DAIKEN GROUPREPORT 2022
Integrated Repor t

Sales Composition by Business and Market (Fiscal 2022)
Corporate Message
Other

5%

Engineering business9%

Toward the future exceeding

Industrial materials
business
Net sales

34%

Domestic market

68%

the functions of yesterday

45%

32%

223.3
billion yen
199.2 billion yen

Building materials
businessby capitalizing on limited resources and listening to our customers’ needs.

Global markets

9%

41%

Since its establishment, the Daiken Group has developed a multitude of products

10%(Fiscal 2021)

15%

Public and commercial buildings
Industrial materials
Home renovation market
Domestic new home market

Daiken Group in Figures (Fiscal 2022)

Today we have evolved into a company where our e orts have accrued to provide

Operating profit

17.3

first rate building materials and comfortable spaces for our customers.
We will continue to strive towards a sustainable future where people can enjoy

ROE

9.1%

innovative functions towards a brighter tomorrow.

%(Fiscal 2021)

100

33.1％

Dividend yield

4.6％*As of March 31, 2022

Number of employees

September

3,965

Japan

56.5

yen per share
70 yen (Fiscal 2021)

Dividend payout ratio

2,461

Overseas(Fiscal 2021)

Market capitalization

Foundation

1945

billion yen

5.6 billion yen(Fiscal 2021)

Dividend

10.9

In pursuit of new possibilities, we will transcend the past by developing

7.8

billion yen

8.7 billion yen

pleasant living spaces and lead spiritually rich lifestyles.

Profit attributable to owners of parent

billion yen*As of March 31, 2022

Production base

Japan

1,504

Overseas*As of March 31, 2022

12
8 6
bases

bases incountries*As of March 31, 2022

CONTENTS
Daiken Group's Value Creation
Corporate Message
1
Daiken Group in Figures2
3
Daiken Group’s Goal
5
Our Sustainability Goals
7Interview with Top Management
13
Changes in Value Creation
Product Development Uses Strengths 15
17
Process of Creating Value
19
Business Models and Strengths
21
Risks, Opportunities and Materiality
Creating Shared Value (CSV) by
23
Daiken Business

1

DAIKEN GROUP REPORT 2022

Strategy for Value Creation
Progress of the Medium-Term
Management Plan Toward
Realization of the Long-Term Vision
Results of the Strategies by
Business Segment and Market
Summary of Businesses
The New Medium-Term Management
Plan GP25 3rd Stage
Strategies by Business Segment
and Market
Initiatives for Priority Markets
Global Markets
Public and Commercial BuildingsHome Renovation Market
Research and Development
Environmental Strategy
Human Resource Strategies
Financial Strategies

Foundation Supporting Value Creation

29
31
33
35
37
39
41
43
45
47
51
53

Interview with the Outside Directors
GovernanceDirectors

57
59
65

Editorial Policy
The Daiken Group has issued the Daiken Group Report as an annual
integrated report for stakeholders in order to enhance the understanding

Eleven-Year Financial Summary
ESG Goals
ESG Data
Stock Information
Glossary
Company Information

This report shows the progress of our strategies and stable stage

67
69
71
73
74
75

DAIKEN CORPORATION and the Daiken Group*Environmental information differs in scope.

of our initiatives for the improvement of medium-term and long-term
corporate value based on both financial and nonfinancial indicators.

Data

Company Information

Eligible Period
Fiscal 2022 (April 1, 2021, to March 31, 2022)*Some sections include information other than the above fiscal period.

change toward the realization of the long-term vision GP25 by publishing
the summary of the past medium-term management plans, in addition to
the medium-term management plan GP25 3rd Stage that started in FY
2023. We also improved the contents to specifically emphasize thevision to realize a recycling-oriented society and carbon neutrality
through business under the Daiken global environment vision 2050 and
Daiken sustainability basic policy that have been newly formulated.

Reference Guidelines
International Integrated Reporting Council (IIRC): The International
Integrated Reporting Framework● ISO 26000●[Disclaimer regarding future prospects]
The forecasts and estimates in this report are based on information
available at the time of the report’s issuance. Plans and figures
depicting the future do not imply a guarantee of actual outcomes.

DAIKEN GROUP REPORT 2022

2

2025
Long-Term Vision

Daiken Group’s Goal
To have a concept in common with all of the Group’s employees and adjust the direction to move forward, the Daiken Grouphas established the group corporate philosophy, which consists of the three elements of the Company mission [Our Mission],
Company vision [Our Vision], and Company values [Our Values]. We aim for the sustainable improvement of corporate value
by deploying business activities toward the realization of this philosophy.

Grow/Glow Plan 25

Group Corporate Philosophy
Company vision

Company values

Our Mission

Our Vision

Our Values

We will create a wonderful future with
our technology, ideas, and passion.

As a company respected by everyone,
we will give the highest priority toharmonizing an affluent society with theenvironment by offering new value thatexceeds people’s expectations.

We pledge the following:
Ensure harmony between theenvironment, society, and people.
● Be careful of safety, security, health,and comfort.
● Courageously accept the challengesof new ideas.
● Promptly respond to changes andopportunities.
● Be sincere at all times.

en
t
ev
elo
pm
cd

- Our Vision -Company values- Our Values -

sp
e

cifi

1 Contribute to the building of a sustainable society by efficiently using limited resources
2 Enrich peoples’ minds by creating more comfortable and secure spaces

DaikenGlobal Environment Vision 2050

How we should be in 2025
1 Contribute to a recycling-oriented society through the development and spread of industrial materials utilizing

sustainable resources, such as timber, in global markets
2 Create safe, secure, healthy, and comfortable spaces for everyone by proposing solutions that capture the userneeds in the new normal era
3 A mechanism to support challenges is established, a culture that admires challenges is nourished, and challenges to
new business domains is progressing
4 Realize the workplace environment where diverse human resources can comfortably work in fulfilling roles andimpartial and transparent management supports the sustainable growth and the improvement of medium- tolong-term corporate value

Business domains, markets, and sectors targeting Long-Term Vision GP25
From the current image as a housing materials manufacturer to the following:●

Supply building materials and industrial materials for building materials as well as construction●

Expand business areas from housing to public and commercial buildings,●

Expand into global markets

and industrial materials

P.47

Engineering businessNew business

Public and commercial buildings
Industrial materials

Domestic

Building materials businessHousing market

Data

Industrial materials business

Global

P.29-38

Markets and sectors

Becoming asustainable society

Medium-Term Management Plan

Business domains
Creating the environmentthat enriches
people’s lives

Long-Term Vision

Towardbecoming an
all-embracing
company forbuilding
materials

Foundation Supporting Value Creation

Company visionofon
isi phye v so
th lo
of hi
n ep
tio ratiza o
al r p
re co
rd up
wa ro
To he gtCompany mission- Our Mission -

To
wa
rd

1
Significance of Existenceand Ambitions●

The system of practicing the

The Group will work to become
an enterprise that people rate
highly for its attractive working
environment and as a place
where employees canwork positively andenthusiastically.

Strategy for Value Creation

Company mission

group corporate philosophy

The Group will work totransform into an enterprisethat meets the expectationsof customers and markets
while contributing to abetter society.

Glow
Daiken Group's Value Creation

GP25

Grow

New markets

Annual Management Policy
Update of the long-term vision GP25

Group Conduct Guidelines

3

DAIKEN GROUP REPORT 2022

In formulating the medium-term management plan GP25 3rd Stage, we have updated how we should be in 2025
based on the change in business environment and reconfirmation of materiality in and after 2025.

DAIKEN GROUP REPORT 2022

4

Our Sustainability Goals

Overall image of “Our Sustainability Goals”

Building a sustainable society

Amid the rising importance of responses to the issues surrounding sustainability, such as the social and global
environment problems, to further clarify the image of sustainability that the Daiken Group aims for and enhance ourinitiatives in corporate management, we have revised and evolved the existing CSR basic policy and formulated the
Daiken sustainability basic policy in June 2022. By increasing the linkage between the contribution to the sustainability ofsociety and the global environment and the sustainability of our business more than ever, we will aim to form a virtuous
cycle and sustainable corporate value improvement.

Achieve the vision of thegroup corporate philosophy
Contribution to the future filled with smiles
Harmonization of an affluent society
and the environment
Daiken Group's Value Creation

Daiken Sustainability Basic Policy
The Daiken Group will bring new value and smiles to the faces of our stakeholders, including
employees, by contributing to the development of a prosperous and sustainable society andenvironment based on the group corporate philosophy. Furthermore, we aim to establish a solidmanagement foundation for the long-term growth of the Daiken Group.

Sustainable corporate value improvement❶ Contribute to the development of a sustainable society, global

environment, and the economy
We will continuously review all activities and promote reforms as we contribute to thedevelopment of a prosperous and sustainable society and the global environment,
while improving business sustainability.

Contribution
to the realization ofa sustainable society,the global environment,
and economy❷ Pursue sustainability as a businessContribution to theresolution ofsustainability issues,
such as social andenvironmental
problems❸ Aim to enhance business value in a sustainable manner

Pursuit ofsustainability as
a company
Enhancement of theability to create value
Maximization of humanresource value
Forming a firmmanagementfoundation

Foundation Supporting Value Creation

The Daiken Group will maintain and even enhance its strength to build value, anessential driving force for transformation, by maximizing the value of human capitalthrough enhanced job satisfaction and employee well-being, while strengthening
engagement with stakeholders.

Forming avirtuous cycle bylinking andintegrating ESG
and CSV

Strategy for Value Creation

Pursuit of
the growthstrategies

Enhancement of the engagement with stakeholders
Building of the relationship of trust and co-creation activities

The Daiken Group aims to enhance corporate value in a sustainable manner throughthe two virtuous cycles of its contribution to a sustainable society, the global
environment, and the economy and the pursuit of sustainability as a business.

Local community

Research
institutions

Shareholders
and investors

Customers

Users and
consumers

The state andgovernment

Business partners

Employees

Structure to promote sustainability

Sustainability (ESG)-related policy system

To enhance our group-based initiatives for sustainability, we have reorganized the existing CSR committee to the sustainability promotion

To deploy initiatives for sustainability issues on a group-wide basis, the Daiken Group has established various policies with a focus oncommittee since fiscal 2023.

the important themes in each field of ESG.

The Board
Executive Directors Committee
Sustainability Promotion
Committee
Deliberations on and approval of policies and important
items concerning sustainability (CSR and ESG)CSR Promotion Departments
Company-wide promotion of sustainability (CSR
and ESG) and progress report to the committee

Each Department/Group Company

Sustainability Promotion Committee
Chairperson: Representative Director, President
CSR Promotion Departments: General Affairs and Human Resources Department, Legal
Department, Quality Assurance Department, Domestic Business Planning Department, and Global
Business Planning Department
Secretariat: Sustainability Promotion Department and Corporate Planning Department

E

Daiken Sustainability Basic Policy

Environment

Daiken Global Environment Vision 2050

Product Quality and Safety

Basic Policy on Product Safety

Fair Transactions

Daiken Procurement Policy and Daiken CSR Procurement Standards
Cartel and Big-rigging Prevention Standards
Daiken Diversity Promotion Policy■ Number of committee meetings convened in fiscal 2022: 4 times*Convened as the CSR committee■ Key Deliberation Items● Progress of the medium-term ESG plan
● Policy to formulate the ESG plan for the next term● Promotionof Health and Productivity Management● Resultsof the surveys on the measures to penetrate and the degree of penetration of the group
corporate philosophy ● Results of the surveys on the CSR Procurement Standards● External ESG evaluation and response to the issues● External evaluation of the integrated report and the production policy

PolicyData

Field
Sustainability (ESG and CSV)S

Daiken Workstyle Reform Promotion Policy

Human Resource

Daiken Human Resource Development Policy
Daiken Health and Productivity Management
Daiken Safety Basic Policy

Human Rights
Coexistence with Local Communities

Daiken Human Rights Policy
Daiken Social Contribution Activity Policy
Basic Policy on Corporate GovernanceG

Governance

Basic Policy on the Building of the Internal Control System
Compliance Code of Conduct

Details of each policy are described on our sustainability website. https://www.daiken.jp/company/csr/
5

DAIKEN GROUP REPORT 2022

DAIKEN GROUP REPORT 2022

6

Interview with Top Management
Daiken Group's Value Creation

Accelerate the transformation to sustainability andimprove the resilience of corporate management
2nd Stage.
What were the achievements and issues
over the past three years?

We achieved good results, especially in the expansion
into global markets, mainly the North American market. To
expand into the North American housing market, whichis the world’s largest wooden housing market and about

7

DAIKEN GROUP REPORT 2022

In the domestic market, we were able to capture
new opportunities related to the securing of workspaces
and sound proofing because of the steady increase indemand for building materials for new houses and homerenovations due to the growing needs for more comfortableliving environments caused by staying at home andteleworking that had prevailed during the COVID-19 crisis.
On the other hand, for public and commercial buildings,
we failed to achieve the sales expansion target becauseof the rapid decrease in demand for building materials foraccommodation facilities and commercial facilities causedby the COVID-19 crisis. Thus, we still have issues to solve.
We have already started to make proposals tailored to
the needs of the new normal by strengthening our sales
structure for public and commercial buildings, and we will
expand and improve the items that incorporated new ideas
developed through collaborations with other companies.
We expect that our proposals will bear fruit as theconstruction projects that were suspended or postponed
resume. In the second half of FY 2022, the delay in thedelivery of some products in the building materials business
was caused by a greater-than-expected increase in orders

DAIKEN GROUP REPORT 2022

Data

P.30

P.31-32

Foundation Supporting Value Creation

P.4▲

Medium-Term Management Plan
GP25 2nd Stage▲

Long-Term Vision GP25

Results of the Strategies by
Business Segment and Market▲

Representative Director, President

In 2015, the 70th anniversary of the foundation of
the company, we formulated the long-term vision, GP25
for 2025, 10 years after 2015, and announced our goal to
become an all-embracing company for building materials.
The reason behind the formulation of GP25 was that wewere a housing materials manufacturer back then, andmost of our sales came from products for the domestic
new housing market; therefore, revising our business andmarket portfolio was a huge management challenge forus since new housing starts would decrease because of
the declining population in the future. Thus, we decided to
strive to become an all-embracing company for building
materials by expanding our business domains frombuilding materials to the supply of industrial materials andinstallation and construction. We also decided to makeproposals not only for the new housing market but also
for remodeling and renovation of public and commercial
buildings with those industrial materials and expand into
global markets.
FY 2022 was the final year of the medium-term
management plan GP25 2nd Stage, the second phaseof the plan to achieve the long-term vision by dividing the
10 years until FY 2026 into three phases. When we lookback on the past three years when we promoted a variety
of different measures to accelerate the growth strategies
and enhance the management foundation as specified
in the basic policy, we appreciate the fact that we madesteady progress toward achieving the long-term vision andadvanced the stage transition in the midst of unexpectedchanges in the environment due to the COVID-19 crisis.

four times larger than the Japanese market due to thenumber of housing starts and vast floor area and wherecontinuous population growth is expected in the medium
and long term, we merged and acquired a veneer plant in
Canada and an LVL plant in the United States in FY 2020.
Subsequently, the external environment provided a boost.
A wood shock, which was a rise in wood product prices
caused by a combination of strong demand due to thegrowing needs for suburban housing during the COVID-19
crisis and supply chain disruptions, has continued to date,
and the North American business fully capitalized on thatdemand and significantly contributed to the company’s
profits. In addition, there was an increase in demandfor MDF, the primary product in the industrial materials
segment along with LVL in North America, as the basematerial for furniture and buildings. The overseas sales
ratio in FY 2022 was 32%, a significant increase from the
6% in FY 2016 when the long-term vision was formulated.

Strategy for Value Creation

year (FY) 2022 was the final year of
Q Fiscalthe medium-term management plan GP25

8

Interview with Top Management

Initiatives for Priority Markets

Public and Commercial Buildings

P.39-40▲ ▲Global Markets

P.41-42P.4

are the key points in the GP25 3rd
Q WhatStage?
We formulated the GP25 3rd Stage using a backcasting
method that started from the updated version of how weshould be in 2025 and the goals set in our environment vision.
The revision reflects our focus on sustainability more clearly
than the GP25 2nd Stage. Because it is the final stage inestablishing our company as an all-embracing company forbuilding materials as specified in the long-term vision, we set
two items in the basic policy: implementation of the growthstrategies and enhancement of the management foundation
centered on sustainability. We will advance our growthstrategies with a focus on our contribution to a recyclingbased society and the fulfillment of user needs in the newnormal in tandem with materiality. As for the managementfoundation that supports the growth strategies, we will
improve the resilience of corporate management in an
uncertain business environment from the four perspectivesof the human resource base, business foundation, financial
foundation, and governance. We will accelerate our initiatives
to pursue the sustainability of raw materials and promote
DX for the business foundation. Since timber is one of themain raw materials that we use, sustainable procurementof timber leads directly to corporate sustainability. We will
advance our initiatives to stop using lauan wood and aim
to improve the level of sustainability of timber procurementin the medium and long term. In addition, we will not only
advance investments in mission-critical systems and therationalization and streamlining of the logistics system but
also promote DX tailored to the new normal by using avariety of digital tools and enhancing digital marketing tostrategically approach customers.
As for numerical targets, the objective will be toachieve 250 billion yen in sales, 15 billion yen in operating
profit, and 10 billion yen in profit attributable to owners

DAIKEN GROUP REPORT 2022

Data

DAIKEN GROUP REPORT 2022

Long-Term Vision GP25

Foundation Supporting Value Creation

9

Realization of resource circulation and a recyclingbased society shows our determination to actively takepart in the realization of resource circulation and contributeto resolving social and global environmental issues.
We have always put the harmonization of an affluent
society and the environment first and created values thatexceeded the expectations of society by effectively using
limited resources. As for wood resources, we have createdproducts from raw materials as a manufacturer and thenfocused on establishing the circulation system so that as
many waste materials as possible, such as timber takenfrom demolished buildings, would not be disposed of or
incinerated and could be used as materials for an extended
period of time. Though our key business is materials
development, such as insulation boards made from timbertaken from demolished buildings and MDF using offcuts
from timber production as a main raw material, which
demonstrates that we use timber with no waste, we arealso advancing our initiatives to use woody fibers for soil
improvement additive and as a wood culture medium
to promote plant growth. As for mineral resources, we
focused our attention on unused resources and worked
to effectively use them. We have developed DAILITE,
our original noncombustible, lightweight, high-strength
material that uses volcanic ash as a raw material. We
will pay attention not only to the wood resources that are

P.51-52

Strategy for Value Creation

Since we have four years left before the deadline forthe achievement of the long-term vision GP25 formulated
in 2015, we are receiving many inquiries from our investors
about our next long-term vision following GP25. Though
we have the option of launching our next long-term visionin advance, we would like to prioritize the completion of ourinitiatives to achieve our goal as set in GP25.
In 2020, the Japanese government announced
its goal to achieve carbon neutrality by 2050. To further
strengthen our initiatives to tackle environmental issues
from a long-term perspective, we formulated the Daiken
global environment vision 2050 (hereinafter called the“environment vision”) in October 2021 and defined ourP.21-22

Human Resource Strategies

When we redefined those three material issues tocope with, we also updated how we should be in 2025
as set in the long-term vision and made it more specific,
taking possible changes in the business environment in2035 into consideration.
▲

management plan GP25 3rd Stage wasformulated.
What is the reason behind it?

Risks and Opportunities/
Materiality

managed on a circular basis, such as plantation timber andcertified wood, but also to resources that are not used anddisposed of and then develop materials that effectively use
such resources and develop new applications to accelerate
the expansion into global markets. In that process, our goal
will be to increase the utilization ratio of certified wood thatcomes from appropriately managed forests and accelerate
our initiatives to stop using lauan wood by using ourtechnologies in order to achieve the goals specified in theenvironment vision.
As for the user needs in the new normal, since people’s
lifestyles have changed because of the COVID-19 crisis,
we will strive to meet user needs by employing our unique
technologies to create a safe, secure, healthy and comfortable
space in light of the high frequency of earthquakes and natural
disasters. We will improve our solution proposals that will help
resolve customers’ issues by making full use of our strengths,
such as our functions to evaluate and analyze spaces that wedeveloped through years of R&D and our integrated systemfor developing materials and building materials, supplying
products, installation work and construction.
Though we have identified the third material issue
as human resource base diversification by improving
the work environment and job satisfaction, we believethat the most important management resource forcompanies to promote their business activities is humanresources. Our human resources strategy stresses
the importance of not only promoting diversity as acompany but also actively supporting each employee’s
skill development, understanding the diversity of theirskills as an organization, and placing the right people in
the right positions regardless of gender. I personally place
importance on making sure that each employee feels
happy to be working at Daiken. If employees feel that way,
it will result in greater job performance and then lead tothe enhancement of our organizational strength. We will
actively promote the necessary investments in humanresources while developing more flexible workstyles by
expanding and improving systems and the mechanismsthat enable employees to continue to develop their careers
without being influenced by life events and making use of
teleworking and shared offices that have become popularduring the COVID-19 crisis.

▲

issues to cope with (materiality)
Q Material
were redefined when the new medium-term

P.47-50

The external environment surrounding us has drasticallychanged because of the pandemic that we did not anticipate
when we formulated the long-term vision GP25 in 2015, in
addition to the higher geopolitical risks. With these changes
and the issues we identified in the GP25 2nd Stage in mind,
we need to formulate the GP25 3rd Stage as a concrete
action plan to achieve our group corporate philosophy
and environment vision. Therefore, we decided to review
the megatrends and our strengths, looking ahead to 2035
beyond 2025, and to redefine materiality in terms of priority
and the coping mechanism. Specifically, we identified threematerial issues: realization of resource circulation and arecycling-based society, user needs in the new normal, andhuman resource base diversification by improving the work
environment and job satisfaction.
▲

P.69

▲

Medium-Term ESG Plan (Fiscal
2020-2022)

P.30

▲

Medium-Term Management Plan
GP25 2nd Stage

Environmental Strategy▲

As for performance, we failed achieve the final year
sales target specified in GP25 2nd Stage. However, ouroperating profit was 17.3 billion yen, which far exceeded
the target of 12 billion yen, and we exceeded all profit
targets. We appreciate the fact that we were able toconsistently accelerate our growth by achieving significant
results as reflected in the major financial indicators of an
ROE of 10.9%, an ROA of 10.5%, and an equity ratio of
41.7%.
In addition, as initiatives related to ESG andsustainability become increasingly more important eachyear, we have set nonfinancial goals and worked on them.
As for the environment, we were able to decrease CO2
emissions by 36%, exceeding the total domestic CO2
emissions reduction goal of 26% (compared to FY 2014) andachieved the goals we set based on our original indicators
to raise the level of our initiatives related to diversity. On theother hand, though the degree of penetration of the group
corporate philosophy developed on governance improvedby five points compared to FY 2018, we failed to achieve
our goal of a ten-point increase. We will consistently
work to disseminate the Group Corporate Philosophy bycontinuously implementing penetration programs so thatall group employees can relate to the philosophy andperform their daily work according to it.

policy and long-term goals to achieve the three zeroes by
2050: net zero greenhouse gas emissions, zero final landfill
disposal of waste, and zero use of natural lauan wood madefrom lauan trees found in Southeast Asia. Because wehave grown by doing business with a focus on the effective
use of limited resources, including wood resources, since
the foundation of the company, sustainability is one of thestrengths directly connected to our businesses. Though
we set the bar high, we will make consistent efforts toachieve our goals throughout the entire value chain bysetting greenhouse gas emission reduction goals for ouroverseas businesses since we set our goals only for ourdomestic businesses, including Scope 3 emissions as well.

Daiken Group's Value Creationand maritime transportation disruptions; therefore, we had
no choice but to limit the number of orders, which caused
significant inconvenience to our customers and business
partners. Though we no longer limit the number of orders,
we realize the major impact that our supply chain has on
the entire industry and will make every effort to prevent itfrom happening again.

10

Interview with Top Management
Summary of the strategies of the new medium-term management plan GP25 3rd Stage*If excluding the decrease in sales by 21.2 billion yen associated with the change in PWT in the U.S., which is our special subsidiary

Domestic market
Home renovation market

Public and commercial
buildings

Industrial materials

Composition Ratio
MarketEnvironment
Execution of the
Growth Strategy
Sales by BusinessIndustrial materials
business➡ ➡

+3.8 billion yen➡

-5.6 billion yen[+15.6 billion yen]*

34 → 32%

15 → 16%

10 → 15%

9 → 11%32 → 27%

Gradually decreasing trend indomestic new housing starts

Distribution of secondhand
housing and revitalization of
condominium renovations

Changes in how an office space should be

The U.S.A.: Medium- to longterm stable housing demand

Penetration of working at home and remote work

Recovery in inbound demand

New/alternative utilization
development (From plywood
and plastics to woodfiberboard)

Redevelopment projectSoutheast Asia: Recovery/growth

Building materials
建材事業 businessIndustrial materials business inNorth America

An increase in share by functional products that correspond to the needsof users in the new normal era
Corresponding to remote work, improvement of the sound environment, and antiviral functions

Capacity expansion[+25 billion yen]*➡

+12 billion yen

Expansion of the products thatsave construction time and work

Proposals of the improvementof the thermal environment

Expansion of condominium
renovations in the Tokyo
metropolitan area

Expansion of the interior
projects in the redevelopment
projects

Engineering businessEngineering business➡

+13.2 billion yen

Industrial materials business: MDF
Structural reform and capacity expansion
Improvement of the ratio of the products with high added value

Industrial materials business in Japan

Building materials business

Acquisition of alternative demand, capacity expansion, and development of new materials

Supply expansion to Europe
and Asia

Optimization of the logistics system

Business
Foundation

Consideration of the introduction of
new products using the sales channels

Enhancement of cooperation in the group andoptimization of the production system

Operational efficiency and productivity improvement using digital technology and restructuring of the core system
Pursuit of the sustainability of raw materials / Initiatives for eliminating the use of lauan wood (tropical natural wood)
Reduction of greenhouse gas emissions in the supply chain
Promotion of diversity and flexible work styles
Optimization of the sales structure and personnel (Shift to the prioritized markets) / Prioritized market enhancement program

Financial Foundation Investments in growth and foundation enhancement, financial soundness, and cash flow allocation that optimizes the improvement of shareholder return

kind of approach is taken
Q Whatconcerning investments for future growthand management resource allocation?

11

DAIKEN GROUP REPORT 2022

P.45-46
P.53-56

are the key points in medium- to
Q Whatlong-term value creation and the directionof management?
The key point in value creation is to harmonize
the promotion of resource circulation, climate change
mitigation, and coexistence with nature, the three themes
specified in the environment vision, with our growthstrategies.
The global environment is seriously deteriorating
at the global level with problems of resource depletion,
increasing waste, climate change, loss of biodiversity due
to deforestation, and other issues. These are the urgent
issues we need to work on. Daiken Corporation was
founded immediately after the war with an eye to effectively
using timber as valuable resources and contributing tosociety through postwar reconstruction. Since then, withthe goal of using timber with no waste, Daiken focusedon the advantages and disadvantages of timber as asustainable resource and brought out its full potential asa material by developing technologies that can overcome
its weak points and bring out the best in the resource. Inthat way, Daiken created new values for society. One of thebiggest features and strengths is that Daiken has grown

Our Sustainability Goals

P.5-6

▲

We will continue active growth investments at the righttime in the GP25 3rd Stage as well, taking into consideration
the geopolitical risks, the rise in resource prices, andexchange rate movements. As for management resource
allocation, we will set a strategic investment ceiling of 40
billion yen using the operating cash flow that is expected
to reach approx. 70 billion yen in four years and the cash
obtained by improving asset efficiency from the reductionof cross-shareholdings as capital and allocate it to growthinvestments as the top priority. The core element of growth

Financial Strategies

Data

P.37-38▲

Strategies by Business Segment
and Market

P.35-36▲

The New Medium-Term
Management Plan GP25 3rdStage

investments is reinforcement of the industrial materials
business, our growth driver, overseas. As for areas, we willplace greater importance on efficiency and focus on North
America. Additionally, we will concentrate on Asia andOceania with a focus on strengthening the MDF business.
Furthermore, we will advance the investments necessary tostrengthen our foundation, such as investments related torationalization and streamlining of our domestic businesses
and R&D/human resource/environmental investments, as
our ESG investments. Since R&D is the core element ofvalue creation, we underwent an organizational change in
FY 2023 to shape new businesses for the next generationand strengthen the system of linking the intellectual
property strategy to R&D. Furthermore, we intend to
gradually raise R&D investments to about 2% of sales witha view to strengthening the development of technologies
that enable global expansion. As for environmental
investments, we increased the renewable energy utilization
ratio to 50% in Japan by using wood biomass boilers thathave synergies with the industrial materials business. We
will consider introducing other types of renewable energy
to reduce our greenhouse gas emissions both in Japanand overseas. In addition, as the effects of environmental
investments cannot be measured only by returns, we willconsider introducing internal carbon pricing. Forty billion▲ ▲Research and Developmentof the parent in FY 2026, the final year of the GP25 2ndStage, by tackling the rise in raw material costs caused by
global inflation resulting from the rise in resource prices,along with structural reform and cost reduction efforts tomaintain profitability as improved in the GP25 2nd Stage
while taking into consideration the fact that the market
prices of wood products in North America will be adjusted.

through businesses that contribute to the sustainability of
the global environment with a focus on wood resources.
When it comes to the initiatives to addressenvironmental issues, Daiken tends to look at risks in termsof whether there is a tradeoff between business growthand such initiatives because costs precede in the shortterm. However, from a medium- to long-term perspective,
tackling environmental issues provides new business
opportunities that enable the company to create lastingvalue. We will achieve the stage transition to establish a
new growth path by changing our perspective and turninga tradeoff into a trade-on and risks into opportunities.
As for the promotion of resource circulation, in addition
to the unused resources of volcanic ash used in the
aforementioned DAILITE, even resources that are disposedof today have the potential to generate unprecedented
value through the use of company technologies. Whenit comes to the climate change mitigation, Daiken cancontribute to carbon neutrality by establishing technologies
to create new renewable materials that include cellulose
nanofibers and by creating a new standard that can replacepetrochemical resources. In addition, Daiken will strengthen
its initiatives to make wood resource procurement, which isvital in our businesses, sustainable.
Linking the growth strategies to the environment
vision is to link the sustainability of businesses tosocial and global environmental sustainability and thenimprove competitiveness and the resilience of corporate
management. In order to do this, it is necessary to review
and reestablish how the entire value chain should workfrom the perspective of sustainability, looking beyond R&D,
raw material procurement, production activities at theplants, and the delivery of our products to our customers,
their use, and their end of life. With these concerns in mind,
we revised and evolved the traditional CSR basic policy
and developed the Daiken sustainability basic policy. As
an executive in charge of managing the company in timesof uncertainty, I am determined to improve sustainablecorporate value by bringing together the group’s
technologies, ideas, and passion and strongly promoting
sustainability transformation (SX). We sincerely ask for yourcontinued support.

Foundation Supporting Value Creation

Human Resource
Foundation

yen, which is our strategic investment ceiling, and 20 billion
yen for ordinary investments in BCP and safety measures,for a total of 60 billion yen, will be allocated to investments
for growth and foundation enhancement. At the sametime, we will promote the penetration of ROIC (return on
invested capital), the new internal management index thecompany has adopted, to pursue asset efficiency in theentire management.
As for shareholder returns over the four years of the
GP25 3rd Stage, the company paid dividends with thegoal of achieving a dividend payout ratio of 35% andDOE (dividend on equity) of 3.5% with a focus on theenhancement of returns linked to business performanceand the stable payment of dividends that is unlikely to be
influenced by short-term profit fluctuations. The company
revised its policy so that shareholders who would stably
continue holding shares in our company for a long periodof time could sit down and invest in the company.

