
Use solutions unique to the Company, including
repeaters and metamaterial reflector panels, and realize
efficient communication environment using area
simulation based on the Company’s know-how
Actively use it at the Company’s plants and constructmodel cases for introduction of smart factories29

4-6. Strategy for New Radio Frequency Areas BusinessNew radio frequency areas businessSocial issues the Company tackles(Applied high-frequency business for environment- and food-related use and other new areas)

VisionPromote environmental management by expanding
areas of application for high-frequency induction
heating technology

Market outlook over medium to long term
 Superheated steam equipment to which induction heating technology
is applied can accumulate large amounts of energy in gases by further
heating a saturated vapor.
 It has a wide range of uses, is environmentally friendly, and expansionof new areas is expected.

Use of superheated steam equipment
Incineration

Sterilization

Antioxidative
treatment•••

Reduce food losses
Promote recycling
Break away from fossil fuels, etc.

Advantages of introducing superheated steam
technology to drying process for industrial
waste and food losses•••

Reduce energy consumption
Shorten processing time
Reduce total costs

DryingAchievement of SDGs
Industrial
waste
processing
industry

Food industry

through effective use ofindustrial waste andreduction in fossil fuel usage30

4-6. Strategy for New Radio Frequency Areas BusinessNew radio frequency areas business

Goal(Applied high-frequency business for environment- and food-related
use and other new areas)•

Net sales targets(100 million yen)

To grow it into a core business for environmental
management
To create businesses, including value-addition toindustrial waste, in addition to equipment delivery•

50

Value addition to industrial waste
Mix plastics into dried industrial waste to process it into
plastic pellets and plastic products

20
Dried industrial
waste

0

FY3/22

Plastics such as
PE and PP

Plastic pellets

Strategy
FY3/25 (F)FY3/31 (F)Establish it as a business by the end of theperiod in this Medium-Term Business Planand expand it into a business worth about
5.0 billion yen by 2031 (for a long term)

•
•
•
•

Expand application to nonautomotive areas byenhancing superheated steam technology
Speed up expansion of business areas through alliancewith peripheral companies
Reinforce development/sales personnel
Expand business into overseas markets by using
overseas group members

31

4-7. Segment Targets and Strategies
Mobile Communications(Mobile phone base station antennas, construction work and steel towers, radio equipment, etc.)

To expand our shares in the 5G market and improve
profitability by entering the radio equipment market, in
addition to antennas, in earnest

Net sales targets

Business opportunities
•

単位：億円
(100
million yen)

150

133

140

•
•
•

100

Activation of infrastructure investment for 5G / beyond
5G
Accelerated area construction moves throughinfrastructure-sharing
Change in area composition methods in response tohigher frequencies, including 28GHz band
Opening of market due to wider use of O-RAN standard

Strategy•

Use advantages of our antenna technologies to expand
shares•Expand business areas by enhancing and expanding thelineup of O-RAN standard-compatible wireless equipment,
which was adopted by NTT DOCOMO
Bolster measures for shared antenna market anddevelopment of less conspicuous designs that address
scenery-protection measures
Increase profitability by reviewing production locations andconsolidating construction work divisions

50

•

0

FY3/222022/3

FY3/25(F)
2025/3予•

32

4-7. Segment Targets and Strategies

Fixed Wireless(Disaster-prevention radio systems for government offices and fire-fighting wirelesssystems, telecommunication antennas and equipment for defense use, etc.)

To help establish society resistant to disasters
and improve profitability by stepping up
development of administrative radio systems

Net sales targets
Business opportunities(100
million yen)
単位：億円

60

•

Extension of applicable deadline for emergency disasterprevention and mitigation program bonds, a form of
public investment•

Continued demand from updates of firefighting andpolice wireless equipment•

Demand for advancing defense equipment

70

80

55

40

Strategy•

Aggressively promote 280MHz band disaster-prevention
wireless equipment and retransmission equipment•

Develop disaster-prevention products in collaboration with
Solutions Business•

Improve profitability by improved work process efficiency
by unifying calculation divisions and consolidating
construction work divisions

20

02022/3
FY3/222025/3予FY3/25(F)

33

4-7. Segment Targets and Strategies

Broadcasting(Transmitter station equipment for TV and radio broadcasting, maintenance, etc.)

