Management Planning Department
ULVAC, Inc.
2500 Hagisono, Chigasaki, Kanagawa Prefecture 253-8543, Japan
TEL. +81-467-89-2033 FAX. +81-467-82-9114

https://www.ulvac.co.jp/en/

Basic Corporate Philosophy/Management Policies

ULVAC's mission‘ULVAC’ is a combination of ‘UL’ from ‘ultimate’ and ‘VAC’ from‘vacuum,’ signifying that we pursue the ‘Ultimate in Vacuum
Technology.’ In 1952, ULVAC was founded by a group of young
people aspired to contribute to Japan’s post-war reconstruction
and the development of industry and science through the useof vacuum technology. This aspiration created various vacuum
technology equipment which played an important role inmultiple fields such as automobiles and electrical appliance ineveryday life to raw materials and chemicals in the industrial
field. For the most advanced industries such as flat panel
displays, semiconductor and electronics, vacuum technology
has become an absolute essential, and we have grown along
Basic Corporate Philosophy

with people’s way of life. Our mission is to continue to create
value for the world and contribute to the future of people and

The ULVAC Group aims to contribute to thethe earth through vacuum technology.

development of industries and science by

In an era of change, we challenge to change, withoutcomprehensively utilizing its vacuum and peripheral

being satisfied with the status quo, and will always pursue

technologies through the mutual cooperation andthe forefront through vacuum technology, together with ourcollaboration of the Group companies.

partners. We will contribute to the realization of a sustainable
society through vacuum technology while fulfilling our social

Management Policies

responsibilities.

Improve Customer Satisfaction
Innovations in Production Technology
Development of Original Products
Free and Open-minded Organization
Enhancing Corporate Value1

ULVAC VALUE REPORT 2021

2

ULVAC’s Vacuum Technology

Table of Contents/Editorial Policy

ULVAC’s Business Segments

Vacuum Technology,
ULVAC’s Core
Competence

Vacuum Equipment Business
Semiconductor and electronic device
production equipment
Semiconductor (memory, logic, power semiconductors, etc.)
production equipment
Electronic device (MEMS, communication devices, opticaldevices, etc.) production equipment

Electronic packaging equipment (WL-CSP, FoPLP, etc.)

FPD production equipment

About ULVAC
579ULVAC’s HistoryULVAC’s Businesses
Consolidated Financial and Non-financial
Highlights

ULVAC’s Vision
11
15

Commitment of Top Management
ULVAC’s Value Creation
Process

LCD production equipment
OLED production equipment

Priority Issues

Roll coater

Value Offered by ULVAC’s BusinessResearch & Development and Global Expansion

Components
Vacuum pumps
Vacuum gauges

Stated simply, a vacuum is a space where
the pressure is lower than the atmosphericpressure. A vacuum has interesting properties:
for example, materials’ lower boiling points
in a vacuum mean they are more likely toevaporate and gas molecules can travel in astraight line in a space. ULVAC has developed
various application technologies that exploit theproperties of a vacuum in its quest to realize
the remarkable potential inherent in vacuum
technology.
For example, using vacuum technology, it ispossible to create ultrathin films with micronto nanometer-order thickness. Since suchthin films cannot be produced by physicallystretching materials, advanced vacuum
deposition technology is required for depositing
layers of atoms or molecules of materials in a
vacuum.
Led by IoT, 5G, and AI, a tremendous waveof technological innovation has brought
about the advent of the smart society. Vacuum
deposition is destined to fulfill a vital role in thefundamental technologies underpinning thesmart society.

Helium leak detectors
Process gas monitors
Power generators for deposition processes
Vacuum valves
Film deposition controllers

ULVAC’s Sustainable Management
Mid-term Management Plan: Breakthrough2022

Business Strategy
29

Vacuum Equipment Business
Semiconductor Production Equipment

Vacuum robots

Electronic Device Production Equipment

Industrial equipment

FPD Production Equipment

Vacuum heat treatment furnaces

Components

Vacuum melting furnaces

Industrial Equipment

Vacuum brazing furnaces
Rare-earth magnet production equipment
Vacuum freeze-drying equipment
High-vacuum distillation equipment
Micro powder dry
Power leak testers

Vacuum Application Business
Materials
Sputtering target materials
High-melting-point materials and production ofcomponents
Nano-metal ink

Others
Surface analyzers
Controllers
Mask blanks, etc.
Major Vacuum Equipment
Sputtering equipment, vacuum evaporation equipment, CVD equipment,
etching equipment, ashing equipment, ion implantation equipment,
annealing equipment, etc.

3

23
25

34

Strengthening of Foundation
for Value Creation
35
39
43
45
47
48
49
52
53
54
55

Corporate Governance
ULVAC’s Value Creation from the
Perspective of External Directors
Management Structure
Risk Management
Compliance
Human Rights
Human Resources
Occupational Safety and Health
Quality Assurance and Product Safety
Procurement
Environment

Financial Data/
Corporate Information
59
61
63
67

11-year Financial Data
Financial Overview
Consolidated Financial Statements
Company Data/Stock Information/ULVACGroup Companies

Vacuum Application Business
Materials
Other

Editorial Policy
We publish the ULVAC VALUE REPORT as a summary of our initiatives
in the past year to achieve sustainable growth and enhancement ofcorporate value, our medium- to long-term vision, and our management
approach.
We consider this report to be an important communication tool
to facilitate stakeholders’ understanding of our activities and deepen
dialogue with them.
Published:
November 2021 (Previous issue published in November 2020)
Guidelines Referenced:
ISO26000: 2010 (Guidance on social responsibility) First Edition
The International Integrated Reporting Framework, the International
Integrated Reporting Council (IIRC) (January 2021)
Report’s Scope and Period
Scope: ULVAC GroupIn principle, this report covers the ULVAC Group; any portions that cover
only ULVAC, Inc. are indicated as such.
Period: Year ended June 30, 2021
(July 1, 2020 to June 30, 2021, FY 2020)
Some portions of the report include activities and initiatives from July
2021 onward.
<Disclaimer>
Figures shown in tables and graphs in this report may not add up to theindicated total because of rounding. Some figures have been revised
from previous years’ data because the scope of reporting was expanded
or calculating methods have been changed.

ULVAC’s Communication Tools
Summarized
ULVAC VALUE REPORT(Japanese and English version)

Securities report

Detailed
Financial information

Business report

Corporate
governance report

Business resultspresentation materials(Japanese/English)

Sustainability(Website)Non-financial information

We endeavor to achieve the optimum information disclosure by making
various communication tools available to meet your needs.
To help you deepen your understanding of the ULVAC Group, ourcommunication tools range from statutory disclosure documentation
centering on information on financial closing to this report that offers
non-financial information, such as social and environmental initiatives
indispensable for creating corporate value, in addition to information on
business activities, management strategies, and financial information.
Please also refer to our website for the latest information.
ULVAC VALUE REPORT 2021

4About ULVACULVAC’s History

The story of
ULVAC’s foundation

Challenging new industrial sectors
Ever since its foundation, ULVAC has been refining its capability to leverage the characteristics of vacuum
technology. In step with the changing industrial structure, we have always boldly sought to develop newtechnologies while expanding application fields to include the production of automobiles, chemicals,
pharmaceuticals, and food, metallurgy, as well as mass production of semiconductors and electronic devices,flat-panel displays, and organic light-emitting diode displays.
Inspired by the promise of the emerging “smart society,” we are confident that our vacuum technology
will be a key to the advance of the cluster of transformative technologies, including IoT, big data, artificial
intelligence, and self-driving vehicles, that will underpin next-generation lifestyles.

1952~ 1960~ 1962~ 1973~ 1975~
Customers’ products

Automobile

Chemical/
pharmaceutical/foodMetal/steel

Liquid crystal display Semiconductor

Reflectors for automobiles

Pharmaceuticals

Special steel

LCD calculator display

Computer (Photo: Courtesy of IBM Archives)

At the time when Japan was
engaged in post-war recovery,a group of talented young
researchers and engineers gatheredwith the aim of “contributing to therevival of Japanese industry throughvacuum technology.” In 1952 sixangel investors, impressed by thepassion of these visionary young
people, invested in the establishmentof Japan Vacuum Engineering Co.,
Ltd., the forerunner of present-day
ULVAC.

Soughtinvestment

Japan Vacuum
Engineering Co., Ltd.

Kohnosuke Matsushita
President of Matsushita
Electric Industrial

First president
Great idea! Throughvacuum technology let’s
help create an affluent
future for the up andcoming generation.

Yoshijiro Ishikawa
President of
Keifuku Electric Railroad

We will provide
wholehearted support
to a company wishingto establish the vacuum
technology business inJapan.

Consult

NRC
Cooperation
Equipment Corporation
U.S. vacuum equipment
manufacturer

I want to establish
a vacuum technology
company to help drive
Japan’s recovery.

Second president

Gen Hirose
President of
NissayTamesaburo Yamamoto
President of Asahi Beer

Aiichiro Fujiyama
Chairman of Chamber ofCommerce & Industry of Japan
President of Dainihon Sugar
Refining Company
Foreign Minister

Yoshio Osawa
President of Osawa-Shokai

Six
investors

Third president
1941: Vacuum Clubwas established.

Jin Imachi

Mazda Research Laboratoryof Toshiba

Chikara Hayashi*1950: Renamed Vacuum
Technology Association

Sagane Lab of the Universityof Tokyo*Names of companies, organizations and titles are those at the time mentioned.

1983~ 1992~ 2016~ 2018~
Electronic storage
media

FPD

Discs

Flat-panel display

Advanced semiconductor/
electronic device

OLED

OLED

Advanced semiconductor

Corresponding ULVAC
products

OLED production equipment
System 731
Vacuum evaporationequipment

High-vacuum distillationequipment for plasticizers

1952
Japan Vacuum Engineering
Co., Ltd. was founded.

1964
Established the first overseas
subsidiary in Hong Kong.

1955
Opened the Omori Plant inTokyo to start manufacturing
equipment in Japan.

1968
Head Office/Plant completed
in Chigasaki, Kanagawa
Prefecture.

1959
Opened the Yokohama Plant
in Kanagawa Prefecture.

1969
Changed the company
name in English to ULVACCORPORATION to promote
exports.

1952
5

Fascinating!
Y’all must do it!

Each invested ¥1 million (equivalent to ¥25 million today) of their own money

When ULVAC was founded back in 1952, vacuum technology had not yet entered widespread use in Japan.
As a trailblazer, we championed vacuum technology by introducing new technologies to the market andaddressing the needs of customers in diverse industries. ULVAC will continue tackling technologicalinnovation to speed progress toward the “smart society” to which we aspire.

History

1952: Japan Vacuum Engineering Co., Ltd. was founded.

1960

100 kg-class vacuum
induction melting furnace

Transparent conductive film
deposition equipment

1971
Established a subsidiary in
Hamburg, then West Germany,
as a base for cultivating thewestern European market.

1982
Established a subsidiary in
Taiwan.

1972
Opened the Institute forSuper Materials as ULVAC’s
first research facility.
1975
Opened the North American
Office. Established a subsidiary
in North America as a base forexports to the U.S.
1977
Established KYUSYU ULVACCORPORATION (presentday ULVAC KYUSHUCORPORATION) in Kagoshima
Prefecture to expand sales
activities in the Kyushu area.

1970

Established the Tsukuba
Institute for Super Materials
in Tsukuba Science City
(present-day Tsukuba City),
Ibaraki Prefecture.
1983
Opened the Beijing Officein China.

1990
Opened the Fuji Susono
Plant in Shizuoka Prefecture,
as a plant dedicated to
semiconductor production
equipment.
1995
Established a vacuum pumpproduction base in China.
Established a subsidiary inSouth Korea.

1987
Established ULVAC TOHOKU,
Inc. in Aomori Prefecture
to strengthen production oflarge-scale equipment.

In-line sputtering equipment

LCD production equipment

2001
Changed the company nameto ULVAC, Inc.

2005
Established a large-scale
production base for large
LCD production equipment inSouth Korea.

2002
Established a subsidiary in
Singapore.
2003
Established a base for fullscale production and field
support in China.
2004
Listed on the First Section of
the Tokyo Stock Exchange.
New buildings of the Head
Office/Plant (Chigasaki,
Kanagawa Prefecture)completed.

Established a subsidiary inThailand.
Established R&D bases inSouth Korea and Taiwan.
Established a subsidiary in
Malaysia.

Semiconductor production
equipment

2010
Relocated the Chiba Institutefor Super Materials to theTomisato Industrial Park in
Chiba Prefecture to enhance
R&D.
2011
Established the South Korea
Institute for Super Materials
to enhance R&D in South
Korea.

2006
Established a production
subsidiary for large LCD
production equipment in
Taiwan.

1990

2000

2005

2016
Began manufacturing production
equipment for large displays in
China.
2018
Established the ULVAC-Osaka
University Joint ResearchLaboratory for Future Technology at
Osaka University.
2021
Opened the ULVAC Advanced
Technology Collaborative Research
Cluster at Tokyo Institute ofTechnology

2007
Established a base in India.

1980

2015
Established the Future
Technology Research Laboratory
in Tsukuba, Ibaraki Prefecture.

2010

2015
ULVAC VALUE REPORT 2021

6About ULVACULVAC’s Businesses
Across a wide range of industries, ULVAC is a source of numerous products and technologies that meet theneeds of our customers and the market.
At present, ULVAC operates businesses in six areas.

Net sales by business segment (amount and %)Net sales by region (amount and %)Vacuum Application
Business

31.7¥

Others

17

16.8

151.3

%

billion¥Vacuum Equipment
Business
¥

15.0

¥

45.3

¥

64

%

(2%)

¥17.6 billion

183.0

15%

¥25.4 billion

Net sales in FY 2020

183.0

¥

26.9

As a comprehensive vacuum
product manufacturer, ULVAC is also
dedicated to the development ofcomponents.
ULVAC pursues cutting-edge
vacuum technology while providing
a wide range of product lines,
extending from vacuum pumps
and measurement and analysis
equipment, to components, such as
power generators for various typesof deposition equipment and vacuum
valves.

¥65.5 billion

(36%)

China

United States

Ratio of employees Other Asia
overseas
104 persons(2%)

Semiconductor
and electronic
deviceproduction
equipment
billionbillion

Employees by region (number and %)

48

31%
¥

Japan

South Korea¥62.7 billion (34%)

billionbillion

(4%)

(10%)

25%

¥

Components¥8.2 billion

Taiwan(14%)

billion

12% Net sales in FY 2020

ULVAC has been involved inthis business sector since theemergence of vacuum technology
in the 1950s. Leveraging thefundamental technology it hasdeveloped so far, ULVAC currently
provides various solutions acrosswide-ranging industries, including
the automobile, pharmaceutical,
and food industries.

7

9%

8%

billion

22.6

¥

%

¥3.7 billion

ULVAC not only develops a rangeof FPD production equipment but
also offers solutions worldwide thatleverage its development of advanced
materials.

ULVAC is a source ofelectronic materials, suchas sputtering targets,for diverse industries.
In addition, in the highperformance materials
sector, ULVAC is a sourceof integrated manufacturing
and precision processing
technologies for titanium,
tantalum, zirconium,
niobium, etc.

Industrial
equipment

83

FPD production
equipment

billionULVAC is a source oftechnology derived fromvacuum-based production
equipment for diverse
industries.