Strategy for Value Creation

Building materials
business

Enhancement of
the Management
Foundation+7.2 billion yen➡

+13.8 billion yen➡

+6.9 billion yen➡

➡

+5.1 billion yen➡

Sales by Market

Growth driver[+47.8 billion yen]*

Daiken Group's Value Creation

Sales: 223.3 → 250 billion yen (+26.6 billion yen)➡

Securing of the revenue base (An increase in the share of new housing, shifting to housing stock and non-housing, and material utilization development)

Global markets➡

Domestic new homemarketMarketDAIKEN GROUP REPORT 2022

12

Changes in Value Creation

1970
Developed a technology toharden wood veneers byinjecting resin into the grains of
the wood called WPC

Housingequipment
Cladding

1946

Tatami matsSpecial plywood

1973

1982

Door

Acoustic products

Promoted making
doors fancy
and created theindustry standardof modern design

Improved theconsistent service
structure forsoundproofing forhousesBuilding material
business

Tatami facing

Launched the first housing equipment
Cabinet set and developed from asingle product to an integrated productStarted manufacturing
Tatami facing thatused machine-madeJapanese paper andthat was excellent inmaintenance

Acoustic products

Plywoodhapia

Launched the hapia
series that pursue
texture2007 Discontinued manufacturing of plywood
2002 Withdrew from Bath and Kitchen business

Tatami facing
Woody fibers
MDF

Industrial materials
business

2021

Started manufacturing MDF
that utilized residual wood
offcuts as the main material

Capabilities to develop
unique industrial materials

GLOW EARTH
Wood culture medium
GLOW EARTH

1958
Insulation board

DAILITE

1997

Interior projects

DAILITE
Started manufacturing
DAILITE, an inorganic
material using an
unused resource
Shirasu (volcanic ash)and slag wool

Started manufacturing
DAILOTONE, noncombustible ceilingmaterials using slag wool,
which is a byproduct ofsteel production

2018

Launched the
GRAVIO series,
decorative wallmaterials thatwere DAILITE
base materials

A non-combustible wallmaterial with a deep carved
design that produces ahigh-quality space andoffers excellent workability

Capabilities to perform installation
work by making use of thefunctions of building materials

GRAVIO EDGEGRAVIOTo realize thelong-term
vision GP25

2,233

Goal of GP25
3rd Stage
200 200

2,0002,000

Housing
startsstarts
Housing(10,000
houses)(10,000
houses)Operatingprofit profit
Operating(¥100(¥100
million)million)173

150 150

1,5001,500

Foundation Supporting Value Creation

DAILOTONE

Engineering business

2016

Strategy for Value Creation

1996

DAILOTONE

Net sales(¥100(¥100
million)Net sales
million)2,5002,500

Veneer/LVL

2004 Transferred the exterior material business

MDF

1964

Capability to develop
building materials withhigh added value andcapability to propose total
plans for interior spaces

2013

Insulation board

Started manufacturing
Insulation boards, woodfiberboards utilizing
lumber sewing waste, andconstruction demolition timber

Daiken’s Features
and Strengths

1996

Integrated storage furniture1945 Foundation

Three-dimensional
high design
flooring

Attractive cabinet
pursuing design

1971

Door

2015

MiSEL

Daiken Group's Value Creation

Ever since foundation, The Daiken Group has been developing awide variety of products to help customer's daily life through our
Flooring
technological innovations which always meet social issues andneeds. The Group effectively uses all the strengths acquiredin our history and aims to grow into a housing material
Cabinetmanufacturer that becomes an all-embracing company
for building materials and thus creates new value.

Developed special
plywood for vehicles
to which durability andwater resistance were
given by the technologicaldevelopment of adhesives

2008

WPC

Trends in Net Sales, Operating Profit,
and Number of Domestic New Housing Starts
1,0001,000

Net sales

Operating profit

Number of domestic new housing starts

100 100

Data

86
500 500

50

50

0

0

Medium-Term
Management
PlanPlanMedium-Term
Management0

1st 1st0

1951
19611961
19711971
19811981
1945 1946
1951
1960
1945 1947
1946 1948
1947 1949
1948 1950
1949
1950 1952
1951 1953
1952 1954
1953 1955
1954 1956
1955 1957
1956 1958
1957 1959
1958 1959
1960 1962
1961 1963
1962 1964
1963 1965
1964 1966
1965 1967
1966 1968
1967 1969
1968 1970
1969
1970 1972
1971 1973
1972 1974
1973 1975
1974 1976
1975 1977
1976 1978
1977 1979
1978 1980
1979
1980 1982
1981 1983
1982 1984
1983 1985
1984 1986
1985 1986

Foundation

1941

C. Itoh & CO., Marubeni Shoten,Ltd., and Kishimoto Shoten,Ltd., have merged to form Sanko
Kabushiki Kaisha, Ltd.

Historyof theDaikenGroup

1944

Sanko Kabushiki Kaisha, Ltd.,
Kureha Cotton Spinning Co., Ltd.,and Daido Boeki Kaisha, Ltd.,
merged to form Daiken Co., Ltd.

1945

Founded Daiken Mokuzai Kogyo Co.,
Ltd., at the Inami plant in Toyama
acquiring all the business of the Forestry
Department at Daiken Co., Ltd.

13

DAIKEN GROUP REPORT 2022

Expansion

Growing

1954

1967

1977

1989

Established Nagoya plant for
manufacturing special plywood

Changed the company name to
DAIKEN CORPORATION

Expanded insulation board
business
Built Takahagi plant●

1958
Built Okayama plant and started
manufacturing insulation board

1969

Established interior projects
department

1970
Started manufacturing WPC
flooring at the Nagoya plant●	Established Toyama plant for
manufacturing special plywood
●	

1984
Established an interior projects
company, DAIKEN ENGINEERINGCORPORATION

1987

Expanded flooring business
Established Mie Daiken Co., Ltd.
(currently, Mie plant)

Started manufacturing housing
products, such as doors andstairs, at the Inami plant● Started manufacturing of
cladding at the Takahagi plant

1994

Established DAIKEN SARAWAK
SDN. BHD. in Malaysia for MDF
manufacture

1995
Built interior doors production line
at the Inami plant

2nd 2nd3rd 3rd(Fiscal year)
1991
20112012
20162017
2021
20012002
1987 1988
1992
2019 20201987 1989
1988 1990
1989 1991
1990
1991 1993
1992 1994
1993 1995
1994 1996
1995 1997
1996 1998
1997 1999
1998 2000
1999 2001
2000
2001 2003
2002 2004
2003 2005
2004 2006
2005 2007
2006 20082007 20092008 20102009 201120102011 20132012 20142013 20152014 20162015
2016 20182017 20182019 2021
2020 2022
2021 2023
2022 2024
2023 2025
2024 2026
2025

New Challenge Challenge to achieve the Long-Term Vision GP25

Selection and Concentration

1996

Implemented Tatami facing and
DAILITE production lines at the
Okayama plant

1999

Purchased an interior projects
company, Koukou Sangyo
Corporation

2000
Integrated the interior projects
department into DAIKENENGINEERING CORPORATION

2002

Alliance with TOTO Ltd. and YKK AP Inc.
for remodeling business●	Established DAIKEN Industries (Ningbo)
Corporation
●	

2005
Purchased MDF manufacturer in Malaysia
Established DAIKEN MIRI SDN. BHD.

2009

Purchased MDF plant in New Zealand andestablished DAIKEN NEW ZEALAND LIMITED●	Integrated flooring business of the Nagoya
plant in the Mie plant
●	

2010

2018

 lliance with Panasonic Corporation inA
production and procurement● Purchased an interior projects company, Sankei
Corporation●

Business and capital alliance with HOKUSHIN
Co., Ltd., for MDF production and supply

●

●

2012
2015

Established interior doors manufacturing company
PT. DAIKEN DHARMA INDONESIA in Indonesia

2016

Purchased an apartment renovation company,
PAC SYSTEM Co., Ltd.

 urchased an MDF manufacturing company in New ZealandP
Established DAIKEN SOUTHLAND LIMITEDEstablished Daiken R&D center● Capital and business alliance with ITOCHU Corporation●2019
 urchased a veneer plant, CIPA Lumber Co., Ltd. in Canada andP
an LVL plant, PACIFIC WOODTECH CORPORATION in the U.S.A.
Purchased a renovation company ReformQ Co., Ltd.
● Purchased T.O FLOORING CO., LTD., that works on solid
wood flooring●

2020
Started production at Nichinan Daiken Co., Ltd., a company
that processes veneers for LVL

DAIKEN GROUP REPORT 2022

14

Product Development Uses Strengths

Building material business
Developing and providing building materials best suited for the interiorof various buildings

The Daiken Group cultivated its technologies throughout a history of more than 75 years and continues to offer products thatare valuable for society and customers.
Our diverse product lineup, with its excellent features, is used in a wide range of scenarios in houses and public and commercial
facilities.

Insulation board

Insulation board●

Wooden fiberboard using
residual wood offcuts formain raw material andmolded into a board
木材チップ

Materials for flooring

Base materials forbuilding and furniture(Substrate of door, storage,
and window frame)

MDF
MDF

Wood fibers

Veneer/LVL
Veneer:Cut from logs
LVL:
A fabricated wood productmanufactured by laminating
veneers all placed parallelin the fiber direction andgluing them together

Dimensional
stability● High strength● Workability

VeneerTatami facing

Structural material

LVL

Acoustic productsSpace for enjoying soundA lineup that is particular about
surface texture and that offers
scratch resistance, long-lasting
beauty, good design, highfunction, and high performance.

Interior door that is highly
functional and easy to use andcan be coordinated flexibly

A complete lineup of cabinets
equipped with abundantstorage capacity that isspace-saving and offers otherfeatures to fit individual
spaces

A complete lineup to meet thesound environment and soundquality needs of a variety ofvenues, including hometheaters, musical instrument
practice rooms, and audio
rooms

A flooring for heavy duty areas

Functional door suitablefor facility applications

Cabinets inspired byconsideration to users

Creating a comfortablesound environment

Interior doors with particularfunctionality for nursing
homes, kindergartens,
childcare facilities, medical
facilities, and stores

Cabinets mitigate the various
risks to users for comfort
during use

A complete lineup suitable forsound-proofing, echo reduction,and other specific purposes

A complete line of flooring thatcan be used in heavy duty
areas, including those made ofnatural wood resistant todamage, sound-proofing
materials, and those that reducethe impact when a person falls

LVL

Tatami matsLight resistance
Water repellent● Moisture
conditioning● Color variations●

Daiken’s Features
and Strengths●

Tatami facing made fromstraw twisted
machine-madeJapanese paper strings
and a resin coating

Engineering businessFor accommodation

For houses●●

Mineral fiberboard
molded into a board
using slag wool as a
byproduct of steel
production
Slag wool

DAILITE

For houses

Non-combustibility
Lightweight● High strength● Workability● Moisturepermeability● Insect repellent● Antiseptic●

Wall base materials

For officeWall materials●

An inorganic material
molded into a board
using an unused
resource, Shirasu(volcanic ash), and slag
wool
Slag wool and Shirasu

Base material for house external walls Non-combustible wall material

Capabilities to perform
installation work bymaking use of thefunctions of building
materials

Our project

Effective use of mineral materials

The Daiken Group’s major projects are interior construction for public spaces andcommercial facilities, including schools, event venues, office buildings, and houses, tocreate spaces that optimize the performance of industrial and building materials.

Ceiling materials

Non-combustibility
Lightweight● Sound absorbing● Workability

DAILOTONE

Total support for creation of spaces from the supply of building materials
through installation work

Data

Machine-made Japanese paper

DAIKEN GROUP REPORT 2022

I-Joist●CabinetStorage improvement

Foundation Supporting Value Creation

Effective use of wood materials

Dimensional
stability● Surfacesmoothness● Workability● Water resistance

MDF

Door
Great range of designand variations

Protection board

For public spaces and commercial facilities

Wood chips

Inner part of a tatami mat

Flooring
A flooring of
ultimate beauty

Strategy for Value Creation

Heat insulation● Moisture
conditioning● Cushioning
properties● Lightweight●

Wooden fiberboard using
construction demolition
timber for main raw
material and molded intoa board15

Major Applications

Features and Functions

For houses

The Daiken Group offers various functional industrial materials having non-combustibility,
anti-seismic, thermal insulation, sound insulation, humidity conditioning, and various
other features required in our daily lives by making full use of wood and mineral resourcesfrom a sustainable perspective.

Capabilities todevelop uniqueindustrial
materials

Capability to develop
building materials withhigh added value andcapability to propose
total plans for interior
spacesDaiken Group's Value Creation

Developing and offering highly functional industrial materials

Overview

The Daiken Group offers building materials that form spaces focusing on safety, peace ofmind, health, and comfort to be used for housing, public spaces, and commercial facilities.

Daiken’s Features
and Strengths

Industrial materials business

Daiken’s Features
and Strengths

Tokyo Metropolitan Government Building

Kyoto Station Building

Kansai University

DAIKEN GROUP REPORT 2022

16

Process of Creating Value
The Daiken Group aims for the realization of a sustainable society and the creation of economic and social value bycontributing to solving social issues, such as the Sustainable Development Goals (SDGs), through business activities thatmake use of our unique strengths.

Daiken Global Environment
Vision 2050

Long-Term VisionGP25

P.47-50

TargetAchieve the Vision of
the Group Corporate
Philosophy P.3-4

P.4

The New Medium-Term Management Plan
Medium-Term
Management Plan
GP25 2nd Stage(Fiscal 2020-2022)
P.30-32(External environment
and trends)

Materiality
P.21-22

Financial foundation

Input

Strength ❶Research andDevelopment
Capabilities

Industrial
materials

A wide variety of customers
ranging from the housing andconstruction industries to various
manufacturers

Natural resources
Usage of wood materials (1,000 t)
Domestic: 219 Global: 1,565
Total energy input (1,000 GJ)
Domestic: 2,711 Global: 5,210
Water resource input (1,000 m3)
Domestic: 1,859 Global: 973

Offering of products that use strengths P.15-16

Creation of economic and social value

Industrial materials business
Make full use of wood and mineral resourcesand offer a variety of functional materials
MDF

Veneer/LVL

Insulation board

Tatami facing

DAILITEDAILOTONE

Engineeringbusiness

Domestic newhome market

Strategies by Business Segment
and Market
P.31-32, P.37-38

Pursue the possibilities ofsustainable industrial materials
and a safe, secure, healthy,
and comfortable space

Human
Resource
Strategies

Building materials business
Offer high-performance building materials
that form spaces focusing on safety,
peace of mind, health, and comfort

P.23-28

01

Contribution to carbon neutrality
by utilizing wood resources02

Promotion the use of domestic
timber03

Effective utilization of unused
resources

04

Creating a safe, secure, healthy,
and comfortable space

05

Saving construction time andwork

Flooring

Acoustic products

Fiscal 2022

Door

CabinetFinancial Outcomes

StairsConstruction materials

Engineering businessBusiness
Foundation

Creating shared value (CSV) by Daiken businesses

Financial
Strategies

Group Conduct Guidelines

GovernanceInterior construction for public spaces,
commercial facilities, and houses to create
spaces that optimize the performance ofindustrial and building materials
Interior projects for buildings and offices
Home renovation
Apartment renovation

Net sales:
Operating profit:
EBITDA*:
Profit attributable toowners of parent:
ROE:
Total dividend:
Dividend payout ratio:

223.3 billion yen
17.3 billion yen
24.5 billion yen
7.8 billion yen
10.9%
2.6 billion yen
33.1%

Data

Customer base

OutcomeHome renovation
marketHuman resource
Consolidated number of
employees: 3,965
The nationwide branch andsales office networks, as well as
dedicated sales personnel bymarket and customer
Seven group companies’
installation work management
systemOutputFoundation Supporting Value Creation

R&D center
R&D expenses:1.5 billion yen

Public andcommercial buildings

Building materials
business

Create a new standard withfunctional products

Shareholders’ equity:
66.3 billion yen
Interest-bearing debts:
28.5 billion yen

Research anddevelopment

Industrial materials
businessStrength ❷Product
Deployment
Capabilities

Source of value
creation

Businesses and market
strategies that connect ourstrengths to value creation
Global markets

Relationships of trust withprofessional customers

Six capitals

Capital investments:
2.8 billion yen
Production bases: 20 bases

Strength ❹Integrated System

Strength ❸Customer Base

P.29

P.35-38

Strategy for Value Creation

Medium-Term
Management Plan
GP25 1st Stage(Fiscal 2017-2019)

GP25 3rd Stage (Fiscal 2023-2026)

P.19-20Engaging in the development,
installation, and constructionof industrial and building
materials

Risks Opportunities

Production system

Business Models
and Strengths

Daiken Group's Value Creation

Social issues and needs*Operating profit + Depreciation + Depreciation of goodwill

Nonfinancial OutcomesAmount of carbon storage by the wood industrial
materials business:
803,000 t-CO2/year
Utilization of domestic timber for flooring
substrates
51%
Total CO2 emissions in Japan (Compared tofiscal 2014):(36%)

Input management resources*Fiscal 2022

17

DAIKEN GROUP REPORT 2022

DAIKEN GROUP REPORT 2022

18

Business Models and Strengths
Markets and Customers

Strength4

Integrated
System●●●Strength

Public Spaces

3

Customer
Base

Engaging in the development, installation, andconstruction of industrial and building materials

Installation Workand Construction

Industrial and building materials do not function as is and the installation work and construction are
required in order for them to deliver performance.
Daiken not only sells products, such as industrial and building materials, but is engaged in the
installation work, construction, and creation of spaces in the three domains of interior projects foroffice buildings and public facilities, home renovation work, and apartment renovation by cooperatingwith the group companies engaged in the installation work and construction.
By consistently engaging in the industrial and building materials located in the upstream part as wellas the installation work and construction to create spaces, our entire value chain can provide value.
We link the needs obtained in the installation work and construction sites with the development oflabor-friendly type products and techniques.

●

Nationwide branch andsales office networks
Dedicated sales structure bymarket and customer●

Relationships of trust with professional customers

The Daiken Group has built relationships of trust with a wide variety of professionalcustomers ranging from the housing and construction industries to various manufacturers
through long standing dealings.
By not only reflecting such needs and information obtained from customers in the initiatives
for daily improvements, such as quality and usability, but also feeding back to thedevelopment of next industrial and building materials and R&D, we continue to provide newvalue.

Sales

Key Customers

in e
Bus
De

2

Product Deployment
Capabilities

Production

1

Strength
R&D
capabilities●●●

Pursue the possibilities of sustainableindustrial materials and a safe, secure,
healthy, and comfortable space●●

Provide new functions to increase
added value

Development

Hou
Manu sing
factu
Va
rer
Man riou
ufac sturers

The Daiken Group

Building materials business
Product
deployment that
overcomes the
weaknesses ofand extract the
beauty of timber

Flooring
Technological development thatwill lead to the promotion of theuse of domestic timber

Door

CabinetAcoustic products

StairsConstruction materials

Special MDF for flooring substrates
Decorative surface
materials

Expansion tobuilding
materials

Product
deployment thattakes advantageof thetechnology to
use timber withzero waste

Special MDF

Expand to the flooring
substrates bydeveloping special MDF

Expansion fromindustrial materials
to building materials

Expand to mineral
resources (slagwool)

Expansion toindustrial
materials

Research andDevelopment

D i s trib ut o r

r

er s

By utilizing industrial materials that made use of timber, which is a renewable resource, and sustainable resources, such as volcanic ash as an
unused resource, the Daiken Group has the capabilities to create a new standard with our products having the functions that make the spaces
where people spend their daily lives safe, secure, healthy, and comfortable.
With the technology cultivated in special plywood, which is the business at the time of the establishment of the company, we developed
industrial materials that made use of wood and mineral resources and by using these industrial materials as base materials, we have been
expanding into the deployment of building materials with increased added value.
These product deployment capabilities have become our response capabilities, leading to the sustainability of our business.

Specialplywood

Daiken R&D Centere si g n e

l Us

Data

Development ofIndustrial Materials

Building
Materials

e /D
Offic
si g nHo m
BuildeerCreate a new standard with functional productsBasematerials●●

Daiken Corporation was founded soon after the war with an eye toward theeffective use of timber as precious resources and the contribution to society
through postwar reconstruction.
We conduct research and development based on the two ideas of (1)overcoming weaknesses and extracting the beauty of timber and (2) using
timber with zero waste as the technology to effectively use timber.
As the expansion of applications to something other than timber, we have also
proceeded with the technologicaldevelopment to apply technology tohandle wood fibers and utilize unused
mineral resources.
Furthermore, as the field to make use ofmaterials and technologies we havecreated, we have been expanding theapplications above into research anddevelopment to pursue spaces where
people can spend the time safely,
securely, healthfully, and comfortably.

er

R e n o v a t i o n B u il d i n g
C o m p a n y C o n t ra c t o rStrength

Realization of highquality and stable supply
at our group’s plants

Engineering business

DAILOTONED
aln e r to r
G e n tr a c
Co

op e

n e r s , Cli en t s , a nd G e n e r aFoundation Supporting Value Creation

Slag woolvel

ss O w

Strategy for Value Creation●

Living Spaces

Daiken Group's Value Creation

The Daiken Group makes use of the four strengths of (1) research and development capabilities to pursue the possibilities
of sustainable industrial materials and a safe, secure, healthy, and comfortable space; (2) product deployment capabilities
to create industrial and building materials having various features; (3) a customer base that has long been built with awide variety of professional customers; and (4) an integrated system to engage in the development of industrial andbuilding materials as well as the installation work and construction for creating spaces and is committed to sustainablevalue creation.

Expand as the base materials

DAILOTONE
CeilingWallmaterials materials

Expand to unused
resources(volcanic ash)

Protection board
Inner part ofa tatami mat
Road joint

DAILITE
Wall base materials

Wall materials

Eaves

Louver materials

Woody fibers

Insulation board
Use application
development thattakes advantage ofthe features ofwooden fiberboards

Expand to sound products
from the acoustic board
technology

Deploy tatami facing thatmakes use of machinemade Japanese paper

MDF

DW fiberBase materials for building and furniture

GLOW EARTH

Tatami facing

Expand to fiberboards of different
specific gravities

Veneer/LVL
Structural housing materials

Industrial materials business

19

DAIKEN GROUP REPORT 2022

DAIKEN GROUP REPORT 2022

20

Processes to Identify the Risks, Opportunities, and Materiality

Risks, Opportunities and Materiality
In addition to the risks and opportunities that are likely to have a significant impact on the Daiken Group’s medium- to longterm management strategies, we have identified materiality as the material issues to preferentially address based on suchrisks and opportunities as the following. In identifying such themes, we made decisions by the Board’s resolutions throughdeliberations in various management meetings. We also link materiality to preferentially address the policies in the medium-term
management plan and the focused measures and proceed with the initiatives after setting the goals.

Risks and Opportunities

Extraction and organization of risks and opportunities that are likely to have a significant impact on the medium- to long-term management strategies
Evaluation and prioritization based on the degree of importance in terms of management (Our management strategies’ and stakeholders’ expectations)
Identify materiality as the material issues to preferentially address (Deliberations in various management meetings ⇒ The Board)
Formulation and implementation of the specific initiatives for materiality
Progress management and a periodic review (Various management meetings ⇒ The Board)

Materiality

Request for decarbonization
Climate change and global warming
Loss of biodiversity

Difficulty in procuring woody resources

Forest conservation and regulations over illegal logging

Needs for industrial materials using sustainable
wood resources

Building a Resource-Recycling andRecycle-Oriented Society

Initiatives for Materiality

Creating Shared Value (CSV) by
Daiken BusinessContribution to carbon neutrality

Daiken Group's Value Creation

Social Issues and Needs(External environment and trends)

Analysis and organization of external environments

01 by utilizing wood resources
P.23-24

Depletion of/scramble for resources

The Japanese government’s growth strategy
Green Transformation (GX)

Digital Transformation (DX)

Promotion of the use of

02 domestic timber

Regional revitalization and compact cities

P.25-26

Formation of a good housing stock

Effective utilization of unused

Resilient urban development andredevelopment projects

National land toughening and improvement of the nextgeneration infrastructure

Recovery in inbound demand

Realization of a tourism-oriented country

New normal as a result of the COVID-19 crisis

03 resources
User Needs in the New Normal Era

P.26

Creating a safe, secure, healthy,

04 and comfortable space

Disruption of business activities and supply chains
Threat of infectious diseases

P.27-28

Lack of human resources

Foundation Supporting Value Creation

Construction of a housing circulation system toward adecarbonized society

Needs for spaces where the elderly and children
can spend time with peace of mind

Strategy for Value Creation

Needs for shifting to alternative resources

Threat of natural disasters
Expansion of the opportunities where diverse
human resources exercise their abilities
Low birthrate and longevity in Japan

Depopulation
A decrease in productive-age population

Needs for the development of products andtechniques to supplement the lack of skilledconstruction workers
A decrease in the number of domestic new
housing starts

Acceleration of women’s participation in society

Continuous expansion of demand for thehigh-quality living environment in the overseas
growing markets

A worldwide increase in population

Surging resource/energy prices

Change in the security environment

Growing geopolitical risk

Request for sustainable management

Management ability that responds to the risks andopportunities and increases corporate value

P.28

Data

A decrease in population and a decrease in
the number of households

Development of labor saving

05 type products and techniques
Diverse Human Resource Foundation by
Improving Comfort in Working and Job
Satisfaction
Environmental Strategy
P.47-50

Human Resource Strategies
P.51-52*Details of the risks associated with businesses are described in the securities report.

21

DAIKEN GROUP REPORT 2022

DAIKEN GROUP REPORT 2022

22

Creating Shared Value (CSV) by Daiken Business

01 Contribution to carbon neutrality by utilizing wood resources

Initiatives for materiality “Realization of a resource-recycling and recycle-oriented society”

Daiken's strengths and value creation

By pursuing the use of wood resources for materials, turn the living space into “The second forest”

C Fix and store as carbon

CO2

Forests are the carbon storage that absorbs andfixes carbon
CO2

CO2

CO2

Use

CO2

CO2

We conduct business activities to maximize the valueof timber and continue to use as materials for a long time.

CO2
CO2

CO2

Lamination

The cycle toFelled trees
keep protecting
Growthand making
use of forest

Photosynthesis

CO2

becomes possible to keep storing carbon

Industrial materials business

MaturityCO2

By keep using timber as materials, itForm “The second forest” byusing timber
Carbon content that forest can store islimited. By expanding the scenes to use
timber as various materials, it will become
possible to store more carbon while enrichingpeople’s living spaces.

Strategy for Value Creation

Grow

CO2

Public spaces anliving spaces

Building materials business

House

Logs

Plant

Wood offcuts

Maximize the CO2 absorptivefunction by moderately felling trees
CO2

O2

CO2

Base materials

CO2

O2

O2

CO2

O2

Timber fromforest thinning

O2

CO2

Wood chips(Virgin)Young forest

Approx.

Wood chips(Recycled)

Tree age*From the frequently asked questions on the Forestry Agency’s website

Growing forest has the function to absorb
more CO2 than matured forest.
By adequately felling trees according to theforest growth cycle and newly planting trees,
it will become possible to maximize the CO2
absorptive function of a forest.

Demolition
Data

Base materials

Emissions by breathing
Fixed carbon content

Tatami mats
Construction demolition
timberApprox.

121,000

t-CO2/year

DW fiberBase materials
for house flooring

Doors, cabinets, stairs, and construction materials

Woody fibers

23

Waste
incineration

Insulation board
Amount of carbon storage*

Agricultureandhorticulture

CO2

Flooring

681,000

Amount of absorption
by photosynthesis

Greening andimprovementof soilCO2

t-CO2/year

Aged forest

Amount ofabsorption/
emissions

165,000

t-CO2/year

Amount of carbon storage*

Promotion ofgreening and growth

Amount of carbon storage*
Approx.

MDF

O2Emitted CO2
is absorbed
by forests

Foundation Supporting Value Creation

Building

LVL

VeneerNursery tree

Tree planting

Daiken Group's Value Creation

Social issues and needs
While the countermeasures for climate change have become a pressing global issue, the importanceof protecting and growing forests that have the functions to absorb CO2 and store it as carbon to reducegreenhouse gas emissions and using wood resources as materials, in addition to energy saving and shifting to
renewable energy, has been increasing.

Daiken Corporation was founded with an eye toward the effective use of timber as precious resources and contribution tosociety. Since the foundation of the company, we have refined technologies to overcome the weaknesses of timber and use
timber with zero waste and developed industrial and building materials offering a wide variety of functions. Trees function toabsorb CO2 during the growth process, to fix it as carbon, and to keep storing it by continuing to use them as materials. Sincetimber is a renewable resource, it can contribute to the realization of a sustainable society and carbon neutrality by creating thecycle to appropriately manage and use forests. By pursuing the sustainable use of wood resources from the three perspectivesof (1) use of appropriately managed timber, (2) use of timber to protect forests, and (3) use of timber with zero waste, we
continue to create social and economic value.

GLOW EARTH*Fiscal 2022
Calculated in accordance with the method of calculation in the“Guideline for Labeling of the Amount of Carbon Storage
Concerning Timber Used in Buildings” by the Forestry Agency

The cycle tocontinue to use as
materials for a longtime without burning
them

24

Creating Shared Value (CSV) by Daiken Business02 Promotion of the use of domestic timber

Initiatives for materiality “Realization of a resource-recycling and recycle-oriented society”

New use application development of wood materials

Promote the use of domestic timber with special MDF that offers excellent water resistanceJapan is one of the world’s most forested countries with about two-thirds of the land covered in forest.
Therefore, domestic timber should be more actively used in order to foster healthy forests that fulfill various
needs, such as absorbing CO2 and prevention of landslides. The Japanese government is aiming to increase
wood self-sufficiency to 50% by 2025.

Daiken's strengths and value creation 1

Utilization of domestic timber for
flooring substrates

Cross-section image of flooring substrates
made from domestic timber

51

Fiscal 2022（%）

Approx.

60

30

Case of greening a slope surface by DW fiber

Wood culture medium
GLOW EARTH

Use case in a vegetable garden%

03 Effective utilization of unused resources

Initiatives for materiality “Realization of a resource-recycling and recycle-oriented society”

41
30

After about six months
Soil improvement additive
DW fiber

47

40

GLOW EARTH

33

23

20
10
0

Expansion of the utilization of unused resources using non-combustible materials that offer excellent durability

11
4
2015

Daiken’s special MDF
2016

2017

2018

2019

2020

2021

2022

Plywood made of domestic
timber(Fiscal year)

Social issues and needs
While everyday lives becoming more convenient and affluent, limited resources and energy on earth have beenheavily consumed and there have been growing concerns about the depletion of natural resources. To respond tothese issues, pursuit of sustainable production and consumption, such as effective utilization of renewable
resources and unused resources and the reduction of waste, has become crucial.

Foundation Supporting Value Creation

50

DW fiberStrategy for Value Creation

The Daiken Group took advantage of the expertise cultivated as the leading flooring manufacturer and Daiken’s unique MDF
technology that offers excellent water resistance and surface smoothness, proceeded with the development of flooring
substrates combined with domestic timber, and has made many improvements. Because of the shift, we newly promoted forour primary products in the fiscal 2022, utilization of domestic timber for flooring substrates, which was approx. 4% in the fiscal
2015, increased to approx. 51%. The group will continuously proceed with product development that will draw out the appealof domestic timber and further promote the use of domestic timber.

While exploring new possibilities of domestic timber, we developed the soil improvement additive DW fiber made of fibrillated
timber offcuts and to which fulvic acid with plant growth-promoting effects is added and the wood culture medium GLOW
EARTH that can create an optimal cultural environment by making factor substances that inhibit the growth of plants harmless
under the conceived idea of using such domestic timber as wood fibers. These products realize the resource circulation thatwood harvested in a forest becomes the culture medium, helps the growth of the next plants, and returns to the soil again anddeployment to the fields of civil engineering and landscaping as well as the fields of agricultural and horticultural materials leads
to new use application development of domestic timber.