To maintain and update broadcasting
equipment as a social mission
Net sales targets
単位：億円
(100
million yen)

50

Business opportunities
40

40

29

•

Updates of terrestrial digital broadcasting; demand frommaintenance needs•

Emergence of FM broadcasting-related demand related
to conversion from AM broadcasting

30

Strategy

20

•

10

•
0

2022/3
FY3/222025/3予FY3/25(F)•

Steadily capture demand from updates associated withconstruction track record
Win more orders by training engineers and taking
advantage of the ability to take on wide-ranging areas ofwork
Capture demand from broadcasting equipment updates
and improve profitability by consolidating construction
work divisions34

4-7. Segment Targets and Strategies

Other Businesses(Steel structure manufacturing and plating, aviation obstacle lights, LED lights, renewableenergy-related, etc.)

Aggressive sale of environmentally friendly products
Capture continuous demand for outdoor steel building
frameworks

Net sales targets
Business opportunities(100
million yen)
単位：億円

50

•

Increased demand for environmentally friendly products,
including those that reduces CO2 emissions•

Continuation of demand for special-purpose steel
structures in construction market and surface treatment

43
40

40
30

Strategy
20
10•

Expand sale of environmentally friendly products,
including aviation obstacle lights for offshore wind power
equipment and emergency power fuel cells forbroadcasting equipment•

Promote differentiation (high quality, ancillary work, etc.)
in steel building frameworks and hot-dip galvanizing
processing

02022/3
FY3/222025/3予FY3/25(F)

35

4-7. Segment Targets and Strategies

Induction heating equipment(Manufacture and maintenance of high-frequency induction heating equipment for
automotive components)

To capture emerging demands associated withelectrification of vehicles, expand market
shares, and improve profitability
Business opportunities

Net sales targets•

Trend of recovery from a slump in capital investmentrelated demand in the automotive industry due to the
COVID-19 pandemic and semiconductor shortage•

Increase in use of next-generation vehicles (EV, PHV),
decrease in demand for fuel system components, andemergence of demand for products such as motor shafts(100
million yen)
単位：億円

73

80

60

56

40

Strategy•

Encourage shift from other heating methods by taking
capitalizing on the advantages of induction heating interms of environmental impacts•

Boost competitiveness through R&D targeting EV market•

Boost profitability by evolving coil manufacturing
technology

200FY3/222022/3

FY3/252025/3予(F)36

4-7. Segment Targets and Strategies

Contract heat treating service(Contract heat treating service for automotive components, etc.)

To promote use of the induction heating methodin the global market and improve profitability

Net sales targets(100 million yen)

単位：億円

Business opportunities•

Recovery in demand for automotive production led by
China and North and Central Americas•

Increase in use of next-generation vehicles (EV, PHV),
continued demand for underbody components, etc. andemergence of demand for products such as motor shafts

40

28
23

Strategy

20•

Develop markets by making effective use of overseas
offices•

Promote labor saving in heating treatment processes;
boost competitiveness by making factories smart•

Reduce costs and boost profitability by introducing solar
power equipment at our plants for environmentallyfriendly measures

0

FY3/222022/3

FY3/25 (F)2025/3予

37

4-8. Structural Reforms
Carry out drastic organizational reforms for optimizing
Business Portfolio, execution of growth strategy
Reform of internalorganization•

Acceleration toward resolution ofmanagement issues

Set up president’s office to enable swift execution ofmanagement decisions; set up cross-divisional
committees according to purposes•

Reinforce sales abilities

Human resource investment in sales divisions;establish issue-solving-format sales styles•

Consolidate R&D divisions

Consolidate wireless equipment development divisions
into Wireless R&D Center offices and consolidate
Wireless R&D Center and Future Research Center
offices to accelerate innovative R&D

Reform of affiliatecompanies in preparation
for group integration•

Consolidate production facilities

Consolidate/split subsidiaries based on the businessfield or area•

Consolidate construction work divisions

Separation from sales divisions; enhance costmanagement by integrating technologies from across
Japan

•

Promote active use of humanresources

Use human resources within the Group in flexible
mannerKoshuha Co., Ltd.

Optimization of overseas
strategies•

Create optimum production structure

Reorganize production facilities in a flexible manner,
including partner companies, in order to address
currency risks and improve profitability•

Expand areas of Radio Frequency
operations overseas

Expand and enhance services through optimum
allocation of equipment-production, maintenance andcontract-processing services
Channeling human resources in response to demand

Denko Co., Ltd.