Materials

billionRatio of sales
overseas

Europe, North
America andelsewhere

Other Asia

56.5

¥

%

billionHigher integration and higher
performance at lower cost are
demanded for next-generation
semiconductors and other highperformance devices. Based on its
development of super-miniaturization
technologies for such semiconductors
and other electronic devices, ULVAC
delivers a stream of new technologies
and products to the world that
underpin the progress of society.

140
(2%)

Taiwan

South
Korea

689
(11%)

559
(9%)

persons

persons

persons

Number of employees
in FY 2020

6,063

persons(As of June 30, 2021)

Japan

3,137
(52%)

persons

China

1,434
(24%)

persons

ULVAC VALUE REPORT 20218About ULVAC

Consolidated Financial and Non-financial Highlights
Consolidated Financial Highlights

Non-financial Highlights

Net sales(Billions of yen)
250

231.8

Operating profit
249.3(Billions of yen)

185.4

ULVAC, Inc. (non-consolidated)

35.4

36

220.7

200

Rate of lost-work-time injuries
2.0

29.5

183.0

23.8

27

150

1.5

16.0

18

17.2

1.63
1.15

1.66
1.02

Voluntary retirement rate

All industries

Manufacturing industry

1.83

1.80

1.20

1.20

50

4.5

1.0

0.5

2016

2017

2018

2019

2020

(FY)

0

2016

2017

2018

2019

2020

(FY)

3.0

0.76

0.37
0.00

0

6.0

1.21

100
9

1.71

0.00

2017

2018

2019

2020

0

(FY)

2.21

1.98

1.97

2018

2019

2020

1.06

1.5

0.00

0.0

2016

ULVAC, Inc. (non-consolidated)

(%)

1.95

2016

2017

(FY)

*Source for average data for all industries and manufacturing industry: “Survey on
Industrial Accidents 2020” by the Ministry of Health, Labour and Welfare of Japan.

ULVAC has been promoting various safety initiatives, including risk
assessment, through the operation of the Occupational Safety and
Health Management System (OSHMS), resulting in safe workplaces thatmeet industry standards. With “safety first” as the Group’s principle, wewill work to eliminate occupational accidents.
For details

Net income attributable to owners of parent

Equity ratio(Billions of yen)
40

30

60

45

24.5
18.7

20

10.8

14.8

10

0

2016

2017

2018

2019

2020

(FY)

49.5

53.5

54.6

57.0

(%)
100

40.2

50

15

25

2016

81.8

87.8

82.4

79.4

2018

2019

83.8

75

30

0

P.52

Localization ratio of presidents of overseas subsidiaries

(%)

35.9

2017

2018

2019

2020

(FY)

0

2016

2017

2020

(FY)

Convinced it is preferable to appoint people of the respective countries
and regions to be in charge of management of overseas bases, wehave been fostering and promoting local managers and next-generation
executives and are promoting assignment of local employees toimportant positions overseas.
For details

ROE (Return on equity)
(%)
30

28.5

Interest-bearing debt

29.2

(t-CO2)80

100,000

60
20

42.7

12.5
7.1

10

40

9.2

75,000

49.8
35.7

39.5

35.6

50,000

20

0

2016

2017

2018

2019

2020

(FY)

0

90,23331,534

2017

2018

2019

2020

(FY)

0

96,653

98,971For details

35,09635,202

93,78190,93434,27935,10561,557

63,76955,829

5,000

2,500

2016

2017

2018

2019

2020

For details

Amount of landfill (t)Total amount of waste recycled (t)Final landfill disposal rate (%)

293
289
3.5

59,502

Amount of valuable materials recycled (t)

(%)
6.0

7,500

58,699Website>>Sustainability>Social Contribution Activities(t)
10,000(FY)

Recognizing that electricity accounts for a large proportion of energy
consumption, we are promoting energy saving in production and productdevelopment and evaluation while introducing facilities with excellent
energy-saving performance.

9

Until January 2020, we vigorously conducted activities designed toencourage young people in the Shonan area, who will lead the next
generation, to work and increase their interest in science, by holding
vacuum experiment classes and conducting plant tours. However, due
to the impact of COVID-19, we are now conducting plant tours for small
groups of junior high school and high school students, and accepting
inclusive education students for internships.
We have re-examined the way we contribute to local communities
during the COVID-19 pandemic, and in partnership with Chigasaki Cityand Shonantobu General Hospital, we provided the venue and our staff
actively supported operation of workplace vaccinations for the 2,300
people including employees of ULVAC Group companies and partnercompanies and family members who wished to be vaccinated, andgroup vaccinations for 1,000 citizens of Chigasaki City in June 2021.
We will continue to work as one with members of local communities toengage in initiatives to assist safe and secure lifestyles.

Group companies in Japan

25,0002016

Contributions to local communities

Waste emissions
Group companies overseas

P.49

For details

P.49

CO2 emissions(Billions of yen)

We recognize that people are the source of sustainable value creationand our most important asset. Retention of talented human resources
is a prerequisite for continuous technological innovation in a rapidlychanging industry. We will continue efforts to retain human resources by
pursuing various initiatives.

P.55

0

7,637
2,071

2016

286

4.5

3.6

3.6

6,504

6,584

163.9
4,987

80.1
4,936

2.6
1,767

2017

1,877

2018

1.4
1,136

1,173

2019

2020

(FY)

3.0

1.5

0

We are taking steps to reduce landfill disposal of waste and increase
the recycling rate while promoting resource-conscious manufacturing,
including design to reduce processing losses and minimize wastematerials.
For details

P.57

ULVAC VALUE REPORT 2021

10

ULVAC’s Vision

Commitment of Top Management

The Group will accurately capture
expanding growth opportunities, while
contributing to the resolution of socialand environmental issues

Setsuo Iwashita
President and Chief Executive Officer

11

Firmly grasping expanding opportunities
for growth while resolving social issues
ULVAC has been comprehensively using thevacuum technology and peripheral technologies it
has developed since it was founded to boldly face
the challenges presented by new technologies as
the structure of industries change in areas such as
chemicals, pharmaceuticals, and food, metallurgy,
semiconductors and electronic devices, and flatpanel displays. By expanding application fields andopening up new markets, we have contributed tothe business expansion of client companies andthe advancement of industry and science, achieving
growth while supporting people’s lives with vacuum
technology.
The business environment in which ULVAC
operates has been undergoing unprecedentedchange in recent years. The movement toward DX(digital transformation) and ICT (information andcommunications technology) usage is accelerating,due to factors such as the normalization of remote
working, the shift to EVs and the expanded use of
AI. At the same time, there is a need for global-level
initiatives for decarbonization to respond to global
environmental issues. Technological innovationis required to reduce the power consumed bysemiconductors and electronic devices, in order torealize a green society.
The realization of such a society is supported by
key devices—such as semiconductor memories
and logic devices, MEMS/sensors, power devices,displays, etc.—as well as technologies enablinglarge capacity and low power consumption ofsemiconductor memories and logic devices,miniaturization and enhanced performance of MEMS/
sensors and power devices, and higher resolution,
lower power consumption, increased size and greater
flexibility of displays. ULVAC will respond to theseneeds by leveraging its strengths in vacuum thin film
processing technology and fundamental technologies
for equipment.
In the past, ULVAC’s involvement in the automotive
industry was limited in scope through just a handfulof devices and technologies. However, with theshift to EVs, many semiconductors and electronic
components make up vehicles, and displays aremounted on vehicles as information display devices,
therefore it is no overstatement to say that ULVAC
is now supporting the automotive industry. Goingforward, we will respond to changes in society andindustrial structure, and firmly grasp expanding
growth opportunities while working with a wide
range of stakeholders to contribute to the resolutionof social and environmental issues such as building
social infrastructure, saving energy and reducing
carbon through our business activities.

Steady improvement in profits by
expanding orders and enhancing
manufacturing capabilities
Market changes and operations in FY 2020
Looking back on FY 2020, uncertainty persisted
regarding the future outlook, mainly due tothe impact of the continued global spread of
COVID-19 and prolonged US-China trade friction.
In the semiconductor sector, there were signs ofmore active investment in advanced equipment
by foundries and logic manufacturers, and therecommencement of investment in semiconductor
memory. In the electronics sector, there wasincreasingly vigorous investment aimed at the shift
to domestic production in China. Additionally, in theflat-panel display (FPD) sector, an increase in demandfor panels led to more active investment in liquid
crystal panels, and there was continued investment
in response to the shift to organic light-emitting
diode (OLED) displays for smartphones and tablets.
There were also indications of efforts to develop
large substrate mass production for OLED displays
to respond to a broad range of applications in tablets,PCs, medical, automotive and game applications.
Reviewing ULVAC’s operations, orders received
for semiconductor and electronic device production
equipment, FPD production equipment, components,
industrial equipment and materials all increased. As
a result, orders received increased ¥42.3 billion year
on year. Net sales decreased year on year due to theimpact of lower orders received for FPD production
equipment in the previous fiscal year, but sales ofsemiconductor and electronic device production
equipment, industrial equipment, materials and otherproducts increased, and overall consolidated net
sales results exceeded the initial plan.
Regarding profit, we proceeded with initiatives toreform technical design, procurement and production
as well as strengthen the information systeminfrastructure as part of our efforts to enhance
manufacturing capabilities. Gross profit margin
improved from 27.3% in the previous fiscal year to29.4%, and operating profit margin improved from
8.6% to 9.4%, due to higher productivity and otherfactors.
As a result, consolidated business results for FY
2020 exceeded the initial targets. Orders received
increased 27.0% year on year to ¥198.9 billion, net
sales decreased 1.3% to ¥183.0 billion, operating
profit increased 7.8% to ¥17.2 billion, ordinary profit
decreased 0.5% to ¥18.0 billion, and net income
attributable to owners of parent increased 37.7% to¥14.8 billion. We made progress with initiatives tostrengthen the financial base, and the equity ratio
improved from 54.6% to 57.0%, while ROE increased
from 7.1% to 9.2% from the previous fiscal year.

ULVAC VALUE REPORT 2021

12

ULVAC’s Vision

Commitment of Top Management

Revision of the mid-term management plantargets and investment amounts
Under the mid-term management plan “Breakthrough2022” (covering the period from FY 2020 to 2022),
we will capture the trend of technological innovation
for a smart society as a business opportunity,
aiming to achieve sustainable growth and highearning capacity while increasing profitability
and management efficiency under the basic
policies: “Investment in development for growth(selection and concentration)” and “Profit-oriented
management through structural change.”
Consolidated results targets for the year ending
June 30, 2023, the final year of the mid-term
management plan, were initially set as “net salesof ¥210.0 billion,” “gross profit margin of 35% orabove,” “operating profit of ¥34.0 billion,” “operating
profit margin of 16% or above,” “ROE of 13% orabove” and “operating cash flow of ¥29.0 billion.”
However, as noted above, investment activity during
the year ended June 30, 2021, the first year of the
mid-term management plan, was more vigorous than
anticipated in each sector, including semiconductors,
electronics and FPD, and the expansion in investment
is forecast to continue. We have therefore decided torevise our numerical targets upwards, for net sales
and operating profit.
We have set a new target of ¥235.0 billion for net
sales, in view of the growth led by semiconductor
and electronic device production equipment, as wellas the expected continuation of strong sales in FPD
production equipment. We will also increase theamount of R&D investment over the three yearsof the mid-term management plan, from the ¥50.0
billion initially planned to ¥65.0 billion, to accelerate

13business growth. On this basis, we will target
operating profit of ¥38.0 billion.
In the semiconductors sector, active investment
in both advanced logic and memory is forecast going
forward. According to the semiconductor equipment
market outlook published by Semiconductor
Equipment and Materials International (SEMI), in
2022, investments in advanced logic and memory
are expected to increase to 1.9 times and 1.5 times
respectively, compared with 2019. The Group aims
for growth exceeding the market growth rate,
targeting FY 2022 orders received for semiconductor
production equipment equivalent to 4.1 times forlogic and 1.6 times for memory, compared with FY
2019.
The electronics sector saw more active investmentin production increases for power devices, opticaldevices, communication devices, etc. in Japan, China
and Taiwan. In FY 2022, the Group aims to captureorders received for electronic device production
equipment equivalent to 1.6 times in Japan, 2.7 times
in China and 2.1 times in Taiwan, compared with
FY 2019. In China particularly, investment in powerdevices and optical-devices for AR/VR is expanding
rapidly under the government’s domestic production
policy, and the number of business negotiations
involving the Group has increased significantly. We
are engaged in strengthening our technical sales
capabilities to ensure we capture this demand.
In the FPD sector, large LCD investment is
continuing due to an increase in panel demand, and
OLED investment is expanding, with the progressive
shift to OLED in IT panels for mobile, medical,
automotive and other applications. In view of thischange, in FY 2022 the Group aims to achieve orders
received for FPD production equipment equivalent to
1.7 times, compared with FY 2019.
At the same time, we will strengthen our stablebusiness foundation by expanding the components,
materials, and customer support businesses incooperation with each equipment business.
Regarding R&D investment, we will focus
our investment in areas such as increasing joint
development related to logic and memory, promoting
the modularization of electronic device production
equipment and response to the China market, andresponding to the shift to larger OLED substrates.
We will also continue to engage in strengthening
our manufacturing capabilities, and strive to improve
our profit margin.
Through the steady implementation of these
initiatives, we will ensure that the Group achieves thegoals of the mid-term management plan.

Forecast for the second year of the plan
In FY 2021, the second year of Breakthrough 2022,
we forecast an increase in orders received and net
sales, amid the progressive expansion of investment
related to semiconductors, electronic devices and
FPD. The operating profit margin will continue toimprove as we proceed with manufacturing reforms.
For FY 2021, on a consolidated basis, we aretargeting orders received of ¥230.0 billion (+15.6%
year on year), net sales of ¥210.0 billion (+14.7%),
operating profit of ¥26.5 billion (+54.1%), ordinary
profit of ¥27.0 billion (+50.3%), and net income
attributable to owners of parent of ¥18.0 billion(+21.4%). We aim to improve the gross profit margin
to 31.9%, the highest level since the Company was
listed, and the operating profit margin to 12.6%.
Capital policy
Regarding the capital policy, we take into accountsuch factors as financial soundness, the capital
structure, and distribution of profit to shareholders,
while securing capacity for growth investment with aview to the future.
ULVAC recognizes the sharing of profits with theshareholders as one of its most important policies.
On the other hand, ULVAC operates in an industry
that undergoes significant changes in capital
expenditure trends and technical innovations, andintends to enhance its internal reserves to securesufficient funds for R&D investments in growth fields
and establish a stable financial base.
Taking into account such factors as demand forfunds, cash flows, performance, and the payout ratio
for each fiscal year, the year-end dividend for FY 2020
was determined to be ¥95 per share.
For shareholder returns from FY 2021, we plan totransition to performance-based profit distribution toenhance transparency for profit return, under a policy
targeting a consolidated dividend payout ratio of 30%
or more.
Based on this policy, we plan a year-end dividendfor FY 2021 of ¥110 per share.