Daiken Group's Value Creation

Daiken's strengths and value creation 3

Social issues and needs

Expanding the scenes to utilize domestic timbers with the wood hardening technology
Daiken's strengths and value creation

With Daiken’s unique WPC* technology to harden woodtissues by injecting plastics into and filling the tissues, it has
become possible to offer flooring with excellent surface
strength that uses domestic natural wood for decorative
surface materials. Because many domestic tree species aresoft materials, low durability in using them as flooring was
an issue, but by taking advantage of this technology, we will
expand the use of domestic timber while meeting the needsof using local materials.

Daiken developed DAILITE, the world’s first new industrial material using an unused resource, shirasu (volcanic ash) as the
major raw material, which has the performance that could not be realized with conventional inorganic materials, such as
lightweight, high strength, and fireproof, and started selling it in 1997. In the beginning, DAILITE was mainly used as a bearing
surface material to enhance strength of houses but we now propose to use it as the non-combustible and well-designed wallmaterials and louver materials. By finding value in an unused resource and expanding the use applications, we contribute to
the realization of a sustainable society.

Results of the commercializationof local materials with the WPCtechnology

23

Data

Daiken's strengths and value creation 2

prefectures
WPC flooring

Mechanism of the WPC technology*WPC: The abbreviation for Wood Plastics Combination

Inject plastic resin into surface woodfor flooring and harden it

25

DAIKEN GROUP REPORT 2022

By filling plastic resin, it demonstrates
strength against dents and scratches

Bearing cloth base materia DAILITE MU

A non-combustible wall material with a deep
curved design made of DAILITE base material
GRAVIO EDGE

Shirasu, an unused resource available in the natural world

DAIKEN GROUP REPORT 2022

26

Expansion of the antiviral products

Creating Shared Value (CSV) by Daiken BusinessSocial issues and needs
With the pandemic outbreak of infectious disease, awareness of health and clean environments has been rapidly
increasing and the needs for sanitary measures for and safety of living spaces and public spaces where people
gather have been expanding.

04 Creating a safe, secure, healthy, and comfortable space
Initiatives for the fulfillment of materiality, “User needs in the new normal era”

Daiken's strengths and value creation 4
Creating a safe space to live together with the elderly

Daiken's strengths and value creation 1*BIOTASK: Our unique name for the antiviral function (our registered trademark)Improvement of the sound environment in living spaces

Cases of adopting the building materials
from the OMOIYARI SERIES for the living
spaces where elderly people live

A wide sliding door that can be easily
accessed by a wheelchair

Social issues and needs
With the changes of the times, issues concerning sound in daily lives have become diversified. Particularly in the
COVID-19 crisis, the needs for the prevention of sound leakage and reverberation have been rapidly increasing
because of the increase in working at home and online meetings.

Daiken's strengths and value creation 5

Creating spaces where children can spend the time safely

Daiken's strengths and value creation 2
We thoroughly examined the performance required for the area
Won the KIDS DESIGN AWARD
around a door in a childcare facility where the risk of injury is*Designs to support comfortable raising of children
particularly high and developed the door dedicated tokindergartens and childcare facilities, while taking advantage of theexpertise in door manufacturing cultivated from past houses andelderly facilities. We will support a wide variety of problem solutions
required for childcare facilities, such as improvement of safety andcomfort and further reduction in the nursery teachers’ burden by OMOIYARI KIDS DOOR
Ceiling sound absorbing pane KIN TONE
A door that is considerate of children’s
using Daiken’s unique technologies and diverse products.

In pursuing comfort of the living spaces, Daiken has been
engaged in acoustic products since the 1980s and faced various
sound issues. Since then, with the accumulation of technologies
and know-how for 40 years, we not only develop products having
soundproof and sound absorbing functions but also propose
spaces to realize the optimal sound environment. In response to
the fact that new issues concerning sound have recently become
apparent in offices, stores, and medical facilities, we expand the
product lineup that corresponds to the needs of each facility. A soundproof room corresponding toplaying a musical instrument
Through the resolution of sound issues that significantly influence
comfort, we will realize more comfortable living spaces.

OTOTEN, a ceiling material for a soundproof room

05 Development of labor saving type products and techniques
Initiatives for the fulfillment of materiality, “User needs in the new normal era”

Foundation Supporting Value Creation

Social issues and needs
With the increase in women’s participation in society and in childcare facilities that increasingly grow inimportance, it is imperative to create safer facilities and reduce nursery teachers’ burden in addition to the
problem of children on the waiting list due to the lack of facilities.

Strategy for Value Creation

Based on our ideas and technologies for living spaces proventhrough our work, Daiken is committed to manufacturing fromthe perspective of all users, including elderly people, their families,
and caregivers. In recent years, we have improved themechanism that can finely respond to the needs that vary
according to facilities, such as elderly facilities and houses thatare considerate of home care, and have been deploying
comprehensive product lines that are safe and have functionality.

Microorganism measurement room in the R&D
CenterDaiken Group's Value Creation

Social issues and needs
Japanese society is more rapidly aging than other developed countries and becoming a super-aging society with
one in four people aged 65 or over. Amid concerns about social problems with elderly people providing care for
elderly people, living spaces where people can live with peace of mind even when they get older are required.

We focused on the antiviral function in the wake of the outbreak of
the novel influenza in 2009 and started working on its
development in 2011. In the following year, we put the function topractical use as the antiviral function BIOTASK* ahead of theindustry. We respond to the needs in the COVID-19 crisis, expand
the product variations having the antiviral function, and proceedwith the initiatives aimed at reviewing the antivirus mechanism and
A product having the antiviral function
contributing to the reduction of the threat of virus.

safetyContributing to the anti-seismic ceiling by developing the labor-saving construction techniqueSocial issues and needs
Japan has been devastated by earthquakes many times, including the Great East Japan Earthquake. Largeearthquakes, such as the Nankai trough earthquake, are predicted with high probability to occur in the future, and theJapanese government has set a target for seismic resistance ratios and promotes the seismic resistance and thestrengthening of disaster prevention for houses and buildings.

Social issues and needs
A shortage of workers has become an aggravated problem in the construction industry. On the other hand, while the
Building Standards Act revised after the Great East Japan Earthquake requires higher aseismic performance of the ceilingsof large public buildings, there was an issue that it requires much time and labor in making existing ceiling anti-seismic.

Daiken's strengths and value creation 3

Daiken's strengths and value creation

Daiken has contributed to improving the aseismic performance ofJapanese wooden houses through the development of DAILITE,
an inorganic bearing surface using mineral fibers and an unused
resource, shirasu (volcanic ash) as the major raw materials. By
deploying not only bearing surface materials but also a number of
product lineups that offer excellent non-combustibility andfireproof property, we have been promoting the strengthening ofdisaster prevention. With our unique base materials, we will
improve safety of various living spaces, such as wooden houses
and public and commercial buildings.
27

DAIKEN GROUP REPORT 2022

Number of households installing DAILITE(cumulative) *Estimated by our company
Approx.

1,000,000(As of the end of March 2022)

960,000
Approx.

(As of the end of March 2021)

DAILITE MS

To particularly respond to the needs of making the ceilings of large
public facilities anti-seismic after the Great East Japan Earthquake,
Daiken developed a unique ceiling construction technique that makes it
possible to make the ceiling anti-seismic with the saving construction
time and work. With this construction technique, we reduced theconstruction time and labor by approx. 25% compared to making theconventional ceiling anti-seismic. We also developed a ceiling system
exclusively for hallways, which will become the evacuation route at thetime of disaster. We will aim to further realize the saving construction
time and work for not only ceilings but also building materials forrenovation from the perspective of a new construction technique.

Data

Seismic resistance / Strengthening of disaster prevention

Rate of reduction of construction
time and labor compared tomaking the conventional ceiling
anti-seismic:

25*Estimated by our company

Approx.

%Our own anti-seismic ceiling construction
technique

DAIKEN GROUP REPORT 2022

28

2025 Long-Term Vision

GP25

The New Medium-Term Management Plan GP25 3rd Stage (Fiscal 2023-2026)

Progress of the Medium-Term Management Plan
Toward Realization of the Long-Term Vision

Medium-Term Management Plan GP25 2nd Stage (Fiscal 2020-2022)
Accelerate growth to become an all-embracing company for building materials

As the roadmap toward the realization of the long-term vision GP25 that drew how we should be in 2025, the Daiken Group has
set the medium-term management plan in three steps. In the medium-term management plan GP25 2nd Stage that started fromfiscal 2020, we set management goals for both the financial and nonfinancial aspects and developed measures with the policies of I
“Accelerating growth strategies” and II “Enhancement of the management foundation” as key axes.

Basic policy
Based on firm management foundation, pursue the resolution of social issues through our business, thereby
accelerating our growth strategies toward becoming an all-embracing company for building materials.

Medium-Term Management Plan GP25 1st Stage (Fiscal 2017-2019)

I. Accelerating growth strategies

II. Enhancement of the Management Foundation

Domestic: Review of the Business (Market) Portfolio
Global: Business expansion through proactive investments
and entry into new markets

Basic policy

1 Optimize our financial foundation

Daiken Group's Value Creation

The first step toward an all-embracing company for building materials

2 Restructure firm and flexible business infrastructure
3 Practice of ESG Management

Results achieved against management goals(¥100 million)● Endeavor to further strengthen current businesses and develop the foundations for new businesses as the key to growth

Results● Proactively develop environmental-related technologies for ecological materials, energy savings, and domestic wood

utilization● Maximize the synergy of manufacturer and engineering to enhance profitability

I. Accelerating growthstrategies● Create a work environment where employees can work with enthusiasm and foster the human resources who will play

important roles in the future

Results achieved against management goals

II. Enhancement of
the Management
Foundation(¥100 million)

Net sales

Goals
Fiscal 2019

1,688

1,705

1,829

1,800

55

85

75

57

70

Ordinary profit

52

90

87

68

70

Profit attributable to owners of parent

39

51

58

44

43

ROE

9.8%

11.7%

11.7%

7.8%

8%

Dividend payout ratio

30.4%

30.1%

30.3%

42.4%

30% or more

4.4%

7.8％

5.3%

54

56

78

70

ROE

9.5%

9.1%

10.9%

10%

ROA

5.5%

5.8%

10.5%

7%

Shareholder equity ratio

32.7%

39.4%

41.7%

40%
30% or more

33.4%

32.4%

33.1%

Total domestic CO2 emissions*1

(28%)

(35%)

(36%)

(26%)

Total diversity index*2

+19pt

+19pt

+30pt

+20pt

Shareholder return Dividend payout ratio
E
Nonfinancial S
Indicators
G

1

1

0

0

+4pt

ー

+5pt

+10pt

Serious quality accidents and violations
Degree of penetration of the group
corporate philosophy*3*1: Compared to fiscal 2014 *2: Our own indices in which the eight diversity items, such as the female manager ratio, were indexed as compared to fiscal 2019 *3: Our own indices in which employees’
understanding, sharing, and practice of the group corporate philosophy were indexed as compared to fiscal 2018

Achievements and issues
 oward the expansion in the global markets positioned as the growth driver, wood industrial materials business by the■T

two North American companies, which became group companies through M&As in fiscal 2020 significantly led the overall
performance and we achieved all of the management goals excluding net sales, such as the profit goal and financial indices.
 hile expansion in the global markets progressed, construction demand, such as accommodation facilities and commercial■W
facilities, rapidly decreased because of the impact of the COVID-19 crisis in Japan, and we could not achieve the expansion
goal in the public and commercial buildings.
 oward the second half of fiscal 2022, because of the combination of a higher-than-expected increase in orders in Japan■T
and delayed arrival of raw materials caused by the disruption of marine transportation, a delivery delay occurred in part ofthe products in building materials business. We were in the situation where we had no choice but to impose a limitation onorders received and issues remained in the BCP of the entire supply chain.
 s for the nonfinancial goals, in addition to the achievement of the total domestic CO2 reduction goal by utilizing renewable■A
energy linked to business activities, we could significantly surpass and achieve the initial goal concerning the total diversity
index, which is our own index, because of the promotion of taking paternity leave.

Achievements and issues
 s for the management goals, we achieved the goals in terms of net sales and net profit.
■A s for operating profit, we increased profitability over the past three years and achieved the goal for two consecutive years;■A

however, issues had come to the surface in raw material procurement and the ordering and order receiving system, and we
could not achieve the goal in the final fiscal year and issues remained in the business infrastructure.
 e actively made investments, such as M&A to enhance industrial materials business, expansion of the product lineup by■Wlaunching products on a large scale, establishment of the R&D center, and the addition of the biomass boiler, and steadily
executed measures to lead to the next stage of growth.
 egarding shareholder return, we followed the policy of the dividend payout ratio at 30% or more and improved shareholder return.
■R

3 investments toward the expansion in the priority markets

120

4.1%

Trends in Performance toward the Realization of the Long-Term Vision GP25
Net sales(¥100 million)
2,500

Of which net sales in the three priority markets (Share)

Operating profit (Operating profit ratio)

Distribution of the wood material business in North
America (Purchased CIPA and PWT)

2,000

Door production facility expansion and reinforcement for special order items
Launch of a new DAILITE wallmaterial product

Expansion and reinforcement of the production
capacity

Tatami facing production facility expansion and reinforcement

1,500

1,681

1,688

555

565

1,705

688

611

（34%）

（33%）

1,992

945

1,012

1,829
（47%）

（38%）

（36%）

200

（51%）

1,000

2018

GP25 1st Stage

29（7.8%）

2019

2020

2021

GP25 2nd Stage

2022 (Fiscal year)

85

55

Enhancement of renovation work in the Tokyo metropolitan
area (Purchased ReformQ Co., Ltd.)
2017

（54%）

（5.1%）

75（4.4%）（3.3%）
0

150

100

173

500

Distribution of the apartment renovation business (Purchased PAC SYSTEM Co., Ltd.)

1,208

1,271

（57%）

Distribution of the solid wood flooring business(Purchased T.O FLOORING CO., LTD.)

Home renovation
market

2,250

2,233
2,024

(¥100 million)
250

Data

Enhancement of the MDF supply system (Purchased DSL in New Zealand)

Global Markets

Public andCommercial
Buildings

2,250

Foundation Supporting Value Creation

1,681

Operating profit

173

Operating profit ratio

Efficiency
Financial
Indicators Soundness

Fiscal 2019

2,233

87

Strategy for Value Creation

be the engine of growth● Strengthen governance to enhance corporate value over the medium and long term

Fiscal 2017

1,992

83

Operating profit
Profit attributable to owners of parent● Define diversity is as one of the management strategies, and the ability delivered by a variety of human resources is to

Results
Fiscal 2018

2,024

Net sales● Actively introduce management resources to the priority markets of public and commercial buildings and global markets

BenchmarkFiscal 2016

Goals

Fiscal 2020 Fiscal 2021 Fiscal 2022 Fiscal 2022

2016

Benchmark

2017

2018

GP25 1st Stage

57

83（4.1%）

87120（5.3%）（4.4%）

50（3.1%）
2019

2020

2021

2022

0
2022 Goals (Fiscal year)

GP25 2nd Stage30

Medium-Term Management Plan GP25 2nd Stage

Results of the Strategies by Business Segment and Market
Strategies by Business Segment and Sales Result

Strategies by Market and Sales Results

Sales by Business(¥100 million)
2,500

Other

Engineering business

Building materials business

Sales by Market(¥100 million)
2,500

Industrial materials business

2,250

2,233

1,500

1,681

1,688

1,705

115
139（8％）

115
136（8％）

119

1,829

92

180

164（10％）

1,000

862

（51％）

868

（52％）

（51％）

（13％）

202

282

886

（41％）

1,500

950

（42％）

（45％）

2,024

2,000

（10％）

919

（47％）

894

（9％）

205

（10％）

949

872

92

217

（11％）

135

1,992

118

1,000

1,688

1,705

102（6％）
165

109（7％）
168

122（7％）
198
（12％）

（12％）

357

343

334

355

（10％）

287

（17％）

0

553

618

（38％）

2020
Results

（34％）

（33％）

（32％）

（34％）

2016
Results

2017
Results

2018
Results

2019
Results

Benchmark

806

（41％）

2021
Results

GP25 1st Stage

288

289

（17％）

（17％）

（19％）

284

（16％）

284

317

（16％）

900

500

（40％）

2022
Results

2022
Goals

(Fiscal year)

0

GP25 2nd Stage

756

312

（16％）

 xpansion of business by purchasing two North American●E

companies that are engaged in LVL and veneer● I mprovement of profitability through enhanced cooperation withthe two North American companies and by introducing productswith high added value
 xpansion of the non-combustible product lineup of DAILITE●E
base materials▲ Continuation and early completion of business structural reforms
in the four group MDF plants

750

767

Expand the construction domains, areas, and ordersources by M&A and cooperating with other companies■ Expand the construction company’s business targeting the

355

199

（16％）

（9％）

1,730

325 Domestic 376（15％） market

1,512

775

786

（42％）

（39％）

（37％）

（34％）

2016
Results

2017
Results

2018
Results

2019
Results

2020
Results

2021
Results

2022
Results

GP25 1st Stage

（77％）

（17％）

 ales expansion of flooring centering on high design products●S● I ntroduction of new products that correspond to changing

lifestyles during the COVID-19 crisis▲ Enhancement of the BCP based on the delivery delays in the

final fiscal year
▲ Sluggish orders received in the solid wood flooring business anddelayed onset of synergy by purchasing companies

 xpansion of the sale of and increased profitability of apartment●E

renovation business in the Tokyo metropolitan area
 xpansion of orders by enhancing cooperation with the ITOCHU●E

Corporation Group▲ Expansion of synergy between the sale of the industrial andbuilding materials business products and the construction function▲ Expansion and optimization of the construction domains (M&As

not executed as planned due to the COVID-19 crisis)P.39-40

Accelerate global expansion with a focus on the industrial
materials business through aggressive investments■ I nvest in the North American wood industrial materials business(LVL/veneer) and expand into the North American market
 ontinuously expand wood materials with a focus on MDF■C ut the Chinese and Indonesian building materials businesses■Pon a path toward stable growth and shift to the growth strategy

P.41-42

Industrial materials

that are our unique technology

2022
Goals

(Fiscal year)

Three-Year Summary (● Achievements and ▲ Issues)● Expansion centering on LVL in the American housing market on

the background of a strong demand● Expansion of the MDF sales channels for overseas countries● An increase in door sales in the Indonesian plant due to thegrowth in demand from the UK▲E nhancement of the development of global human resources

corresponding to the expansion of business operations● An increase in the number of adoption of doors for elderly

facilities, medical facilities, and offices● Enhancement of the proposals with functional products, such as non-combustible, antivirus, and improvement of the sound environment▲R esponse to the decrease in demand in commercial and accommodation

facilities associated with the rapid decrease in the number of overseas
visitors to Japan and increased number of people staying at home▲S
 hift of the sales structure from the housing market andacceleration of the introduction of new products● New deployment to the civil engineering, agriculture, andCover the decrease in these for housing with application
development and expand industrial materials business ocus on application development for the new markets and fields■F romote the development of and search the applications of new■Pmaterials and R&D productsHome renovation market

675

（30％）

GP25 2nd Stage

Expand investments, including M&A, and accelerate growth xpand the product lineup (The medical field will be the new focused target)■E■ I mprove infrastructure for the expansion of the markets, such as
logistics, correspondence of drawing, and the sales structure xpand the product and sales networks, including cooperation■Ewith other companies and M&A

wooden boards associated with the COVID-19 crisis and soaring
construction costs

756

730

（44％）

Public and commercial buildings▲ Postponement of the judgment of commercialization of new

and external resources

Engineering business（10％）

P.43-44

Expand in the renovation market from a perspective ofdevelopment of functional products and methods
 xpand the renovated properties and renovation work in the■E
Tokyo metropolitan area ocus on the expansion of the products for renovation, such as■F
construction savings and waste savings

Domestic new home market
Restructure the sales structure in response to changes in
the market and customer needs, and increase our share ontinuously enhance the products and proposals from the perspective■Cof functionality, such as soundproofing and construction work saving
 nhance the collaborative system with key distribution companies■E
as well as a system to make proposal to key customers

horticulture markets utilizing woody fibers● Establishment of the technology for new wooden boards toward

the substitution for lauan woodDatachosen■ Expand the product/sales networks by actively utilizing M&A（14％）

Foundation Supporting Value Creation■ Further expand differentiated products that can keep getting

520

312

（45％）

Global markets

Three-Year Summary (● Achievements and ▲ Issues)

Domestic

By taking advantage of the industrial materials business,
as well as functional and construction saving-type
building materials, increase our share in the housing
market and expand in the public and commercial
building fields

224

（45％）

BenchmarkGlobalBuilding materials business

237

（12％）

Strategies by Market

business (LVL/veneer) and expand into the North American
market ursue optimization of the production system■P ccelerate application development centering on the■Aresolution of social issues●S tart the non-combustible business for wood materials●C onsider commercialization of wood material use for the
agricultural and gardening markets●C onsider commercialization of new wood materials

（32％）

246

Strategies by Business Segment■ I nvest in the North American wood industrial materials

（23％）

462

（12％）

GP25 2nd Stage (FY 2020-2022)

Globally expand the markets and by taking advantage
of sustainability and functionality, expand applications,and maximize the fixed asset efficiency

31

（20％）

262

（13％）
（14％）

721

（23％）

GP25 2nd Stage (FY 2020-2022)

Industrial materials businesspriority markets (public and commercial building,remodeling, and renovation)

（20％）

211

2,250

1,992

365

（18％）

2,233

（68％）

1,001

（45％）

（10％）

（11％）

Home renovation market

Strategy for Value Creation

563

564

765

1,829
192

1,681

（21％）

（49％）

500

Industrial materials

Daiken Group's Value Creation

2,024

2,000

110

Global markets
Public and commercial buildings
Domestic new home market▲R eview of the supply system based on the delivery delays▲A cceleration of the new application development in preparation

for the decrease in demand in the future● Development of labor-saving type products and enhancement ofproposals for specialized remodeling companies● Expansion of the apartment renovation and renovation work in

the Tokyo metropolitan area

▲ I ntroduction of products that utilize the know-how on renovation

work

▲O
 ptimization of the remodeling work system● Expansion of sales to large production builders targeting first-timehome buyers that are increasing their presence in the market● Promotion to increase the use of domestically produced

materials for flooring substrates▲ A decrease in profitability associated with the change in themarket structure▲ Pursuit of the operational productivity improvement by promoting DX

32

Summary of Businesses
Industrial materials businessNet sales

Sales Breakdown by Segment(Fiscal 2022)(¥million)

5%

45%

15.0

12,958100,177

100,000

Industrial materials
business（%）

15,00012,00080,00076,58912.9

80,69212.0

9,000
60,0009.0

61,84355,354

6,000

6.0
4.6

40,000
3.5
3,000

20,000Net sales:

1,955

3.3
1.8

3,732

3.0

2,503

1,132

223,377

0

2018

2019

2020

2021

million yen

2022

0

(Fiscal year)

2018

2019

2020

2021

0.0

2022

(Fiscal year)

Net sales in the industrial materials business in fiscal 2022
decreased because of the sale of a domestic MDF sales subsidiary,
but because of the increase in MDF sales in the global market, theincrease in LVL sales in the U.S. housing market, the increase insales of materials for tatami mats in the domestic new home market
and the renovation market, and the increase in DAILITE sales for
public and commercial buildings, revenues increased.
Regarding operating profit, in addition to the effect of increased
revenues above, as we proceeded with rationalization, cost
reduction, and incorporation of the increases in raw material prices
and marine transportation costs into selling prices, as the market
prices of wood products hovered at the high level on the backgroundof strong housing demand in the U.S., and as we strived to expand
the sales of the products with high added value, such as antiseptic
LVL and high-strength LVL, revenues increased.
As a result of the above, net sales amounted to 100,177 million yen(up 24.1% year-on-year) and operating profit amounted to 12.958
billion yen (up 247.2% year-on-year).

Production Plants

Subsidiaries part of the Group● Okayama Plant● Dai-tac Corporation● Takahagi Plant● Aizu Daiken Corporation● Nichinan Daiken Co., Ltd.
● Eco Techno Co., Ltd.
● DAIKEN NEW ZEALAND LIMITED (New Zealand)● DAIKEN SOUTHLAND LIMITED (New Zealand)● DAIKEN SARAWAK SDN. BHD. (Malaysia)● DAIKEN MIRI SDN. BHD. (Malaysia)● CIPA Lumber Co., Ltd. (Canada)● PACIFIC WOODTECH CORPORATION (USA)

Nikkei Architecture
Rankings of the Building Materials and Equipment Manufacturersthat the Readers Want to Adopt in 2021
Second place in the Inorganic Bearing Surface Category●●●●●●●●●●部門

A questionnaire survey for the readers in regard to their
1位
intention
to adopt building materials and equipment
読者を対象に、建材・設備メーカーの製品採用意向等をアンケート調査
20xx年xx月xx日号
manufacturers’
products
The November 25, 2021 issue

Net sales

Building materials
business●●●●●●●●●●部門

1位(¥million)

41%

Operating profit ratio（%）(¥million)

6.0

6,000

5.3
100,000

94,93886,85389,48588,69791,907

5.2

5,000

3,000

40,000

2,000

4,955

3.6

4,076

4.0

2.9
3.0

3,189

2,680
2.0

(Fiscal 2022)
1,000

20,000Engineeringbusiness

6%

Other

4%

0

Industrial materials
business

2018

2019

2020

2021

75%

2022

0

(Fiscal year)

1.0

2018

2019

2020

2021

0.0

2022

(Fiscal year)

Net sales in the building materials business in fiscal 2022 sufferedfrom the influence of the decrease in sales due to door and flooring
delivery delays and a limitation on orders received during the fourth
quarter consolidated accounting period, but as we increased thesales of flooring, doors, and sound products for the new homemarket, renovation market, and public and commercial buildings
during the third quarter consolidated accounting period, revenues
increased.
Regarding operating profit, although we proceeded withrationalization, cost reduction, and incorporation into the selling
prices for the increases in raw material prices, such as plywood, we
also suffered from the influence of decreased revenues during thefourth quarter consolidated accounting period due to delivery delays
and a limitation on orders received, we could not absorb them, andrevenues decreased.
As a result of the above, net sales amounted to 91,907 million yen(up 3.6% year-on-year) and operating profit amounted to 2.68 billion
yen (down 34.3% year-on-year).

Operating profit/Operating profit ratio

17,361(¥million)

（%）

7.0

1,400
1,200

million yen

21,71320,00020,542 20,264

1,000
1,015

800
3.2
600

Building materials
business

10,000

952

5.0

4.7

4.0

613

528

2.8

400

15%

3.0

2.5
508

2018

2019

2020

2021

2022

(Fiscal year)● Mie Plant● Dai-wood Corporation●●●●●●●●●●部門

1位

読者を対象に、建材・設備メーカーの製品採用意向等をアンケート調査
20xx年xx月xx日号● Setouchi Kakoh Co., Ltd.
● Toyama Juki Co., Ltd.
● T.O FLOORING CO., LTD.
● DAIKEN Industries (Ningbo) Corporation (China)● DAIKEN (Shanghai) Corporation (China)● PT. DAIKEN DHARMA INDONESIA (Indonesia)

Nikkei Architecture
Rankings of the Building Materials and Equipment Manufacturersthat the Readers Want to Adopt in 2021
First place in
the Composite

0Regarding net sales in the engineering business in fiscal 2022,
because of the decrease in interior projects for office buildings,
revenues decreased.
Regarding operating profit, as apartment renovation we engaged
in the Tokyo metropolitan area was favorable, profitability
improved, and revenues increased.
As a result of the above, net sales amounted to 20,264 million
yen (down 1.4% year-on-year) and operating profit amounted to952 million yen (up 87.5% year-on-year).

Second place inthe Home Interior

Flooring Category●●●●●●●●●●部門

Door Category●●●●●●●●●●部門

読者を対象に、建材・設備メーカーの製品採用意向等をアンケート調査
20xx年xx月xx日号

読者を対象に、建材・設備メーカーの製品採用意向等をアンケート調査
20xx年xx月xx日号

1位
A questionnaire
surveyfor the readers in regard
to their intention to
adopt building materials
and equipment
manufacturers’ products
The November 25, 2021
issue

1位
A questionnaire
surveyfor the readers in regard
to their intention to
adopt building materials
and equipment
manufacturers’ products
The November 25, 2021
issue●●●●●●●●●●部門●●●●●●●●●●部門

読者を対象に、建材・設備メーカーの製品採用意向等をアンケート調査
20xx年xx月xx日号

読者を対象に、建材・設備メーカーの製品採用意向等をアンケート調査
20xx年xx月xx日号

1位

Subsidiaries part of the Group● DAIKEN ENGINEERING CORPORATION●●●●●●●●●●部門

1位● Koukou Sangyo Corporation
読者を対象に、建材・設備メーカーの製品採用意向等をアンケート調査
20xx年xx月xx日号● Sankei Corporation●●●●●●●●●●部門

1位

読者を対象に、建材・設備メーカーの製品採用意向等をアンケート調査
20xx年xx月xx日号● Smileup Corporation● ReformQ Co., Ltd.
● PAC SYSTEM Co., Ltd.
● T.O FLOORING CO., LTD. (construction)

2.0

200
0

33

6.0

5.6

18,063
16,458Results in Fiscal 2022

Operating profit ratio(¥million)

30,000Subsidiaries part of the Group● Daifit Co., Ltd.

Data

Operating profit

Operating profit:

Production Plants● Inami Plant

1位

Engineering BusinessNet sales

読者を対象に、建材・設備メーカーの製品採用意向等をアンケート調査
20xx年xx月xx日号

Foundation Supporting Value Creation

4,000

60,000

5.0

4.6
4,598

80,000Operating Profit Breakdownby Segment

Results in Fiscal 2022

Operating profit/Operating profit ratio
Operating profit

120,000

Strategy for Value Creation

Building materials business

Daiken Group's Value Creation

9%

Other

Operating profit ratio(¥million)

120,000

Engineeringbusiness

Results in Fiscal 2022

Operating profit/Operating profit ratio
Operating profit

1.0

2018

2019

2020

2021

2022

0.0

(Fiscal year)

Our apartment renovation project34

The New Medium-Term Management Plan GP25 3rd Stage
Positioning of the New Medium-Term Management Plan

Basic Policy
I. Execution of the Growth Strategy ~Key to the Resolution of Social Issues (CSV)~

Toward the Realization of theLong-Term Vision GP25 in 2025

Contribution to a Recycling-Oriented Society

Fiscal 2023 to fiscal 2026

Satisfaction of User Needs in the New Normal Era

GP25 3rd StageFor user needs that seek for further improved safety, security, health, and comfort in all kinds of spaces, enhance our solution
proposal capabilities that take advantage of having diverse products (industrial materials and building materials), the spatial
evaluation and analytical functions, and the construction function

Establish the image of an all-embracing company
for building materials
Execute the growth strategy based on the pursuit of theresolution of social issues using sustainability as the key axisof management and establish the image of an all-embracing
company for building materials

II. Enhancement of the Management Foundation with Sustainability as the Key Axis
Human Resource Foundation

GP25 2nd Stage

Accelerate growth to become an all-embracing company
for building materials

Fiscal 2017 to fiscal 2019:

GP25 1st Stage

The first step toward an all-embracing company
for building materials

Financial Foundation

Management Goals
I. Execution of the Growth Strategy

To become a company that will keep growing even in the situationof decreased domestic new housing starts(100 million yen/10,000 homes)(¥100 million)

BenchmarkFiscal 2016
Results(¥100 million)

300

3,000

To achieve the Long-Term Vision GP 25
Goals
2,500

250

2,500

2,000

1,681
150

GP25 2nd Stage
Fiscal 2022
Results

1,681

1,829

2,233

2,500

+266

+818

1,579

1,637

1,512

1,835

+322

+255

Global markets

102

192

721

665

(56)

+562

Operating profit

55

57

173

150

(23)

+94

3.3%

3.1%

7.8%

6%

(1.8pt)+2.7pt

39

44

78

100

+21

+60

Operating profit ratio
Profit attributable to owners of parent

II. Enhancement of the Management Foundation

1,500

Financial Indicators
92

100

50

500

55

CapitalROE

10% or more

efficiency

ROIC

8% or moreFinancial

Shareholder equity ratio

40% or moresoundness

Debt equity ratio

Shareholder

Dividend payout ratio

35％

returnDividend on equity ratio

3.5％

Medium-Term Management Plan
1st

0

3rd

26
20

22

21

20

20

20

19

20

18

20

17

20

16

20

20

11
20

06
20

01
20

96
19

91
19

86
19

81

0

19

35

2nd

(Fiscal year)

Nonfinancial Indicators
Fiscal 2026 Goals

1,000

86

GP25 3rd Stage
Increase/Decrease
Fiscal 2026
As compared to 2nd
As compared to
Goals
Stage Result
Benchmark

Data

173

GP25 1st Stage
Fiscal 2019
Results

Domestic market

Net sales

2,233
200

◦ Impartial and highly transparent management that
supports the improvement of corporate value◦ Improvement of the stakeholder engagement byenhancing the dissemination of information andimproving dialogues

Foundation Supporting Value Creation

While a decrease in domestic new housing starts is expected in the future, we will aim at expanding the global market, publicand commercial buildings, and the home renovation market that we position as the priority markets, in addition to the increasein our share in the new home market. By proactively investing our management resources in these priority markets, we willproceed with the reform to become a company that will keep growing even in the situation of decreased domestic new housing
starts.