Asia

R&D
Denko Techno
Heat Co., Ltd.

North andCentralAmerica

DKC Co., Ltd.

Sales
Management

Fukoku Denko
Co.,Ltd.

Improved organizationalperformance

Denko Seisakusyo
Co., Ltd.

Stronger profit structure

Improved profitabilityof overseas operations38

5. CAPITAL STRATEGY39

5-1. Financial Strategy
 Capital allocation

Shareholder returns

Bolster growth investment and shareholder
returns, aiming for D/E ratio of 0.2 to 0.3

Minimum

Dividends / sharebuybacks

10.0 billion yen

Note: Including share buybacks disclosed in February 2022

Period of Medium-Term Business Plan (FY3/2023-FY3/2025)

Cash inflows

Cash outflows

Use of leverage

Shareholder returns(dividends; sharebuybacks)

Review of asset holdings

 Pay attention to growth investment aimed at improving earnings
and optimum balance sheet composition, in addition to dividends,
and continue to carry out share buybacks
 Cancel all treasury shares bought back except for about 10% of
the total outstanding shares

M&A

Up to

M&A

4.0 billion yen Aggressively carry out for new business creation(cash and cash equivalents, crossheld shares, etc.)

M&A
investment

Operating CF(excluding R&D)

Growth investment(related to capital
expenditures)
Growth investment(related to R&D)
Update investment / DXinvestment / ESG-related
investment

Growth investment(total for period through end-March 2025)

Capital expenditures

About

4.0 billion yen

R&D investment

About

6.0 billion yen

 Make investments that pay attention to cost of capital

Other investments
Update investment /DX investment /ESG-related investment

About

4.0 billion yen
40

5-2. Enhancing Shareholder Returns
Spend 10.0 billion yen for measures
to bolster shareholder returns (cumulative for three-years)
Aim for at least 10.0 billion yen in shareholder returns combining dividend payouts and share buybacks (including one
currently underway) based on capital allocation (more to be spent for shareholder returns when M&A investments not made) Dividend policy

DPS (in yen)

 We link payouts to the earnings of thecurrent fiscal year with a target payout ratioof 40% on a consolidated basis while aiming
to not allow the dividend on equity ratio(DOE) on a consolidated basis to fall below
1.5%.

Value of share buybacks (in 100 million yen)

Initial45 yen

FY3/11

FY3/12

FY3/13

FY3/14

FY3/15

FY3/16

FY3/17

FY3/18

FY3/19FY3/20FY3/21

ROE (%)

3.1

5.1

4.0

15.3

5.3

3.3

1.2

1.8

3.4

4.0

2.5

2.1

DOE (%)

1.1

0.9

1.6

2.4

2.1

2.1

2.1

1.2

1.2

1.2

1.2

1.5

Payout ratio (%)

35.6

17.6

39.2

15.4

40.1

62.6

168.7

68.4

36.1

30.2

46.8

70.8

Total return ratio
(%)

79.7

43.3

54.7

31.7

80.0

94.7

217.1

68.4

36.1

66.6

46.8

142.7

Maintain shareholder return policy
announced in November 2021
Realize shareholder value by
maintaining or increasing dividends
and buying back shares in a
flexible manner

FY3/22 (F) FY3/23 (F) FY3/24 (F) FY3/25 (F)Achieve 5.0% earlyTarget 40% in payout ratio
Limit DOE from falling below
1.5% (target: 2.0%)
Flexible share buybacks

 Share buybacks••

Decide repurchase of shares (up to 2.5 billion yen and 1.10 million shares) as part of capital allocation to bolster growthinvestment and shareholder returns while maintaining financial discipline
We have established a policy to continue to consider ways to use treasury shares in our possession and actively cancel
those in excess of the amounts deemed necessary. If treasury shares exceed 10% of the total outstanding shares, theportion exceeding this threshold will be canceled.