To continue creating social value whileachieving sustainable growthWith the prolonged impact of COVID-19 andfrequent occurrence of climate change disasters
worldwide, global values have changed dramaticallyand awareness of ESG and SDGs has becomeheightened. We must reaffirm the role required of
ULVAC by international society and seek to ensurecompatibility between the global environment andthe sustainability of ULVAC.
Under such social conditions, we believe it
is necessary to further promote responsible

management as a global company, and have signed
and participated in the United Nations Global
Compact. We support the Ten Principles related toprotecting human rights, eliminating unreasonable
labor, addressing environmental concerns andpreventing corruption, and intend to accelerate
activities aimed at their realization to contribute to therealization of a sustainable society.
Furthermore, we recognize that responding
to climate change is a pressing global issue, andhave set a medium- to long-term goal of reducing
greenhouse gas emissions by 40% by 2030
(compared with 2020) and achieving net zero
greenhouse gas emissions by 2050. Responding
to climate change is one of the most importantmanagement issues for ULVAC, and we have begun
detailed analysis of business opportunities andrisks based on future regulatory trends. We willcontinue to implement initiatives for compliancewith environmental laws and regulations as well as
measures aimed at the achievement of targets for
reduction of environmental impact and greenhousegas emissions based on our environmental
philosophy and environmental policy, in addition toappropriately disclosing them.
In FY 2019, we launched the Sustainability
Promotion Committee and established our
Sustainability Policy, and we have also examined key
issues (materiality), but the environment surrounding
the Group has changed significantly over the past few
years. We recognize that it is difficult to become acompany able to continue to create value required bysociety and customers as such uncertainty increases
through thinking that is simply an extension of
conventional business strategies, and have begun to
discuss its vision for 2050. We will establish targets
using back-casting based on our view of society in
2050 and create a system for monitoring progress of
initiatives.
Among sustainability issues, the development of
human resources is particularly important. We now
think from a global, market, social and customer
perspective with a view to the future transcending
borders, and must transform the mindset of each
employee and our corporate culture to be able to act
swiftly.
Furthermore, the Group is combining its strength
as one to steadily proceed with the developmentof the next generation of management to realize
sustained growth and the creation of a sustainable
society.
We hope our stakeholders look forward to our
future value creation, and ask for your continued
support in the long term.

ULVAC VALUE REPORT 2021

14

ULVAC’s Vision

ULVAC’s Value Creation <Process>As a comprehensive vacuum product manufacturer,
Value Creation

ULVAC will contribute to the realizationof a sustainable society.

Value ULVAC Offers to Stakeholders

mization of Synergy
M ax i

Customers

Human Capital

Contribution to customers’ business activities, technological innovation, andvalue creation; offering of cutting-edge production technology, enhancementof productivity and quality, and reduction of environmental impacts throughequipment and services

Number of employees*1

6,063

Intellectual Capital
Number of patents owned*1

2,265
Overseas: 2,582
Japan:

persons

Shareholders and investors

Customer-oriented
development, design,
procurement,
manufacturing, sales, andservice capabilities

Realization of long-term growth and enhancement of corporate value, andgreater returns

Suppliers

Priority Domains

Local communities

R&D and capital expenditures

Creation of employment opportunities, industrial development, reduction ofenvironmental impacts¥15.3 billion
Manufacturing

Employees

CapitalPrincipal production bases*1

17
10

Coating business
Advancedmaterials¥39.5

SocialissuesEquipment
controlbillionShareholders’ equity*1¥166.9SurfaceanalysisbillionD/E ratio*1

0.23Services

Control
Analysis

Workplaces offering job satisfaction

Contribution to realization of a sustainable society*3
Major contributions through products and services

VacuumApplication
Business

Financial CapitalInterest-bearing debt

Materials

Realization of the smart society,fundamental technology forrealization of the smart society

Customer
supportJapan: Overseas:

Achievement of growth together with ULVAC based on trust andcollaboration, fair and free competitive environment

P.17

Energy management,
next-generation energy

FPD

Value Offered by ULVAC’s Business

Vacuum Vacuum

Equipment
Business

Healthcare, life innovation

Major contributions through processes
Partnerships for the goals

Social Capital

Participation in consortia andcollaboration with universities
and other institutions

Industrial
equipment
Components

Equipment
Semiconductors
Electronics

ESG

ULVAC’s major initiatives

E

Environmental management(Environment) nvironmentally friendlyE
products

S(Social)Quality management
CSR procurement
 ccupational safety andOhealthSocial contribution activities

Human
RightsP.48

Human
Resources

P.49

Occupational
Quality
Safety and Assurance andProcurement
Health
Product Safety
P.54
P.52
P.53

Corporate GovernanceManagement Structure
Basic Corporate
Philosophy

P.35

Socialcontribution
2
Environment activities*

P.55

WEB

Relevant SDGs

Reference pages

P.19

P.55

P.53

P.54

 ontribution to reduction ofCpower consumption of various
devices

Construction, social
infrastructure, mobility

Relationships of trust withcustomers and business
partners worldwide

Foundation for
Value Creation

P.19

G(Governance)

Corporate governanceManagement structure
Compliance
Risk management
 uman resourcesH
development
Diversity & inclusion

P.52
WEB

*2

P.35

P.43

P.45

P.47

P.49

Health management

P.1

 reating motivatingC
workplaces*3 Indicates relationships with the United Nations’ Sustainable Development Goals (SDGs).
*1 As of June 30, 2021 *2

15

For details

Website>>Sustainability>Social Contribution Activities

ULVAC VALUE REPORT 2021

16

ULVAC’s Vision

ULVAC’s Value Creation <Priority Issues>

We are committed to realizing a society that is not only safe and secure but also affluent and convenient byoffering value utilizing vacuum technology, which is indispensable and fundamental for industrial and scientificdevelopment.
We will continue helping to resolve social issues in cooperation with our customers through the provision of
products and solutions to them.

ULVAC’s business activities
Social issues

Progress of the smart society,advances in 5G and IoT, andestablishment of network
infrastructureMarket opportunities

Aspiration for the progress of
all industries and technologicalinnovation
Diversification of semiconductor
and electronic device
applications and needs
Trend toward devices withsmaller size, more speed,larger capacity and lower power
consumption

ULVAC’s six businesses
Priority domains

Semiconductor
production
equipment

Electronic
deviceproduction
equipment

FPD production
equipment

Components

Industrial
equipment

Materials

Realization of the smart society

Autonomous driving, agriculture, healthcare,virtual currency, etc.

Fundamental technology forrealization of the smart society
IoT, cloud, AI, robots, big data, drones

See

See

See

P.29

P.32

P.34

See

See

P.30

P.31

Main value offeredby the business

Customers and their products

Response to new
semiconductor andelectronic device fields
and needs by applying
vacuum deposition andother technologies andR&D of cutting-edge
processes throughcollaborative creation
with customers

FPD, semiconductor, electronic equipment,
and device manufacturers
Semiconductors:
Memory, logic

Contribution toresolution of principal
social issues*

Contribution to realization of anadvanced, convenient, safe andsecure, smart society

DRAM, PCRAM,
3D-NAND, CPU, etc.

Functional devices:
Sensing,communication (5G),
displayMEMS,
SAW/FBAR devices,
OLED, etc.

Environmental issues, such as
global warming and climatechangeGlobal energy issues due todependence on finite resources

Progress of renewable and lowcarbon energy systems
Improvement in energy
conversion efficiency

Food safety and security,
population explosion and sharp
increase in demand for food in
emerging countries, increase infood loss
Longevity, needs and progressof health promotion andhealthcare

Longer preservation of foodand pharmaceuticals, volume
reduction

Aging of infrastructure indeveloped countries
Development of industrial
infrastructure in emerging
countries
Wider gap between rich andpoor

Development of safe, secureand comfortable infrastructure

Energy management,
next-generation energy
See

P.33

Healthcare, life innovation

Construction, social
infrastructure, mobility

Enhancement of
performance of solar
cells and power devices
by vacuum deposition,ion implantation andother technologies,
contribution to
reduction of power
consumption of various
devices

Solar cell manufacturers, battery
manufacturers, etc.

Longer life and volume
reduction of freezedried food, powder
vaccines, drugs, etc.
by vacuum freeze
drying and othertechnologies

Food manufacturers, pharmaceuticalmanufacturers, etc.

Enhancement of
performance ofindustrial materials
and response to
new materials byapplying vacuum heat
treatment and othertechnologies

Chemical and materials manufacturers,
steelmakers, transportation equipment
manufacturers, etc.

Energy: Heatgeneration, power
storage,conversion

Contribution to creation of asustainable society by power
generation, energy storage andenergy saving

Solar cells, all-solid-statebatteries, power devices,magnets for wind turbines

Foodstuffs,
pharmaceuticals:
Freeze drying

Contribution to human health,the future of medicine, andrealization of a sustainable
society with minimal food loss
by means of safe and secure
foods and pharmaceuticals

Freeze-dried foods,
emergency provisions,
supplements, powder
vaccines, etc.

Contribution to creation of asustainable society that is safe
and secure and comfortable

Industrial materials:
Heat treatment
Glass building
materials, industrial
materials, materials
for transportationequipment, etc.

* Indicates relationships with the United Nations’ Sustainable Development Goals (SDGs).

17

ULVAC VALUE REPORT 2021

18

ULVAC’s Vision

ULVAC’s Value Creation <Value Offered by ULVAC’s Business>
Through implementation of the Basic Corporate Philosophy stating that the ULVAC Group aims to contribute to
the development of industries and science by comprehensively utilizing its vacuum and peripheral technologies,
ULVAC aims to be an enterprise indispensable for society.

ULVAC supports the smart society
The smart society, whose emergence is accelerated by IoT and 5G, is expected to become social infrastructure that canbalance the resolution of the social issues addressed by the SDGs and economic development. ULVAC is helping bring abouta smart society, whose attributes will include sustainable cities and communities, good health and well-being, and zero
hunger, through technological innovation in semiconductors, electronic devices, displays, and other fields, thus contributing
to realization of an advanced, convenient, safe and secure, smart society.

Contributing also to the food and pharmaceutical fields throughcomprehensive utilization of vacuum technology
While the population explosion and sharp increase in demand for food in emerging countries highlight the need to eliminate hunger and malnutrition, indeveloped countries, the disposal of food and food loss are increasing. There are also ever-greater needs for healthcare, including countermeasures for
infectious diseases, greater access to healthcare, promotion of welfare, and development of vaccines and drugs. ULVAC contributes to human health, thefuture of medicine, elimination of hunger and malnutrition, and realization of a sustainable society with minimal food loss by enabling longer preservation offood and pharmaceuticals and safe transportation through longer life and volume reduction of food, powder vaccines, drugs, etc. using vacuum technology.

Smart society
Sustainable
cities andcommunities

Industry, innovationand infrastructure

Concentration on cities,
traffic congestion andaccidents

Good healthand wellbeing

Fundamental technology for realizationof the smart society

Unmanned delivery

R&D of vaccines and drugs

Powder vaccines
Vacuum freeze-drying
equipment

Semiconductor production
equipment

Good healthandwell-being

Limited access tohealthcare services

Autonomous driving

IoT

AR/VR

Countermeasures for
infectious diseases

Semiconductors

Sterile preparation

Micro Powder Dry
systemBig data

Remote medicine

AI

Electronic devices

Electronic device production
equipment

Promotion of welfare

Zero hunger

Liquid nitrogengenerators

Regenerative medicine

Edge server

Response to labor
shortages in agriculture,
weather, etc.

Cloud

Agricultural infrastructure

Network infrastructure

No poverty

Displays

Reduction of food disposal
and food loss

Display production equipment

Vacuum freeze-drying
equipment
Freeze-dried foods,
emergency provisions

Zero hunger

Addressing soaring electricity demand and environmental andenergy issues

Food packaging

Roll coaters

Environmental issues, such as climate change and global warming, and global energy issues due to dependence on finite
resources are intensifying. ULVAC will contribute to the creation of a sustainable society by power generation, energy storageand energy saving through enhancement of the performance of solar cells, batteries, power devices, and other products.
ULVAC will offer comprehensive support for digitization by helping address the issue of soaring electricity demand thatentails the emergence of the smart society.

Responsible
consumption
andproduction

Elimination of hunger andmalnutrition

Supplements

High-vacuum distillationequipment

Contributing to development of infrastructure in emerging countries
Affordable
and cleanenergySoaring electricity demand

Finite resources

Semiconductor
production equipment
Advanced miniaturized devices(Lower power consumption)

Semiconductors

Electronic devices

Electric vehicles/hybrid vehicles

Lithium-ion
batteries

Power devices

Global warming

19

Electronic device
production equipment

Roll coaters

Solar cells

No poverty

Vacuum circuit breakers
for substation systems

Ion implantationequipment

Cat-CVD system forsolar cells

ClimateactionULVAC has been contributing to diverse industries through vacuum heat treatment technology ever since Japan’s postwar
economic boom. ULVAC will also contribute to development of safe, secure and comfortable infrastructure in emerging
countries by enhancing the performance of industrial materials.

Industry,
innovationandinfrastructure

Infrastructure in emerging
countries
Heat exchangers

Vacuum furnace

ULVAC VALUE REPORT 2021

20

ULVAC’s Vision

ULVAC’s Value Creation <Research & Development and Global Expansion>
Research & Development

Global Network

Ongoing value creation from a medium- to long-term perspective

Networks offering solutions to support industrial development worldwide

ULVAC has long been a source of vacuum-technology-based products and materials indispensable for wideranging industries. Building on our strengths in vacuum technology, we will continue to promote innovative,
pioneering R&D capable of addressing actual and potential needs and create high-added-value products andtechnologies, thus contributing to the progress of society.

ULVAC has established optimal networks covering development, sales, manufacturing, and services not only
for Japan but also for Asia. To spur development by capitalizing on the global development system, ULVAC ispromoting joint development with leading companies and research institutions around the world.

To continue to provide innovative technologies andproducts in the everchanging market, our R&D
projects undergo selection and focus in whicha clear distinction is made between “developmentof innovative technology for principal products of themainstay business” and “development of fundamental
technologies in preparation for the future” basedon analysis of customer needs and market trends.
Moreover, our development structure leverages
business partnerships with various companies andresearch institutions.
We are also striving to equip ourselves with theadvanced technologies necessary to respondswiftly to the progress of 5G and IoT in line with theestablishment of global network infrastructure and thesmart society while flexibly addressing social issues,
including environmental issues such as global warming
and climate change, thus establishing a foundation for
long-term sustainable growth.
Principal themes
Logic
NAND/DRAM
Next-generation non-volatile memory
Next-generation displays
Next-generation batteries
Communication devices
Power devices
Electronic devices, MEMS
Electronic packaging
Optical devices

TOPICS

Head Office/Plant(Japan)Relevant SDGs

Kagoshima Plant

On September 22, 2021, ULVAC, Inc. and Tokyo Institute ofTechnology (hereinafter the “Tokyo Tech”) established the
ULVAC Advanced Technology Collaborative Research Cluster(hereinafter the “Collaborative Research Cluster”) on the
Ookayama Campus of Tokyo Tech. ULVAC and Tokyo Tech haveachieved results through individual research cooperation, but
to further strengthen the collaboration between the company
and the university as organizational partners, we set up the
Collaborative Research Cluster with the support of the Tokyo
Tech Open Innovation Platform.
Combining the Tokyo Tech’s plasma diagnostics technology
and AI technology, the Collaborative Research Cluster aims
to improve the performance of plasma processing equipment
by measuring plasma conditions that could not be measured
before. The synergy created by laboratories from different
fields working together is expected to produce new research
results that cannot be obtained through individual collaborative
research. Additionally, leveraging this organization-toorganization collaboration will lead to a wide range of positive
outcomes, not only in joint research but also in fields such as
personnel development, leading to the advancement of future
growth for both ULVAC and Tokyo Tech.