Net sales (100 million yen) on the right axis
Operating profit (100 million yen) on the left axis
Domestic new housing starts (10,000 houses) on the left axis

Governance◦ Aggressive investments for growth◦ Building of the solid financial foundation that supports
growthGrowth trajectory targeted in the Ling-Term Vision GP25

Business Foundation◦ Simultaneous pursuit of the reduction of environmental
burden and risk management in the supply chain◦ Restructure firm and flexible business infrastructure◦ Optimization of the business portfolio (Selection and concentration)◦ Ensuring quality, which is the source of provided value◦ Offensive/defensive digital strategy◦ Building of an efficient and optimal logistics system

Strategy for Value Creation◦ Creating the workplace environment and culture where
diverse human resources can be active◦ Human resource development that supports the growthand can respond to changes◦ Establishment of the system and mechanism that admireand support challenges◦ Building of the balanced human resource foundation

Fiscal 2020 to fiscal 2022:

Daiken Group's Value Creation

Accelerate the development of industrial materials using wood resources and waste where recycling is managed and thedeployment to the global market through utilization development

Fiscal 2026 Goals
E

Total greenhouse gas emissions in Japan andoverseas*1*2

Total diversity index 3rd StageS

0.5 times or less

Serious quality incident/violation*3

＋30pt
0
60pt

*4

Employee satisfaction
G

(10％)

*3

Serious compliance violations

0*1 Scope1+2 as compared to fiscal 2022
*2 Our unique indices that indexed diversity-related items, such as the female manager ratio, compared with FY 2022. Seven items concerning the calculation method have been reset as the Diversity Composite Index
3rd Stage in the medium-term management plan GP25 3rd Stage in FY 2023
*3 During the Medium-Term Management Plan period*4 Our own indices in which employees' actual feeling for satisfaction / job satisfaction in the workplace were indexed

36

The New Medium-Term Management Plan GP25 3rd Stage

Strategies by Business Segment and Market
Strategies by Business and Sales Goals
2,500(¥100 million)
2,500

Compared with fiscal 2022 results

85

2,233

335

Engineering business

202

2,000

＋13.2 billion yen

2,233（＋65％）

2,000

（9％）

1,040

919

Building materials
business

（42％）

（41％）

＋12 billion yen

665（＋13％）

Industrial materials
business

224

272

1,040

（＋4％）

[+25 billion yen]*

（42％）

（45％）

325

（11％）

Domestic
market1,512

Domestic
market1,835

395[＋32％]（73％）

Home renovation
market

808

756

（32％）

（34％）

*If excluding the decrease in sales by 21.2 billion yen associated with the change in
PWT in the U.S., which is our special subsidiary02022
Results

2026
Goals

GP25 2nd Stage

GP25 3rd Stage0(Fiscal year)

2026
Goals

2022
Results

GP25 2nd Stage

Domestic new homemarketStrategies by Market

acquisition of alternative demand from the perspective of sustainability■ Enhancement of the appeal of and sales expansion of the products for publicand commercial buildings, such as noncombustible products and materials fortatami mats

Building materials business◦Expansion of the functional building materials that meet the user needs inthe new normal era and enhancement of the proposal capabilities◦Improvement of profitability by improving productivity using digitaltechnology and operational efficiency

through the performance measurement and evaluation of spaces, such as thesound environment and thermal environment​

Engineering business◦Pursuit of the synergy between the products in the industrial materials andbuilding materials businesses and the construction function◦Expansion of the construction areas that meet the spatial needs in the new normal era
Value Creation■ To provide new spatial value by improving the sound and thermal environmentsthat take advantage of the group’s product appeal, we will proceed with the
expansion of the construction areas and the improvement of our technologicalcapabilities and enhance our integrated order-taking system for industrial
materials and construction■ Support for the development of construction techniques and product development
incorporating the short construction period and saving construction time and workby using our construction network（＋21％）+32.2 billion
yen（＋21％）+5.1 billion yen（+7％）

Accelerate the further exploration of the global markets through penetration of industrial material
and building material products that use sustainable resources table supply of sustainable industrial materials for the North American market and investment of management resources to deploy business in new markets■S ully use and expand our production and sales channel in the Asia/Oceania region and enhance the industrial material and building material supply■F

system for the areas of demand, such as North America, China, and Europe

 ccelerate the shift to managed and sustainable wood resources (certified materials and plantation timber) in procuring raw wood materials and focus■A

on the development and penetration of the industrial materials that use such resourcesmarkets and targets​ ptimization of the business portfolio●Othrough ROIC by business ursuit of sustainability of raw materials●P eduction of greenhouse gas emissions in●R
the supply chain
 eduction and recycling of waste in●Rproduction and sales, and after sales(Circular economy)

acceleration by expanding and improving functional building materials that meet user
Public and commercial buildings Growthneeds in the new normal era and by enhancing proposal capabilities
 xpansion and improvement of the functional building materials that create safe, secure, healthy, and comfortable spaces in order to respond to the user■Eneeds associated with the penetration of new lifestyles, purchasing styles, and work styles

 ocus on solution proposals that use functional building materials through the performance measurement and evaluation of spaces■F arketing activities by co-creation activities and agile development■M■ I mprovement of the integrated order-taking system for industrial materials and construction toward the provision of new spatial value by improving thesound environment and thermal environment

 fficiency of sales activities and enhancement of proposal capabilities that use the digital methods■E estructuring and optimization of the●Rproduction bases centered on logistics​

Industrial materials

 fficiency of business activities that use●Edigital technology● Improvement of order-taking andconstruction contract volume per personthat uses human resource development
and digital technology​

Exploration of new markets and new areas by developing new industrial materials with theadvantages of sustainability and environmental burden reduction

 hallenge a new market and a new area, such as agriculture, by making knowledge on wood materials into a strength■C ccelerate co-creation activities with diverse companies not only in R&D but also in all kinds of business activities■A

Domestic

secure, healthy, and comfortable spaces for everyone”+6.9 billion yen

Domestic
market uman resource development to accelerate the expansion into the global markets and enhancement of the marketing capabilities to determine new■H■ Promotion of the development of functional building materials that create “Safe,■
Enhancement of the solution proposals that use functional building materials（＋36％）

Data

Value Creation

Global markets
GlobalValue Creation■ Utilization development that will expand the possibility of industrial materials and ptimization of the production system by●Oenhancing cooperation in the group​+7.2 billion yen

Foundation Supporting Value Creation

Strategies by Business Segment
Transformation of Business Activities（＋61％）

GP25 3rd Stage

GP25 3rd Stage (FY 2023–2026)◦Contribute to the resolution of social issues in the global markets throughthe development of industrial materials that use sustainable resources andthe sales expansion◦Execution of the business structural reform toward the profitability improvement+13.8 billion yen(Fiscal year)

GP25 3rd Stage (FY 2023–2026)
Industrial materials business37

Industrial materials

（16％）

（68％）
500

Public andCommercial Buildings

Strategy for Value Creation

1,001

500

（9％）
（15％）

＋3.8 billion yen*If excluding the decrease in sales by 21.2 billion yen associated with the change in
PWT in the U.S., which is our special subsidiary

（15％）
（10％）

1,000

（-8％）

[+15.6 billion yen]*[＋31％]

199

1,000-5.6 billion yen

721

363

1,500

Global markets

（27％）
（32％）

1,500

Compared with fiscal 2022 results

2,500(¥100 million)
2,500

Daiken Group's Value Creation

（13％）

110

Strategies by Market and Sales Goals

 n increase in the share of housing use and expansion of industrial use by using industrial materials using sustainable resources as a weapon■A xpansion of the use that will solve customers’ issues by taking advantage of diverse industrial materials using sustainable resources as raw materials,■E

products, and functions​Home renovation market

Expand and improve functional building materials that meet the user needs in the new normal
era and establish and penetrate the construction technique models that meet demand for thecondominium renovation construction, such as the short construction period, saving construction
time and work, and waste reduction■ Improvement of the functional building materials that create safe, secure, healthy, and comfortable spaces to meet the needs of clients associated withthe penetration of new lifestyles■ Expand the products specifically for the market by developing construction techniques and products for condominium renovations and enhancing proposals■ Enhancement of the supply system, including logistics, in the renovation market and enhancement of cooperation with TDY and prioritized distribution■ Supply of the purchased and reselling properties in response to the expansion of demand for housing in the Tokyo metropolitan area and expansion andimprovement of the renovation construction system​

Domestic new home market

Development of differentiated products that promptly meet user needs and an increase in the shareby enhancing proposals in order to minimize the impact of shrinking of the market Improvement of
the efficient proposals and order-taking system that effectively uses digital technology

 evelopment of key items that meet the new clients’ needs in the new normal era and enhancement of proposals■D fficiency of the sales and order-taking system by introducing digital technology and outsourcing■E ssured order taking and supply by restructuring the sales structure according to demand​■A

38

Initiatives for Priority Markets

Global Markets
In addition to the sales of MDF produced in Malaysia and New Zealand, the industrial materials business in the global markets
expands the sales by the North American wood materials with a focus on the veneers and LVL produced in Canada and the USA.
The building materials business has been deploying interior doors in China, which has a huge market size, and Indonesia, where
housing demand expansion is expected.

Global Markets: Trends in Net Sales

1000(¥100 million)
800

Industrial materials business

Building materials business

Development by MDF+496

Malaysia
Tree species: Hardwood

Tree species: Softwood

Brown-colored MDF that effectively uses wood offcuts from theplywood/lumber plants in Malaysia. It is used for the flooring substrates
that require excellent water resistance and dimensional stability.

White-colored MDF that uses plantation Pinus radiata timber in New
Zealand. It is used for the base materials for furniture and building
materials that require lightness and smooth surface.

Characteristics

Characteristics

DSK is a mother plant for MDF, which produces highvalue-added special MDF, etc. They are in the two-plantsystem with DMR after M&A in 2005. They developed MDF
that uses 100% plantation acacia timber and proceed withthe distribution of new applications.

MDF that is globally recognized with the CUSTOMWOOD
brand. In addition to the product development that corresponds
to the customer needs, such as ultra-lightweight MDF, DNZ
and DSL take advantage of their respective characteristics ofthe production lines and optimize their production items.

200

Second afforestation area

+3

+71

0

+15

192

102
0
2016
Results

BenchmarkGP25 1st Stage

2023
Forecast

GP25 2nd Stage2026 (Fiscal year)
Goals

GP25 3rd Stage

Veneer

CIPA Lumber Co., Ltd. (CIPA)

Third afforestation area

Foundation: April 1968 → Purchased the company in June 2019
Location: Canada (Delta, British Columbia)
Business Lineup: Veneer manufacturing and sales

8,000
6,000
4,000

LVL

2,000

2003

2011

2006

2016

Foundation: January 1998 → Purchased the company in June 2019
Location: The U.S.A. (Burlington, Washington)
Business Lineup: Structural LVL and I-Joist manufacturing and sales

2021 2022(Fiscal year)

On June 22, 2022, PWT announced the agreement on acquisition of the housing structural material
manufacturing business (Engineered Wood Products Business) from Louisiana Pacific and the capitalincrease plan, which was accepted by Itochu Corporation, with the acquisition. The company wastransferred from a consolidated subsidiary to an equity method affiliate on August 2022.

MDF
DAIKEN NEW ZEALAND LIMITED (DNZ)［ 海外地域別売上高構成比 ］
中国

Sales office7%

9

Industrial materials business
Building materials business

東南
アジア
%

721
億円

北米

61%

20

Doors, flooring, andconstruction materials

DAIKEN Industries (Ningbo) Corporation(China/from 2002)

Business Flow

DAIKEN MIRI SDN. BHD. (DMR)
Foundation: September 1996 →Purchased the company in February 2005
Production Capacity: 120,000 m3/year
Acquired Certificate: JIS A 5905, PEFCCoC CARB, and EPA TSCA Title VI

Data

Expansion with wood materials in North America
We will proceed with the expansion into the world’s largest wooden housing market with the North American wood industrial materials
business by CIPA, a Canadian veneer plant that we jointly invested in with ITOCHU Corporation who is in a relationship of capital allianceand PWT, an American LVL plant, as a key axis.

MDF

Indonesia office

その他

オセアニア
%

Production baseFoundation: 1976 → Purchased the company inFebruary 2009
Production Capacity: 210,000 m3/year
Acquired Certificate: JIS A 5905, FSC CoCCARB, and EPA TSCA Title VI

2021年度4%

Foundation Supporting Value Creation

0

PACIFIC WOODTECH CORPORATION (PWT)

DAIKEN (Shanghai) Corporation(China)Singapore Branch

2022
Results

2019
Results

Strategy for Value Creation

First afforestation area

665
605

600

Tree planting activity in Malaysia（ha） [Cumulative afforestation area in Sarawak, Malaysia]
10,000721

400

New Zealand

Toward the realization of stable procurement, we started acacia tree planting inSarawak, Malaysia, from 2002, and thecumulative afforestation area is 9,500
ha or more. With a view to increasing
the ratio of plantation timber, which is
the wood material used for MDF, fromthe current ratio of approximately 50%
to 100% in fiscal 2026, we will conductsustainable raw material procurement.

+26

0

+5

Other

Daiken Group's Value Creation

With the system of four plants in the two countries of Malaysia and New Zealand, we are engaged in the production of MDF for which wood
offcuts from timber are effectively used. By taking advantage of tree species and the characteristics of the production lines and cooperation,
we will promote the distribution of products having new value and the further expansion of the sales channels in global markets.

Engineering business

Veneermanufacturing(CIPA)

LVL
Manufacturing(PWT)

CuttingLaminate and glue
veneers together

I-Joist*Manufacturing(PWT)

Major applications in the North American housing market

Door

PT. DAIKEN DHARMA INDONESIA(Indonesia/from 2015)

MDF

MDF

DAIKEN SARAWAK SDN. BHD. (DSK)
Founding: May 1994
Production Capacity: 120,000 m3/year
Acquired Certificate: JIS A 5905,
PEFC CoC CARB, and EPA TSCA
Title VI

39

DAIKEN SOUTHLAND LIMITED (DSL)
Foundation: November 1993 →Purchased the company in April 2018
Production Capacity: 195,000 m3/year
Acquired Certificate: JIS A 5905, FSC
CoC CARB, and EPA TSCA Title VI

Veneer

LVL

Structural LVL for homes

I-joist installed as the joist in a home

*I-Joist: A structural material, which is a composite material of Oriented Strand Board (OSB: a structural wooden board made by laying thin rectangular wood pieces cut from raw wood upon one
another in such a way that the surface layer and core layer cross at right angles in the fiber direction and are then compressed at high temperature), LVL, and timber.

40

Public and Commercial Buildings: Trends in Net Sales

Initiatives for Priority Markets

Public and Commercial Buildings(¥100 million)
400

Industrial materials businessEngineering business350

We take advantage of our unique technologies and expertise in safety, durability, non-combustibility, as well as the provision of acomfortable sound environment that we have cultivated as a housing material manufacturer in order to proceed with proposals forspaces by product series that offer the functions required by each public facility and commercial building.

300

Proposals for spaces with the product series by facility and function

150

Building materials business
Other

363
268

250
200

165

+3

+18

+22

+1

+27

211

(3)

224

+1
(12)

100

Sound
absorbingCeiling materials

2016
Results

BenchmarkNon-comAseismic
Sound
Moisture
bustibility performance Lightweight absorbing conditioningSound
insulation

Arrange sound vibrations andprovide a comfortable soundenvironment according to the
Examination room
facility characteristics

0

Ceiling with aseismic performance and moisture
conditioning that realizes a safe, secure, andcomfortable space

An anti-seismic ceilingconstruction technique

Wall materials
Non-combustibility

Workability

DesignNon-combustible and well-designed
walls that decorate spaces

2022
Results

2019
Results

GP25 1st Stage

GP25 2nd Stage

2023
Forecast

2026 (Fiscal year)
Goals

GP25 3rd Stage

Enhancement of the Distribution of Non-combustible Products
We realize spaces having aunified design with
non-combustible products,
such as walls, ceilings, eaves,and louver materials.

Strategy for Value Creation

Sound absorbing and moisture
conditioning ceiling material

A ceiling system exclusively for hallways
Kindergartens and childcare facilities Karaoke room

Improvement of the sound environment
in offices

The 40th anniversary of acoustic
product businessOur acoustic product business marked its 40th anniversary
in April 2022. At first, we started with proposals of soundproof products for houses and by taking advantage of thetechnologies and know-how on sound cultivated in thepast, we now respond to demand for potential soundissues in public and commercial buildings.
On the occasion of the 40th anniversary, we expanded andimproved content on sound on our website and are actively
deploying promotions toward the further expansion in
public and commercial buildings.

Tatamimats

Non-combustible wall material

Easy maintenance

Medicalfacilities

Durability

Publicfacilities

Elderly
facilities

Color variations

Accommodation
facilities

OfficesCommercial
facilities

Schools andeducational
facilities

Tatami mats madefrom washi paper
have a great range
of design and are
best suited formodern spaces

Designed wall materials

Kindergartensand childcare
facilities

ScratchresistanceCommercial facilities

Promoting the use of domestic or local timberSound
insulation

We proactively use domestic timber, such as Japanese cedar andcypress, which were difficult to use in public and commercial
buildings, in a wide range of parts, such as wall and ceiling materials, by using our unique technologies.

SafetyData

SafetyAccommodation facilities

Flooring/Solid wood flooring

Flooring that produces wood spaces while utilizing local timber

Door

Water
repellentFoundation Supporting Value Creation

With the building materials that focus onsound control, suchas ceiling materials
that suppress soundvibrations and soundproof doors with a high level of sound insulation, we realize
the sound environment in offices suitable for new ways ofworking.

Daiken Group's Value Creation

50

Acoustic
products

hapia public

Durability

Easy maintenance

Doors that pursue safetyand durability according
to use scenes

Proposals of spaces made with antiviralbuilding materials

Doors for public and commercial facilities
OMOIYARI Series

While demand for offices changes with the current diversification of work
styles, we have been participating in point 0¥ since 2021, which operates a
co-creation consortium with other companies, with a view to enhancing proposal capabilities in public and commercial building. At a co-working spacepoint 0 marunouchi, we have been working on a demonstration experimenttoward the proposal of a new office, such as an improvement proposal of the
comfortable sound environment, using wood in interior finishing of the office.
Doors for kindergartens andchildcare facilities

DAIKEN GROUP REPORT 2022

Solid wood flooring for gymnasiums
and classrooms

Participation in point 0, a co-creation consortium with other companies

We respond to the risingneeds of the antiviralfunction and expand the
product lineup thatenables the proposals forthe entire space.

41

Flooring that can be used in heavy
duty areas

Doors for elderly facilities

Co-working space

Demonstration experiment to Case of the introduction ofuse wood in interior finishing sound environment improvement

DAIKEN GROUP REPORT 2022

42

Home Renovation Market: Trends in Net Sales

Initiatives for Priority Markets

Home Renovation Market(¥100 million)
400
350

Industrial materials businessEngineering businessWe have built a system where the entire group can meet a wide variety of needs for renovation through a great range of product

300

287

lineups for renovation as follows: (1) Proposals for spaces in the TDY Collaboration Showroom, (2) cooperation with the250

engineering business that handles construction, and (3) product development and manufacturing from the perspective of the200

construction site. By further enhancing cooperation in the group and promptly responding to the changes of the times and market

150

needs, we will expand in the entire home renovation market.

100

+38

+24
(7)

395

Building materials business
Other

+1

284

(21)

+3

352
325
(0)

(0)

Integrated system by the group's cooperation

0

2016
Results

BenchmarkLabor-Saving Type Products that Realize Renovation
in a Short Time

Ceiling material that can be installedon the existing cloth

GP25 2nd Stage

2023
Forecast

2026 (Fiscal year)
Goals

GP25 3rd Stage

Enhancement of Renovation Proposals that
Take Advantage of the Strength of the TDY
Alliance that Marked Its 20th Anniversary

hapia line frame

Product

Lineup

Product lineup withfunctions anddesign to totally

coordinate

In February 2022, the TDY alliance formed by the three companies TOTO Ltd.,
Daiken, and YKK AP Inc. (hereinafter referred to as “TDY”) marked its 20th anniversary. We have been cooperating with each other in product planning and development,
as well as the sales support system, since 2002 and following the change in the consumer trend from things (products) to events (ways of living), we have proposed valueof new life in line with the times, such as shifting to proposals with lifestyles as thestarting point, instead of products being the start point. Collaboration showrooms
jointly operated by the three companies have been deployed in eight sites in Japan.

a space

Proposals Corresponding to the Changing Lifestyles

TDY Collaboration Showroom

Strategy for Value Creation

Adhesive flooring

2022
Results

2019
Results

GP25 1st Stage

Daiken Group's Value Creation

50

during the COVID-19 Crisis

Production

Proposal

The build-to-order system for ordering

A one-stop proposal for a space by the TDY

specific sizes that can finely respondalliance that customers can easily

to customer needs

imagine the value

TDY Sapporo

TDY Kanazawa
TDY Tokyo

TDY Hiroshima

TDY Nagoya

Development
Development of products that are
Improvement of sound problems

The Group’s Construction System in the Home
Renovation Market
Renovation●

Smileup Corporation●

ReformQ Co., Ltd.

DAIKEN GROUP REPORT 2022of the construction site, such as savingthat maximally brings out

construction time and work

product value

TDY Osaka
TDY Takamatsu

In fiscal 2023, we further enhanced renovation proposals that take advantageof the TDY cooperation, such as holding TDY’s first online event TDY
Remodeling Expo, as a plan to propose the value of remodeling and will
expand in the home renovation market.

Apartment Renovation●

PAC SYSTEM
Co., Ltd.

Our project43

easy to renovate from the perspective

Provide a completed space

TDY Fukuoka

Data

Installation of a teleworking space

Installation Workand Construction

Foundation Supporting Value Creation

While working at home has become common and the time spent athome has increased because of the COVID-19 pandemic, the needs ofwanting to realize more convenient and comfortable spaces havebeen growing. In response to such market needs, we have enhanced
the development of products that secure a workspace with thelabor-saving technique and correspond to the improvement ofsound problems, such as sound leakage and reverberation.

360-degree showroom video

TDY Remodeling Expo

DAIKEN GROUP REPORT 2022

44

Research and Development
The Daiken Group has positioned development of industrial materials using sustainable resources, such as timber, andtechnological development to create safe, secure, healthy, and comfortable spaces centering on the R&D center as the priority
themes and has been proceeding with research and development aimed at creating new shared value that will lead to theresolution of social issues and expansion into new technologies and new businesses for the next generation. In addition, to
speed up the far-sighted research and development and expand the domains, we proactively put effort into the co-creation
activities with various stakeholders.

Policyusing co-creation (open innovation), and the creation of new business toward the new generation● Nourishment of a culture that admires and supports challenges by creating a mechanism to be able tochallenge new business areas

DaikenGlobal Environment Vision
2050

Industrial
Materials

Building
Materials

1

Prioritized Theme

Development BaseIntellectual Property Strategy
Intellectual property strategy to lead thedevelopment areas linked to the
management strategy and to secure
differentiation and a competitive advantage

Analyses and
Evaluations

Human Resource Development
Development of human resources to keep
opening up the future with technologies,
ideas, and passion

R&D Investment
Aggressive investment ofmanagement resources toaccelerate the efforts

Daiken R&D Center

Communication with Stakeholders
Universities andResearch Institutions

Expansion of business domains andcreation of joint development themesby technology exchanges● Matching between the technologicalseeds and needs●

Joint development andcomprehensive partnership●Work experience through internships
Interactions with the generation that will bear the
future●

45

Deepening their understanding of our
products and quality● Enhancementof the relationship of trust●Creation of new businesses
Expansion of the existing
businesses

Students/Recruitment●Customers and Suppliers● High functionality of the wooden boards and inorganic boards● Wood building material utilization development in the new field● Technology development to use unused resources● R&D of industrial materials for new markets other than building materials

SpatialEnvironment

Development of spaces
and building materials thatwill realize a comfortablelife

Within the Company

A company that is loved by the
local community● Cooperation with a municipality●Enhancement of cooperation, sharing of issues, anddiscussions of development themes● Acquisition of a way of thinking necessary for capability
development as well as research and development

Development of new
secure and safe building
materials that will beneeded by society in the future

Building
Materials● Development of environment-conscious building materials
 evelopment of high functional paints and painting technology●D● Development of new construction technique for building materials
 dding a high value to wood building materials●A

Analyses and
Evaluations● Development of energy-saving and indoor environment improvement

technologies● Analysis by simulation of the thermal, humidity, and cross-ventilation

Various measurements
and analyses of spaces
and building materials
using the expertise
cultivated in R&D● Measurement of air quality● Sound insulation performance evaluation● Building materials’ heat generation test

environment● Asbestos analysis

Organizational structure toward the enhancement of intellectual property
strategies and investment of management resources
In starting the new medium-term management plan GP25 3rd Stage from fiscal 2023, we have newly established the development division toward
the acceleration of the initiatives for new businesses, new technology development, and product development. R&D center, which is the core oftechnology development, and next-generation business development department, which is responsible for crystallization of new businesses toward
the next generation are under the division and to increase the linkage with the intellectual property strategies, we departmentalized the intellectual
property department and enhanced our organizational structure. To make the research and development capabilities, which are the sources of
Daiken Group’s strength, robust, we proactively invest management resources and lead to the medium- to long-term corporate value improvement.

Trends in the R&D Costs, Right Holder Scores, and Number of Patents Owned
Development Division
R&D center
Next-Generation
Business Development
Department
Intellectual Property
Department

Local Community●Further improvement of
the existing industrial
materials and developmentof industrial materials that will become akey to capturing new markets

Data

Co-creation
activities

Companies and Manufacturers

In addition to the pursuit of the possibilities of industrial materials, we have beenproceeding with research and development to give a new function to industrial
and building materials. We grasp the spatial environment based on the assay
evaluation technology, delve into it from the perspectives of the temperature,humidity, and sound environment that are essential when people spend time
comfortably, and at the same time, we conduct assay evaluations toward making responses to harmful substances, such as asbestos and formaldehyde.
While further saving of energy in buildings is required toward the realization ofa decarbonized society, we also have been focusing on research projects concerning temperature and humidity to simultaneously pursue the comfortableness of livelihood and the reduction of consumption energy by the functions ofindustrial and building materials.
While performance that people require
for spatial environment changes withtimes, by always thinking what performance will be necessary in the future andproceeding with technology development of functional building materials, wewill realize the creation of a safe, secure,
healthy, and comfortable space.
Thermal image measurement

R&D Theme

Industrial
Materials

2

Development oftechnologies thatcreate safe, secure,
healthy, andcomfortable
spacesPassion

Daiken has been accelerating not only the research and development of industrial and building materials that effectively use timber
but also the research and development aimed at challenging a newarea without being bound by conventional ideas and the initiatives
toward commercialization. Above all, as part of the initiatives for thehigh-degree application of timber, we have been proceeding withthe development of technology to utilize cellulose nanofibers (CNF)
that are fibrillated timber at the nano-level under the joint researchwith a university and collaboration with a company.
If we can establish the technology to use CNF that has strength
and workability, it will become possible to expand into the domain
where plastics, metals, and othermaterials have been conventionallyused. With this, the possibility as a
product from a new perspective inthe market and area that our groupaims to expand into will widen andwe will be able to significantly contribute to the realization of a sustainable society.
Strength test

Foundation Supporting Value Creation

Idea

SpatialEnvironment

Prioritized Theme

R&D that embodies
the mission in the group
corporate philosophy

2

The R&D Center works on Ecology and Improvements in the Quality of Space in four sectors and promotes R&D that will contribute to a sustainable society.

Development ofindustrial materials
that use sustainable
resources, suchas timberTechnology

Expansion into newtechnologies and new
businesses for the
next generation

1

Development of technologies thatcreate safe, secure, healthy, andcomfortable spaces

Prioritized
Theme

Strategy for Value Creation

Creating new shared valuethat will lead to theresolution of social issues

Development of industrial
materials that use sustainable
resources, such as timber

Prioritized
Theme

Daiken Group's Value Creation● Development of new technology for the resolution of social issues, business expansion by aggressively

Development of Technologies*
Right holder score: One of the indicesto evaluate the value of the entire patentgroup owned. The right graph shows
values by indexing fiscal 2016, which isthe benchmark, as 100 to indicate thechanges over the years. Created by using Patent Result Co., Ltd.’s Biz Cruncher.

(¥million)

1,800

Number of patents owned

1,430

1,477

1,551

1,592

100

112

291

308

2016

2017

Benchmark

124
318
2018

GP25 1st Stage

550
500

177

450
400

149

600

0

1,587

1,491
163

900

300

(1 patent)

R&D expenses

1,452

1,500
1,200

Right holder score (Indexed)

132

339

361

2019

2020

390

2021

401

350
300

2022 (Fiscal year)

250

GP25 2nd Stage

46

1 Promotion of Resource Recycling

Environmental Strategy

Recycling of waste materials

Initiatives toward the realization of the Daiken Global Environment Vision 2050
In October 2021, we formulated the Daiken global environment vision 2050, in which the Daiken Group’s attitude for the long-term
initiatives, policies, and goals for environmental issues are established We aim to contribute to the realization of a sustainable society
from the three perspectives of the promoting resource recycling, mitigating climate change, and coexisting with nature and will put
effort into the resolution of social issues, such as environmental issues.

VisionFor a future full of smile
The overall aim of the Daiken Group is to realize a sustainable society towards 2050 bypromoting resource recycling, mitigating climate change, and coexisting with nature.
Environment Policy● Promote material recycling and thermal recycling on

By actively taking advantage of properly managed sustainable forest resources, we can promote forest circulation and help to realize a circular economy of sustainable
resource circulation throughout society by reusing resources, material recycling, and thermal recycling, rather
than disposal.

2 Mitigation of climate change

the premise of cascade use.
● Zero final disposal of waste in landfills.
● Reduce waste through a series of processes fromprocurement of raw materials to the use and disposalof products.

2 Net zero greenhouse gas emissions● Promote energy conservation by improving productivity

and efficiency.

We will reduce our own greenhouse gas emissions, as wellas emissions throughout the entire supply chain. Also, byusing sustainable forests and wood resources, we will
help to expand carbon storage and contribute to themaintenance and circulation of carbon sinks as we work
together with society to achieve carbon neutrality.

● Expand the use of renewable energy.
● Expand the use of wood materials and products that

store carbon.
● Promote reforestation through the active use ofmaterials from managed forests.
● Contribute to the maintenance and recycling of CO2

sinks through afforestation.

3 Reduce the impact on the natural

3 Coexistence with natureenvironment– Conservation of biodiversity –In consideration of biodiversity, our objective is to coexist
with a sustainable natural environment and preserve ecosystems by contributing to environmental impact reduction, conservation, and restoration.