41

5-3. Investment Strategy

Aim to make aggressive investment in growthinvestment, M&A investment and other investment
Investment detail

DKK-Plan2025

Capital expenditures•••

Growthinvestment

Plant update / office consolidation to improve productivity
Introduction of automation equipment at plants
Addition of production lines to expand business

R&D investment
•

•
•

•

M&A

Research on new technologies and fusion with ourtechnologies for the purpose of establishing solution
business
R&D of advanced antenna technologies and antennadevice integration technology to solidify leading position in
the beyond 5G / 6G age
Development of induction heating equipment with a view toexpand business into new areas

Invested amount(cumulative for three-years)

Capital expenditures

4.0 billion yen
R&D investment

6.0 billion yen
Up toSpontaneous investment for capital tie-ups and M&A aimed
at realizing new business creation early

4.0 billion yen

DX investment

Other
investments••

Smartification of factories
Renew production control systems to improve work efficiency

Update investment / ESG investment•

4.0 billion yen

Step up ESG efforts, including promotion of environmental
management42

5-4. Establish ROIC Management
Ensure business operation that pays attention to cost of capital is practiced
across the Group to help secure sustainable increase in ROE
 Increase ROE to levels above capital costs

<ROE>


8%


5%


Work out business administration system in which targets
are set for each business division (establishment of
ROIC-focused management)
Visualize business and improve financial performance byintroducing ROIC
Reduce WACC and improve spread with ROIC

Period of this MediumTerm Business Plan

Current level(end-FY3/22)

Target by end of Medium-TermBusiness Plan period(end-FY3/25)

WACC

5.5%

(weighted average cost of capital)

ROIC(return on invested capital)

•
•

4.5%

Add ROIC in management indicators and aim to increase it above WACC
Calculated for each segment (business division)/office. Improve efficiency andprofitability of assets, taking business portfolio into consideration

43

APPENDIX
1. DKK Group’s Material Issues

2. Specific Initiatives to Address Material Issues

DKK Group’s Material Issues■ Five Material Issues
Workplace culture andwork style reforms

Put effort into creating workplace environment inwhich employees respect each other and maximize
their potential

Enhancing corporate
governance

Increase effectiveness of corporate governance toestablish a sound and transparent businessfoundation

Contribution to social
infrastructuredevelopment

Increase existing businesses’ contribution to social
infrastructure and grow as a business throughimproved earnings

Promotingenvironmental
management

Mitigate climate change impacts and contribute toefforts to create a low-carbon society throughbusiness

Creation of new
businesses

Aim to create new businesses using theexperience and technologies we have developed
while actively taking advantage of R&D and M&A

Goal 17 of the SDGs (“Partnerships for the goals”) is given the utmost importance forachieving the goals. It applies to all material issues.

45Specific Initiatives to Address Material issues
Workplace culture and work style reforms
Priority initiatives

Specific initiatives

KPI / medium- to long-term goals
Note: We aim to continue working every year on theitems for which no target fiscal year is indicated.

Respect of employee human • Conduct human rights training
rights (including those of
to raise awareness about
partner companies)
respect for human rights■ Employees attending human rights
training sessions: 100%

• Awareness-raising to eradicate
harassment
Eradication of harassment• Monitoring through employee
satisfaction survey■ Employees attending harassment
training sessions: 100%

Hiring diverse humanresources; promoting
women’s empowerment• Develop a structure fordiversity and inclusion
promotion

Productivity improvement • Improve productivity throughusing
digitalization of work processes
digital transformation (DX)and smartification of plants■ Ratio of female managers: At least 15% (FY3/25)■ Ratio of employees with disabilities:
Adhere to legal requirements■ Establish system to employ ages
up to 70 (FY3/25)■ Reduction in average total working hours
in a year: Level of 1,800 hours (FY3/25)

46

Specific Initiatives to Address Material issues
Enhancing corporate governance
Priority initiatives

Specific initiatives

Management prioritizing • Promote compliance programs• Strengthen operation of compliancecompliancetraining programs

Promotion ofcommunication withstakeholders• Enhance/expand disclosed
documents; early disclosure ofEnglish versions of the documents• Enhance/expand communication
between investors and management
team• Conduct Board of Directors
Maintain transparency of effectiveness evaluation• Improve Board of Directors
management
effectiveness

Enhancing information • Obtain ISO 27001 certification• Conduct security training
security

KPI / medium- to long-term goals
Note: We aim to continue working every year on
the items for which no target fiscal year is indicated.