China Plant

South Korea Plant

18.4

18

12.9

12.9

12

7.2
6

0

21

6.5

2017

6.6

10.3
6.9 5.1 7.8

2018

2019

10.0 12.7
8.1
6.9(Billions of yen)
12

8.3

9.2

8.4

8.4

9.6

10.8

2021
Plan

2022 (FY)
Plan

Website>>Support>Service Center

After refurbishing

Sales ofrefurbishedused machines

Field support(maintenance)

Parts sales

Cleaningand surface
treatment

Effective utilization of resources throughout the life cycle andaddressing environmental issues
Initiatives for enhancement ofequipment recyclability and production
technology improvement

Modification of equipment and machines alreadyin operation, reduction of power consumption,
maintenance that also covers components

Procurement of parts andconsumables

ULVAC’s plants

Relevant SDGs

ULVAC is contributing to reductionof power consumption, waste,and consumption of raw materials
throughout the life cycle, including thecustomer support phase.

60Mining of materials for
products

2017

2018

2019

2020

Customers’ plants

Modification of equipment, sales ofrefurbished used machines

3

2020

For details

On-siteRemoteTOPICS

16.7
10.2

Website>>Support>Sales Offices

R&D expenses(actual and planned)

99.2

For details

Our customer support network (66 bases in 13 countries) in Japan and around the world underpins ourcustomers’ production operations in a manner that meets their needs throughout the life cycle. We offer
comprehensive maintenance service covering components and make proposals for improvement andrefurbishment covering customers’ processes. Furthermore, by using information on customer needs as
feedback for the development of new equipment, we aim to offer even more sophisticated vacuum technologies
and service. We will also expand remote customer support packages utilizing IoT equipment for the future.

Before refurbishing

21.8

P.27 Mid-term Management Plan “Enhancing Manufacturing Capabilities”

ULVAC’s customer support solutions pool the Group’s know-how

Modification/
improvement

R&D equipment
Buildings, production equipment, etc.
Depreciation(Billions of yen)
24

Taiwan Plant

For details

Customer Support¥65.0 billion in R&D investments (capital expenditures for R&D and R&D expenses) is planned centering on the growing
semiconductor and electronic device fields for the three years covered by the mid-term management plan.
Total investment

Hachinohe Plant

Established ULVAC Advanced Technology Collaborative
Research Cluster at Tokyo Institute of Technology

Capital Expenditures and R&D Expenses (Actual and Plan)

Capital expenditures(actual and planned)

Fuji Susono Plant

In regard to manufacturing, ULVAC has expanded a production
system centering on Japan, China, South Korea, and Taiwan.
Going forward, we will emphasize improvement of production
efficiency by promoting optimal production. Whereas each base has
established its own local supply chain, the ULVAC Group will strive
to optimize procurement by developing a global supply chain.

2021
Plan

Rejuvenation, precision cleaning, and resource recovery(extension of component life and the cleaning cycle, recovery of valuable materials, etc.)

2022 (FY)Plan

ULVAC VALUE REPORT 2021

22

ULVAC’s Vision

ULVAC’s Sustainable Management
The foundation of all business activities is the Corporate Philosophy stating our aspiration: “to contributeto the development of industries and science by comprehensively utilizing its vacuum and peripheraltechnologies.” We will work with our partners to pursue cutting-edge technology, and contribute to thecreation of a sustainable society with vacuum technology while fulfilling our social responsibility.

Basic Corporate Philosophy
The ULVAC Group aims to contribute to the development of industries and scienceby comprehensively utilizing its vacuum and peripheral technologies throughthe mutual cooperation and collaboration of the Group companies.

Sustainability Policy
The ULVAC Group strives to create economic, social, and environmental value
by comprehensively utilizing its vacuum and peripheral technologies.
In 2019, the ULVAC Group established the Sustainability Policy based on its Basic Corporate
Philosophy for the purpose of promoting sustainability.

Our goal for 2050
A company that utilizes vacuum technology to create value for the world with its partners andcontinues to contribute to the future of people and the planet
Economic growth and social abundance
Use the latest technological development to contribute to the realization of a safe, secure,affluent and convenient society
Human happinessContribute to the creation of a society in which all people can lead happy lives
Environment
Contribute to creation of an environmentally friendly and sustainable society

Key measures for the realization of the goalManagement Policies

Priority Issues

Improve Customer Satisfaction

Exploration of new markets
Further creation of customer value

Innovations in Production Technology

Improvement of profitability through manufacturing
Promotion of DX

Development of Original Products

Creation of next-generation technology and new business
Enhancement of marketing capabilities
Strengthening of collaboration

Free and Open-minded Organization

Creation of a highly dynamic, strong organizational structure
Development of organizations and human resources for the expansionof global business

Enhancing Corporate Value

Strengthening of foundation supporting value creation

Promotion Structure
Sustainability Promotion Committee
Meetings of the Sustainability Promotion Committee (the Management Planning Department acts as the office for theCommittee) chaired by the Executive Officer in charge of sustainability and attended by internal directors and managers
of relevant departments are held twice annually to promote sustainability management.
The committee formulates policies, discusses and decides important matters, checks and evaluates progress of key
initiatives, and gives instructions to various meeting bodies and divisions as needed. Furthermore, progress is reported
to the Board of Directors, which deliberates and makes management decisions when significant issues arise.

CSR Committee
Meetings of the CSR Committee chaired by the Executive Officer in charge of sustainability and attended by the
personnel responsible in key divisions, production sites and Group companies are held twice annually. The committee
shares and discusses responses concerning action for meeting customers’ requirements and complying with RBA*
standards within corporate social responsibility. Furthermore, the Board of Executive Officers deliberates and reports
when significant issues arise.
*Responsible Business Alliance. CSR promotion group focused on the electronics industry in global supply chains

Global Environmental Management Committee
Meetings of the Global Environmental Management Committee chaired by the Executive Officer in charge of theenvironment and attended by environmental managers of Group companies are held twice annually. The committee setstargets for each Group company, monitors progress, takes action to ensure targets are reached, and reports to the Board
of Executive Officers.

Involvement with External Initiatives
Signing the United Nations Global Compact
In September 2021, ULVAC agreed to and became a signatory to the United Nations
Global Compact, supporting the Ten Principles related to protecting human rights,
eliminating unreasonable labor, addressing environmental concerns and preventing
corruption set forth therein. Based on its Basic Corporate Philosophy and Sustainability
Policy, ULVAC has been working for some time to realize a safer, secure and affluent
society through the provision of value brought about by vacuum technology, which isa fundamental technology that is indispensable for people’s lifestyles. With this signing,
we will adhere to and implement the Ten Principles of the United Nations Global Compact,
further promote responsible management as a global company, and continue to contributeto the resolution of major social and environmental issues with our customers.

Initiatives aimed at SDGs (Sustainable Development Goals)
SDGs are common global goals for 2030 that were unanimously
adopted at the 2015 United Nations Sustainable Development
Summit. ULVAC will contribute to the achievement of Sustainable
Development Goals (SDGs) and the realization of a sustainable
society through the promotion of key initiatives for the realizationof the Company’s vision.

In the future, we will establish targets using back-casting based on our view of society in 2050, and create a system formonitoring progress.
23

ULVAC VALUE REPORT 2021

24

ULVAC’s Vision

Mid-term Management Plan:
Breakthrough 2022

Progress

Under the mid-term management plan “Breakthrough 2022” (covering the period from FY 2020 to FY 2022)
currently being implemented, we set consolidated results targets for the final year at net sales of ¥210.0
billion and operating profit of ¥34.0 billion. However, backed by strong market conditions, the ULVAC Groupis aiming for further growth, and has revised the targets for the final year (FY 2022) to be net sales of ¥235.0
billion and operating profit of ¥38.0 billion.

Investment in development for growth(selection and concentration)
Profit-oriented management through structural change

Basic Policy
Quantitative targets
Targets for FY 2022

(Billions of yen)

Net sales∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥235.0 billion

Net sales

Operatingprofit margin

ROE∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 13% or above

8.6%
16.0

2020
Result

38.0

12.6%
26.5

9.4%
17.2

2019
ResultOperating CF∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ ¥29.0 billion

3

16%

2021
Plan

Initiatives under the mid-term
management plan

2022 (FY)
TargetSemiconductor

Expand investment for development in the semiconductor and electronic device
fieldsEnhance components, materials, and customer support

Strengthening theGrowing Business
Strengthening Researchand Development

1 Strengthening

Strengthen product development in response to technological innovation in
growing markets

Enhancing Manufacturing
Capabilities

investment to meet increased panel demand, and webelieve that semiconductor, electronic device and FPD
demand will continue to increase in future.
There is no change in the basic policy of the midterm management plan, but we have revised the targets
upwards for net sales to be ¥235.0 billion and operating
profit to be ¥38.0 billion in the final year of the plan (FY2022). Due to the expected increase in investment insemiconductors, electronics and FPDs, we increased
research and development investment for technologicalinnovation by ¥15.0 billion.

or above

OperatingprofitOperating profit margin∙∙∙∙∙∙ 16% or above

2

183.0

185.4

Gross profit margin∙∙∙∙∙∙∙∙∙∙∙∙ 35% or above

1

235.0
210.0

Under the current mid-term management plan, we
apprehend the trend of technological innovation fora smart society as a business opportunity leading to theresolution of social issues, and have engaged in a variety
of measures based on the basic policies: “Investment indevelopment for growth (selection and concentration)”and “Profit-oriented management through structuralchange.” In FY 2020, the first fiscal year of the plan, net
sales, operating profit, ordinary profit and net income
exceeded the plan. This is due to more active logic andmemory investment, electronics investment based on
China’s domestic production policy and FPD-related

the Growing
Business

2 StrengtheningImprove profitability by enhancing productivity throughout the processes fromengineering and design to production

Electronics

Research andDevelopment

Results and progress

New entry into the logic
miniaturization process,resumption of memory
investment and entry
into new processes

Aggressive investment plans for both logic andmemory.
Opportunities to enter other processes
increased through entry into logic, and orders
received increased.

Expansion of proposed
equipment throughmodularization,
strengthening
development, sales
and support systems in
China

Increase in orders received mainly in Japanand China due to more active investment inareas such as power, optics and communication
devices.
Release of the uGmni Series, combined
deposition and etch modules’ system of cluster
type to equip with a variety of different processmodules on the same transfer core.

Development for mass
production of largesubstrate OLEDs andtransition to a profitablestructure

Steady increase of orders received andenhanced manufacturing capabilities throughcontinued investment in LCDs and continued
investment in small and medium OLEDs.

Steady improvement in gross profit margin by strengthening manufacturing capabilities
Gross profit margin (%)

Net sales

35% or above

Gross profit margin

FPD

31.9
29.3
26.6
24.5

29.4

27.5

29.4
27.3

24.3

Strengthen manufacturing
capabilities and improve
productivity
Increase sales
Increase in ratio of
semiconductors
and electronics

22.6
19.4

Increase sales
Increase profit margin
Increase in the ratio of highly profitablesemiconductors and components

Establish a profit structure

2010

25

2011

2012

2013

2014

2015

Manufacturing
Capabilities

4 Enhancing Group

Visualization
Reduce product loss
Contain subsequent expenses

14.4

3 Enhancing

Management
Efficiency
2016

2017

2018

2019

2020

2021
Plan

2022
Target4

Enhancing GroupManagement Efficiency

Promote business unit-based management
Strengthen management of Group companies that have their own products

5

Strengthening theManagement Base

Human resources development and activation
Strengthening of the information system infrastructure
Strengthening of the financial baseEnhancing productivity and improving
profitability through comprehensive
reform of engineering and design,
procurement and production

Steady implementation of measures forengineering and design, procurement,
production processes and information system
reform. Steady improvement of profit margin.

Promoting business unit-based
management and strengthening
management of Group companies thathave their own products

Integration of four Group companies in South
Korea and promotion of management reform(FY)

5 Strengthening

the ManagementBase uman resources development andHrevitalization
Strengthening of the information
system infrastructure
Strengthening of the financial baseIntroduction of new personnel system anddevelopment of next-generation leadersMaintenance and implementation of systems
to improve productivity
ROE: Increased from 7.1% to 9.2%
Equity ratio increased to 57.0%

ULVAC VALUE REPORT 2021

26

ULVAC’s Vision

Mid-term Management Plan: Breakthrough 2022

Enhancing Manufacturing Capabilities
ULVAC is engaged in promoting comprehensive reform of processes including engineering and design,
procurement and production processes in order to significantly improve its profit margin through the“strengthening of manufacturing capabilities” set forth in the mid-term management plan.
For technical design reform, as device cost is determined in the design phase, measures are taken toaccurately ascertain the required specifications of the customer and improve the completeness of technicaldrawings. With respect to procurement reform, we will integrate procurement organizations and rebuild theglobal supply chain to reduce procurement costs of materials that account for a large portion of variable
expenses. For production process reform, we have implemented activities for more efficient operation at
manufacturing sites by concentrating production bases and increasing productivity of manufacturing sites, inaddition to conducting manufacturing education required for new ways of thinking and working.

Value chain and enhancing
manufacturing capabilities

Marketing

Processdevelopment
Equipment
concept
Product
development

Procurement reform

Concept
designMassproduction
designEquipment
sales

Assembly
Purchasing

Detailed
design ofequipmentParts
manufacturing

Logistics Installation

Services

Inspection

Information system
Engineering anddesign reform

Production Process Reform
We are implementing production process reform along
the two tracks of “specialization of production sites”
and “improvement of manufacturing productivity.”In the “specialization of production sites,”although we use to manufacture a single model atmultiple production sites, we will reorganize themby consolidating and specializing production while
monitoring market trends. Having production sites
specialize in certain specified models will dramatically
improve production technology, improve the efficiency
of production processes, enhance quality and reduce
costs.

Quality Assurance
Enhancing manufacturing capabilities is made possibleby the foundation of quality and safety of ULVAC
products. From the perspective of quality assurance, wehave revised our policy by rebuilding the manufacturing
policy with the aim of enhancing manufacturing quality.

Production process reform

Quality Policy
Engineering and Design Reform
The cost and quality of equipment are mainly
determined in the engineering and design phase.
The efforts of upstream divisions are very importantin manufacturing, and we conduct reforms with anawareness of changing equipment concepts from tacitknowledge to explicit knowledge.
With regard to engineering reforms, we are engaged
in standardizing, optimizing and clarifying equipment
specifications, improving the quality of technicalmaterials and upgrading manufacturing quality.

With regard to design reforms, we have incorporated“modular design” and are promoting the sharing andstandardization of manufacturing. Furthermore, weare conducting VE (value engineering) education andincorporating the approach of customer perspectives
into design with the aim of realizing manufacturing thatprovides satisfaction to customers.

27

Improve quality, and reduce costs
and lead time to halfMaximize profits and customer
satisfaction

Based on this policy, we have defined all costs andtime not creating value from a customer perspective as“non-conformity in a broad sense” or “COPQ (Cost Of
Poor Quality)” and begun efforts to control this.
In FY 2020, we established and began operation ofa database system for integrally managing information
on non-conformity in the manufacturing phase. Goingforward, we will create a system for analyzing work
costs to make them more transparent. In addition,
we will utilize data and conduct repeated analysis of
information to measure the results of manufacturing
reform, leading to further improvements.