● Zero use of lauan wood.
● Appropriately manage chemical substances andreduce emissions.
● Promote the effective use of water resources.
● Reduce the use of plastics derived from fossil fuels.

Sustainability Promotion Committee

QEMS Manager

Secretariat: Quality Assurance Department
and Sustainability Promotion Department■ Chairperson: Representative Director, President■ Secretariat: Sustainability Promotion Department andCorporate Planning Department(Key Agendas Concerning Environment in Fiscal 2022)● Results and progress of the medium-term ESG plan
(Environment)● Response to the climate change-related issues

QEMS Internal Audit Team

Each Department/Group Company
QEMS Manager

47

5 offices and plants at 5 companies

Use for materials

28%

54%

(reused as energy)(reused as ingredients)

2

36%

120

reduction
42%
26% Greenhousegas emissions in 52%
Japan (Scope 1+2)
117.4
compared
Reduction
Reduction
Reduction
114.8
to fiscal
100 t-CO2)(1,000103.9
Target 2014of the medium-term
Goal of the medium-term management plan GP25 3rd Stage
140
99.3
initialgoal in 2030
(Japan): 26%
reduction(Compared
to fiscal 2014)
94.0Stage
management
Compared to fiscal 2022:The
10%
reduction(Compared
to fiscal
2014:
42% reduction)
93.9 plan GP25 2nd
127.1
91.1
80
81.4
10%
25% Reduction
82.5
120
36%
reduction
reduction
26%compared 42%
52%
New goal in 2030 (Japan): 46% reduction (Compared to fiscal 2014)
117.4
compared
73.2Reduction
60
Reduction
Reduction
to fiscal
114.8
to fiscal
100
2022
103.9
2014
99.3
The initial goal in 2030 (Japan): 26% reduction (Compared to fiscal 2014)
94.0
40
93.9
91.1
80
81.4
10%
25%
Reduction
To achieve net
82.5
reduction
zero greenhouse20
New goal in 2030 (Japan): 46% reduction (Compared to fiscal
2014)
compared73.2
gas emissions
60
to fiscal
Reduction image in the future(To realize carbon neutrality)
2022
0
2014
2022 2022
2026
2031
2051 (Fiscal year)
40
Results Target
TargetTargetTargetTo achieve net
zero greenhousegas emissions

20

Reduction image in the future
0

140

2014

2022 2022
Results Target

2026
Target(To realize carbon neutrality)

2031
Target2051 (Fiscal year)
TargetOverseas greenhouse gas emissions (Scope 1+2)

(1,000 t-CO2)

We took the opportunity ofthe start of the GP25 3rdStage and have expanded
the scope of calculation ofgreenhouse gas emissions
from Scope 1-3 in Japanto Scope 1-3, including theoverseas group bases andset the reduction goals inJapan and overseas.

100
140
80
120

Goal of the medium-term management plan GP25 3rd Stage
Compared to fiscal 2022: 10% reduction

10%

80.2

25%Reduction
reductioncompared
to fiscal 72.2
2022
Goal of the medium-term management plan GP25 3rd Stage

60 t-CO2)(1,000
100
40
80
20
60
0
40

Compared to fiscal 2022: 10% reduction

10%

80.2

reductioncompared
to fiscal 72.2
2022

2022
Results

Reduction image in the future(To realize carbon neutrality)

2031
Goals

2051 (Fiscal year)
Goals

To achieve net
zero greenhousegas emissions

Future Initiatives toward Reduction● Pursuit of the productivity
0 improvement and efficiency in
2022
2026

（%） production bases

To achieve net
zero greenhousegas emissions

25%Reduction

2026
Goals

20

37 offices and plants at 9 companies

Use for heat

Under the idea of effectively using timber that has the functions to fix and store carbon as a material for a longer period of time, the Daiken Group has
been implementing initiatives for the reduction of greenhouse gas emissions linked to the business activities by using wood chips derived from residual
wood offcuts and construction waste materials as raw materials. In the previous medium-term management plan, we could achieve a 36% reduction
against the reduction goal of the total CO2 emissions in Japan at a 26% reduction compared to fiscal 2014, thanks to the effects of using renewableenergy and productivity improvement. In addition, in the new medium-term management plan, we expanded the scope of calculation to our overseas
bases, instead of only in Japan, and upheld the goal of a 10% reduction compared to fiscal 2022. With an eye toward the medium and longer term,)as(1,000
thet-COgoals
in fiscal 2031, we set a 52% reduction in our domestic group bases that surpasses the goal of a 46% reduction by fiscal 2031 compared
Target of the medium-term
Goal of the medium-term management plan GP25 3rd Stage
to140
fiscal2014
upheldby theplan
Japanesegovernment
and aCompared
25% reduction
compared
toreduction
fiscal 2022
in our overseas
and will aim for the
management
GP25 2ndStage
to fiscal
2022: 10%
(Compared
to fiscalgroup2014:bases,
42% reduction)
127.1
realization of carbon neutrality upheld in the Daiken global environment vision 2050.

ISO 14001 Certificate Acquisition Status (As of the end of March 2022)(2) The percentage of the offices that acquired the certificate in all overseas
offices: 54.1% (Based on the consolidated number of employees)

92%

47,100 t

Initiatives for the reduction of greenhouse gas emissions linked to the business activities*QEMS: Quality and Environment
Management System(1) The percentage of the offices that acquired the certificate in all offices inJapan: 91.1% (Based on the consolidated number of employees)

RecyclingAmount of waste
generated:

Data

President

Simple incineration

3%

2 Mitigation of Climate Change

120

Structure to promote Environment Management

9%

Results

Goals

Reduction image in the future(To realize carbon neutrality)● Considerationof the introduction of internal carbon 2051
pricingfor2031(Fiscal year)
Goals
investment
decisions

Goals● Expansion of the use of renewable energy and100● Consideration of fuel conversion based on technology development,

consideration of purchasing green electricity

price trends, and negative emissions (collection
and storage of CO2)
MDF

（%）
100
80

22

22

21

Foundation Supporting Value Creation– Realization of carbon neutrality –Valuables

Strategy for Value Creation

1 100% waste recycling– Waste reduction and reuse of resources –Final volume disposed of in landfill

6%Note) Recycling rate = Amount of recycled resources / Amount of waste generated
x 100 (%)
Amount of recycled resources = Valuable + Use for materials + Use for heat

Long-Term Goals

1 Promotion of resource recycling

Amount of Waste Generated and Breakdown of Waste Processing(Fiscal 2022)

Daiken Group's Value Creation

Daiken Global Environment Vision 2050

The Daiken Group aims to realize a recycling-oriented society and puts
effort into recycling waste, such as reusing the defectives generated in
the manufacturing process as product materials to the extent possible,
and using those as fuel for production, if not suitable for material
itself. During the previous medium-term management plan period, bypromoting the initiatives to increase the use of waste for materials, inaddition to the promotion of use as fuel for production by stably operating
biomass boilers, we improved the percentage of final volume disposed ofin landfill by approximately 2 points compared to fiscal 2019. In the new
medium-term management plan, we have newly set the goal to reduce
the final waste volume disposed of in landfill by 15% compared to fiscal
2022 in the group production bases at home and abroad and will put
effort into the further improvement of the recycling rate.

21

20

Other

19

17

MDF
18

Plantation timber (Imported)
Domestic timber
Lauan wood (Imported)
Other

48

80.2

25%Reduction
reductioncompared120
72.2
to fiscal (1,000
t-CO )
2022 100
Goal of the medium-term management plan GP25 3rd Stage

60

2Compared to fiscal 2022: 10% reduction

40

Environmental Strategy

400Under the Daiken global environment vision 2050, which indicates the long-term direction of the initiatives for the environment, theDaiken Group expressed an agreement on the recommendation by the TCFD (Task Force on Climate-related Financial Disclosures)in October 2021. We acknowledge that environmental responses, such as climate change, are one of the important management
issues that lead to the risks and opportunities in business and disclose information on governance, strategies, risk management,
and indices and goals, which are the disclosure items recommended by the TCFD.

Reduction
image
in the future
Initiatives toward zerousage
of lauanwood

Risk & ComplianceManagement Committee(RCM Committee)

Chairperson: Representative Director,
President
Secretariat: Sustainability Promotion
Department and Corporate Planning Department

Chairperson: Deputy President
Executive Officer
Secretariat: Corporate Planning80
Department and Legal Department

100

22

22

21

Other
Other

CSR Promotion Departments

Department Responsible for Legal Affairs

21

19

2017

28

23
27

43
28

32

19

MDF17
18

27

20

0

Climate change is one of the important external risks and we acknowledge that it is the risk to be addressed by the entire company. We enhancethe effectiveness by the sustainability promotion committee and the RCM committee cooperating with each other and proceeding with it in theenvironment management system and the company-wide risk management system. We will put effort into the improvement of processes to further
evaluate the climate-related risks.

Indices and Goals
We have set Mitigation of climate change – Realization of carbon neutrality – as a pillar in the environment policy of the Daiken global environment
vision 2050 and aim for net zero greenhouse gas emissions as a long-term goal toward 2050. Toward the reduction of greenhouse gases that have asignificant impact on climate change, we have back-casted from how we should be in 2050 and set and proactively put effort into the following goals
in order to contribute the countermeasures against climate change in the medium-term management plan GP25 3rd Stage (fiscal 2023–2026).
Japan: 50% or more
Overseas: 40% or morePursue the sustainable use ofbase materials toward thestable supply of products

40

24

30

34

41

47

Domestic
timber51

Pursue the sustainable use of
To achieve thebase materials
toward the
Daiken global
environment
stable supply of vision
products

11

Active use of 4domestic timber

28

30

24

26

11
0

2015

2016

41use of lauan47
Reduction of the
wood
34
23

21

19

2017

2018

2019

Domestic
timber
51
17

2020

15

2050

Lauan
(Imported)
15

2021

Lauan (Imported)
7

2022

26

2016

Cross-section image of flooringmade from domestic timber

On the background where we were able to use plywood made of domestic timber as the

To achieve thezero use of lauanwood in 2050

flooring substrates, there is our unique special MDF. As much of domestic timber is mostly soft
Reduction of the useof lauan woodtree species, such as Japanese cedar, it was not suitable to be used as flooring substrates.

23
2015

Daiken global
2051 (Fiscal year)
environment
vision
2050

2026
Goals

Special MDF that will realize the reduction of the usage of lauan wood28

To achieve thezero use of lauan
Toinachieve
the
wood
2050

2017

Lauan
So, we uniquely developed 17
special MDF that
15has performance required for flooring substrates,
21such as surface
19 smoothness and water resistance,(Imported)and by laminating with plywood
made
of
Lauan
(Imported)
domestic timber, we have been improving the usage of domestic
timber for flooring substrates.
15
7
Moreover, as this special MDF made it possible for commercialization of flooring substrates

2051 (Fiscal year)

2018
2019
2020
2021
2022
2026
sing not only domestic timber but also plantation timber, the switching from lauan wood has
Goals

Plywood made of
Daiken’s special MDF domestic timberbeen significantly accelerated.

Data

Resilience● Improvement of the reliability of the supply chain by revitalizing investments for
BCP measures
Products, Services, and Markets
20● Formation of the markets for and expansion of demand for energy-saving products
and environmentally friendly products (New wood industrial materials etc.)● Mitigation of climate change and expansion of the sale of adaptive products(Expansion of the sale of timber products from the perspective of carbon storage)● Improvement of corporate value by newly developing and commercializing
environmentally friendly products by taking advantage of our strengths of thetechnologies to use timber
Resource Efficiency● Appeal to customers by recycling raw materials (Improvement of corporate value)● A decrease in costs by efficient transportation● Appeal to customers by increasing the usage of recycled materials (Improvementof corporate value)● An increase in demand due to the establishment of the production processes
that do not emit greenhouse gases

Lauan wood (Imported)

Foundation Supporting Value Creation

Transition Risks (Risks associated with transition to a low-carbon economy)● Difficulty in obtaining wood chips (product raw materials and fuels) bypromoting biomass power generation● Responses to the regulations on products and materials● Procurement risks and an increase in costs due to the shift to environmentallyfriendly raw materials and materials● An increase in costs associated with the responses for decarbonization of theexisting production facilities (Capital investments etc.)● An increase in procurement costs due to the timber price hike (Regulations fortree trimming etc.)

Lauan wood (Imported)
Domestic
timberActive use of domestic timber

20

4

Opportunities

Plantation timber (Imported)

Plantation
timber (Imported)
Domestic timber

timber
(Imported)
16

60

Risks

MDF
MDF

MDF
18

Plantation
timber
(Imported)
20
Plantation
23
16

40

43

Renewable energy
utilization ratio

20

60

40

10% reduction (Ascompared to fiscal 2022)
6% reduction (Ascompared to fiscal 2022)

21

32

Departments Responsible for Risks

Each Department/Group Company

22
21

22

80

Cooperate each other in regard to the risks

Sustainability Promotion Department(To realize carbon neutrality)

To achieve
net
2022
2026
2031
2051
(Fiscal year)
zero
greenhouse
20
With
a view to reducing the risksof stable timber procurement
and currency exchange fluctuations, in addition to the reduction Goalsof environmental
Results
Goals
Goals
gas emissions

ReportingResponsible
Sustainability
for TCFD Promotion Committee

To achieve net
zero greenhousegas emissions

Ratio of Flooring Substrates

100

Risk Management

49

25%Reduction（%）

We grasped the risks and opportunities related to the Daiken Group’s businesses in regard to the climate change and organized important risks andopportunities.
We organized them based on the results of the risks that had been sorted out, evaluated, and responded by the RCM committee.
40
As the next step, we will serially implement scenario analyses from the risks and opportunities that are judged to have a significant impact on business,
conduct impact evaluations, apply the results of scenario analyses, and lead to the formulation of countermeasures and development of plans.

Gross emissions in Japan andoverseas (Scope 1+2)
Gross emissions in Japan andoverseas (Scope 3)

reductioncompared
to fiscal 72.2
2022

The Board

Strategy

Physical Risks (Risks associated with physical changes due to climate change)● Damage on and shutdown of production and sales bases due to natural
disasters and delays in member procurement, shipment, and delivery due todisruption of the logistics network● Delays in goods deliveries due to suppliers and logistics warehouses being
affected by natural disasters● An increase in investments due to the BCP measures● An increase in insurance premiums for damage caused by natural disasters

3 Symbiosis with Natureburden, we have been proceeding with the switch from natural lauan wood (tropicalnaturalto plantation timber, MDF,
andcarbon
domestic
Reduction
imagewood)in the future(To realize
neutrality)0timber to be used for flooring substrates
produced by ourcompany. As a result,
we have reduced the percentage of use of2051
lauan
wood, which
2022
2026
2031
(Fiscal year)
Resultsto approximatelyGoals
was approximately 28% in fiscal 2015,
15% in fiscal 2022. Goals
From fiscal 2023, we also started the initiativesGoals
for the reduction by
50% compared to fiscal 2022 that was newly set as the goal toward fiscal 2026. We further envision beyond that and will further put effort into
technological development toward Zero use of lauan wood in 2050 upheld as how we should be in the Daiken global environment vision 2050.

（%）
Promotion Structure

10%Strategy for Value Creation

In the sustainability promotion committee in which the representative
director and president is the chairperson, we identify important climaterelated risks and opportunities, disseminate them to each department
and group company, and appropriately conduct management.
Regarding risks, as we established the risk and compliancemanagement committee (hereinafter referred as the “RCM committee”)
in which the deputy president and executive officer is the chairperson
and disseminate them to each department and group company, thesustainability promotion committee is responsible for the responses tothe climate-related risks and opportunities and has been proceeding withthe responses by cooperating with the RCM committee. These results
are regularly reported to the Board.
From now on, through the promotion of the Daiken global environment
vision 2050, we will analyze the risks and opportunities to be brought tothe Daiken Group’s businesses and value chains, as well as the financial
impacts associated with them, incorporate them into the management
strategies, and disclose information.

80.2

Daiken Group's Value Creation

GovernanceGreenhouse gas

60

20

Response to TCFD

Fiscal 2026
Goals

80

Initiatives for the reduction of chemical substances
The Daiken Group had upheld the appropriate management and reduction ofchemical substances in the medium-term ESG plan (fiscal 2020–2022) as a theme
and had set the goal to reduce the amount of substances released subject to the
PRTR law by 70% in the final fiscal year as compared to fiscal 2019. The releaseamount and transfer amount of substances subject to the PRTR law in fiscal 2022
decreased by 59% compared to fiscal 2019, but we could not achieve the goal;
however, regarding methylene chloride, we made significant reductions as theestablishment of technology for the product specification change was completedin October 2020 and totally abolish the use in production processes in our group.
We will continually put effort into the reduction of other target substances andpromote the reduction of environmental burden in the entire group.
*As the substances subject to reporting by the PRTR regulations have been newly specified, therelease amount and transfer amount were revised retroactively.

Trend of the Release/Transfer Amount of the Substances
Subject to the PRTR Law/Methylene Chloride（t）

20

Release/transfer amount of the substances subject to the PRTR law
Release/transfer amount of methylene chloride

17

16

15

10

8

8

8

7

5

2
0

0
2019

2020

2021

2022 (Fiscal year)

50

Initiatives that link diversity promotion and work style reform

Human Resource Strategies
In order for our employees to be able to feel happy to be the members of our group, the Daiken Group has been promoting theinitiatives from the perspectives of the promotion of diversity, workstyle reform, human resource development, and promotion ofhealth management. By continuously deploying the measures from four perspectives, we will lead to producing the favorable
cycle, maximizing human resource value by improving individual performance, and improving the entire group’s corporate value.

As shift to more flexible work styles without being bound by the conventional ideas is necessary in order for human resources who have diverse
values to fully exercise their abilities, we link the diversity promotion and the workstyle reform and have been integrally promoting the initiatives, suchas the formulation of the policy and system, refreshing awareness, and education and training for upskilling. Particularly in recent years, with a view tofurther improving corporate value in the medium- to long-term, we have been deploying a number of measures to facilitate the active roles of female
employees. As a result, the percentage of newly graduated females hired, which was approximately 8% in fiscal 2011, increased to approximately 46%
on average of seven years after formulating GP25, and the ratio of female employees has been increasing year after year. These initiatives lead not only
to the active roles of female employees but also to the building of the foundation for the work-style reform and for employees who will be in various life
events to more flexibly work with enthusiasm. We will proceed with the creation of workplaces where diverse human resources can maximally utilize
their abilities from the medium- to long-term perspective.
Trends in the Ratio of Newly Graduated Females Hired and the Ratio of Female Employees Hired

Improvementof Corporate
Value● Promotion of labor saving andautomation● Pursuit of a sense of satisfaction
and job satisfaction

Workstyle Reform

（%）
60
50
40

Maximizationof HumanResource
Value

Promotion ofDiversity● Development of the humanresource development plan andimprovement of the education
program based on the plan

Human Resource
Development

50

24.2

15.2

16.3

17.4

20.0

13.4

14.5

18.5

12.8
2016

2017

2018

2019

2020

2021

2022

2026 (Fiscal year)
Goal

23.6

2014

2015

Formulation of
GP25

GP25 1st Stage

GP25 2nd Stage

Workstyle Reform Promotion Policy

Comeback System*

Diversity Promotion Policy
Started automatic PC shutdown

GP25 3rd Stage

Total Diversity Index goal setting

Introduced the hourly paid leave system

Trial of working at home

Full-Time Work at Home System

Harassment Prevention Workshop for Department Heads

Diversity Exchange Meeting

Refreshing

Workstyle Reform Declaration
Ikuboss declarations

Upskilling

Female Exchange Meeting ~Deployed it to the contract employees ~Deployed it by job type
Next-Generation Sales Recommendation Project

Harassment Prevention Training

Staggered Working
Hours System
Diversity Management
Training

Diversity Management Training
Communication Exchange Meeting

Explanation meeting for the system to support
the combination of work and childcare

Seminar to support the combination of work and childcare
Seminar to support the combination of work and long-term care

Realization of the growth strategy and development of human resource for the next generation
Believing that cultivating autonomy in our employees is a key for our further growth and persistent corporate value improvement, we haveprovided various training opportunities for our employees to acquire the skills or knowledge needed for each service year, rank, and job type.
From the new medium-term management plan GP25 3rd Stage, we newly established the skill enhancement training and have been enhancing
capabilities required for each rank. Moreover, to develop human resources who can be active in the three markets that are positioned as priority
markets toward the realization of the long-term vision, we will proactively invest in human resource development with a focus on the priority
market enhancement program.
Key Training System

Senior management candidate development training

Enhancement of businessskills for each rankTraining for new department heads

Finance

Theme

Personal
Development

Accounting
Coaching

Career plan training

Logical thinking(Basic problem resolution version)

Follow-up training after joining the company

Business communication

New employee orientation

Enhancement of the development/
following-up of young employees

Language education

Presentation

Correspondence education

Problem resolution (Practical version)
Training for those promoted

Compliance training

Responsible
person class

Evaluator training
Leadership (Cross-industrial exchange)

Middle level teamleader class

Prioritized market
enhancement program

OJT leaders / Mid-career employees / Appointment
as full-time employees / Start-up

Training for new managers

Management school

Managerial
position class

Pre-overseas assignment training

Fiscal 2022 Goals

GlobalDepartment head candidate development training

Follow-up
Training fortraining for
those in the
young
middle level
young rank in manufacturing
manufacturing employees

Goal: Newly set training attendance rate at 100%

Manufacturing

Manufacturing
technology
training for theleader class

The female
manager ratio
Goal: 2%

By Job Type and Theme
Sales

Leader candidate training
for female employees

The percentage of male
employees taking
childcare leave
Goal: 30%

Skill Enhancement Training

Data

Department
head class

Training by Rank

Foundation Supporting Value Creation

Three-way meeting at thetime of maternity leave andchildcare leave*Comeback System: A common name for the system to reemploy voluntarily retired persons as full-time employees

The percentage ofFemale executive ratio
leaving work to care
Goal: 8%
Goal: 0%Young employees’ career plan training attendance rate

Fiscal 2022 Results

21.9

20.2

Ability to make decisions

Fiscal 2019 Results

32.6

29.0

Training for female leader candidates

160%

0%

20.3

34.0

19.5

Established the Workstyle Reform Promotion Office

Support of the
Combination

The female full-time employee ratio
Goal: 20%

The reemployment rateof retired persons
Goal: 90%

30.3

Basics of sales skill
enhancement

51

34.0

Application ofsales skill
enhancement*“The percentage of male employees taking childcare leave” in the total
diversity index is calculated based on the three-year total value tomeasure the progression rate over the years.

2013

37.5

18.9

18.4

Past Key Initiatives

0

The Degree of Attainment of the Eight Items in the Total Diversity Index

100%

2012

22.9
20.0 24.9
17.4
15.9
15.0
14.5

50.0

48.3
42.4

26.1

60

10AwarenessGoal management by our unique indices toward the steady promotion of diversity

The employment rate of persons
with disabilities
Goal: Statutory rate at 100%

13.7

50.0

*Fiscal 2011-2015 include the four plants in Japan absorbed in April 201520

Based on the idea that our employees’ health is the essential foundation for the group’s sustainablegrowth and development, we try to improve every employee’s awareness of health and have started
the initiatives toward the preservation and improvement of mental and physical health. In 2021, we
formulated Daiken health management policy and have been putting effort into the improvementof health measures for both aspects of mind and body since then, such as the payment of thehealth promotion allowance, quit smoking challenge to encourage our employees to quit smoking,and the distribution of health videos. In March 2022, we were certified as the Health & Productivity
Management Outstanding Organizations 2022 (Large-Scale Company Category) in the Health &Productivity Management Outstanding Organization Certification System selected by the Ministry of
Economy, Trade and Industry and Nippon Kenko Kaigi. We will continuously put effort into setting
indices to measure the effects of measures and actively providing support and create a virtuous cycleof the productivity improvement and company growth.

13.1

35.9

53.3

50.0

4.5
2011

30

Implementation of the measures that preserve and promote
the employees’ mental and physical health21.7 16.0

17.8

40
Policy/System

Promotion of Health and Productivity Management

To steadily promote the initiatives for the promotion ofdiversity in a balanced way, we have set the total diversity
index from the medium-term management plan GP25 2ndStage in which the eight diversity items were indexed as ourown indices and manage the goals. The total index in fiscal
2022 increased by 30 points from fiscal 2019, which is abenchmark, and surpassed a 20-point increase, which was
the goal in the final fiscal year. In particular, the fact that thepercentage of taking paternity leave* significantly improved
contributed, and the results of the initiatives toward theimprovement of the percentage of taking such leave
emerged, such as the issuance of a guidebook to lead todisseminating the system and refreshing awareness ande-mail newsletters for eligible persons. From fiscal 2023,
we changed part of the items to set goals that are more inline with the issues under the present circumstances andhave been continuing to promote the initiatives as the total
diversity index 3rd Stage.

0● Improvement of support for theemployees’ career design

21.7

18.7

12.4
10 8.326.9

48.3

Strategy for Value Creation● Support for achieving abalance between workand personal constraint,
such as child rearing,
nursing care, andmedical treatment

28.6

30
20

● Promotion of playing arole without being boundby age and gender

The ratio of newly graduated females hired(Graduate from university/graduate school)
The ratio of newly graduated females hired (Overall)*
The female employee ratio
The female full-time employee ratio

Daiken Group's Value Creation● Institutionalization andestablishment of flexible work
styles52

Financial Strategies

Shareholder Return
Funds in Hand, etc.

An Increase inFunds in Hand 50

A decrease in Bonds
33
Payable/Loans

Investment for Growth and Enhancement of the Foundation

Global300
Strategic
Investments

GP25 2nd Stage

GP25 3rd Stage

Make it a top priority implement growth investments toward therealization of the long-term vision GP25

●Aggressive investments in the three markets that are positioned
as focused markets in the long-term vision GP25

Select investments by reflecting risk and return as well as thecost of capital●●Stringent selection by evaluating the investment effect basedon the consistency and synergy with the growth strategies, aswell as the capital cost (We responded to the uncertainty of the
COVID-19 crisis and reduced investments in fiscal 2021.)●Aggressively utilize advanced technologies such as AI and IoT,
and lead to the improvement and efficiency of productivity●Implement the cash allocation to optimize the aggressive investments for the growth strategy and enhancement of the foundation,
Maintenancefinancial soundness, and the improvement
ofand
the shareholder return​Domestic 46●Replacement
150

Expansion of IT investments toward the improvement of efficiency and productivity
Strategic Investments●Strategic Investments(¥100 million)

North American business: 200
Industrial materials business: 100
Domestic New business: 30
Expanding market: 30
Infrastructure: 40● Research and development● Operational efficiency system● Ordering and order receiving/logistic systems
GlobalRegularInvestments

Cash on Hand
and Debts

GlobalStrategic
Investments
400

Shareholder
56
Shareholder
ReturnReturn
56
StrategicStrategic
Investments
Investments

Sales Sales
Cash flow
Cash flow(Three-year(Three-year
cumulative
cumulative total) total)
458 458

StrategicStrategic
Investments
Investments(Cash in)

Maintenance andReplacement
200
Reduction of Cross
Shareholdings(Cash out)

(Cash in)(Cash out)

Shareholder
Shareholder
ReturnReturn

Target Balance Sheet

New Business
New Business

GP25 3rd Stage

GP25 2nd Stage(¥100 million)
Cash Deposit

GlobalGlobal
Cash Deposit

168

Cash
Deposit Cash Deposit
Liabilities
Liabilities

168

168

228

307

Liabilities

D/E Ratio

307

D/E
Ratio
Ratio
Reduction
ofD/E
Cross
Reductionof Cross
Shareholdings
0.52Shareholdings
times0.52 times

0.52 times
589

Shareholder
Equity Ratio

1,601

Total Assets

589

589

Shareholder
Equity Ratio

36.8% 1,601
36.8%
1,601

36.8%

Total
NetAssets
AssetsTotal Assets
Net Assets Net Assets

Stage
Results
1st Stage
1st Stage Results
Fiscal 2019 1stFiscal
2019
Fiscal2019 Results

53Interest-bearing
Debts

Investment

Strategic
Investments

Interest-bearingInterest-bearing
Debts
Debts

Investment

Investment

Investment

Investment

Strategic
Strategic
0.37 times
0.37 times0.37 times
Investments
Investments

Strategic
Investments

Strategic
370 Strategic370
Investments Investments(Domestic: 46)(Domestic: 46) (Domestic: 46)(Global: 300)
(Domestic: 100)

(Domestic: 100)(Domestic: 100)

RegularInvestments

Regular
RegularInvestments Investments

RegularInvestments

Regular
RegularInvestments Investments

285
374

374 285

D/E Ratio

D/E Ratio

285

D/E Ratio

292
292
292
Replacement
Replacement(Global: 246)
(Global: 246) (Global: 246)
200 200

Shareholder Equity
Shareholder Equity
Shareholder
Equity Ratio

400
400

Liabilities

82
764

Shareholder
EquityShareholder
Equity Ratio

1,833

Total Assets(¥100 million)
million)（times）（times）(¥100
1.00
Interest-bearing
D/E ratio
ratio 500
D/E ratio
ratio debts
500
Interest-bearing
debts Interest-bearing
D/E
Interest-bearing debts
debts 1.00
D/E

400
400

0.77
0.77
314
314

300
300

82

Shareholder
Equity764

Shareholder
Equity Ratio

41.7%
41.7%
1,833
1,833

Shareholder
Equity

764

550

400

150

Shareholder
Equity Ratio

41.7%

Total
NetAssets
AssetsTotal Assets
Net Assets Net Assets

Fiscal 2022 Fiscal
Results2022
FiscalResults2022 Results

550

Interest-bearing
Debts
D/E Ratio

Total Assets

Fiscal 2022

Interest-bearingInterest-bearing
550
Debts
Debts
370
D/E Ratio

D/E Ratio

400times 400
0.5
0.5 times 0.5 times(Global: 300) (Global: 300)
Shareholder
Equity150
730

Shareholder
Equity Ratio

1,800

600

Investment

40%
1,800

Shareholder
Equity150

730

Shareholder
Equity Ratio

40%
1,800

Shareholder
Equity730

Total
NetAssets
AssetsTotal Assets
Net Assets Net Assets

TargetTargetFiscal 2022 Fiscal
2022

D/E ratio:

Strategic
Investments

400

Maintenance andReplacement

200

TargetTotal Assets

Fiscal 2026

0.80
0.80
307
307

300285300
285(¥100 million)
million)
(¥100

1.00
1.00

1,500
1,500

0.80
0.80

1,200
1,200

0.60
0.60

900
900

0.40
0.40

600
600

0.20
0.20

300
300

0.00
0.00
0
0.00
0.00
02019
(Fiscal
2016
2019
2022
2026
2022
(Fiscal year)
year)
2019
2022
2026
(Fiscal year)
year)
2016
2019 2026
2022
2026 (Fiscal
Results
Results Goals
Results
Goals
Results Results
Results Results
Goals
Results
Results
Results
Goals

0
0

0.37
0.37

0.60

0.52
0.52
0.5 times
times oror lessless 0.5
0.50.40times oror less
less
0.40
0.5
times
0.37
0.37
0.20
0.20

100
100
2016
2016
Results
Results300
0.60300（times）（times）

Trends in Shareholder Equity
and Shareholder Equity Ratio(¥100 million)
million)
(¥100

1,000
1,000

Shareholder
equity800
800

1,000

600
Shareholder
equity ratio:

2,100

0.77
0.77
314
314
285
285

Trends in ROIC andInvested Capital

0.5 times※Ｄ/Ｅレシオ（デット・・エクイティ
エクイティ※Ｄ/Ｅレシオ
・レシオ）
レシオ）
（デット
＝有利子負債÷自己資本・エクイティ
エクイティ・・レシオ）
レシオ）（times）＝有利子負債÷自己資本（times）（times）※Ｄ/Ｅレシオ（デット
・＝有利子負債÷自己資本（times）※Ｄ/Ｅレシオ（デット
・＝有利子負債÷自己資本
or less※ネットＤ/Ｅレシオ＝純有利子負債※ネットＤ/Ｅレシオ＝純有利子負債（有利子負債－現金預金）（有利子負債－現金預金）
÷自己資本（times）（times）
÷自己資本（times）（times）※ネットＤ/Ｅレシオ＝純有利子負債（有利子負債－現金預金）
÷自己資本※ネットＤ/Ｅレシオ＝純有利子負債（有利子負債－現金預金）
÷自己資本