■ Compliance education sessions for officers
and division chiefs: At least once every year
■ Attendance at compliance training sessions:100%■ Participation of director and outside directors
in dialogue with investors■ Board of Directors effectiveness evaluation:
Once every year
■ Rate of Directors’ attendance at Board meetings
in a year: At least 80%■ DKK and group companies in Japan obtain
ISO 27001 certification (FY3/25)■ Attendance rate of security training sessions:
100%

47

Specific Initiatives to Address Material issues
Contribution to social infrastructure development
Priority initiatives

Specific initiatives

KPI / medium- to long-term goals
Note: We aim to continue working every year on the items
for which no target fiscal year is indicated.

• Strengthen delivery of carrier 5G-

Construction of stronger and local 5G-related products• Appropriate update andinformation
maintenance of systems andinfrastructure

Secure safety throughpromotion of disasterprevention businessequipment• Enhance/expand disaster-prevention
information provision systems by
updating disaster-prevention
systems• Reinforce disaster-preventionfunctions by providing our systems,
including information cameras, waterlevel gauges, etc.

■ Sales from communication equipment
update/maintenance deals, local governments
disaster-prevention function reinforcement deals,
induction heating equipment for safety device
system components, etc.: at least 15% FY2020
ratio (FY3/26)

Reinforce safety of car • Boost sale of induction-heating
equipment for automotive safety
societysystem components

Secure safety andquality• Improve technology for processing
quality• Assess risks regarding quality andsafety; carry out risk mitigation
activities■ Percentage of our engineers holding government
certification related to business evaluation
application: at least 70% (FY3/26)■ Introduce advanced safety vehicles (ASVs) tocompany-owned cars: Begin ASV introduction(FY3/25)48

Specific Initiatives to Address Material issues
Promoting environmental management
Priority initiatives

Specific initiatives• Raise environmental awarenessacross the Company throughenvironmental education• Promote efforts to reducegreenhouse gas emissions
Promote carbon neutral • Enhance power-saving features of
products• Install solar panels at our facilities• Buy power generated using
renewable energy sources, etc.

Promotion of realizing
circular society• Promote efforts to control generationof waste; waste recycling throughseparation into types• Promote three Rs throughcoordinated efforts in supply chains• Work out DKK Group green
purchasing guidelines; promote
Expansion ofgreen purchasing
environmental products • Develop environmental products;
promote sales expansion activities

KPI / medium- to long-term goals
Note: We aim to continue working every year on
the items for which no target fiscal year is indicated.

■ Amount of Scope 1, 2 greenhouse gas emissions:
Calculation including overseas group companies(FY3/25)■ Amount of Scope 3 greenhouse gas emissions:
Calculation including group companies in Japan(FY3/25)■ Promotion of renewable energy usage:
No quantitative target (followed item)*■ Percentage of total emissions recycled:
Separation, disclosure of results (FY3/25)■ Amount of waste discharged (t):No quantitative target (followed item)*■ Develop products that reduce environmenta
impacts by 10%:Consideration, selection, design (FY3/25)* We are examining impacts and compiling basic data for followed items. Current period is for assessing impacts and we have not set
quantitative targets. Targets will be set after the impact assessment is completed.

49

Specific Initiatives to Address Material issues
Creation of new businesses
Priority initiatives

Specific initiatives

Using wireless andradio frequency
technologies in newareas• Participate in academic societies,
study groups and other groups forthe purpose of creating new market /new product candidates• Develop a system in which ideasthat can lead to new businesses arecollected and shared• New hires for new businessdevelopment

Entry into service
business• Develop application programs thatcan be used for service business• Develop organizational structure forservice business• Accelerate service expansion
through collaboration with othercompanies

KPI / medium- to long-term goals
Note: We aim to continue working every year on the items
for which no target fiscal year is indicated.

■ Increase instances of joint

development, collaboratingcompanies and M&A instances:
selection of collaboration partners(FY3/25)

50

Cautionary Note About This Document

 The forecast figures and descriptions/statements about future
outlook in this document are compiled based on the information
currently in the company’s possession.
 This document was created using the preconditions (assumptions)required to make forecasts and describe them, in addition to facts
established and accurately recognized in the past. In view of theindeterminacies and uncertainties inherent in descriptions orstatements about forecasts or future outlook, or variability arisingfrom changes in the situation of future business operation,
domestic and overseas economies, the securities market, orotherwise, actual earnings figures, results, performance andachievements may differ from descriptions or statements about
forecast figures, future outlook, etc. herein.

51