Summary

Procurement Reform
In procurement reform, we have established the policyof “realizing globally optimized procurement” and are
integrating procurement organizations to carry out
efficient operations in part procurement that accounts
for a large portion of variable expenses. In pursuit of
optimal procurement costs for each part, we havechanged the method of operating from a system
in which a personnel is responsible for each pieceof equipment to a system in which a personnel is
responsible for each part. Furthermore, we will rebuild
the global supply chain while strengthening coordination

Furthermore, “improvement of manufacturing
productivity” is also being implemented in parallel. In
the area of equipment manufacturing, each production
site sets timely targets for indicators that are greatly
involved in manufacturing, such as production manhours and lead time. We are making company-wide
efforts to address the challenge while monitoring thetrends of such indicators.

with overseas group companies, actively make efforts
to procure quality products from best suppliers at low
cost and ultimately reduce procurement cost. From theperspective of parts processing, we are focusing on
improvement proposal activities such as proposals of
optimal configurations for design divisions, proposal of
alternative parts and reviewing manufacturing methodsof processed parts through collaboration with suppliers.
We will establish these reform activities to enhance ourmanufacturing capabilities.

We are seeing enhanced productivity and a solid improvement in profitability, thanks to the steady
implementation of various measures towards comprehensive reform. Through such efforts, we willbuild manufacturing capabilities that create value, provide value to customers and are resilient tochanges in the environment. In addition, we aim to further strengthen our profitability not affected by
the external environment.
In future, we will further enhance the ability to create value using the approach of the customer’s
perspective, share and standardize manufacturing, optimize procurement and also specialize production
sites and increase manufacturing productivity to optimize manufacturing costs. Furthermore, we aim to
reduce costs not only in manufacturing divisions but also throughout the Company by enhancing quality
control in the broad sense.

ULVAC VALUE REPORT 2021

28

Business Strategy

VacuumEquipment
Business

Semiconductor & Electronics
Equipment Division
Semiconductor Production Equipment
We aim to achieve continued growth throughthe creation of new products and acquisition ofcustomers. We aspire to expand our market share byconcentrating resources on major customers and key
regions on site and on time.
As company-wide investment in development in
the semiconductor field expands, we will establish
a project system to ensure that investments lead topositive results, and proceed with efforts aimed at
expansion of scale.

Tetsuya Shimada

Electronic Device Production Equipment

Orders received (Billions of yen)

Growth of the electronic device market for the realization ofa smart society is not stopping. In China, investments arebeing actively made in areas related to semiconductors andelectronic devices.
Furthermore, although demand for electronic devices
has risen due to the trend of stay-at-home consumption
arising from COVID-19, there has been a global shortage ofsemiconductor and power devices.
Such circumstances are increasingly bolstering the
expansion of the electronic device market, presenting an
opportunity for business expansion and growth.

35
28
21
14
7
0

2017

2018

2019

2020

Orders received (Billions of yen)
40

30

20

10

0

2021 (FY)
Plan

2017

2018

2019

2020

2021 (FY)
Plan

Managing Executive Officer
General Manager of Semiconductor & Electronics Equipment Division

Review of FY 2020

There were active movements in the semiconductor
industry, such as investments by companies in responseto the global shortage of semiconductors, and moves bycountries to accelerate domestic production due to the
US-China trade friction. Due in part to this, orders received
were strong in the second half of FY 2020, enabling us
to achieve our targets. We began initiatives to establish
a development system for major customers, increase
orders received and bolster our market share with the aimof expanding the semiconductor business, which is ourcompany-wide policy.
Furthermore, we have built a mass-production systemwith a view to future expansion of orders received
and revised our procurement mechanisms to lay thefoundation for business growth.

Medium- to long-term outlook of the market
environment

The evolution and growth of semiconductor devices willcontinue with the expansion of data processing devices
such as equipment, servers, and edge computing that
accompany the increase of information communicationand networks such as IoT, AI, and 5G. In particular, demandfor cutting-edge devices in memory and logic is rising. The
development and production of these devices requires
not only the technology of device manufacturers, but also
the advanced technology of equipment manufacturers,
and so the semiconductor production equipment market
is expected to undergo further growth over the medium
to long term. In addition, due to the impact of the USChina trade friction, semiconductor production bases are
beginning to be dispersed globally, which is expected tocreate new business opportunities.

Medium- to long-term initiatives

The main battleground of ULVAC’s semiconductor businessis the leading-edge device market. As we have entered themarket catering to not only existing memory customers but
also logic and foundry customers leading the market, we
now have a foundation on which we can expect growth inboth memory and logic. We are now conducting numerous
joint development and evaluation projects with important
strategic customers, and will enhance support for strategic
customers even more to increase the number of process
steps and products to acquire.
Based on ULVAC’s unique business growth strategy,
we will continue to expand our business and develop
products that are not available from major competing
solution manufacturers to support cutting-edge devices.
29

Review of FY 2020
Recognized Business Opportunities
1. E
 xpansion of mass production of leading-edge 5-3
nm logic devices and development of 2 nm or less
2. Investment in mass production of leading-edge
DRAM and 3D-NAND products, and new processes
and change in materials
3. Expansion of wafer level package deposition process
4. A cquisition of new customers spilling over fromresults in important strategic customers

Conceivable Risks
1. Intensifying of competition
2. C hange in the semiconductor business structure
due to the impact of U.S.-China trade friction
3. D elay in new generation device development andapplication to (investment in) mass production
4. Delay in expansion of the new memory market such as PCRAM
5. Longer delivery times in the supply chain associatewith market conditions and the semiconductor chipshortage

Measures for Reducing Risks and Maximizing Opportunities
1. D evelop products by embracing customer
requirements through precise marketing anddevelop differentiation technology
2. P romote joint development with important
strategic customers leading the market
3. S trengthen support for development and mass
production of leading-edge devices
4. S upport for development and mass-production
launch by new customers
5. P rovide thorough support to customers that
manufacture new types of memory such as
PCRAM and maintain 100% market share
6. P recise supply chain management (procurement
and inventory management)

The heightened demand for electronic andtelecommunications equipment caused by the impact
of COVID-19, and the expansion of the electronic device
market due in part to promotion of EVs have led to a risein equipment and service business opportunities and anincrease in orders received in the Japanese market andChina. As a result, annual targets were achieved.
ULVAC’s advanced electronics equipment businesshas a wide variety of product lines. We have standardized
equipment to increase manufacturing efficiency with aneye to future market expansion, and released the uGmni
Series of complex modular equipment capable of being
equipped with a variety of modules on the same transfer
core.
Priority fields
Priority fields

Final products

Communication devices

Smartphones

Optical devices

Smart devices

Electronic devices (MEMS)
Power devices
Electronic packaging

while continuing to accumulate the necessary technology
and establish production bases.
Furthermore, in an effort to further strengthen orders
received in the Chinese market where investment is
becoming increasingly active, we have strengthened ourtechnical sales capabilities by dispatching engineers. In
North America, we will assign sales personnel to Silicon
Valley to investigate the latest technology trends, monitor
trends such as those in major platformers, and search forseeds leading to electronics business.
Recognized Business Opportunities
1. Expansion of Chinese electronic device market
2. Evolution of devices for realization of a smart society
3. Spread of EVs for realization of carbon neutrality
4. E
 xpansion of the electronic device market due toremote work and stay-at-home demand

3D sensors

In-vehicle displays

5G-ready equipment

Conceivable Risks

Devices for EV application
Industrial robots Energy-saving equipment

1. Rapid growth of Chinese competitors

Smartphones
IoT devices

2. Longer delivery times in the supply chain

High-speed data servers

Medium- to long-term outlook of the market
environment

Due to the continued creation of new devices andemergence of manufacturing methods for the realizationof a smart society in various regions worldwide, itis necessary to continue providing equipment withmarket needs. In addition, as China continues to invest
more in and ramp up domestic production of electronic
device-related products, we need to capture the market
by differentiating our technology from our Chinesecompetitors and optimizing our production.

Medium- to long-term initiatives

We are enhancing competitiveness through value
engineering and consolidating our diverse productgroups. While further promoting the modularization of
production equipment, we will work to strengthen ourline-up through the development of new products such asorganic evaporation equipment for wafers and ion milling
equipment. As for device manufacturing, we will further
promote manufacturing reforms and maximize productivity

3. Expansion of restrictions on exports and otherissues due to the impact of U.S.-China trade friction
4. Continued travel restrictions due to COVID-19

Measures for Reducing Risks and Maximizing Opportunities
1. E stablish product groups capturing market andregional characteristics (equipment for the Chinese
market, switching production countries, etc.)
2. Increase orders received through a technology
differentiation strategy and the launch of new models
3. S ecure the necessary parts through planned
advance arrangements
4. Strengthen sales skills of Group companies in China
5. E
 nhance manufacturing productivity throughdeeper manufacturing reforms

ULVAC VALUE REPORT 2021

30

Business Strategy

FPD Production Equipment

VacuumEquipment
Business

Amid the prolonged COVID-19 global pandemic, it isexpected that flat panel display (FPD) demand will rise
and that its importance as an interface connecting people
with information and communications technology willfurther increase in the realization of a smart society. Due
to such changes in the social environment, the market
environment has recently undergone a positive shift.
We will endeavor to seize opportunities to make great
leaps in our business.

Yasuo Shimizu

Executive Officer,
General Manager of FPD Division

Orders received (Billions of yen)

The main markets of FPDs, semiconductor andelectronic devices, automobiles and home appliances
are expected to further expand and recover.
To ensure we do not miss this opportunity, we will
utilize our global sales, development and production
systems to become more competitive and expand ourbusiness.

120
96
72

24
0

40
32
24

8

Ju Hoon Shin
2017

2018

2019

2020

Plan

Review of FY 2020
Difficulties continued due to the impact of COVID-19 in
the first half of FY 2020, but there was a recovery in thesecond half of FY 2020, resulting in net sales picking up to
the targeted level.
In sales, we revised our global sales structure andpromoted education and communication between sales
offices. In production, we engaged in initiatives aimed
at quality control and improvement of productivity, suchas the sharing of production technology and information
between production bases and the optimization of items
produced in order to improve profitability.

Recognized Business Opportunities
1. Increased demand for 65-inch and 75-inch large
panels2. L
 arger display substrates supporting the use of
OLED in IT products
3. Increased demand for lithium-ion batteries due tothe acceleration of the shift to EVs

Conceivable Risks
1. S
 udden decline in demand for display due to arebound from the increase in stay-at-home demand
2. D isruption and restriction of supply chains due tosecurity issues
3. D elay in the shift and adaption to next-generation
technology
4. D eclines in sales prices and profit due to pricecompetition
5. Longer delivery times in the supply chain

2020

2021 (FY)Plan

At the same time, we are strengthening alliances andwill build a structure capable of providing appropriate
solutions to meet a variety of demands from the market.
Recognized Business Opportunities
1. L arge-scale investment related to smart society
and remote work
2. New businesses related to the global trend of SDGs
3. More active market in emerging countries

Conceivable Risks

Medium- to long-term initiatives

Measures for Reducing Risks and Maximizing Opportunities

Components

4. R edevelop and strengthen structure of global
supply chain

2019

2. E
 mergence of low-cost manufacturers in themarket due to quality improvements

 urther improve production efficiency by
3. F
enhancing manufacturing capabilities

1. S trengthen marketing (particularly in OLED andlithium-ion battery markets)

2018

It is expected that the recovery that has already begun in
the FPD market and automotive market will continue andthat semiconductor and electronic device-related demand
will expand. Furthermore, new areas expected to grow inexisting markets, such as EVs in the automotive market,
are also becoming more active.

2. J ointly develop advanced technology with leading
companies

Measures for Reducing Risks and Maximizing Opportunities

As the positive market environment is expected tocontinue, we will strive to maintain our leading market
share by strengthening the competitiveness of ourmainstay products in the area of large-scale LCD production
equipment. In addition, we will increase R&D investment
for technological innovation and develop and sell massproduction equipment for large-substrate OLEDs leveraging
our strengths in the core technologies of large-substratetransfer technology and high-definition support.
We will also utilize the fundamental technologies
cultivated in displays to engage in product development ofcompact, high-capacity products for automotive batteries,
a market that is expected to expand in the future.

2017

1. F
 aster-than-expected technological innovation in
the market

Medium- to long-term outlook of the market
environment

We have started integrated reform of product development,
production and sales in the vacuum pumps business,
and will aim to improve profitability through further
implementation of these. By optimizing the roles ofdevelopment, production and sales between sites, wewill create highly competitive products not only in existing
markets but also for new markets and applications.

Medium- to long-term initiatives

0

Executive Officer,
General Manager of Components Division

2021 (FY)FPD-related investment became more active with theincrease in panel demand thanks in part to the stay-athome demand related to COVID-19. Orders received
increased year on year due to continued investment inlarge LCDs mainly in China, in addition to more active
investment in organic light-emitting diode (OLED)
displays for smartphones and tablets. Although net sales
decreased year on year affected by the market slump
in the previous year, the profit margin was significantly
improved by strengthening manufacturing capabilities andother initiatives.

Demand for FPDs is expected to remain strong in anenvironment where remote work is becoming the norm,
the shift to EVs is accelerating, and the use of AI is
expanding. In addition, due to higher resolution of mobile
devices and tablets as well as the advances made to make
OLED displays lighter and thinner, applications will expandin areas such as medical, automotive and game IT panelsin the future, and the expansion of investment in thedisplay market is predicted to continue.

Orders received (Billions of yen)

16

48

Review of FY 2020

Medium- to long-term outlook of the market
environment

31

Components

VacuumEquipment
Business

Components essential for vacuum
equipment.
ULVAC supplies vacuum
pumps, vacuum gauges, vacuum
valves, vacuum leak testers, gas
analyzers, power generators fordeposition processes, etc. tovacuum equipment manufacturers,
machinery manufacturers, etc.

 onger delivery times in the supply chain
3. L
4. R
 estriction of sales to certain regions due tosecurity issues

1. D evelop products to meet market needs andlaunch them in the market at the appropriate time
2. R educe cost and enhance production capacity
through the optimization of production bases
3. Promote global information sharing

Application example
Examples of installation

Vacuum measurement

Vacuum valves
Cryopumps

Dry pumps

4K cryocoolers
for coolingsuperconductive
magnets

Helium leak detectors

OLED production
equipment
Film deposition
controllers

Advanced research,
medical, etc.

VacuumgaugesResidual gas
analyzers

Liquidnitrogengenerators

ULVAC VALUE REPORT 2021

32

Business Strategy

VacuumEquipment
Business

Industrial Equipment

VacuumApplication
Business

Materials
Orders received (Billions of yen)
20

ULVAC’s industrial equipment business is engaged in expansion of sales andequipment development of vacuum heat treatment equipment for brazing
used in heat exchangers and vacuum melting furnace equipment for magnet
materials making up motors used in EVs and generators overseas (mainly in
China). Furthermore, in Japan, we are engaged in sales and development ofvacuum freeze-drying equipment used for vaccines, nucleic acid medicine,biopharmaceuticals and generic drugs.