600

Shareholder
Equity Ratio

40%

Interest-bearing
100
100
debts

300 00

307
307

0.52
0.52
200
200

200
200

Investment

82

Shareholder Equity

Liabilities

Domestic
Domestic

Interest-bearingInterest-bearing Maintenance
Maintenanceand and
Debts
Debts

307

Liabilities

228(¥100 million)
million)
(¥100

500
500

300
300

374

Interest-bearing
Debts

228

200

(¥100 million)

Strategic
Strategic
Investments
Investments
Cash
Liabilities
Deposit Cash Deposit
Liabilities Liabilities
400 400

Trends in the D/E Ratio* andInterest-Bearing Debts

Liabilities

400
400
40％ or more

Shareholder
equity ratio
ratioShareholder
Shareholder equity
equity ratio
ratio(¥100 million)
million)Shareholder
equity
(¥100
1,000
1,000
Shareholder
equityShareholder
1,000 equity
Shareholder
Shareholder equity
equity

1,000

31.3
31.3
407
407

200
Net Assets
200

Target 00

36.8
800 36.8
800

41.7
41.7

36.8
36.8
40%
764
40% oror more
more
764
589
589

（％）1,000
（％）

1,000
50
50

（％）
（％）

50
50

1,500
1,500

11.1
11.1

11.1
1,300
1,300

1,087
1,087

1,087
1,087
873
873
8% or
or more
more
8%
4.6
4.6

11.1

1,200
1,200
737
737
5.1
5.1

873
873
900
900
600
600
4.6
4.6

737
737
5.1
5.1

300
300
2016
2016
Results
Results

Invested
capital（％）（％）
Invested capital

（％）
（％）

12.0
12.0

12.0
12.0

10.0
10.0

10.0
10.0

8.0
8.0
8% or
or more
more
8%
6.0
6.0

8.0
8.0

4.0
4.0

4.0
4.0

2.0
2.0

2.0
2.0

1,300
1,300

6.0
6.0

0.0
0.0
0
02019
(Fiscal year)
year) 0.02026 (Fiscal
year) 0.0
2016
2022
2019
2022
(Fiscal
2019
2022
2026
2016
2019 2026
2022
2026 (Fiscal year)
Results Results
Results
Results Results
Results Goals
Goals
Results
Goals
Results
Results
Results
Goals

Trends in ROE and Profit Attributableto Owners of Parent(¥100 million)
million)
(¥100

100
100

（％）
ROE (¥100
ROE(¥100 million)
million)
（％）
ROE
ROE
100
100
Profitattributable toto owners
ownersProfitof
ofattributable
attributableparent 100
to owners
owners ofof parent
parent100
Profitattributableparent12.0100
Profit
to

100

9.8
9.8

10.9
10.9
9.8
9.8
78
78

10.9
10.9
78
78
10% oror more
more
10%

12.0

10.0
10.0
10%
or moremore
10% or
8.0
8.0

（％）
（％）

12.0
12.0
10.0
10.0

40
40
40%
40% oror more
more

40
40

80
80

30
30

30
30

60
60

20
20

20
20

40
40

10
10

10
10

20
20

20
20

0
0
0
02019
(Fiscal year)
year) 0 2026 (Fiscal(Fiscal year)
year) 02016
2022
2019 2026
2026
2022(Fiscal
2019
2022
2016
2019
2022
2026
Results
Results
Results
Goals
Results Results
Results Results
Goals
Results
Results Goals
Results
Goals

0
0

0.0
0.0
0
02019
(Fiscal year)
year) 0.02026 (Fiscal(Fiscal year)
year) 0.0
2016
2022
2019 2026
2026
2022(Fiscal
2019
2022
2016
2019
2022
2026
Results Results
Results
Goals
Results
Goals
Results
Results Results
Results
Results Goals
Results
Goals

589
600 589
600
400
400
200
200

2016
2016
Results
Results

41.7
41.7

Invested capital
capital
ROIC(¥100(Return
On Invested
Invested
ROIC
Capital)(Return On
On Invested
Capital)(¥100
million)
ROIC(ReturnOn
Capital)ROIC(Return
Capital)million)

Data

OperatingCash Flow
OperatingCash Flow(Cumulative(Cumulative
total total
four years)
for fourforyears)
700 700
Cash Deposit

Domestic
Restructuring of the product supply network
according to demand● Enhancementof the order-taking system for materials
and construction to improve spatial performance● Reformof the ordering system and operational
efficiency●

Maintenance
Maintenanceand andRegular Regular
onofSales ofLoss onLoss
Sales
Investments
Replacement
82 Investments
82
Investment
Securities
55 Replacement
Investment
Securities
55(Cash out)

Cashon HandCash on
Hand
and Debts
and Debts

Domestic

Domestic
46
Domestic
46(50/year)(50/year)

GlobalExpansion and improvement of the supply and sales
structure for the areas of high demand● Developmentof new industrial materials andexpansion into new markets and areas●Foundation Supporting Value Creation

Maintenance
Maintenanceand andReplacement Regular Regular
Replacement
Investments
Investments
150 150

GlobalGlobal
246 246

Operating Cash Flow
(Cumulative total
for four years)
700

Strategy for Value Creation*M&A investments include interest-bearing debt of the acquiring company, but not cash or deposits.

Domestic
Domestic
100 100(Cash in)CommonEnhancement of the R&D structure (Developmentof new industrial materials and measurement of thespatial environment)● Expansion
into new business areas (Including M&A)
● Reductionof environmental burden in the production
activities●

New Business

An Increasein
An Increaseinin 50
Hand 50
FundsFunds
in HandOperatingCash Flow
OperatingCash Flow(Three-year(Three-year
cumulative
cumulative total) total)
450 450

Overview of the Key Strategic Investments

Shareholder ReturnA decrease
A decreasein Bondsin Bonds 33
33
Payable/Loans
Payable/Loans

GlobalGlobal
300 300

RegularInvestments(¥100 million)

M&A of wood industrial materials business(¥100 million)
in North America
Enhancement of cooperation in the business group after M&A in North
America and productivity improvement
Productivity improvement of the MDF business: 246
Domestic M&A of solid wood flooring business and renovation business
Productivity improvement of industrial materials business andbuilding materials business
Investment in the IT system: 46

in Hand,FundsFunds
in Hand,etc. etc.

Maintenance andReplacement 82

Loss on Sales ofInvestment Securities 55(50/year)
FY 2023–2026
Four-Year Total Cash Flow Balance

GlobalShareholder
Shareholder
ReturnReturn

Daiken Group's Value Creation

Sales
Cash flow(Three-year Goals
GlobalOperating Cash Flow
Medium-Term Management Plan (Four-Year)cumulative total)
Strategic
246(Three-year● Continue
Investments
Domestic
458 as well as the capital cost toward thethe aggressive
realization
cumulative
total) investment stance that gives consideration to the risk and return100
450 vision GP25of the long-term

Results from Fiscal 2020 to Fiscal 2022 (Three years)

Medium-Term Management Plan (Three-Year) Target

Shareholder Return 56

764
764
31.3
31.3
407
407

39
39

2016
2016
Results
Results

80
80
60 7.8
7.8
60
44
44
40
40

39
39

7.8
7.8
44
44

8.0
8.0

6.0
6.0

6.0
6.0

4.0
4.0

4.0
4.0

2.0
2.0

2.0
2.0

※ROE
※ROE
＝
親会社株主に帰属する当期純利益÷期首
自己資本当期純利益率)
・
・
※ROE（
（自己資本当期純利益率)
自己資本当期純利益率)＝（
親会社株主に帰属する当期純利益÷期首・期末平均自己資本×100
期末平均自己資本×100（％）
（％）
※ROE
（
自己資本当期純利益率)＝＝親会社株主に帰属する当期純利益÷期首
親会社株主に帰属する当期純利益÷期首・期末平均自己資本×100
期末平均自己資本×100（％）（％）

54

Financial Strategies
Capital Policy/Shareholder Return

Initiatives for reduction of cross-shareholdings

Basic policies for capital and shareholder distributions

Policy for Cross-Shareholdings

Our capital policy is based on striving for effective management that places emphasis on return on equity (ROE) while
being aware of the capital cost and improving corporate value by improving shareholder return and optimizing the balance
between financial soundness and strategic investments.
● For
shareholder return, while aiming for the distribution of earnings linked with results of operation, strive to maintain astable dividend.
● Decisions
about the repurchase of stock will be made based on the current level of capital, the market environment andother applicable considerations.
● Shareholders’equity will be effectively used for the improvement of production, sales and construction systems as well as
for new businesses, global operations and other activities in order to achieve medium- and long-term growth and build asolid foundation for business operations.

Regarding the shares held for the purpose other than the investment purpose (cross-shareholdings), targeting the companies
with which synergy creation can be expected by maintaining and enhancing the business alliance or business relationship shallbe the basic policy and shares that are judged to be insufficient in terms of the significance of holding shall be serially sold.
● To verify the effect and the rationality that are in line with the holding purpose, scrutinize whether or not the benefits and risks
associated with holding are commensurate with the cost of capital from the qualitative and quantitative aspects and conduct a
review by reporting the annual review results to the Board.
● Regarding the voting right, exercise the voting right on the assumption of contributing to the improvement of our corporate value.
● When exercising the voting right, comprehensively make a judgment from the perspective of the medium- to long-term
improvement of our and the investment destination company’s corporate value, instead of uniformly judging pros and cons
based on the quantitative standards.

●●

Trends in Cross-Shareholdings(¥100 million)

Trends in Dividend, Dividend Payout Ratio, and DOE
(¥)

140

Dividend payout ratio (%)

3.5

33.6

Dividend payout
ratio: 30% or more

30.4

30.1

3.0
2.6

45

40

37.0

100

80

Improve the return rate to the dividend payout ratio of 35%
Stable dividend with DOE 3.5%

42.4

3.5
120

Dividend
payout ratio DOE

Policy of the GP25 3rd Stage

DOE (%)

33.4

32.4

3.2

Average DOE in the past 10 years: 3.1%

35

30

0

37.50

2014

37.50

2015

2016

64.00

※

2017

2018

74.00

2019

GP25 1st Stage

70.00

2020

70.00

2021

GP25 2nd Stage

2022

2023

2024

2025

Tetsuo Harima
Message from theexecutive officer incharge of business
management

55

1

1

1

1

155

114

130

105

31

26

18

25

25

133

156

131

Sale Value

0

(4)

(11)

(25)

(20)

Acquisition Cost

0

0

0

0

0

Reduction

0

(4)

(11)

(25)

(19)

Listed

25

24

19

18

17

Unlisted

25

24

24

22

23

20

2.0

DeemedShareholdings

3

3

3

2

2

Total

53

51

46

42

42

15

1.5

Decrease

0

(2)

(6)

(4)

(1)

10

1.0

Increase

1

0

1

0

1

Reduction

1

(2)

(5)

(4)

0

Total Assets

1,407

1,601

1,706

1,725

1,833

Proportion of Total Assets

13.1%

9.7%

6.7%

7.6%

5.8%

569

617

629

767

905

5

0.5

0

0

2026 (Fiscal year)

GP25 3rd StageNet Assets
Proportion of Net Assets
Proportion of Net Assets (If including
the deemed Shareholdings)

32.4%
37.9%

25.2%
29.6%

18.1%
21.1%

17.0%
20.4%

50

184
37.9

40

Reduction(4)
155

Reduction

32.4

(25)

29.6

150

Reduction

130

(11)

Reduction

30

(20)

114

105

25.2
20.4
21.1

100

20
17.0

18.1
14.5
13.1
11.7

50

10

9.7
6.7
31

11.7%
14.5%

（%）

Deemed Shareholdings

Proportion of Total Assets
Proportion of Net Assets
Proportion of Net Assets (If including the deemed Shareholdings)

Reduce cross-shareholdings (including the deemed
Shareholdings) to 10% or less of net assets by fiscal 2026

200
182

Number of
Stock Names(¥100 million)
Outstanding balance in the balance sheet

250

0

2018

26

2019

18

2020

7.6
5.8
25

25

2021

2022

(Fiscal year)0

The improved capability to generate cash advanced
the reinforcement of the financial structure.

Firmly maintaining the basic stance with a focus
on growth investments

Aiming for an A rating* by implementing thefinancial strategies of 3rd Stage

Over the three years of the previous medium-term management
plan GP25 2nd Stage, we identified the Target Balance Sheet andthen implemented a variety of different measures to implement morebalance sheet-based management. We achieved improvementof the ability to generate cash and the steady reduction of crossshareholdings. As for improvement of the capability to generate
cash, operating cash flow increased to approximately 45 billion yen,a 1.5-fold increase from the accumulated total of approximately
30 billion yen during the three-year period of the GP25 1st Stage
until FY 2019. In addition, since we consistently worked to reducecross-shareholdings as one of the most important management
challenges, the proportion of cross-shareholdings (including deemedholdings) to net assets decreased to less than 15% in FY 2022
compared to the approximately 30% in FY 2019. As a result, in FY
2022, the final year of the GP25 2nd Stage, we are proud to havesignificantly advanced the reinforcement of the financial structure byachieving all the targets set in the 2nd Stage with an ROE of 10.9%,
an ROA of 10.5%, an equity ratio of 41.7%, and a D/E ratio of 0.37.

On the other hand, there remains an issue. We failed to makeinvestments exactly as planned, and the actual total investment was
37.4 billion yen compared to the original plan to invest 55 billion yen
in total. We have to say that we could have done better and had tocarefully select where to invest, even though we experienced a huge
impact from the uncertainties, the restrictions on activities, and theinflation resulting from the rise in resource prices in the COVID-19
crisis. However, we have not discarded our active investment
policy. In the new four-year medium-term management plan GP25
3rd Stage that starts in FY 2023, we will steadily advance growthinvestments that are essential to achieving the long-term vision
based on the capability to generate cash and the financial structurethat were strengthened in the 2nd Stage. Specifically, we expect the
total investment over the four years of the 3rd Stage to be 60 billion
yen, which includes strategic investments of 40 billion yen while theoperating cash flow is expected to be 70 billion yen over the term.
We will allocate capital to optimize financial soundness, improveshareholder returns, and make growth investments as our top priority.

As for growth investments, we will pursue efficient investments tostrengthen the industrial materials business overseas with a focus
on the return on invested capital (ROIC) that has been set as a new
management goal and make investments to reinforce the businessfoundation and reduce greenhouse gas emissions with a focus onsustainability. As for financial soundness, our goal is to achieve an
equity ratio of 40% and above and a D/E ratio of 0.5 and below,
as well as flexibly make use of financial leverage. In addition, we
will improve shareholder returns in the 3rd Stage with the goalof achieving a dividend payout ratio of 35% and DOE (dividendon equity) of 3.5%. We will continue working to reduce crossshareholdings as we did in the 2nd Stage with a specific numericaltarget of decreasing the proportion of cross-shareholdings,
including deemed holdings, to net assets to 10% or below. By
implementing these well-balanced financial strategies, we will obtain
A long-term issuer rating* as early as possible.

Data

Implementation of thefinancial measures
suitable for the realizationof the growth strategies

104

2.5

*The company consolidated shares at a rate of one share per five as of October 1, 2016. The past figures were also consolidated retrospectively for ease of comparison.

Message from the executive officer
in charge of business management

129

Foundation Supporting Value Creation

20

50.00

74.00

112

25

60

40

154

216

2.4

100.00

183
1

3.5

2.9

Fiscal2022

184

Total of the outstanding balancein the balance sheet and deemed
Shareholdings

3.0

Fiscal2021

Total
Deemed Shareholdings

33.1

Fiscal
2020

Unlisted

4.0

3.6

3.4

30.3

4.5

Outstandingbalance in thebalance sheet

Fiscal2019

Strategy for Value Creation

160

Dividend per share (¥)

ListedFiscal2018

Daiken Group's Value Creation

Shareholder Return Policy in the Medium-Term Management Plan GP25 3rd Stage
Shareholder return in the medium-term management plan GP25 3rd Stage for four years (FY 2023–2026) puts emphasis on the improvementof profit return linked with the results of operations and the maintenance of a stable dividend that is less affected by the short-term profit
fluctuation and we implement the dividend payment with goals of the dividend payout ratio at 35% and DOE (Dividend On Equity ratio) at 3.5%.

●*BBB+ long-term issuer rating assigned by Japan Credit Rating Agency, Ltd., (JCR) as ofJune 30, 2022

56

Interview with the Outside Directors
Shingo Ishizaki

Yuko Asami

Kiyoshi Mukohara

Outside Director, Audit andOutside Director, Audit andOutside Director, Audit andSupervisory Committee Member

Supervisory Committee Member

Supervisory Committee Member

As an outside director, what
do you think are the strengths
and weaknesses of the Daiken
Corporation?

What roles do you think you shouldplay to achieve the new medium-term
management plan GP25 3rd Stage?

Q2

I think the greatest achievement in the previous medium-term management plan
was that the company expanded its businesses through active investments
overseas and developed new markets while revising the domestic businessportfolio. However, Daiken Corporation’s reputation in the stock market has
not improved even though the company has been optimizing its financial
foundation. In terms of communication with investors through IR, I think thecompany is not making sufficient efforts. I believe that the company needs totake the beginning of the period of the new medium-term management plan as
an opportunity to start actively communicating with investors and inform themof its medium- to long-term management strategies and competitiveness.

I’d like to discuss the two issues confronting the company. The first issue isa lack of coordination and connection between the domestic businesses andoverseas businesses. Instead of simply expanding the size of the businesses,
the company needs to implement measures to establish organic relationships
between the domestic and overseas divisions and continuously review thebusiness model from a company-wide perspective. The second issue is thedelay in promoting diversity. Though the company seems willing to address
diversity, it needs to take the beginning of the period of the new medium-term
management plan as an opportunity to implement drastic measures.

Though the company achieved all of its management goals, except the sales
target, I think it is largely attributable to market conditions in which the prices
of US wood products, in particular, remained at a high level. On the other
hand, the company ended up facing a difficult situation in terms of revenue
because the company fell behind in encouraging the selling price pass-throughin response to the abrupt rise in raw material prices in Japan and coordination
between manufacturing and sales and between domestic and global offices was
disrupted in the final year. I think there remains an issue as to the ability to flexibly
respond to significant changes in the economic environment.

Q3

Though the company aims to establish its image as an all-embracing company
for building materials, it needs to actually become one with substance. Though
I recognize the efforts based on the pursuit of resolving social issues byachieving the SDGs, the company should pay closer attention to its purpose(the raison d’etre as a company) to practice corporate philosophy so that thephilosophy can appeal to the reason and emotions of people working for it. I
also think that the company should develop and explain its business strategies
to this end in detail from global and technological perspectives.

The points of particular focus are (1) the launch of new materials throughR&D and new technologies, (2) contributions to the achievement of the SDGs
through the businesses, (3) expansion of overseas businesses, (4) promotionof human resource diversity, and (5) the promotion of DX. Though these points
have been incorporated into the policies, we need to pay closer attention todetermine whether effective measures are implemented and that management
resources are properly allocated as we promote the new medium-term
management plan.

We mainly discussed growth strategies and ESG. However, we failed to take
into consideration the abrupt changes in the economic environment, such as the
emergence of geopolitical risks, in our initial discussion; the growth strategies
that we discussed simply incorporated the same course of action as before. This
failure delayed the announcement of the new medium-term management plan,
and we responded by holding discussions again. However, since the world may
drastically change in the future, we need to consider a wider range of risk factors
and hold discussions at the Board meetings.

Q4

Global expansion and M&A are vital to Daiken Corporation’s growthstrategies. I would like to become more actively involved in the calculation offair acquisition prices, the identification of the variety of risk factors, and theimplementation of PMI after acquisition by using the expertise that I developed
while involved in investment banking operations.

The role I would like to play and focus on as of the new fiscal year is tolisten to the opinions of employees. Though we failed to implement sufficientmeasures as a result of the limitations caused by the COVID-19 crisis, I would
like to listen to the opinions of midlevel managers, employees at a plant, R&D
personnel, and female employees, in particular, that we cannot listen to at theBoard meetings and use those opinions to invigorate Daiken Corporation.

In relation to the weakness of the company that I mentioned earlier, in otherwords, the delay in DX, the company needs to quickly advance the sophisticationof its human resource strategy and deepen the discussions on developing an
executive succession plan. I’d like to contribute to the implementation andachievement of the plan by using my experience in management.

When I participated in the selection process, I paid close attention to selecting
human resources with the skill to manage all domestic businesses andintegrate globalization, M&A strategies, and DX strategies, which are necessary
to implement the new medium-term management plan and can contributeto the improvement of our corporate value. Though it is difficult to select an
outside director because we cannot evaluate the candidates based on theirwhole careers, I had several interviews with the executives to get to know thembetter and focused on ensuring fairness, objectivity, and transparency.

There remain issues in terms of the diversity of the Board of directors. Though
we went through a generational change by welcoming the new members
to the Board of directors, the level of the management strategies has not
significantly improved with the new Board of directors. When we holddiscussions in Governance Committee meetings, I realize how hard it is to train
successors. The current management must pay attention to establishing thenext-generation board instead of remaining satisfied with the current Board.

In order to deepen our discussions on the succession plan, we need to link itto the sophistication of the company-wide human resource strategy. I have tosay we have not thoroughly discussed this matter. As for the skills matrix, thefirst version was developed and disclosed in November 2021. However, wehave completed it. We need to improve our skills matrix as quickly as possible
by linking it to the human resource strategy and deepening our discussions atGovernance Committee meetings and the Board meetings.

To make the company better, we should fully discuss at The Board meetings
the future direction of the company and its response to the needs of eachstakeholder. It is important for us to aim to become a company that exceeds
the conventional perception of an excellent global company and optimize all
the values we provide to society instead of simply pursuing profits. These arechallenging goals. However, by discussing them at the Board meetings andoptimizing risk-taking and the financial foundation, we can make a significant
change and promote the achievement of the SDGs.

(1) Human resource diversity, (2) R&D, and (3) management resource
allocation. (1) To make Daiken Corporation’s technological capabilities, oneof our strengths, sustainable, we need to achieve diversity so that the humanresources that support them can tolerate the risks. (2) In order to create
revenue streams and value from a long-term perspective, it is essential tolaunch sustainable materials. Though the company already has many R&D
topics with great potential, it is necessary to invest management resourcesin order to accelerate commercialization. (3) Long-term revenue streams andvalue cannot be created unless the company expands overseas on the basisof its technological capabilities with coordination and synergy. With this inmind, I would like to deepen our discussions on how to develop our businessportfolio and allocate management resources.

It is said that the world is probably at a historical turning point. First, I’d like tohold discussions from a perspective that focuses on the economy and society
for the medium- to long-term future, instead of continuing our discussions as wehave. The important topics to discuss are (1) the promotion of DX in the truest
sense of the word that leads to drastic business reform, (2) reinforcement of
the human resource strategy, and (3) sophistication of a global perspective that
may be more important and offer a major advantage to Daiken Corporation in
the future. We need to strengthen our (2) human resource strategy, in particular,from the perspective of investment in and the development of human resources.
Finally, I think the most important part of a company is its human resources.

Q5
Q6

As for long-term corporate
management, what points would you
like to focus on and discuss in depth
at the Board meetings?

57

Data

The skills matrix has been disclosed
and two new directors have been
appointed. What points did you
pay attention to as a member of
the Governance Committee whenselecting them?

Though Daiken Corporation’s strengths can be summarized into R&D capabilities, productdeployment capabilities, customer base, and its integrated system, the partnership with
ITOCHU Corporation with which the company has formed a capital and business alliance isanother component that further improves these four main strengths. ITOCHU Corporation’s
network in the North American market offers a major advantage to the company, especiallybecause it aims to strengthen its overseas businesses. Daiken Corporation’s weakness is
its delay in DX. Human resources are essential to accelerate DX. I would like to discuss thismatter in depth at the Board meetings in order to strengthen the DX efforts by linking themto the medium- to long-term human resource strategy.

Foundation Supporting Value Creation

What were the particular points ofdiscussion when formulating the new
medium-term management plan GP25
3rd Stage?

Daiken Corporation has two strengths: strong technological capabilities andexcellent human resources. In particular, technological capabilities enable thecompany and its businesses to contribute to the achievement of the SDGs
and offer a distinct advantage to the company in this era when sustainability
is important. On the other hand, Daiken Corporation’s weakness is that it
does not fully use its R&D capabilities, the origin of its strong technologicalcapabilities. It is necessary to properly allocate management resources inorder to use the R&D capabilities to develop new businesses and improve
competitiveness.

Strategy for Value Creation

What were the achievements andissues in the previous medium-term
management plan GP25 2nd Stage?

Q1

I think our domestic customer base is significantly strong. In addition, it issafe to say that the integrated system from the development of materials andbuilding materials to the work of installation and construction is sufficiently
feasible and one of the greatest strengths of the company. However, I think thecompany should conduct R&D activities more tailored to customer needs. As
for the product deployment capabilities, I would like the company to improve
its supply chain and use the power of IT brought about by DX in its strategies.

Daiken Group's Value Creation

Six questions for the outside directors

58Corporate Governance
Key initiatives for the enhancement of corporate governance
2002
2003
2008

2015

2018

2020
2021

2022

Response status of the Corporate Governance Code revised in 2021
Key revised point
Electronic platform forexercising the voting right

Response status
ComplyImplemented from the general meeting of shareholders for the fiscal year ended
March 2022.

Shareholders (General meeting of shareholders)Election and dismissal

Disclosure and dialogue

The Board

Election and dismissal
Election and dismissal

Consultation
Recommendations

Directors: 9

Governance Committee
Audit & Supervisory Committee Directors: 5

Supervision and election/
dismissal

Audit and supervision
Audit

Executive Board Member

Instruction andreporting

Supervision and election/dismissal

ReportingExecutive Directors Committee
Decision-making, approval, and instruction

Executive Officer/Operating Officer

Audit

Monitoring, supervising, andimportant decision-making

Accounting
audit

Business execution anddecision-making

Auditing

ComplyIn November 2021, we revised the policy for the improvement and maintenanceof the systema and initiatives for the promotion of dialogues with shareholders
and clearly stated the outside directors’ active involvement in IR activities.

Proportion of the
Independent outside
directors: 1/3 or MoreComplyIn and after June 2020, the system in which the ratio of the independent outside
directors is 1/3 or more has been kept.

Effectiveness ofthe nomination andremuneration committee

ComplyThe Advisory committee in which the chairperson and majority of the members
are outside directors was established in 2015 (Governance Committee from
June 2021), and its operation has been continuing.

ComplyWe started to disclose it on our website in November 2021.
We published it in the convocation notice for the general meeting ofshareholders for the fiscal year ended March 2022.

Basic policy for the
initiatives for sustainability
was formulated by the
Board

ComplyToward the realization of the group corporate philosophy that expressly statedthe contribution to the realization of a sustainable society, the Daiken global
environment vision 2050, and the Daiken sustainability basic policy, we set
the priority themes concerning ESG and goal values in the medium-term
management plan and have been promoting specific initiatives.

Disclosure of the initiatives
for sustainability

ComplyWe have been continuing the active disclosure in the integrated report and on
our website.

ComplyWe linked with the Daiken global environment vision 2050 in which we committed
to contributing to carbon neutrality in 2050 and expressed an agreement on the
TCFD in October 2021. Based on the TCFD’s recommended disclosure items,
we started disclosing governance, strategies, risk management, and indicesand goals. In the future, we will conduct scenario analyses and financial impact
analyses and strive to formulate countermeasures and plans, incorporate them inthe management strategy, and improve information disclosure.

Information disclosure
based on the TCFD

 umber of committee meetings convened in fiscal 2022:■N

Member are independent outside directors)

7 times■ Consultation matters from the Board(Consultation matters from the Board)Proposal for election and dismissal of the director in the general meeting of shareholders and election anddismissal of the Executive Officer
Plan for the successors of the directors and executive officers
Remuneration for directors* and executive officers, the method of evaluation, and remuneration calculation standards, etc.
Evaluation of the effectiveness of the entire Board
Establishment, revision, and abolition of the policy and rules on procedures, etc. for the governance system
Establishment, change, and abolition of the procedures, etc. for a transaction between related parties
Analysis and countermeasures if opposition votes exceeded the standard in the resolution of the general meeting of shareholders
Necessity and rationality, etc. when examining the capital policy that damages the common benefit of the shareholders*Except for the directors who are Audit & Supervisory Committee Member

Proposal for the election of directors
Amounts of remuneration for directors
The method of the effectiveness evaluation of the Boardand the results of the evaluation● Review of the corporate governance structure andpolicy● Response and disclosure content based on the revised
Corporate Governance Code● The concept of the skills matrix and the disclosing
method
●

●

●
●

●
●
●
●
●

Points of the Structure
The Governance Committee has been established that gives advice and makes recommendations on particularly important matters, suchas the nomination of and remuneration for directors and executive officers, improvement of the effectiveness of the entire Board, and thebuilding of the governance structure, to the Board in response to the Board’s consultation.
● The Governance Committee has the structure that the committee chairperson and a majority of the members are independent outside
directors. It is clearly stated in the basic policy concerning corporate governance that the Governance Committee’s deliberation andrecommendation details should be respected as much as possible in the Board.
● By setting up the internal audit division as an organization directly controlled by the Audit and Supervisory Committee, the structureenhances the audit function.
●

Executive Officer

They make and execute decisions on management under authority and responsibility delegated from the Board and Executive Directors
Committee and play the role of promoting our company’s growth and reform from the perspective of the total company optimization as
the strategic function.

Operating Officer

They undertake business operation in their responsible businesses and domains and execute operations toward the realization ofreform and growth. They are positioned to develop the next-generation leaders.

Structure to promote sustainability

The CSR committee was reorganized to the sustainability promotion
Sustainability Promotion Committee* *committee
in April 2022. Details are published on page 5.

System to Promote Risk Management and Compliance
The Board
Executive Directors Committee
Risk and Compliance Management Committee
Building of the group-wide risk management and compliancesystems and overall management of the promotion plans

Risk and Compliance Management Committee
Chairperson: Deputy President Executive Officer
Secretariat: Corporate Planning Department and Legal Department■ Number of committee meetings convened in fiscal 2022: 4 times■ Key deliberation items

Risk Management

Consideration of the important risk measures andanalysis/evaluation of the influence degree● Revision of the Disaster Countermeasure BCP Manual● Disclosure of the risks associated with businesses●

Departments Responsible
for Risks

Department Responsible
for Legal Affairs

Each Department/Group Company

59

Business execution

Data

Outside directors'
involvement in dialogs

Disclosure of the
combination of skills thatthe Board has

Sustainability
issuesComplyOutside director

Foundation Supporting Value Creation

Fulfillment of theBoard’s function

Disclosure of the English
versionInternal director

Term Director (Except for the director who is an Audit and Supervisory Committee Member) : 1 year Directors who are the Audit and Supervisory Board Member: 2 years

Governance Committee (Committee chairperson and majority of the●

English versions of the summary of financial results, financial result explanatory
materials, notice of the general meeting of shareholders (agenda part), integrated
report, and corporate governance report were disclosed. We will proceed withthe consideration of future improvements as needed.

Auditors
Chairperson/Committee chairperson

Headquarters, respective departments, andaffiliated companies●

Dialogues withinvestors /information
disclosure

Election/
dismissal,
determination Reportingof agendas,
and the rightof dismissal

Strategy for Value Creation

Reduced the number of directors from 9 to 7 (outside
directors: 2/7)
Outside directors increased from 2 to 3 (outside
directors: 3/8)
Enhanced the Board’s supervisory function and madea shift to the Company with Audit & Supervisory
Committee for the purpose of acceleration andefficiency of business execution.
A female outside director was selected (outside
directors: 3/9)
Clarified the Executive Officer system’s management
responsibilities and roles and introduced the Operating
Officer.
Revised the executive remuneration system andimproved the remuneration system for the directors who
are the Audit & Supervisory Committee Member.
Integrated the nomination & remuneration committee
and the Corporate Governance Committee andreorganized to the Governance Committee.
Reorganized the CSR committee to the sustainability
promotion committee to enhance initiatives forsustainability.
Revised the CSR basic policy to the Daiken
sustainability basic policy.

Internal audit
division

2016
2017

2019

Daiken Group's Value Creation

2010
2011
2012

Made the shift to the chief executive officer system
The compliance committee was established.
Reorganized to the risk & compliance management
committee for reinforcement.
Reduced the number of directors from 11 to 9.
An outside director was selected (outside directors: 1/9)
The term for directors was reduced from two years to one
year.
Outside directors increased from 1 to 2 (Outside directors:
2/9)
The basic policy on corporate governance was established.
The nomination and remuneration committee and the
Corporate Governance Committee were established.
The effectiveness evaluation of the Board was started.
Evolved the conventional management philosophy andcorporate code of conduct and established the group
corporate philosophy and the group conduct guidelines.
A female outside Audit & Supervisory Board Member was
selected.
Introduced the transfer restricted stock-based
compensation system.

Corporate Governance Framework

Compliance

Results of the Survey on the compliance consciousness
degree● Personal information management status● Operation of the whistle-blowing system in the overseas
bases
●

60

The effectiveness evaluation of the Board

Executive Remuneration

To increase the effectiveness of the Board and to improve corporate value, the Daiken Group has implemented the effectiveness evaluationof the Board once a year since the end of fiscal 2016. Based on the self-assessment by all directors and deliberations at the GovernanceCommittee in which the chairperson and majority of the members are independent outside directors, the effectiveness of important decisionmaking in management and proper business execution has been conformed to be sufficiently secured. The issues to work on for more
effective the Board operations have been extracted, and they have been continuously putting effort into the improvement of responses.

The first survey on the degree of penetration of the group
corporate philosophy was implemented. Issues in thepenetration was confirmed and measures were executed
Consideration and determination of themeasures to penetrate philosophy
Started to operate thesystematized group corporate
philosophy penetration program

Developmentof theManagement
Strategies/
Policies

Execution of the evaluations of the degreeof penetration of the management strategies
and policies as well as the progress ofimportant issues

Results and issues of the previous
medium-term management plan werereported in the process to formulate the
new medium-term management plan.
The business and market strategies, aswell as the concept of the enhancementof the management foundation, weredeliberated from the draft stage

Enhancement of the Board’s involvement
particularly in the CA process (analyses,
issue organization, and execution ofcountermeasures) in the PDCA process inthe management strategies

Directors’
Knowledge
and Abilities

Enhancementof the Supervisory Function
and RiskManagement

The director human resource development program wasset and its operation started
The nomination & remuneration committee was involved inhuman affairs of the directors to develop the next generation

Improvement of the information provision
to deepen outside director and Audit &Supervisory Board Member’ understanding ofour businesses and that they could sufficiently
review agendas of the Board in advance
Improvement of the information provision tooutside directors and Audit & Supervisory
Board Member to promote theirunderstanding in advance in deliberations
Improvement of the support system in orderfor the directors and Audit & Supervisory
Board Member to be able to actively collectinformation in and outside the company
Improvement of thesupervisory function bydelegating part of decisionmaking to the executive
officer side

Reporting of the matters to deliberate in the
management meeting to outside directors in the regulardebrief session and to outside Audit & Supervisory
Board Member in the Audit & Supervisory Board
Improvement of the information provision, such as
deliberation results on the executive officer side,and implementation of deliberations several times
in regard to high-risk acquisition cases
Thorough implementation of the prompt
distribution of materials

Procedure
The Board has the authority to make decisions on the policy concerning the amounts and the method of calculating executive remuneration,and the authority is delegated to the Board of representative directors by a Board resolution. The reason for delegation was because we judgedthat the Board of representative directors would be suited to evaluate each director’s responsible division while taking into consideration theentire company’s business performance, etc. In determining remuneration, to secure transparency, fairness, and objectivity, remuneration isdetermined by the Board of representative directors after deliberations and recommendations by the Governance Committee.

Continuous operation
Implement rolling for each fiscal year
based on the changes and forecasts ofthe business results and management
environment in the past fiscal year

Focused discussions on the management
strategy in the process to formulate thenext medium-term management plan

Reviews of the PDCA process are
executed, so that the progressconcerning the important itemsof the medium-term management
plan can be easily grasped
Enhancement of the monitoring ofimportant cases(1) Reconfirmation of risks, opportunities,
and materiality; (2) update of the long-term
vision; and (3) discussions on the policy andpriority measures in the next medium-term
management plan
Continuous operation

2

Periodic
reporting

Enhancement of themonitoring after acquisition

Composition
Executive remuneration is composed of mission remuneration as fixed remuneration, performance remuneration as the performancebased remuneration, and stock-based compensation. The proportion of the performance-based remuneration in the remuneration for the
directors (except for the director who is an Audit and Supervisory Committee Member and outside director) is around 40% and is designed
to fluctuate according to performance.

Continuous operation
Continuous operation
Improvement of discussion on the succession plan
Make and disclose the list of the combinations of
the skills expected to have according to strategies
and the skills that the Board has

1

Director (Except for directors who are Audit & Supervisory Committee Member and outside directors)

Since then, regular holding has been continuing

Representativecompensation

Executivecompensation

Supervisor
compensation

Since then, continuously
implementing thisIssue
Response

Review of the regulations of decision-making authority

Revised the Board’s rules and expanded thescope to be delegated to the executive officer side
Shift to the Company with Audit &Supervisory Committee
Enhancement of the Board’s involvement in the group-based
Reviewofimportant risks
risk management

Director who is an Audit & Supervisory Committee Member

2

Improvement of the structure topromote a constructive dialog andtransmit helpful information forstakeholders including shareholders

Mission remuneration

Since then, periodic implementation on a quarterly basis has been continuingIn creating the integrated report,
a questionnaire survey of thedirectors and individual meetings
were implemented, and the Board
has been actively involved
To improve informationtransmission to stakeholders,such as shareholders, evaluations
by the recipients of the information
were monitored by the Board

Since then, periodic implementation of an opinion hearing
questionnaire survey and production meeting has been continuing

Evaluations by the investors weremonitored by the Board andevaluations from external institutions
improved by reflecting them in the
integrated report and on the website

Audit & Supervisory Committee
Member compensation

External opinions are continued to be reflectedon the integrated report creation policy

Deepening of the discussions on the responses
to the opinions by shareholders and investors

Since then,these have been
continuing

Mission remuneration

1

Further discussions on the president candidate development plan and succession of the Board to securesustainability of the functions of the management and the Board

2

Continuation of the discussions on the realization of the long-term vision and the important issues, including thefollowing three themes, with a view to improving sustainable corporate value beyond the vision.

1) Human resource development toward the securing of diversity and human resource strategies including theimprovement of the internal environment2) Internal control and risk management in the entire group
3) Response to sustainability issues

Fixed remuneration to be determined based on one’s duty. To ensure the background of the money amount, the breakdown (Audit & Supervisory
Committee Member compensation in addition to representative compensation, supervisor compensation, and executive compensation) is
organized and determined.

Performance remuneration

Performance-based remuneration based on the accomplishments/results in company performance

Stock-based compensation

To reflect medium- to long-term performance and corporate value improvement, the transfer restricted stock-based compensation system has
been introduced. (Except for directors who are Audit & Supervisory Committee Member and outside directors)

Data

The Board’s effectiveness evaluation implemented in fiscal 2022 evaluated that its sufficient effectiveness, which was equal to or
surpassed that of the previous fiscal year, has been secured as they steadily executed the responses to the issues recognized in theprevious fiscal year and proceeded with the improvement measures. Particularly regarding their involvement in the PDCA process inexecuting and verifying management strategies, such as the ex-post evaluation of the important investment case and the monitoringof the progress status, it has been confirmed that the Board effectively fulfilled their functions and sufficiently functioned in regard to
the role to be involved in the governance structure by the Governance Committee. To further improve the effectiveness of the Board,
we will proceed with the responses to the following issues.

Supervisor compensation

Within the annual amount of 108 million yen

Discussions on the reduction of cross-shareholdings
toward the improvement of stock liquidity

Results of the evaluation in fiscal 2022 and responses to future issues

61

Within the annual amountof 30 million yen

Within the annual amount of 300 million yen

Since then, these have been continuing

Improvement of the feedbacks of IR activities

Improvementof a Dialog
withStakeholders

Performance-based Operating profit: 50%
Profit attributable to owners of parent: 50%
indices

Holding of an office visit for the outside directors
and Audit & Supervisory Board Member

Periodic implementation of the reporting of IR activities

Stock-based
compensation

Performance remuneration

Mission remuneration

Since then, continuously
implementing thisFoundation Supporting Value Creation

ImprovementofDiscussions

Improvement of the provision oftraining opportunities for directors
and Audit & Supervisory Board
MemberContinue to periodically implement the survey toconfirm the penetration status and issues

Strategy for Value Creation

Review of the reporting content,such as the execution ofoperation, toward the effective
involvement in the PDCA process
for management strategies

4. T he procedure for determining remuneration shall be transparent, fair, and objective to achieve the responsibilities
of explanations to all stakeholders including shareholders, investors, and employees.

Fiscal 2020 to fiscal 2022: GP25 2nd Stage

Establishment of the group
corporate philosophy

Effective involvement in the PDCA process
through annual or interim evaluations andverifications for management strategies andpolicies

2. T he remuneration system shall be designed reflecting the long-term vision GP25 and the medium-term
management plan, prevent too great an emphasis on short-term inclinations, and motivate the improvement of
medium- to long-term corporate value.
Daiken Group's Value Creation

Fiscal 2016 to fiscal 2019: GP25 1st Stage

1. T
 he remuneration system shall be based on the practice of the group corporate philosophy.

3. T he standards and system of remuneration shall be effective enough to secure excellent human resources to whom
we can entrust our future.

Key issues and responses
Deliberations to review the management
philosophy and revise it as the group
corporate philosophy

Policy of Executive Remuneration

Executive remuneration for the fiscal year ended March 2022
The total amount of remuneration to each executive classification, the total amount of remuneration by type, and number of target executives
are as follows.
Executive Classification
Retirement Benefits*1
Director (Audit & Supervisory
Committee Member)*2
Audit & Supervisory Board
Member*3
Outside Directors and Audit &Supervisory Board Member

Total Amount of
Remunerations,etc.
(1 million yen)

Missionremuneration

Performance
remuneration

Stock-based
compensation

Stock-based
compensation

200

98

92

8

–

5

36

36

–

–

–

2

10

10

–

–

–

2

42

42

–

–

–

8

Total Amount of Remunerations, etc. by Type (1 million yen)

Number of Target
Executives*1: Except for directors who are Audit and Supervisory Committee Member and outside directors *2: Except for outside directors*3: Except for outside directors (Our company has been shifted from a company with an Audit and Supervisory Board to a company with an Audit and Supervisory Committee as of June 25, 2021.)

62

Message from the newly appointed directors

63

Corporate
Position in
Our Company management /ESG

Finance andaccounting

Riskmanagement,compliance andlegal

Domestic
businessstrategy andDX

Globalbusinessstrategy andDX

Manufacturing
technology
and R&D

Masanori Okuda

Representative
Director, President

●

●

●

●

●

●

Koshin Nomura

Representative
Director, Managing
Executive Officer

●

●

●

●

●

●

Takeshi Nagata

Director, Managing
Executive Officer

●

●

●

●

Masatoshi Maki

Director●●●

Takashi Aihara

Director, Audit andSupervisory Committee
Member (Full-time)●

TakashiTerubayashi

Director, Audit andSupervisory Committee
Member (Full-time)●●

Shingo Ishizaki

Outside Director,
Audit and Supervisory
Committee Member

●

●

●

●

●

Outside Independent

Yuko Asami
Outside Independent

Kiyoshi Mukohara
Outside Independent

Outside Director,
Audit and Supervisory
Committee Member
Outside Director,
Audit and Supervisory
Committee Member

●

●

●

●

●

Reasons for appointment of outside directors as audit and supervisory committee members
Name

Reasons for Appointment

Shingo Ishizaki

Has been engaged in investment bank operations at securities companies for many years, and possesses abundant financial
expertise acquired through said experience. Expected to play supervisory and advisory roles in the execution of duties bydirectors, from a specialized perspective based on the said expertise, especially in financial accounting, thereby contributing to
the increased governance of our company.

Yuko Asami

Is a professor at the Faculty of Economics, Gakushuin University, and has served as a committee member for the Ministry of
Finance, the Financial Services Agency, and other organizations demonstrating adequate expertise in finance and accounting.
Expected to play supervisory and advisory roles in the execution of duties by directors from a specialized perspective based on
the said expertise, especially in corporate accounting, thereby contributing to the increased governance of our company. Has
no experience of engagement in corporate management other than serving as an outside director but is considered capable ofproperly executing the duties of an outside director for the reasons above.

Kiyoshi Mukohara

Has been engaged in the management of financial institutions for many years and possesses abundant financial and managerial
expertise acquired through the said experience. Expected to play supervisory and advisory roles in the execution of duties bydirectors from a specialized perspective based on the said expertise, especially in corporate management, thereby contributing
to the increased governance of our company. History of working at Sumitomo Mitsui Trust Bank, Limited, a major lender of
Daiken Corporation, but resigned as a director of the lender for seven years.

Data

Director, Managing
Executive Officer
Responsible for Overseas
Business and New
Overseas Business

NameFoundation Supporting Value Creation

Takeshi Nagata

Since joining my previous company, I have been consistently involved in the timberindustry for approximately 30 years, and I have experience in a variety of operations
throughout the entire value chain from procurement to sales and the processing of wooden
boards. I lived and worked overseas, mainly in Southeast Asia and Oceania, for 14 years
during this period. After taking a post at the overseas business group of Daiken Corporationin 2015, I focused on expanding overseas businesses with the launch of the door business inIndonesia in 2016 and the acquisition of the MDF plant in New Zealand in 2018 to contributeto the reinforcement of the overseas businesses, which are specified as the growth driver inthe long-term vision.
Currently, the North American wood industrial materials business we established throughM&A in 2019 significantly contributes to the performance of our overseas businesses.
However, another strength we have with our overseas businesses is MDF. We haveestablished a solid customer base and sales network that now enables us to sell the products
we manufacture using the manufacturing technologies we have accumulated through thedevelopment of the businesses for a quarter of a century and the development capabilities
that reflect both manufacturer’s and user’s perspectives in Japan, Asia, and North America. In
addition, I’m confident that expanding the industrial materials business, which effectively uses
timber, will contribute to the realization of a recycling-based society and carbon neutrality
because trees fix the CO2 they absorb as they grow as carbon. Wood will turn into highvalue-added materials, such as MDF and LVL, and such materials can be stored for several
decades. We would like to share such social values with our customers and improve ourcorporate values by increasing the profitability of our overseas businesses.
As the newly appointed director, I’m aware that my most important mission is to balance
the implementation of the overseas growth strategies and risk management. While focusing
on the aforementioned North American business and MDF in the growth strategies andaiming to improve internal control to optimize the balance between the transfer of authority
and management at the overseas locations for risk management, I’d like to focus ondeveloping human resources that can work actively overseas into the future because humanresources that work at and manage our overseas locations are essential.

Main expertise / Experience

Strategy for Value Creation

Representative Director,
Managing Executive
Officer
Responsible for Domestic
Business and New
Domestic Business

To optimize the combination of the skills that the directors have and to make it the Board that will contribute to the mediumto long-term corporate value improvement, we have created the Board members’ skills matrix. For the main items of expertiseand experience, the Company has set core skills for conducting fair and highly transparent management, such as corporate
management, ESG, finance and accounting, risk management, and compliance, etc.; skills of high importance as a construction
materials manufacturer based in Japan, such as domestic business strategy and DX; and skills related to manufacturing
technology in factories at the cutting edge of manufacturing and related to R&D, the source of the Company’s medium- tolong-term competitive advantage. The Company has also set global business strategy and DX for strengthening its position inoverseas markets, which is of particularly high importance for realizing the management strategy set out in the long-term vision.
The skills matrix is also created for the executive officers and operating officers from the perspective of the development of
successors who will play roles in the next-generation management, and we strive to build the optimal management structure.

Daiken Group's Value Creation

Koshin Nomura

Since joining the company, I have worked mainly in the fields of manufacturing anddevelopment. I have been involved in the development of new applications for materials
and the expansion of the lineup of building materials products as an employee in chargeof development in the manufacturing division, and I have been involved in management aspresident of the building materials plant, which was a separate company spun off from thecompany back then. My experience participating in the establishment of the door businessto change the focus of the main business from plywood, which was the business when thecompany was founded, and working at the building materials plant specialized in doors andflooring in China as a manufacturing manager to expand operations was notably memorable
partly because it happened when the company was at a turning point. In order for us tocontinue growing into the future and increase our corporate values, the change of businessin response to the market environment and the acceleration of overseas expansion are
unavoidable management challenges. The change of business requires the power of unity tobring together wisdom by sharing the purpose of launching a new business and the issues toovercome with the group. On the other hand, overseas expansion requires the courage to try
to win trust while discovering the strengths and weaknesses of the company in countries with
cultures different from ours. I’d like to lead the company as a director and set the direction forimprovement of corporate values by utilizing the experience I have built up in my career.
In addition, I'm aware that the greatest strength we have in order to overcome thesemanagement challenges is the technological capabilities we developed based on social
issues and customer needs. The technical development for advanced applications of timber,in particular, reflects the company’s DNA since its foundation and has the potential to serve asa sustainable source of value creation that will lead to the resolution of social issues, such as
the contribution to carbon neutrality. The board of directors will not only optimize the businessportfolio and lead the discussions on the long-term R&D vision but also focus on developing
a corporate culture that encourages young employees to be enthusiastic about development
and makes them feel the joy of taking on challenges using the company’s technologicalcapabilities.

Skills Matrix*1: The three directors above satisfy the criteria for independence assessment specified by the company and have been registered in compliance with the regulations of the Tokyo Stock Exchange.
*2: The three directors above are members of the Governance Committee and have been engaged, from an objective and neutral standpoint, in the selection of directors for the company and the determination of
executive remuneration and governance structure.

64

Directors

Governance

As of June 24, 2022

*Attendance at the Board and the Audit and Supervisory Committee is the status in fiscal 2022.
*The number of shares owned is the number as of the end of March 2022.

Director (Except for the director who is an audit and supervisory committee member)
Masanori Okuda
Representative Director, President
GovernanceAttendance at the Board: 12/13 (92%)●

Number of shares owned: 47,020

Apr. 1974 Joined the Company
Apr. 2007 Executive Officer
General Manager of Tobu Juken Sales Control
Apr. 2008 Senior Executive Officer
General Manager of Juken Sales Control and General Manager of Tobu Sales Control
June 2008 Director, Senior Executive Officer
Apr. 2009 Director, Managing Executive Officer
Tokyo Representative and General Manager of Juken Sales Control
Apr. 2010 General Manager of Juken Sales
June 2011 General Manager of Sales, Manager of New Development Sales, and General Manager of
the Tokyo Office
Apr. 2012 Director, Senior Managing Executive Officer
General Manager of the Tokyo Office
June 2013 Representative Director, Senior Managing Director, and Senior Managing Executive Officer
Oct. 2013 General Manager of Procurement Innovation and General Manager of the Tokyo Office
Apr. 2014 Representative Director, Representative President and Executive Officer
June 2018 Representative Director, President (present)

Director who is an audit and supervisory committee member
Takashi Aihara
Director, Audit & Supervisory
Committee Member (Full-time)

Attendance at the Board: 13/13 (100%)
Attendance at the Audit & Supervisory
Committee: 10/10 (100%)● Number of shares owned: 11,960●●

Apr. 2001 Professor of School and Graduate School of Law and Politics, KWANSEI GAKUIN UNIVERSITY
Aug. 2003 Director and Manager of IR Planning of Takara Printing Co., Ltd.
Mar. 2006 Outside Audit & Supervisory Board Member of Urban Life Co., Ltd.
Aug. 2006 Director and Executive Officer responsible for IR business development of Takara Printing
Co., Ltd.
Feb. 2008 Registered lawyer (present)
June 2010 Outside Audit & Supervisory Board Member of the Company
Jan. 2011 Member of the Ninth Tender Monitoring Committee of Ministry of Finance
Apr. 2011 Member of the Committee of Monitoring Mint Contracts (Independent Administrative Institution)
June 2011 Outside Director of the Company
June 2017 Representative Director, Senior Managing Director, and Senior Managing Executive Officer
June 2018 Representative Director, Senior Managing Executive Officer
Apr. 2021 Responsible for the Head Office and crisis management (present)
June 2021 Director, Audit & Supervisory Committee Member (full-time) (present)

Apr. 1980 Joined the Company

Takashi Terubayashi Apr. 2011 Executive Officer
Koshin Nomura●

Number of shares owned: 8,500

Joined the Company
Manager of DAIKEN Industries (Ningbo) Corporation
Manager of Building Products Development Department of the Company
Division Manager of Interior Products
Executive Officer
Deputy General Manager of Products Head Office and Division Manager of Building
Products
Apr. 2016 Deputy General Manager of Products Head Office and Department
Manager of New Business Development
Apr. 2017 Senior Executive Officer
Manager of Finance and Accounting Department
Apr. 2018 Manager of Corporate Planning Department
Apr. 2019 General Manager of General Development and IT・Logistics
Apr. 2020 Managing Executive Officer
General Manager of Domestic Manufacturing
Apr. 2021 General Manager of Domestic Manufacturing and Division Manager of Home Furnishings
Apr. 2022 Responsible for Domestic Business and New Domestic Business
General Manager of the Tokyo Office (present)
June 2022 Representative Director, Managing Executive Officer (present)

Director, Audit & Supervisory
Committee Member (Full-time)

 ttendance at the Board: 13/13 (100%)AAttendance at the Audit & Supervisory
Committee: 10/10 (100%)● Number of shares owned: 14,610●●

Shingo Ishizaki
Independent

Takeshi Nagata
Director, Managing Executive
Officer●Number of shares owned: 8,930

Director●65

Number of shares owned: 0

Apr. 1987
Apr. 2000
Apr. 2005
Apr. 2006
Apr. 2009
Apr. 2011

Joined ITOCHU Corporation
Chief of Construction Section 2 of Construction & Realty Department
Acting Manager of Construction & Realty Department
Acting Manager of Construction & Realty Department No. 1
General Manager of Construction & Realty Department No. 2
Director of China Construction & Realty Division (Stationed in Shanghai), ITOCHUSHANGHAI LTD.
Apr. 2013 Director of China ICT, General Products & Realty Group (Stationed in Shanghai), ITOCHUSHANGHAI LTD.
Apr. 2014 Deputy Chief Operating Officer of Construction, Realty & Financial Business Division
Apr. 2015 Deputy Chief Operating Officer of Construction, Realty & Logistics Division
Apr. 2016 Chief Operating Officer of Construction, Realty & Logistics Business Division
Apr. 2019 Executive Officer (present)
Chief Operating Officer of Construction & Real Estate Division
Apr. 2022 President of General Products & Realty Company (present)
June 2022 Director of the Company (present)

Governance Committee Chairperson

 ttendance at the Board: 13/13
A(100%)● Attendance at the Audit &Supervisory Committee: 10/10 (100%)● Number of shares owned: 0●

Yuko Asami
Outside Director, Audit &Supervisory Committee Member
Independent
Governance ttendance at the Board: 13/13
A(100%)
Attendance at the Audit &Supervisory Committee: 10/10 (100%)● Number of shares owned: 0●●

Kiyoshi Mukohara
Outside Director, Audit &Supervisory Committee Member
Independent
Governance ttendance at the Board: 13/13 (100%)AAttendance at the Audit & Supervisory
Committee: 10/10 (100%)● Number of shares owned: 0●●

Apr. 2000
Feb. 2002
Apr. 2003
Apr. 2008
Feb. 2010

Full-time instructor, Faculty of Economics, Gakushuin University
Member of performance report project, Accounting Standards Board of Japan
Assistant Professor, Faculty of Economics, Gakushuin University
Professor, Faculty of Economics, Gakushuin University (present)
Member of the Evaluation Committee for the Incorporated Administrative Agency (independent administrative institution), Ministry of FinanceActing chairman of the working group of the Organization for Small and Medium Enterprises and Regional Innovation of the same committee
Feb. 2012 Temporary member of the Business Accounting Council, Financial Services Agency
Apr. 2012 Member of the advisory committee of economics, subcommittee of the establishment of the university, council of the establishmentof the university and incorporated educational institution, Ministry of Education, Culture, Sports, Science and Technology
Apr. 2014 Vice President, Gakushuin University
June 2018 Outside Audit & Supervisory Board Member of the Company
Apr. 2019 Chairperson and Professor, Graduate School of Management, Gakushuin University (present)
June 2019 Member of the Certified Public Accountants and Auditing Oversight Board, Financial Services Agency (present)
Member of Standards Advisory Council, Financial Accounting Standards Foundation (present)
Dec. 2019 Japan Society for the Promotion of Science, Member of the Committee on Grants-in-Aid for Scientific Research (present)
Jan. 2020 Examiner of Certified Public Tax Accountant Examination, National Tax Agency (present)
Sep. 2020 Auditor of Ibaraki University (present)
June 2021 Outside Director, Audit & Supervisory Committee Member of the Company (present)

Data

Masatoshi Maki

Apr. 1985 Joined ITOCHU Corporation
Jan. 2006 Acting Manager of Wood Material and Building Material Department and Chief of Wood
Building Materials Section
Feb. 2009 Senior Executive Director of DAIKEN NEW ZEALAND LIMITED(Stationed in Christchurch)
June 2012 PT. ITOCHU Indonesia (Stationed in Jakarta)
Apr. 2014 Acting Manager of Wood Products & Materials Department of ITOCHU Corporation
July 2014 Acting Manager of Wood Products & Materials Department, and Planning and
Administration Department, ICT, General Products & Realty Company
Apr. 2015 Deputy General Manager of Overseas Business Group of the company
Mar. 2017 Retired from ITOCHU Corporation
Apr. 2017 Executive Officer of the Company
General Manager of Overseas Business Group and Department Manager of Overseas
Business Planning
June 2017 Outside Director of HOKUSHIN Co., Ltd. (present)
Apr. 2019 Senior Executive Officer of the Company
General Manager of Overseas Business
Apr. 2020 Deputy General Manager of Overseas Business Headquarters and General Manager of MDF
Business Division
Apr. 2021 General Manager of Overseas Business, Manager of Asia Business Department, andManager of North America Business Department
Apr. 2022 Managing Executive Officer
Responsible for Overseas Business and New Overseas Business
Manager of North America Business Department (present)
June 2022 Director, Managing Executive Officer (present)

Apr. 1979 Joined Yamaichi Securities Co., Ltd.
Apr. 1998 Joined Merrill Lynch Japan Securities Co., Ltd.
July 2001 Joined UFJ Capital Markets Securities Co., Ltd. (present Mitsubishi UFJ Morgan Stanley
Securities Co., Ltd.)
Oct. 2004 Joined Mizuho Securities Co., Ltd.
Executive Manager of Investment Banking Group
Apr. 2009 Managing Executive Officer and Kansai Investment Banking Group Leader
Apr. 2010 Managing Executive Officer and Kansai and Western Japan Investment Banking Group Leader
June 2015 Special Adviser of Sekisui House, Ltd.
Special Adviser of Sekisui Plastics Co., Ltd.
Apr. 2018 President and Representative Director of SI.Management Co., Ltd. (present)
June 2019 Outside Audit & Supervisory Board Member of the Company
June 2020 Outside Director of the Company
Apr. 2021 Adviser of Asahi Broadcasting Group Holdings Corporation (present)
June 2021 Outside Director, Audit & Supervisory Committee Member of the Company (present)

Foundation Supporting Value Creation

Outside Director, Audit &Supervisory Committee Member

Apr. 2012 Senior Executive Officer
Manager of General Affairs and HR and Manager of the Secretarial Office
Apr. 2013 Managing Executive Officer
Manager of Management Planning Department and Manager of the Secretarial Office
June 2013 Director, Managing Executive Officer
Apr. 2014 Manager of Management Planning Department, Manager of the New Business Development
Office, and Manager of the Secretarial Office
Apr. 2015 Manager of Finance and Accounting
Apr. 2017 Director, Senior Managing Executive Officer
June 2017 Representative Director, Senior Managing Director, and Senior Managing Executive Officer
June 2018 Representative Director, Senior Managing Executive Officer
June 2019 Audit & Supervisory Board Member
June 2021 Director, Audit & Supervisory Committee Member (full-time) (present)

Strategy for Value Creation

Representative Director,
Managing Executive Officer

Apr. 1983
Apr. 2006
Apr. 2011
Apr. 2013
Apr. 2015

Daiken Group's Value Creation●

Governance Committee Members

Apr. 1975 Joined The Sumitomo Trust and Banking Company, Limited (present Sumitomo Mitsui Trust
Bank, Limited)
June 2006 Director and Managing Executive Officer
June 2008 Representative Director and Senior Managing Executive Officer
Apr. 2011 Representative Director and Deputy President Executive Officer
Representative Director and Deputy President of SUMITOMO MITSUI TRUST HOLDINGS, INC.
Apr. 2012 Representative Director, Deputy Chairman of Sumitomo Mitsui Trust Bank, Limited
Representative Director of SUMITOMO MITSUI TRUST HOLDINGS, INC.
Apr. 2015 Corporate Advisor of Sumitomo Mitsui Trust Bank, Limited
June 2015 Retired from Director of SUMITOMO MITSUI TRUST HOLDINGS, INC.
June 2016 Outside Audit & Supervisory Board Member of Rengo Co., Ltd.
Apr. 2018 Executive Advisor of Sumitomo Mitsui Trust Bank, Limited
Mar. 2019 Advisor of Sumitomo Mitsui Trust Research Institute Co., Ltd. (present)
June 2020 Outside Audit & Supervisory Board Member of the Company
June 2021 Outside Director, Audit & Supervisory Committee Member of the Company (present)

66

Date

Eleven-Year Financial Summary(¥million)

8,000

（％）
15.0

Profit attributable to owners of parent
ROE (Return on equity)

7,000

11.7

11.7

10.9
9.5

9.8

9.1

10.0

5,000

7.0

4,000

7.8

7.0

7,872

3,000

2,000

3.8

874

5,895

2,546

2,736

5,447

5,620

5.0

4,402

3,988

2.6

1,000

2.5

1,318
0

Fiscal 2012

Fiscal 2013

Fiscal 2014

Fiscal 2015

Fiscal 2016

Fiscal 2017

Fiscal 2018

Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2022

Net sales

151,209

158,153

180,392

168,833

168,141

168,841

170,581

182,962

202,481

199,210

223,377

Cost of sales

113,189

119,121

137,693

131,657

127,452

125,201

127,946

139,289

151,442

148,328

160,210Gross profit

38,02039,031

42,69937,17540,68943,64042,63543,67351,03850,881

63,167

Selling, general, and administrative expenses

33,47734,327

39,12133,72235,10235,10835,11637,94042,653

42,10245,805

Operating profit

4,542

4,703

3,577

3,452

5,586

8,532

7,519

5,733

8,384

8,779

17,361

Ordinary profit

4,600

5,669

5,025

4,648

5,281

9,033

8,760

6,838

9,108

9,935

18,725

Profit before income taxes

1,893

2,373

4,617

1,373

6,875

7,247

8,342

7,301

8,871

10,97018,264

Profit attributable to owners of parent

874

1,318

2,546

2,736

3,988

5,132

5,895

4,402

5,447

5,620

7,872

ROE (Return on equity)

2.6%

3.8%

7.0%

7.0%

9.8%

11.7%

11.7%

7.8%

9.5%

9.1%

10.9％

3.8%

4.4%

3.8%

3.4%

4.0%

6.9%

6.4%

4.5%

5.5%

5.8％

10.5％

Gross profit margin

25.1%

24.7%

23.7%

22.0%

24.2%

25.8%

25.0%

23.9%

25.2%

25.5％

28.3％

Selling, general, and administrative expenses ratio

22.1%

21.7%

21.7%

20.0%

20.9%

20.8%

20.6%

20.7%

21.1%

21.1％

20.5％

Operating profit ratio

3.0%

3.0%

2.0%

2.0%

3.3%

5.1%

4.4%

3.1%

4.1%

4.4%

7.8％

Ordinary profit ratio

3.0%

3.6%

2.8%

2.8%

3.1%

5.4%

5.1%

3.7%

4.5%

5.0％

8.4％

Cash flows from operating activities

9,074

2,624

9,663

9,299

6,016

10,566

9,158

10,052

16,807

12,254

16,834

Cash flows from investing activities(3,218)(2,033)(5,168)(4,072)(5,972)(4,201)(2,711)(15,079)(17,863)(910)(6,636)

Cash flows from financing activities(1,929)224(1,054)(2,635)(5,486)(6,734)(6,342)

11,165

1,468(11,369)(10,737

Free cash flows

5,856

591

4,494

5,227

43

6,364

6,447

(5,027)(1,056)

11,344

10,198

Capital investments

2,758

4,036

3,274

3,206

3,508

4,757

3,081

6,586

5,490

3,697

2,864

Depreciation

4,217

4,107

3,990

4,093

4,068

3,506

3,768

4,134

5,079

5,563

5,546

R&D expenses

1,470

1,453

1,342

1,349

1,430

1,477

1,551

1,592

1,491

1,452

1,587

Total assets

125,469

131,618

135,890

135,596130,315132,171

140,776

160,158

170,638

172,553

183,391

Net assets

36,94939,87041,41944,984

43,83349,08656,97961,741

62,97576,771

90,563

Shareholder equity

33,56936,00237,15440,57340,78946,61454,24458,90455,77868,04376,487

Shareholder equity ratio

26.8%

27.4%

27.3%

29.9%

31.3%

35.3%

38.5%

36.8%

32.7%

39.4％

41.7％

Interest-bearing debts

32,86534,506

34,59934,20431,43826,33821,95230,78443,87635,50828,500

0.98

0.96

0.93

0.84

0.77

0.57

0.40

0.52

0.79

0.52

0.37

1,337.57

1,434.53

1,480.47

1,669.47

1,692.28

1,933.99

2,250.58

2,264.10

2,142.99

2,612.54

2,935.31

Earnings per share (EPS) (¥)

34.83

52.53

101.46111.70164.67212.96244.60174.55209.32215.83302.18Dividend per share (¥)

37.50

37.50

37.50

37.50

50.00

64.00

74.00

74.00

70.00

70.00

100.00

Dividend payout ratio

107.7%

71.4%

37.0%

33.6%

30.4%

30.1%

30.3%

42.4％

33.4%

32.4％

33.1%

DOE (Dividend on equity ratio)

2.8%

2.7%

2.6%

2.4%

3.0%

3.5%

3.5%

3.4%

3.2%

2.9%

3.6%

Total dividend

941

941

941

914

1,210

1,542

1,783

1,925

1,821

1,823

2,605

Market capitalization

35,88832,24935,26032,93137,842

49,67560,54556,03944,14357,40256,597

Employees (Consolidated) (Persons)

3,183

3,194

3,141

3,191

3,060

3,071

3,073

3,287

3,807

3,852

3,965

D/E ratio (times)
Book value per share (BPS) (¥)

Data

ROA (Return on assets)

Foundation Supporting Value Creation(¥million)

Strategy for Value Creation

0

5,132

7.5

Daiken Group's Value Creation

6,000

12.5

(Note) 1. The company consolidated shares at a rate of one share per five as of October 1, 2016. The past figures were also consolidated retrospectively for ease of comparison.
2. For more information about our financial statements, please refer to our securities report posted on our website. https://www.daiken.jp/company/ir/document/
3. Free cash flows = Cash flows from operating activities + Cash flows from investing activities
4. Debt-equity ratio = Interest-bearing debts / shareholder equity (times)
5. DOE (Dividend on equity ratio) Annual dividend amount / Average shareholder equity at the beginning and end of the period x 100 (%)

67

DAIKEN GROUP REPORT 2022

DAIKEN GROUP REPORT 2022

68

Data

ESG Goals

ESG Goals (Fiscal 2023-2026)
We integrated the past medium-term ESG plan and the medium-term management plan in fiscal 2023 and set the important
themes to work on from the perspective of ESG and goal values as the ESG goals.