Orders received (Billions of yen)

ULVAC offers high-quality, high-performance advanced materials related tovacuum technology to the worldwide market.
As our main business, we produce thin-film materials (mainly sputteringtargets) used in the deposition process for semiconductors, electronic devices
and displays centered on powder metallurgy and metallurgy technologies that
we have long cultivated, and supply them to customers.

35
28
21
14

16
12
8
4
0

2017

2018

2019

2020

7
0

2017

2018

2019

2020

Medium- to long-term outlook of the market
environment
In response to the global trend of aiming to becomecarbon neutral, demand for EVs and energy business suchas wind power generation and power storage is expected
to increase more and more in China.
The growth of the pharmaceutical market is impressive.
At the same time, there have also been changes such as
the shift from small molecule drugs to polymeric drugs,in addition to the use of cells in pharmaceuticals and theacceleration of approval of pharmaceuticals recently seen
with COVID-19 vaccines. These trends are expected torequire not only equipment safety but also a high level ofproduct stability.

Medium- to long-term initiatives
In Chinese bases, we will strengthen technology, design,
procurement and manufacturing, improve safety andquality, and also follow activities in China requiring speed.
We will work to strengthen support for vacuum freezedrying equipment by providing systems also including partof the preceding and subsequent processes particularly inthe sterile preparation market.
Furthermore, in order to support the supply of large
volumes of low-cost products required for genericpharmaceuticals, we will provide solutions including
proposals on the improvement of customers’ vacuum
freeze-drying processes.

33

Plan

2021 (FY)
Plan

Review of FY 2020
The production of vacuum heat treatment equipment
and vacuum melting furnace equipment has been fullytransferred to China, and mass production has begun. This
has enabled the timely provision of optimal equipment to
the Chinese magnet industry undergoing active investment,
leading to an increase in orders received. At the sametime, importing the equipment manufactured in China toJapan has enabled us to use the existing domestic service
network while lowering equipment prices.
With vacuum freeze-drying equipment, we havesupported the large-scale investments made by domestic
pharmaceutical manufacturers, and also started the renewalof existing small and medium-sized equipment with an eye
to medium- to long-term customer requirements.

2021 (FY)

Recognized Business Opportunities
1. L arge-scale investments in the magnet industry
in response to the mass production of EVs by
Chinese and Japanese manufacturers
2. N eeds for stabilization of drug formulations using
vacuum freeze-drying associated with the increased
difficulty of the manufacturing process caused by
the shift toward polymeric pharmaceuticals
3. M ajor pharmaceutical manufacturers’
requirements for higher formulation standards
4. H eightened demand for energy business such as
wind power generation and power storage

Conceivable Risks
1. E
 xpansion of export restrictions on equipment
produced in China due to the impact of U.S.-China
trade friction
2. S hift of production overseas by domestic
pharmaceutical companies
3. Intensifying competition among Chinese EV
companies, revision of subsidy system

Measures for Reducing Risks and Maximizing Opportunities
1. P romote joint development by industry, government
and academia for the improvement of performanceand new functions of equipment for magnets
2. C
 ultivate opportunities for winning new orders
related to energy
3. P repare for overseas expansion of vacuum freezedrying equipment (response to laws and regulations
on pharmaceuticals unique to each country)
4. R espond to expansion in demand for products in
the healthcare industry

Review of FY 2020

Orders received in the semiconductor field such as powerdevices decreased due to the impact of COVID-19 in thefirst half of FY 2020, but recovered in the second half of
FY 2020 due to a recovery in the semiconductor market
and the boom in the display market. Sales of IGZO*
target materials, which are strategic products, increased
in line with the expansion of the OLED market, and we
maintained a high market share. In China, the largest
display market, sales of materials for cutting-edge displays
such as LTPS and OLED continued to grow from FY 2019.
We also made preparations for business expansion bystrengthening the development structure and executing
capital investment in semiconductor target materials
production lines at Chinese production bases with the aimof full-scale entry into the semiconductor market.
*A transparent oxide semiconductor made up of In (indium), Ga (gallium), (Zn) (zinc) andO (oxygen), which enables low power consumption and high definition.

Medium- to long-term outlook of the market
environment

Based on the forecast of medium- to long-term market
growth in the semiconductor and electronic device, andthe display fields, demand for thin-film materials such as
wiring and semiconductor layers incorporated into thesedevices, and new materials for realizing higher device
performance is forecast to inevitably increase.
Medium- to long-term initiatives
We will accelerate development of competitive newmaterials, and also promote the improvement of
production technologies and production efficiency at eachbase. Furthermore, we will increase mass-production
products at the production lines for semiconductor target
materials introduced in Chinese production bases, andconduct business globally centered on China, where thesemiconductor market is growing rapidly.

VacuumApplication
Business

Recognized Business Opportunities
1. Increased demand for thin-film materials(sputtering targets) associated with the ongoingspread of smart devices
2. Investment in mass production lines by leadingedge semiconductor device manufacturers
3. S witching to new materials in line with the trend
toward higher-definition and diversification of
display panels

4. Rapid growth of the semiconductor market in China

Conceivable Risks
1. Intensifying price competition
2. D elay in application to mass production of
products for the semiconductor market
3. R estrictions on exports for security reasons, andsupply chain interruption

Measures for Reducing Risks and Maximizing Opportunities
1. P romote joint development with leading
manufacturers
2. S trengthen marketing activities and networks ineach base
3. S trengthen production technology and enhance
production efficiency
4. Promote alliances with partner companies

Other

Semiconductor/FPD mask blanks business:

Surface analyzer businessWe will respond effectively to increasing needs
for miniaturization and higher definition in linewith the expansion of the application field andthe proliferation of types, reflecting the improved
performance of smartphones, development ofself-driving vehicles, and the ramp-up of demand
related to IoT and artificial intelligence (AI).

Whereas university and company laboratories werepreviously the principal users of surface analyzers, thisequipment is increasingly used nowadays for routine
purposes such as product inspection. Surface analyzers arebeing applied to more materials in more regions and markets
throughout the world. ULVAC will continue offering surface
analyzers with functions attuned to customer needs.
ULVAC VALUE REPORT 2021

34

Strengthening of Foundation for Value Creation

Corporate Governance
Basic corporate governance policy and structure
In accordance with its Basic Corporate Philosophy, “TheULVAC Group aims to contribute to the development ofindustries and science by comprehensively utilizing its
vacuum and peripheral technologies through the mutual
cooperation and collaboration of the Group companies,”
ULVAC, Inc. works to ensure thorough corporate
governance in order to increase corporate value overthe medium to long term. From this perspective, we
respect the interests not only of shareholders, but alsoof business partners, local communities, employees,
and other stakeholders that are related to our businessactivities. We also value competitive and efficient
operation, while ensuring strict compliance with laws
and corporate ethics.
ULVAC, Inc. has adopted a company with a boardof corporate auditors as its management structure.
Particularly important institutional structures include theBoard of Directors, the Board of Executive Officers, theBoard of Corporate Auditors, and the Committee for
Appointment and Remuneration, etc.
Firstly, ULVAC, Inc. has a Board of Directors, which
is a decision-making body for important management

issues. The Board holds regular meetings once amonth, as well as ad hoc meetings as necessary toensure flexibility. The Board of Directors comprises
seven members, of whom four are external directors.
Three of the external directors are designated as
independent external directors. By virtue of thisstructure, ULVAC, Inc. is not only able to make swift andefficient judgments concerning important management
issues, but is also able to achieve fair, impartial, andhighly transparent deliberation, as well as operational
supervision.
Next, with the introduction of an executive officer
system, executive officers exercise executive functions,having been granted a certain amount of responsibility
and authority over their designated areas, throughdelegation by the Board of Directors. ULVAC, Inc. also
has a Board of Executive Officers that comprises a totalof 14 internal directors and executive officers. The Board
of Executive Officers holds regular meetings once amonth, as well as ad hoc meetings as necessary. By
virtue of this structure, we have achieved more flexible
and swifter business operations that are appropriate fora rapidly changing business environment, based on aclear expression of the responsibilities and authority ofeach executive officer.
In addition, ULVAC, Inc. has a Board of Corporate
Auditors, which performs auditing and supervisionof management decision-making and business
operations. The Board of Corporate Auditors comprises
four members, of whom two are external auditors.
Both of the external auditors are designated as
independent external auditors. We ensure full auditing
and supervisory functions through close links between
auditors and the Internal Auditing Department andthe independent auditor, whose independence isensured, as well as through attendance and comments
by auditors at important meetings, such as meetingsof the Board of Directors and the Board of Executive
Officers, and through regular meetings between theInternal Auditing Department and the President, etc.
By virtue of this structure, we have achieved rigorous,
fair, impartial, and transparent auditing and supervisory
functions, ensuring that each auditor obtains sufficient
information.
Composition of Key Organizations in FY 2021

Corporate Governance Structure (As of September 30, 2021)

Title

General Meeting of Shareholders
Appointment/
Dismissal

Board of Directors

Appointment/
Dismissal
Audit

Collaboration
Board ofCorporate Auditors

Appointment/
Dismissal

Independent
AuditorRecommendations

Risk Management
Committee
Compliance
Committee

Accounting audit

Audit

Committee for Appointment
and Remuneration, etc.

President and CEO

Collaboration

Board of Executive Officers

Audit

Name

President and Chief Executive
Officer

Setsuo Iwashita

Director and Executive Vice
President

Mitsuru Motoyoshi

Senior Managing Director

Dr. Choong Ryul Paik

External Director

Hiroyuki Nishi

External Director

Norio Uchida

External Director

Dr. Kozo Ishida

External Director

Yoshimi Nakajima

Auditor

Makoto Ito

Auditor

Mitsuru Yahagi

External Auditor

Senshu Asada

External Auditor

Isao Utsunomiya

Board of Directors

Board of Corporate
Auditors

Board of Executive
Officers (Note)

Committee for
Appointment andRemuneration, etc.

Collaboration

Divisions of the Company

Group companies

Furthermore, we have a Committee for Appointment
and Remuneration, etc. for instances that require
objective determination of important matters, such as
the appointment and remuneration of directors andexecutive officers. The Committee for Appointment
and Remuneration, etc. comprises seven members,of whom one is an internal director, four are external
directors (three of whom are independent external
directors), and two are independent external auditors.
The Committee is chaired by External Director Yoshimi
Nakajima. By having these kinds of advisory bodies
for the Board of Directors, we are able to achieve fair,
impartial, and highly transparent deliberations withregard to especially important management decisions,and increase the effectiveness of the Board of
Directors.
Members of the Board of Directors, the Board of
Corporate Auditors, the Board of Executive Officers, theCommittee for Appointment and Remuneration, etc. areindicated in the list below.

Internal Auditing
Department

Chairperson

Chairperson

ObserverNote: The Board of Executive Officers also comprises executive officers in addition to the above.

35

ULVAC VALUE REPORT 2021

36

Strengthening of Foundation for Value Creation

Corporate GovernancePrincipal activities of external directors and auditors in FY 2020

Directors’ remuneration
A resolution on the policy on determining the content of
individual remuneration, etc. of directors was passed in
the meeting of the Board of Directors held on February
12, 2021. ULVAC’s policy on determining the content
of individual remuneration, etc. of directors is that thedetermination of remuneration of each director shouldtake into consideration the responsibility of each director
for not only the Company’s non-consolidated businessresults for a single fiscal year, but also for the sustainableenhancement of the corporate value of the ULVACGroup. Multiple remuneration elements are evaluatedin combination as described below to appropriatelyreflect their contributions according to their respective
responsibilities to ensure the remuneration, etc. of eachdirector is at an objectively appropriate level.
When determining the specific remuneration for
individual directors, the Committee for Appointment andRemuneration, etc., which consists of external directors,
external auditors, and the chairman of the Board of
Directors and was established in order to ensure
management transparency, fairness, and appropriatenessof remuneration, etc., analyzes the level of remuneration
at other companies of the same size and industry, etc.
as ULVAC. The Committee then evaluates and verifies
the aforementioned responsibilities and contributionsof individual directors from various perspectives,
examines the remuneration, etc. of each director toensure that it is at an appropriate level, and submits
recommendations to the Board of Directors. Based onthese recommendations, the amounts of remuneration,etc. of individual directors are determined by a resolutionof the Board of Directors within the total amount of
directors’ remuneration approved by the resolution of thegeneral meeting of shareholders.
The remuneration, etc., of internal directors will reflect
not only the appropriate supervisory function of theCompany’s overall management, but also multifaceted
evaluations such as internal directors’ responsibility for
the Company’s non-consolidated performance for asingle fiscal year, their responsibility for the sustainableenhancement of the corporate value of the ULVAC Group,and the degree of contribution of their responsibility
according to the respective positions. For this purpose,
the remuneration is made up of base remuneration as
fixed remuneration paid in a fixed amount every month,annual performance-linked compensation (officer bonus)
linked to the business results for the corresponding fiscal
year and stock- based remuneration, etc. through a Board
Benefit Trust (BBT) that is a stock-based remuneration
plan determined according to the degree of achievementof annual performance targets. In contrast, from theperspective of conducting appropriate supervision of
the Company’s management as a whole from a fair
viewpoint, external directors’ remuneration consists onlyof basic remuneration, which is fixed remuneration.
37

Resolutions of the Board of Directors on
remuneration, etc. of directors are determined within
the extent of the maximum amount of aggregate
remuneration for directors set at ¥500 million perannum (including a maximum of ¥90 million for external
directors) by resolution at the 117th Ordinary General
Meeting of Shareholders held on September 29, 2021.
For internal directors, remuneration, etc. through a Board
Benefit Trust (BBT), which was resolved at the 112th
Ordinary General Meeting of Shareholders held on
September 29, 2016, is also granted as performancelinked remuneration not included in the relevant
remuneration limit.
Moreover, the officer retirement benefits system wasabolished at ULVAC by resolution at the Ordinary General
Meeting of Shareholders held on September 28, 2006.

Evaluation of effectiveness of the Board of
Directors
For the purpose of enhancing functions of the Board of
Directors and thus enhancing corporate value, at ULVAC,
Inc. an annual self-assessment survey of directors andauditors is conducted concerning the effectiveness of theBoard of Directors.
Anonymity is secured as directors and auditors
provide their responses to the survey directly to an
external institution. Based on the external institution’sreport on the survey results, the Board of Directors of
ULVAC, Inc. conducts analysis and evaluation.
As a result of analysis and evaluation about theeffectiveness of the Company’s Board of Directors
for FY 2020, it is judged that effectiveness of theCompany’s Board of Directors is secured. However,proposals such as ongoing examination of management
strategy and the mid-term management plan as wellas enhancement of discussion on risk management
have been submitted, and we will continue to strive toenhance the effectiveness of the Board of Directors withconsideration for these proposals.

Policy on selection of external directors andauditors
In order to enhance the effectiveness of the Boardof Directors by realizing multifaceted discussion atmeetings of the Board of Directors, balance among
knowledge, experience, capabilities, etc., diversity, andappropriateness of the size are taken into consideration
regarding the composition of the Board of Directors.
Based on these perspectives, the Board of Directors
carefully selects director candidates. Regarding
attendance at the meetings of the Board of Directors,
efforts are made to ensure an appropriate number fromthe viewpoint of ensuring swift decision-making.

Name of external
director/auditor

Reasons for selection as an external
director/auditor

Attendance and principal activities

Hiroyuki Nishi

To receive valuable opinions based on
his extensive experience and broad
perspective particularly centered on risk
management

Attended all 14 meetings of the Board of Directors held during the fiscal year
and provided opinions for deliberation of the agenda as necessary, based on
his extensive experience and advanced insight as a corporate manager of othercompanies both in Japan and overseas.

Norio UchidaTo receive valuable opinions based on
his extensive experience and broad
perspective particularly centered oninternational sales activities

Attended all 14 meetings of the Board of Directors held during the fiscal year
and provided opinions for deliberation of the agenda as necessary, based on
his extensive experience and advanced insight as a corporate manager of othercompanies both in Japan and overseas.

Dr. Kozo Ishida

To receive valuable opinions based on
his extensive experience and broad
perspective particularly centered on
research and development

Attended 13 meetings out of 14 meetings of the Board of Directors held during
the fiscal year and provided opinions for deliberation of the agenda as necessary,
based on his extensive experience and technical expertise as a corporate manager
of other companies both in Japan and overseas.

Yoshimi Nakajima

To receive valuable opinions based onher extensive experience and broad
perspective particularly centered oninternational sales activities

Attended all 14 meetings of the Board of Directors held during the fiscal year
and provided opinions for deliberation of the agenda as necessary, based onher extensive experience and advanced insight as a corporate manager of othercompanies both in Japan and overseas.

Senshu AsadaTo receive valuable opinions based on his
experience and specialized knowledge
as an attorney

Attended all 14 meetings of the Board of Directors and all 19 meetings of theBoard of Corporate Auditors held during the fiscal year and provided opinions fordeliberation of the agenda as necessary, mainly from a specialist perspective as
an attorney.

Isao Utsunomiya

To receive valuable opinions based on his
experience and specialized knowledge
as a certified public tax accountant

Attended all 14 meetings of the Board of Directors and all 19 meetings of theBoard of Corporate Auditors held during the fiscal year and provided opinions fordeliberation of the agenda as necessary, mainly from a specialist perspective asa certified tax accountant.

Initiatives to ensure effectiveness of audit
Meetings of the Board of Corporate Auditors of theCompany were held 19 times in FY 2020 at which
important matters concerning audit, including agendas
for meetings of the Board of Directors were reported
and discussed. Based on discussions at meetingsof the Board of Corporate Auditors and expertise ofindividual auditors, auditors provide recommendations
to directors of the Company, as necessary, not just at
meetings of the Board of Directors. ULVAC, Inc. secures
opportunities for auditors to periodically exchange views
with directors, staff of the Internal Auditing Department,
and the Independent Auditor on wide-ranging matterssuch as compliance and the situation concerning designof internal control. ULVAC ensures that auditors areprovided with information necessary for auditing and thatthey attend necessary meetings from the perspective ofensuring the acquisition of such information.

Policy on training of directors and auditors
ULVAC, Inc. provides its directors and auditors with
opportunities for training deemed necessary in order forthem to fulfill their roles and responsibilities.
Newly appointed external directors receive
explanations about management strategy, financial
standing, management issues and other importantmatters, and are given opportunities to acquire
knowledge and insight through tours, etc. of businesssites for the purpose of deeper understanding of the
ULVAC Group.
For newly appointed auditors, ULVAC, Inc. provides
training opportunities on a par with those for newly
appointed directors upon the request of auditors. Afterthey take office as directors and auditors, the Board of
Directors provides them with opportunities to explain
business strategies and management issues, etc. foreach fiscal year. ULVAC, Inc. also provides directors
and auditors with financial support for training deemednecessary in order for them to fulfill their duties as wellas encourages them to enhance their expertise. These
training opportunities are reviewed on a continuous basis
and updated as necessary.

Policy on strategic shareholdings
ULVAC, Inc. may acquire shares of a listed company
with which it has transactions only when it is judged thatmaintaining and strengthening the business relationshipwith the entity by acquiring its shares contributes to
ULVAC’s sustainable growth and enhancement ofcorporate value over the medium to long term.
Regarding strategic shareholdings, an annual
assessment is conducted on whether or not to hold eachindividual strategic shareholding, examining whether
the purpose is appropriate in terms of the benefits
and risks from each holding or the Company’s cost ofcapital, and the results of this assessment are reported
at a meeting of the Board of Directors. If, as a result of
the assessment, it is judged that the holding of certain
shares has little significance, the Company considers
reduction of the shareholding of such shares.

ULVAC VALUE REPORT 2021

38

Strengthening of Foundation for Value Creation

ULVAC’s Value Creation from the
Perspective of External Directors

Hiroyuki Nishi

Norio Uchida

Yoshimi Nakajima

Dr. Kozo Ishida

The shift toward a smart society has accelerated due to the impact of COVID-19, and the businessenvironment surrounding us is showing signs of further change. We asked External Directors about
initiatives aimed at enhancing long-term corporate value when viewing ULVAC from an outside
perspective.

Norio Uchida, External Director
Became an External Director of the Company in September 2015 after
serving as Representative Director, President & CEO of TOPCONCORPORATION.

Changes in ULVAC as seen by External
Directors
Uchida: I have been serving as an External Directorof ULVAC since September 2015. Looking back on
39

the past six years, as the business environment
has changed at an extremely rapid pace, ULVAC has
conducted management reforms and strengthened
its management base, greatly improving its financial
position. Manufacturing capabilities have improved,and growth in existing areas has become substantiallymore powerful than in the past. This is the result of
the leadership of President Iwashita and the rest of
the management team as well as simple efforts of
employees working together under this top-down
approach. I think the corporate culture of engaging inefforts wholeheartedly as an engineering company
and a manufacturing company has become deeply
ingrained throughout the entire company. Also, thetop-down approach has become clearer in recent
years, and the growth strategy based on the mid-term
management plan has become more specific.
Ishida: Although affected by COVID-19 from FY
2019 to FY 2020, being able to increase orders
received in each field by staying attuned to changes
in the market, while steadily improving profit byenhancing manufacturing capabilities and undergoinga transformation aimed at improving performance
was a great accomplishment. As an External
Director, I have made suggestions about issues
faced by ULVAC from an outside perspective andsupported management reforms, and I think thecurrent mid-term management plan “Breakthrough2022” (covering the period from FY 2020 to FY2022) will steadily produce results, and that ULVAC
can become more resilient to future changes in thebusiness environment by continuing to focus onhuman resource development and technologicaldevelopment.
Nakajima: I became an External Director of ULVAC
in September 2018, and have felt the high level ofscalability and possibilities of vacuum technology,
and the potential for growth as a global company.
I have a renewed awareness of the strength of the
manufacturing capabilities of ULVAC as a company
based on the current improvements in performanceachieved by seeing the changes in society brought
about by COVID-19 as an opportunity. Meanwhile,over the past three years, I have also learned thatthe scalability, possibilities and potential have not yet
been fully tapped, and that transformation is required
to make the next leap. I am very interested in people
and corporate culture and have many opportunities
to come in direct contact with employees in various
locations at ULVAC. There are many very talented
people, and by encouraging them to accomplish more,
I think it will be possible to achieve sustained growthfor 50 years or 100 years in the future.
Nishi: One year has passed since I was appointed
External Director in September 2020. I have mainly
worked in management in Japan and overseas indifferent industries than ULVAC, and seeing ULVAC’s
pride in contributing to society through engineeringand manufacturing capabilities as well as the diligent
work of its employees conduct their work has been
refreshing and impressive. Furthermore, I have also
been very inspired by the way the members of theBoard of Directors including the External Directors
here engage in vigorous discussion and actively
exchange opinions with people on the executive side.
I would like to utilize the knowledge and experience
I have accumulated in areas such as risk managementin the expansion of businesses and scale ULVAC
will undertake to play my role in contributing to theenhancement of corporate value.

Aiming for inorganic* growth andexpansion
Uchida: As its management base is currently being
strengthened under the mid-term management plan,
ULVAC has started formulating a long-term vision
with a view to the future. ULVAC has conductedmanagement based on the Basic Corporate
Philosophy of aiming to contribute to the developmentof industries and science by comprehensively utilizing
its vacuum and peripheral technologies, and by
establishing a long-term vision, ULVAC will clarify whatkind of company it aspires to be in the future (vision)as well as indicate its stance of contributing to theresolution of all types of social issues. To do this, wemust identify key issues (materiality) unique to ULVAC,
and incorporate them into the mid-term management
plan. Strategies for achieving this are also required.
As I mentioned earlier, I recognize that the current
ULVAC has strengthened its manufacturing capabilities
and achieved powerful growth in existing fields
through a top-down approach under the leadership ofPresident Iwashita and the rest of the management
team. However, for ULVAC to develop in the longterm, to survive as a company required by society andcontinue to provide value, I think it is necessary toachieve inorganic growth not dependent on existing
fields. Specifically, I think there is an urgent need to
expand business globally, enter into new businesses
and secure and develop human resources for handlingthese. What do you all think?
Nakajima: Growth accompanied by change that is not
an extension of existing business is required, and the*Non-continuous growth that is not an extension of the current state

Yoshimi Nakajima, External Director
Became an External Director of the Company in September 2018 after
serving as Vice President of Citibank, N.A., Senior General Manager ofSociete Generale Securities Services and President and Representative
Director of American Express Japan Co., Ltd.

ULVAC VALUE REPORT 2021

40

Strengthening of Foundation for Value Creation

ULVAC’s Value Creation from the Perspective of External Directors

Hiroyuki Nishi, External Director
Became an External Director of the Company in September 2020 after
serving as Director of Nippon Life Insurance Company, President andChief Executive Officer of Nissay Asset Management Corporation andPresident and Chief Executive Officer of Nissay Credit Guarantee Co., Ltd.

question is what kind of preparations are being madeto take the next step. In particular, human resources
are an important key for global business expansion as
Mr. Uchida says, and it is essential to break away fromthinking centered on the Chigasaki head office as well
as seek human resources able to take opportunities
at local sites in addition to human resources whoview themes and overcome challenges from a global
perspective. Naturally, it is assumed that work will bedone in English on site, and I think top management
and middle management at the Chigasaki head officemust communicate in English in order to aim for
global growth. In addition, it is necessary to havea perspective and decision-making criteria as a global
company.
Nishi: Until now, the rate of acquiring Japanese
language skills in local subsidiaries has been very highat ULVAC, and I think business has been conducted
globally in a Japanese-language environment
especially in East Asia. However, with a view tolong-term growth, it is necessary to consider entry
into Europe, the United States and new areas such
as India and Africa, making working in English
a requirement for business.
Ishida: The development of human resources has
already begun within the company, and such initiatives
will be further accelerated while changing the mindset
throughout the company to be more globally oriented.
Further, global business expansion and entry into
new businesses will require IT reform and digitaltransformation to be quickly implemented throughout
the entire Group.
Uchida: When aiming for new growth, unlesssystems that are more consistent throughout the41

entire Group are rebuilt, it will not be possible tograsp, analyze and accurately evaluate productivity
and capital efficiency in detail.
Ishida: If core systems and information systems
are effectively utilized through IT reform and digitaltransformation, I think more advanced awareness of
issues will be shared throughout the Group in a timely
manner, and priority management aimed at long-term
growth will function.
Nishi: If new inorganic areas are captured whilevisualizing issues within the Group though thecreation of such systems and executing strategic HR
from a long-term perspective across organizations,
I think it will be possible to expand business in a waythat utilizes the high level of versatility of vacuum
technology.

Producing globally competent personnel
Uchida: I think focus should be placed on the
production of “globally competent” personnel
as a succession plan for the next generation ofmanagement that will guide ULVAC in the future.
Globally competent means being able to workand produce results anywhere in the world. I thinkproactively sending talented human resources
working in various departments overseas to givethem experience launching businesses is an effectivemeans of developing such personnel.
Ishida: When implementing initiatives such as this,cases frequently occur where superiors refuse
to let go of the talented personnel in their own
departments. However, personnel who are talented
in one workplace often learn the job and exhibit theirabilities even after moving elsewhere, and it would
be a shame to restrict them to one job. The culture
should be changed to enable talented personnel towork for the company as a whole and develop new
personnel to succeed them in the workplace.
Nakajima: I feel that ULVAC has a very large numberof young and talented personnel. If they would liketo leave their current workplace and try working
overseas, I would like them to consider whether theywould be able to work overseas if they develop theirown successors.
Nishi: Alternatively, it may be effective to introduce
a quota-like system in which a fixed number of people
is sent overseas from the workplace.
Uchida: The production of globally competentpersonnel will not be in time for developing andsecuring the next generation of management unless

we start now, obviously without any gap between
men and women.
Nakajima: I agree. I think more women will be given
assignments without being accompanied by family
in the years to come. Naturally, the company must
provide adequate support. Also, the work that can bedone is limited when personnel are sent abroad alone,
so it is better to send a number of people together
and important to create systems enabling them towork with locally hired personnel. For example, thereis quite a large number of talented women who havemigrated from Japan to the United States, so one
approach would be to also hire such people and formteams with them.
Ishida: The semiconductor production equipment
business has service bases in North America, andI think it would be good to set up local sites to send
personnel in this way as well as give them themes towork on such as marketing or the introduction of newtechnologies.
Nishi: This is building the basis for local business inan entrepreneurial format, isn’t it? It would be ideal tosend young personnel there to provide vitality leading
to inorganic business expansion.
Uchida: Efforts to hire and coordinate with local
personnel as mentioned by Ms. Nakajima are also
important. In particular, I think unique taste is required
for marketing. Local management should also be
utilized in M&A after showing ULVAC’s guidelines.

Check points for ULVAC going forward
Uchida: The members of the Board of Directors
and the executive side will thoroughly discuss thebusiness portfolio strategy going forward as well
as work to resolve issues related to materiality torealize long-term growth of ULVAC. I think particularly
important aspects of this are promoting organizational
reform to enable the rapid production of personnel
able to gain successful experiences and monitoring
the status of such efforts. At the same time, I will
respond to the mandate given to me by shareholders
to focus monitoring on risk management andcompliance.
Ishida: There are four points I would like to focus
on. The first is the state of creation of an advanced
information system that is consistent throughout
the Group. The second is the development of global
human resources and the advancement of thesuccession plan for CEO and President. The third is
how research and development resources are utilized

to produce value. Efforts to actively communicate thevalue held by ULVAC outside the company throughmeans such as presentations at academic conventions
are vital. The fourth is further improvement ofefficiency of production divisions. Considerable results
have been produced even now, but I think initiatives
including those abroad can further improve profit andwill also lead to increased quality and improvement indelivery times. I will make proposals with focus on the
progress of initiatives in these four areas.
Nishi: In the immediate future, I will thoroughly checkoverall risk management across Group companies.
Another thing I would like to do is utilize my own
experience of corporate management overseas tomake a variety of suggestions from a long-term
perspective concerning regional strategy, businessportfolio strategy and personnel strategy supportingthese.
Nakajima: I would like to be constantly consciousof the way employees, shareholders and otherstakeholders think about how ULVAC can not only
continue to survive as a company in the long term
but also continue to provide value as a presence thatis absolutely essential for society. I will continue toprovide support to use diversity and sustainability asmeans to establish the significance of existence that
“we could not do without this company.” As a familiar
approach as a female Director who is originally froma foreign company, I would like to be actively involved
in diversity initiatives and make a variety of proposals
about such initiatives.

Dr. Kozo Ishida, External Director
Became an External Director of the Company in September 2016 after
serving as Vice Chairman and Representative Director of HORIBA, Ltd.