Results of the Medium-Term ESG Plan (Fiscal 2020-2022)
Field

Theme
Greenhouse gas emissions
reduction*1

50%
Maintained the target level through the stable operation of
biomass boilers◦

Environment

Serious product accidents: 0
Product safety and quality improvement education
execution rate: 100%
Product audit implementation cover rate: 100%Rate of acquisition of the agreement on the CSR
procurement standards at home and abroad: 100%
Serious violations of the Anti-Monopoly Act andSubcontract Act: 0

One case respectively in FY 2020 and FY 2021, and 0cases in FY 2022
100％
100％
Japan: 98% Progressed in the suppliers of the newconsolidated subsidiaries
Global: Preparations for the trial survey to suppliers completed
0 (continued)

Greenhouse gas emissions reduction

×

×

◦

×

◦

◦
×
◦
◦
×

Amount of carbon storage by the wood industrial materials business(MDF and insulation board)

1,100,000 t-CO2/year

Procure wood in a biodiversity friendly way

Lauan usage rate in flooring substrates

50% reduction(Compared to fiscal 2022)

Appropriate management and reduction ofchemical substances

Release/transfer amount of the substances subject to the PRTR law

70% reduction(Compared to fiscal 2022)

Promotion of effective use of water resources

Water resource input (Group production bases in Japan andoverseas)

4% reduction(Compared to fiscal 2022)

Reduction of the use of plastics derived fromfossil fuels

Reduction of the use of plastic containers and packaging

4% reduction(Compared to fiscal 2022)

Strengthen environmental risk management

Number of environmental accidents and violations at home andabroad (Those with administrative guidance and penal charge)

0

Enhancement of the quality control structure

Number of accidents caused by design in the new product developed
Manufacturing and product audit implementation cover rate
Product safety and quality improvement education execution rate

0
100％
100％

Promotion of CSR procurement

The rate of the CSR survey implementation in Japan and overseas

100％

Ensuring fair competition and transactions

Serious violations of the Anti-Monopoly Act and Subcontract Act
Planning and holding of the enlightenment activities by division andjob type

0
20 times/year

Total diversity index 3rd Stage*2

3％
70％
60pt

96％

▲

Reinforcing human resources development

100％

◦

Job separation rate within three years
Young employees’ career plan training attendance rate
Attendance rate for the prioritized market enhancement program
Management skill training attendance rate

Within 15%
100％
50％
80％

Enhancement of the occupational safety andhealthSerious disaster
Plant mutual safety diagnosis execution rate

0100％

Human rights promotion activities

Human rights enlightenment training attendance rate
Supervisor harassment training attendance rate

100％
100％

Social contribution activities by cooperatingwith local communities

Holding of the event planned by cooperating with local communities(Each group production bases)

1 times/yearG

Enhancement of the governance system

Female executive ratio (Director)
Degree of penetration of the group corporate philosophy*4

10% or more
60 pt or more

Improvement of a dialog with stakeholders

Establishment of the index for the engagement with customers andbusiness partners and the method, and setting of the goal

Implementation in fiscal
2023

Number of sessions on our IR site

200% (As compared tofiscal 2022)

Serious compliance violations
Compliance consciousness degree*50+5 pt (As compared tofiscal 2022)

0 (continued)
Although diagnosis by visiting the plants was suspended,online information sharing by the safety supervisor wasenhanced

A total of 62 events held in 18 bases among 20 bases athome and abroad▲

Group corporate philosophy penetration program80％
Enhancement of the governance execution rate: 100%
Newly established and operating the collection of cases of*4*1
Degree of penetration of the group corporate philosophy : practicing philosophy and the good case awards programsystem+10 pt (As compared to fiscal 2018)+5 pt (As compared to fiscal 2018)
System BCP 3-year proactive measure completion rate：
100%
100%
Promotion of risk management Procurement BCP 3-year proactive measure completion Grasping and evaluation of risks completed, andresponses have been continuing
rate：100%▲

Serious compliance violations: 00 (continued)
Compliance consciousness degree*5: +5 pt (As compared+3.1 pt (As compared to fiscal 2020)
to fiscal 2020)

×
◦

◦
×

*1: Set as the non-financial management goals in the medium-term management plan
*2: Our own indices in which diversity-related items, such as the female manager ratio, were indexed. Total Diversity Index 3rd Stage is used in and after fiscal 2023 and items related to the method of calculation are reviewed
and reset*3: Our own index based on the survey using the employees’ sense of satisfaction and pleasant workplaces as evaluation axes
*4: Our own indices in which employees’ understanding, sharing, and practice of the group corporate philosophy were indexed*5: Own indices to measure employees’ compliance consciousness degree from the perspectives of legal compliance, a sense of ethics, structure, and corporate culture

Strict compliance

Data

GovernanceTotal work time reduction rate
Rate of taking annual paid leave
Employee satisfaction*3

×
◦
▲

S
SocialSocialPromotion of workstyle reform

Job separation rate within three years: Within 15%
15.4％
Young employees’ career plan training attendance rate: 100% 100％
Attendance rate for the prioritized market enhancement
42％
program: 50%
Management staff training program attendance rate: 70% 55.8％

Status of achievement… ◦Achieved × Not achieved ▲ The impact of postponement and suspension due to the restricted activities in the COVID-19 crisis

69

Expansion of the amount of carbon storage byusing timber▲◦▲

Reinforcing human resources
development

Strict complianceJapan: 50% or more
Overseas: 40% or more

80％
20 pt
25％

◦
×
×

Holding of the event planned by cooperating with local
communities: Once a year
(Each group production bases)

Renewable energy utilization ratio

The rate of receiving health promotion allowance
Health score (Exercise, rest, and nutrition)
Presenteeism loss rate

Total work time reduction rate: 3% (As compared to fiscal
3.5% reduction (As compared to fiscal 2019)
2019)
61.4％
Rate of taking annual paid leave: 70%-0.8 pt (As compared to fiscal 2020)
Employee satisfaction*3: +5 pt (As compared to fiscal 2020)

Social contribution activities
by cooperating with local
communities

Total greenhouse gas emissions in Japan and overseas(Scope3)

Promotion of health management

Promotion of workstyle reform

Human rights enlightenment training attendance rate:
100%
Supervisor harassment training execution rate: 100%10% reduction (Ascompared to fiscal 2022)
6% reduction (Ascompared to fiscal 2022)

Promotion of diversity◦

Human rights promotion
activities

Total greenhouse gas emissions in Japan and overseas (Scope1+2)

Promotion of the use of renewable energy◦

Promotion of diversity*1

Serious disaster: 0
Plant mutual safety diagnosis execution rate: 100%15% reduction(Compared to fiscal 2022)+30 pt (As compared tofiscal 2022)
The ratio of female employees hired (New graduate nationwide course) 50％
The female full-time employee ratio
20％
The percentage of male employees taking childcare leave
50％
The female manager ratio
2％long-term care seminar attendance rate
90%/year
Diversity training attendance rate (Managers)
100％
The degree of attainment of the employment rate of persons with100％
disabilities
Personnel composition by age (Difference by generation)
Within the difference of
10 pt+30 pt (As compared to fiscal 2019)
Total diversity index*2: +20 pt (As compared to fiscal 2019) Achieved the goal as taking childcare leave among male
employees progressed

Enhancement of theoccupational safety and health

E

Reduction of the final waste landfilling treatment amount (production
departments in Japan and overseas)

Foundation Supporting Value Creation

0 (continued)
Maintained 0 cases by operating and continuously
improving the environmental management system

Promotion of recycle and conversion of waste
into valuables

Goal (Fiscal 2026)

GovernanceFair transactions

Number of environmental accidents and violations: 0(Those with administrative guidance or penal charge)

Theme

Strategy for Value Creation

51%
Utilization of domestic timber for flooring substrates: 45% Achieved the goal by promoting the switch from lauan
wood

Field

Environment

Procure wood in a biodiversity
friendly way

Promotion of effective use ofwater resources

Enhancement of the quality
control structure*1

G◦

Appropriate management
and reduction of chemical
substances

Promotion of recycle andconversion of waste into
valuables

Strengthen environmental risk
management

S

Renewable energy utilization ratio: 50% or more

Status ofAchievement

36% reduction (As compared to fiscal 2014)
Achieved the goal by renewing to energy-saving facilities
and the reduction measures, such as production
rationalization

Amount of carbon fixation by the wood industrial materials 1,044,000 t-CO2/year
business
Although it increased compared to fiscal 2019 through the(MDF and insulation board)
increase in production of MDF production, the goal could
1,100,000 t-CO2/year
not be achieved
5.8%
Final disposal rate (ratio of volume disposed of in landfill
Although it improved by 1.8 points compared to fiscal
outside the company): 5% or below
2019 by promoting the material use of waste, the goal
could not be achieved
4% reduction (As compared to fiscal 2019)
Water resource input: 3% reduction (As compared to fiscal
Achieved the goal by improving the production processes,
2019)
such as the loss in using water when starting production(Group production bases in Japan)
processes each time
59% reduction (As compared to fiscal 2019)
Release/transfer amount of the substances subject to the Although reduction of methylene chloride progressed as the
PRTR law: 70% reduction (As compared to fiscal 2019)
establishment of technology for the product specification
change completed, the goal could not be achieved

Promotion of carbon fixation

E

Total greenhouse gas emissions in Japan
Fiscal 2022: 26% reduction (As compared to fiscal 2014)

Results

Daiken Group's Value Creation

Promotion of the use ofrenewable energy

Goals

70

Data

ESG Data

E Environment

S Social(Fiscal year)

Scope

Quantity of water
intakeChemical substances(Substances subject to the
PRTR law)

2020

2021

2022

2,888

2,874

2,914

2,667

2,711

50

50

50

50

50

2,041

1,943

1,865

1,799

1,859

3

1,000 mDischarge ofdrainage

1,572

Amount generated
Waste, etc.

2019

％

Percentage of renewable energy
Effective use of water
resources

2018

Percentage of final
volume disposed ofin landfill

Group production
bases in Japan

Emissions/Transfer
volume1,000 t

1,455

48.8

48.6

1,381
47.5

1,331

1,408

43.7

47.1

％

7.5

7.6

7.2

5.9

5.8

t

15

17

16

8

7

0

Case

0

0

0

0

Japan

Japan

Japan
Scope 1+2+3 Total
Japan

Average length of service

3,965
2,461
1,504
41.9
39.2
42.8
17.7
11.7
19.6

2.0

2.2

1.9

1.3

2.3

19.5
34.0

20.2
20.3

21.9
34.0

23.6
29.0

24.2
32.6

0.62

1.04

1.23

1.62

1.63

Persons

5
0
5

12
7
5

28
20
8

17
7
10

37
24
13

％

100

100

100

100

100

Non-consolidated

％

1.80

2.03

1.95

1.96

2.14

Non-consolidated

％

49.8

53.9

64.9

65.8

61.4

Group consolidation in
Japan*1

％

100

100

100

100

98

Group production basesin Japan

-

0.82
100
0
0

1.22
100
0
0

0
100
0
0

1.65
100
0
0

2.06

%

-

-

55.4

56.7

54.6

Non-consolidated

FemaleYear

Voluntary job separation ratio
Voluntary job separation ratio (Full-time employees)％

Non-consolidated

The female employee ratio
The ratio of female employees hired
The female manager ratio (positions equivalent
to section chief or higher)

2021

2022

-

73.5

73.7

Number of employees taking childcare leave

Group consolidation inJapan
Overseas groupconsolidation*1

36.1

35.4

35.4

31.2

32.9

-

-

-

42.3

40.8

FemaleThe rate of returning to work from childcare
leaveGroup consolidation*1

-

-

-

89.2

87.9

Group consolidation inJapan
Overseas groupconsolidation*1

63.2

58.6

55.7

51.3

48.5

The employment rate of persons with disabilities

-

-

-

38.0

39.4

Annual paid leave

-

-

-

1,763.8

2,212.9

Acquisition of paid holidays

Group consolidation in
Japan*4-

1,077.7

1,120.6

1,008.5

1,082.1

CSR procurement

Group consolidation*1

-

-

-

162.7

161.5

Group consolidation in
Japan

99.3

93.9

91.1

82.5

81.4

Group consolidation*1

-

-

-

1,926.5

2,374.4

Group consolidation in
Japan*4-

1,171.7

1,211.8

1,091.0

1,163.4

1,000 t-CO2

Male
Non-consolidated

Employment of the persons with disabilities

The rate of acquisition of the agreement on
the CSR procurement standards

Occupational Safety
The Rate of lost-worktime injuries
The plant mutual safety diagnosis execution rate
Workplace fatality

Employees
Contractor

Non-consolidated

Persons

Group consolidation in
Japan*1

pt

Employee satisfaction
Employee satisfaction*3*1. Four production bases in Japan in fiscal 2018 and the group production bases in Japan from fiscal 2019 to 2021
*2. Although diagnosis by visiting the plants was suspended due to the COVID-19 pandemic, online information sharing by the safety supervisor was enhanced*3. Employee satisfaction: Our own index based on the survey using the employees’ sense of satisfaction and pleasant workplaces as evaluation axes
*4. Except for T.O FLOORING Co., Ltd.

Scope2 4%G GovernanceDirector composition

Category 12
End-of-life treatment of sold products

9%

17%

Scope3Category 4
Upstream transportation and distribution

Total Emissions
in Fiscal 2022:

2,374.414%1,000 t-CO 2

Number of directors
Number of outside directors

Scope3 93%(Fiscal year)

2018

2019

2020

2021

2022

Persons

9
2

9
2

7
2

8
3

9
3

Times

12

15

13

12

13

％

95

100

100

100

100

3,276
1

863
6

1,337
14

1,471
8

3,951
12

Scope

Unit

Non-consolidated*The number of persons are the figures as of the end of June in each fiscal year

Status of the board convened

Scope3Category 1
Purchased goods and services

49%

Number of the audit & supervisory board
convened
Attendance rate of outside directors

Non-consolidated

Compliance
Number of participants in compliance training

pe3
S co

- *2
0
0

Data

Scope1 Sco
pe2％

Non-consolidated

Childcare leave

2020

5%

Scope3Category 10
Processing of sold products

3,852
2,449
1,403
41.6
38.8
42.4
17.6
11.4
19.4

Age

Male

-

Scope1 3%

Scope3

3,807
2,411
1,396
41.6
38.8
42.4
17.5
11.6
19.2

Female2019

Greenhouse Gas Emissions Composition Ratio in Fiscal 2022 (Group consolidation)

Other Categories(Categories 2, 3, 5, 6, 7, 9, and 11)

3,287
2,268
1,019
41.6
38.6
42.4
17.7
11.6
19.3

Persons

Average age

-

Unit

*1. Except for Singapore Branch, Indonesia Office, Vietnam Office, and Daiken (Shanghai) Corporation among the overseas group bases*2. Conform to the Basic Guidelines on Accounting for Greenhouse Gas Emissions throughout the Supply Chain by the Ministry of Environment and Ministry of Economy, Trade and Industry.
*3. Excluding some of the bases and activities with small emissions and a small impact on the entire supply chain’s emissions.
*4. Including emissions by procuring materials from the overseas group companies.

Scope3

3,073
2,248
825
41.4
37.7
42.2
17.7
11.5
19.3

Group consolidation

Global2018

Group consolidation*1

Scope 1+2 Total

Domestic

Foundation Supporting Value Creation

Overseas
Scope 3*2 and 3 Total

2022

Number of employees (Consolidated)

Group consolidation*1

Scope

Overseas

2021

Strategy for Value Creation(Fiscal year)

Scope 2 Total

2020

Male

Greenhouse Gas Emissions

Japan

2019

Unit

Women’s active participation

Number of environmental accidents and violations(Those with administrative guidance or penal
charge)Scope 1 Total(Fiscal year)

2018

Scope

Daiken Group's Value Creation

Total energy input

Unit
1,000 GJ
(Heat quantity
equivalent)

Number of employees

Number of whistle-blowing

Group consolidation inJapan

Total/persons
Case

More detailed information is published on our website. https://www.daiken.jp/company/ir/document/esgdata.html
71

DAIKEN GROUP REPORT 2022

DAIKEN GROUP REPORT 2022

72

1.0

Data

Stock Information (As of March 31, 2022)

Glossary

Stock Information

Breakdown of shares by type of shareholder

0.8

（%）

79,643,600

0.30%

0.53%

0.63%

Securities companies

Total number of shares issued

27,080,043

3.88%

3.82%

3.78%

Treasury stock

4,490

5.96%

6.61%

12.97%

Shareholder registry administrator Sumitomo Mitsui Trust Bank, Limited

Foreign institutions
and others

14.45%

14.93%
15.72%

Individuals and others

25.55%

Financial institutions

Number of shareholders

100

80

Ownership
Ratio (%)

ITOCHU Corporation

9,475,300

36.4

The Master Trust Bank of Japan, Ltd. (Trust
Account)

2,253,800

8.6

Sumitomo Mitsui Banking Corporation

986,980

3.8

SUMITOMO LIFE INSURANCE COMPANY

931,200

3.6

824,600

3.2

DAIKEN CORPORATION Trading-Partner
Shareholding Association
DAIKEN CORPORATION Employee Shareholding
Association
Custody Bank of Japan, Ltd. (Trust Account)

2.8

614,400

2.4

Nippon Life Insurance Company

545,669

2.1

The Norinchukin Bank

463,667

1.8

JUTEC Corporation

376,390

1.4

45.38%

41.35%

Other Japanesecompanies0

2021

2022 (End of the period)(Fiscal year)

2018

2019

2020

2021

2022

DAIKEN CORPORATION (%)

125.5

111.7

92.9

120.9

124.2

Including dividend

115.9

110.0

99.6

141.5

144.3

605

574

560

496

565

329

100
100

0
High (¥)
Low (¥)

Solution proposal

The words are often used in the sense of resolving a customer’s issue by combining the existing products orcreating a program other than the product. Product development tailored to the needs, instead of only theexisting products, for trouble that a customer has and proposals for spaces that utilize simulations aimed at
the environmental improvement for the spaces are such proposals.

Veneer

A thin plate of timber (thin plate with thickness of 2-4 mm: veneer) cut in manner of rotary cutting of a log. It
is used for manufacturing LVL and plywood as well as decorative surface materials for furniture and building
materials.

New normal

It refers to the state where there is a huge change occurred in society, conditions cannot be returned tothe previous state before the change occurred, and new common sense is established (new normal). The
Daiken Group positioned the responses to new normal, such as the changes in society, lifestyles, andconsciousness, in and after 2020 on the background of the worldwide spread of COVID-19 as materiality,
User Needs in the New Normal Era.

Presenteeism

The state where an employee is not absent and it does not appear in managing attendance, but productivity
decreased for health reasons. In promoting health management, the Daiken Group has set the Presenteeism
Loss Rate as one of the ESG goals as the index to measure the effect of each measure.

Material recycling

It is to collect waste generated from used products and production processes, process it in a way that it canbe easily used, and use it as a material or raw material for new products. Based on the idea of the pursuitof using timber as a material to the extent possible, the Daiken Group uses wood chips from offcuts anddemolished houses as primary raw materials for MDF and insulation boards that are the primary products.

Lauan wood (Natural
Tropical Species)

Natural hardwood timber in Southeast Asia. It has high workability and is used for plywood, substrate offurniture.

CSV

The abbreviation for Creating Shared Value. An approach to create both the economic value and social value
by the company responding to social needs (resolution of social issues). It is the concept advocated byProfessor Michael Porter who is an American management scholar. The Daiken Group defined it as finding
solutions to social issues through the provision of common values capitalizing on Daiken’s uniqueness andhas been enhancing it to increase the linkage with the growth strategy.

LVL

The abbreviation for Laminated Veneer Lumber. A fabricated wood product manufactured by laminating
veneers cut from a log all parallelized in the fiber direction and gluing them together. It is used for posts andbeams of houses, frame materials for furniture, staircase sets, and frames/substrates of doors.

MDF

The abbreviation for Medium Density Fiberboard. Wooden fiberboard using residual wood offcuts for main
raw material and pressed into a board. It is used for flooring substrates, substrates of doors, cabinets, andfurniture.

TOPIX

大建工業株価500Fibers made by thinning cellulose, which is a type of prime constituent of cell walls extracted from timber, tothe width of about 15 nanometers (nanometer is one millionth of a millimeter). The abbreviation for Cellulose
Nano Fiber, which is also called CNF.

Stock price of DAIKEN CORPORATION

TOPIX※大建工業株価とTOPIXの値は、2011年3月末日の終値データを100として指数化しています。
*Figures of stock price of Daiken Corporation and TOPIX are indexed as 100, based on the data of closing prices on March 31, 2012.
(Fiscal year)

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

1,450

1,530

1,635

2,050

2,349

3,150

2,844

2,291

2,379

2,545

830

1,135

1,180

1,130

1,918

1,950

1,747

1,316

1,523

1,905

Stock price at the end of the period (¥)

1,285

1,405

1,355

1,570

2,061

2,512

2,154

1,696

2,204

2,172

PER (times)

24.46

13.85

12.13

9.53

9.68

10.27

12.34

8.10

10.21

7.19

PBR (times)

0.90

0.95

0.81

0.93

1.07

1.12

0.95

0.79

0.84

0.74

Note 1: Market capitalization = Stock price at the end of the period (Total number of shares issued – Number of treasury shares at the end of the period)
Note 2: PER (price earnings ratio) = Stock price at the end of the period / Net income per share (times)

Data

150
150

50

Cellulose nanofibers (CNF)

441

378

352

The strategic policy for companies to place emphasis on Sustainability in the environment with growing
uncertainties, to simultaneously pursue the company’s profitability and ESG (environment, society, andSustainability transformation
governance), to transform the concept of management and the concept of a dialogue with investors. This(SX)
was recommended in the Study Group on Approaches to Making More Substantial the Dialogues for
Creation of Sustainable Corporate Value by the Ministry of Economy, Trade and Industry in August 2020.

Foundation Supporting Value Creation

Note1: Total shareholder return: This expresses the total investment return for a shareholder thatcombines the amount of the stock price increase and dividend.
Note2: Figures in the table above are calculated using the calculation formula by the Cabinet Office andare the values as of the end of each fiscal year from fiscal 2018 to fiscal 2022.

時価総額
Market
時価総額（億円）
capitalization（億円）(¥100 million)

322

Thermal recycling

It is to not only simply conduct waste incineration processing but collect and use energy generated at thetime of incineration. The Daiken Group uses wood chips, which cannot be used as product raw materials,
and offcuts and wood power generated in the working process as fuel for woody biomass boilers as thenecessary heat source in the manufacturing process.

Total Shareholder Return

Trend of Stock Price/Market Capitalization/PER/PBR (For last 10 years)

200
200

Circular economy

Economic activities to create added value through servitization while minimizing resource input andconsumption and effectively using stocks, in addition to the initiatives for the conventional 3Rs (Reduce,
Reuse, and Recycle) (Circular economy). This is to aim for maximization of the value of resources andproducts, minimizing resource consumption, and inhibiting the generation of waste.

28.73%

45.61%

20

Note 1: Daiken Corporation is in possession of 1,022,456 treasury shares. However, the Company is
excluded from the above list of major shareholders.
Note 2: The ownership ratio is calculated excluding the treasury stock.

250
250

The internal carbon price set in a company. A mechanism to promote investments in and countermeasuresfor low carbon, such as the reductions in carbon dioxide emissions, the incentive for the promotion ofenergy saving, refreshing awareness in a company, and the policy for investment decision-making.

40

2020

729,539

Internal carbon pricing

Strategy for Value Creation

Number of
SharesName

29.80%

60

Major Shareholders

Description

Daiken Group's Value Creation

Total number of authorized shares

Term

WPC = The abbreviation for Wood Plastics Combination. Our unique technology to harden wood tissues
WPC Processing Technology by injecting plastics into and filling the tissues. By processing surface wood for flooring, it demonstrates

strength against dents and scratches.

Note 3: PBR (price book-value ratio) = Stock price at the end of the period / Net assets per share (times)
Note 4: company consolidated shares at a rate of one share per five as of October 1, 2016. The past figures were also consolidated retrospectively for ease of comparison.

73

74

Data

Company Information (As of July 01, 2022)
Company NameDAIKEN CORPORATION

Registered Head Office

1-1, Inami, Nanto City, Toyama, Japan

Operational Headquarters
Osaka office

3-2-4 Nakanoshima, Kita-ku, Osaka, JapanTokyo Office

3-12-8 Sotokanda, Chiyoda-ku, Tokyo, Japan

Major Sales Offices

Sapporo, Sendai, Tokyo, Saitama, Niigata,
Nagoya, Kanazawa, Osaka, Hiroshima,
Takamatsu, Fukuoka, and Singapore

Production Plants

Inami Plant (Nanto City, Toyama Prefecture)
Okayama Plant (Okayama City)
Takahagi Plant (Takahagi City, Ibaraki Prefecture)
Mie Plant (Tsu City)

September 26, 1945
15.3 billion yen

Stock exchange
listings

The Prime Market of the Tokyo Stock Exchange

Security code

7905

Setting day

March 31

General Meetingof Shareholders

June

Production baseIndustrial materials business

Building materials businessEngineering business

TDY Collaboration Showroom
You can see products from three TDY companies in the same place: Daiken's floorings, interior building materials such as doors,
TOTO's kitchens and bathrooms, and YKK AP's windows and exteriors.

Japan

Daiken Group's Value Creation

Founding
Capital Stock

Subsidiaries part of the Group

Overseas

Yubari Plant, T.O FLOORING CO., LTD.

DAIKEN (Shanghai) Corporation (China)

Inami Plant

PACIFIC WOODTECH CORPORATION(USA)
The company was transferred from a
consolidated subsidiary to an equity
method affiliate on August 2022.

TDY Sapporo
Nichinan Daiken Co., Ltd.

CIPA Lumber Co., Ltd. (Canada)

Takahagi Plant

Strategy for Value Creation

Daifit Co., Ltd.

Daiken R&D Center

Okayama Plant

Foundation Supporting Value Creation

Tokyo Office

Aizu Daiken Corporation
DAIKEN Industries (Ningbo)
Corporation (China)
Toyama Juki Co., Ltd.

Singapore Branch
Eco Techno Co., Ltd.
DAIKEN MIRI SDN. BHD.
(Malaysia)

TDY Kanazawa
Koukou Sangyo Corporation

Sankei Corporation

TDY Tokyo

Dai-tac Corporation

PAC SYSTEM Co., Ltd.

Indonesia office

TDY Nagoya

Data

TDY Osaka

ReformQ Co., Ltd.

Setouchi Kakoh Co., Ltd.
T.O FLOORING CO., LTD.

TDY Hiroshima
TDY Takamatsu

DAIKEN SARAWAK SDN. BHD.
(Malaysia)

Mie Plant

TDY Fukuoka
Dai-wood Corporation
Operational Headquarters Osaka office

DAIKEN ENGINEERING CORPORATION
Smileup Corporation

PT. DAIKEN DHARMA INDONESIA(Indonesia)

75

DAIKEN GROUP REPORT 2022

DAIKEN SOUTHLAND LIMITED(New Zealand)

DAIKEN NEW ZEALAND LIMITED(New Zealand)

DAIKEN GROUP REPORT 2022

76

DAIKEN CORPORATIONHead Office
14F Nakanoshima Festival Tower West,3-2-4 Nakanoshima, Kita-ku, Osaka 530-8210
https://www.daiken-ad.com/en/

Issued in September 2022
[175-18] IR2022.08 WI/SI（P16.1-07）