ULVAC VALUE REPORT 2021

42

Strengthening of Foundation for Value Creation

Management Structure
Directors
Setsuo Iwashita

Mitsuru Motoyoshi

Norio Uchida

Dr. Kozo Ishida

President and Chief Executive Officer

Director and Executive Vice President

Director

Director

External

Expertise/
experience

March 1984
August 1992
September 1995
July 1998
March 2006
October 2006
September 2011
July 2012
September 2013
July 2015
July 2016
September 2016
July 2017
January 2019
July 2020

September 2018
July 2019
July 2020
July 2021

GlobalSales/
marketing

Joined the Company
Manager of Beijing Business Office and Shanghai Business Office, Overseas
Operation Division
Director and Chief Executive Officer of ULVAC (NINGBO) CO., Ltd.
General Manager of Chinese Region, Asia Division of the Company
Director and Chief Executive Officer of ULVAC (CHINA) HOLDING CO., LTD.
Chairman of ULVAC (Shanghai) Trading Co., Ltd.; Chairman of ULVAC (SUZHOU) CO., LTD.
Director of the Company
Director and Executive Officer
Managing Executive Officer
Senior Managing Executive Officer of the Company; Chairman of ULVAC(CHINA) HOLDING CO., LTD.
Senior Managing Executive Officer and Senior Manager of Management
Planning Department of the Company
Director and Senior Managing Executive Officer, Senior Manager ofManagement Planning Department
President and Chief Executive Officer
President and Chief Executive Officer and General Manager of Human Resource Center
President and Chief Executive Officer (current position)

Expertise/
experience

April 1980
July 2000
September 2005
July 2010
July 2012
July 2013
July 2014
July 2015
July 2017
July 2018
January 2019
July 2019
January 2020
July 2020

Corporate
management

GlobalFinance/accounting

Joined the Company
Senior Manager of Accounting Department
Director and Senior Manager of Accounting Department
Director and Senior Manager of Management Planning Department
Director and Executive Officer, Senior Manager of Management Planning Department
Chairman of ULVAC TAIWAN INC.
Director and Managing Executive Officer, Senior Manager of Management
Planning Department of the Company
Director and Senior Managing Executive Officer, Senior Manager of Management Planning Department
Director and Senior Managing Executive Officer, Senior General Manager of Business; Strategy
Headquarters; Chairman of ULVAC (Shanghai) Trading Co., Ltd.; Chairman of ULVAC (SUZHOU)
CO., LTD.; Chairman of ULVAC SINGAPORE PTE LTD; Chairman of ULVAC MALAYSIA SDN. BHD.
Director and Executive Vice President of the Company
Chairman and Chief Executive Officer of ULVAC (CHINA) HOLDING CO., LTD.;
Chairman of ULVAC Automation Technology (Shanghai) Corporation
Director and Executive Vice President, General Manager of Management
Empowerment Center of Excellence of the Company, responsible for associatecompanies; Chairman of ULVAC Tianma Electric (Jingjiang) Co., Ltd.
Chairman of ULVAC (CHINA) HOLDING CO., LTD. (current position)
Director and Executive Vice President (in charge of Group companies) of the Company (current position)

Expertise/
experience

April 1973
June 1980
February 1989
October 1994
July 1999
June 2003
July 2003
June 2005
June 2007
June 2010
June 2011
June 2013
June 2015
September 2015

Corporate
management

External

GlobalHiroyuki Nishi

Yoshimi Nakajima

Senior Managing Director

Director

Director

External

External

Corporate
management

Global

R&D/technology/
manufacturing

Joined the Company
Joined ULVAC KOREA, Ltd. as Senior Director
President of ULVAC KOREA, Ltd.
Executive Officer of the Company
Managing Executive Officer
Chairman of ULVAC KOREA, Ltd. (current position)
Managing Executive Officer, Senior General Manager of R&D Headquarters of
the Company
Director and Managing Executive Officer, Senior General Manager of R&D
Headquarters
Director and Managing Executive Officer, General Manager of Innovation Centerof Excellence
Senior Managing Director (in charge of Innovation) of the Company; President
and Chief Executive Officer of ULVAC-PHI, Inc.
Senior Managing Director (in charge of Innovation) of the Company; Chairmanof ULVAC-PHI, Inc. (current position)

Expertise/
experience

April 1983
March 2007
March 2010
July 2011
March 2014
March 2017
March 2018
March 2018
March 2020
April 2020
September 2020

Corporate
management

GlobalLegal affairs/riskmanagement

Joined Nippon Life Insurance Company
General Manager of International Planning & Operations Dept. and General
Manager of China Office
Executive Officer, General Manager of Europe, Deputy Director-General andGeneral Manager of London Representative OfficeDirector and Executive Officer, General Manager of the Americas, General
Manager of Europe, Deputy Director-General, and General Manager of New
York Representative OfficeDirector and Managing Executive Officer, General Manager of International
Planning & Operations Dept., General Manager of the Americas, General
Manager of Europe, and General Manager of Asia
Director and Senior Managing Executive Officer, General Manager of theAmericas, General Manager of Europe, and General Manager of Asia
Director
President and Chief Executive Officer of Nissay Asset Management Corporation
Advisor of Nissay Credit Guarantee Co., Ltd.
President and Chief Executive Officer (current position)
External Director of the Company (current position)

Expertise/
experience

April 1980
February 1982
May 1997
June 2000
April 2002
August 2011
February 2014
April 2014
June 2017
June 2018
September 2018
April 2021

Sales/
marketing

Joined Tokyo Optical Co., Ltd. (currently TOPCON CORPORATION)
General Manager of Topcon Singapore Pte. Ltd.
President of Topcon Australia Pty Ltd.
Senior Vice President of Topcon Laser Systems, Inc. (currently Topcon
Positioning Systems, Inc.)
President of Topcon Laser Systems Japan, Inc.
Executive Officer of TOPCON CORPORATION
Director and President of Topcon Sales Corporation (currently TOPCON SOKKIAPOSITIONING JAPAN CO., LTD.)
Director and Executive Officer of TOPCON CORPORATION
Director and Managing Executive Officer
Director and Senior Managing Executive Officer
Representative Director, President & CEO
Advisor to the Board
External Director of Nabtesco Corporation (current position)
External Director of the Company (current position)

Dr. Choong Ryul Paik

Expertise/
experience

April 1991
September 1999
September 2000
September 2012
July 2015
September 2016
July 2018

Corporate
management

Independent

Expertise/
experience

March 1970
June 1982
March 1985
June 1988
June 1991
June 1996
July 2001
June 2002
June 2005
March 2011
March 2014
March 2016
September 2016
March 2017
April 2018

Independent

Corporate
management

Global

R&D/technology/
manufacturing

Joined HORIBA, Ltd.
General Manager of Product Department I, Development and Sales Division
President and Director of HORIBA Europe GmbH (Germany)
Director of HORIBA, Ltd.
Managing Director
Senior Managing Director
President and Director (CEO) of ABX, S.A. (currently HORIBA ABX SAS) (France)
Vice President and Director of HORIBA, Ltd.
Executive Vice President and Representative Director
Director and Advisor of HORIBA STEC Co., Ltd.
Vice Chairman and Representative Director of HORIBA, Ltd.
Senior Advisor
External Director of the Company (current position)
External Director of Seiko Electric Co., Ltd. (current position)
Fellow of HORIBA, Ltd.

Independent

Corporate
management

GlobalSales/
marketing

Joined The Yasuda Trust and Banking Co., Ltd. (currently Mizuho Trust &Banking Co., Ltd.)
Joined AVON PRODUCTS CO., LTD.
Joined Citibank, N. A. as Vice President
Joined Societe Generale Securities Services as Senior General Manager
Joined American Express International, Inc. as Vice President in charge of
Global Traveler’s Check & Prepaid Card Service, Japan Branch
Country Manager in Singapore (President)
Senior Vice President of Japan BranchPresident and Representative Director of American Express Japan Co., Ltd.
External Director of Yamaha Corporation; External Director of AEON Financial
Service Co., Ltd. (current position)
External Director of Japan Freight Railway Company (current position)
External Director of the Company (current position)
Outside Director of Sekisui House, Ltd. (current position)

Auditors
Makoto Ito

Mitsuru Yahagi

Senshu Asada

Isao Utsunomiya

Auditor

Auditor

Auditor

AuditorExternal

Expertise/
experience

April 1984
March 2008
March 2012
April 2015
September 2015

43

Finance/accounting

Legal affairs/riskmanagement

Joined Nippon Life Insurance Company
General Manager of 1st Osaka Corporate Finance Dept. and Kyushu Area
Corporate Finance Dept.
General Manager of Metropolitan Area Corporate Finance Dept.
Joined the Company. Counselor to Senior Manager of Management Planning
Department
Audit & Supervisory Board Member (current position)

Expertise/
experience

April 1983
July 1995
July 1996
July 1999
July 2004
June 2011
July 2018
September 2018

R&D/technology/
manufacturing

Joined the Company
Manager of Product Development Section, Vacuum Pumps Department,
Precision Machinery Division
Manager of Section I, Product Development Department, Components Division
Manager of Section II, Precision Machinery Technology Department,
Components Division
Senior Manager of Research Department II, Research and Development Division
General Manager of Research and Development Division
Adviser to Senior Manager of Management Planning Department
Audit & Supervisory Board Member (current position)

Expertise/
experience

April 1977
October 1996
June 2001
September 2007
April 2012
March 2014
June 2017

Independent

External

Legal affairs/riskmanagement

Registered as an attorney. Joined the Daini Tokyo Bar Association
Jointly established Koju Law Firm
External Audit & Supervisory Board Member of HIMIKO Co., Ltd.
External Auditor of the Company (current position)
Auditor of Judo Federation of Tokyo (current position)Councilor of All Japan Judo Federation
External Director of Ahkun Co., Ltd. (currently Fuva Brain Limited)

Expertise/
experience

April 1997
July 1999
June 2011
June 2012
June 2013
June 2015
June 2017
September 2017
June 2019

Independent

Finance/accounting

Registered as Certified Public Tax Accountant
Opened Isao Utsunomiya Certified Public Tax Accountant Office
Manager of Welfare Department of Kyobashi Branch, Tokyo Certified Public Tax
Accountants’ Association
Representative Partner of Tsukiji Accounting Tax Corporation (current position)
Director of Tokyo Certified Public Tax Accountants’ Association
Director and Deputy Manager of General Administration Department
Manager of General Administration Department of Kyobashi Branch
External Auditor of the Company (current position)
Deputy General Manager of Kyobashi Branch, Tokyo Certified Public Tax
Accountants’ Association (current position)ULVAC VALUE REPORT 2021

44

Strengthening of Foundation for Value Creation

Risk Management
The ULVAC Group considers that responding appropriately to increasingly complex and diverse risk factors leads
to the creation of governance structures that contribute to the fulfillment of legal requirements and the creation ofinternal control structures, and by extension, the medium- to long- term improvement of corporate value. We are
expanding systems that can respond appropriately to risk factors through identification, classification, analysis,
and evaluation, and we are working to increase corporate value by reflecting them in our management strategy.

Risk Management Systemby the president, and mainly comprises representativesof the risk control offices with primary responsibility forrisk management. The Risk Management Committee
holds regular twice-yearly meetings as an umbrellaorganization for risk management, and it determines
company-wide basic policies, monitors the state ofmanagement and administration, and considers any
improvements that can be made, etc. Furthermore,
initiatives at ULVAC, Inc. are implemented at ULVACGroup companies as appropriate for the scale andbusiness type of the company in question.

Risk Management System

ULVAC, Inc.

ULVAC Group companies

Chief Risk Officer =Chief Risk Officer =Reportingandinstructionsfor
improvement

President and CEO

Risk Management Committee

Risk
control
officeRisk
control
officeWe have acquired our market share and achieved
growth by developing unique technologies andintroducing them in the field of vacuum equipmentused, in particular, in FPD, semiconductor, andelectronic device production processes. On the other
hand, if a great reduction in capital investment occurs
or customers’ financial conditions deteriorate owing tochange in the market conditions of FPD manufacturers,
or semiconductor and electronic device manufacturers,
who are ULVAC’s customers, the Group’s businessresults and financial position may be adversely affected.
Under the two fold basic policy, “investment indevelopment for growth (selection and concentration)”and “profit-oriented management through structuralchange,” of the new mid-term management plan
launched in FY 2020, even in the case of market
fluctuation, ULVAC improves profitability by enhancing
productivity and reinforces its ability to respond tomarket changes by focusing on development in growthfields.

President and CEO

Research and development

Risk Management Committee

Risk
control
officeRisk
control
officeRisk
control
office isk control offices are designated according to risk classifications and they implement risk management throughR
a PDCA cycle.
Each Group company decides whether it is necessary to establish a Risk Management Committee in considerationof the size of the company in question and other factors.

45

Principal risks that may have a significant impact on financial position, business results, and cash flows are
identified as below. ULVAC examines measures to reduce these risks and utilize them as opportunities throughdiscussion at a decision-making body such as the Board of Executive Officers.

Market fluctuation

We have established rules concerning the risk
management system, classifying a broad range of risks
from various perspectives, and designated the control
offices primarily responsible for risk management
according to the classification of risks. Furthermore,these risk control offices identify more specific risks andrespond to them. We work to ensure that these offices
efficiently gather important information in operating therisk management system. In addition, in order to shareand evaluate information concerning the operation of therisk management system on a company-wide basis, wehave a Risk Management Committee, which is chaired

Risk
control
officeManagement of risks

By maintaining vigorous R&D investment, we havecontinued to introduce a stream of new productsthat incorporate cutting-edge technology. However, if
development is significantly delayed for a compelling
reason, resulting in delay in introduction of new
products in the market, ULVAC’s business results andfinancial position may be adversely affected.
ULVAC is accelerating development, which
is necessary for growth, through selection andconcentration of investment. At the same time, periodic
monitoring is implemented for progress management inorder to prevent significant delay in development.

Global competitive environment

affected. ULVAC is striving to maintain competitivenessby sharing its technology and product roadmap withcustomers and launching products using cutting-edge
technologies at the appropriate time.

COVID-19
ULVAC’s business results and financial position may be
adversely affected by factors such as the worldwide
travel restrictions and deterioration of the economic
environment associated with the prolonged spreadof COVID-19 and other factors. ULVAC is striving
to minimize the impact on business activities byimplementing measures to prevent the spread of
COVID-19 centered on the COVID-19 Emergency
Response Headquarters headed by the President andCEO.

Recognized business risks
Impact of fluctuations in FPD, semiconductor
and electronic device markets
Impact of research and development
Impact of the global competitive environment
Impact concerning securing of human resources
Impact concerning laws and regulations
Impact concerning quality
Impact concerning financing
Impact concerning information security
Impact due to currency fluctuations
Impact concerning intellectual property
Impact concerning safety

We operate business globally and provide products tocustomers in a variety of countries and regions, butcompetitors also operate globally, and it is a competitiveenvironment with new entries. In such an environment,competition is intensifying not only in terms of productperformance but also price, and the ULVAC Group’sbusiness results and financial position may be adversely

Impact concerning responses to environmental
regulations and climate change
Impact of COVID-19
Other risks

ULVAC VALUE REPORT 2021

46

Strengthening of Foundation for Value Creation

Compliance

Human Rights

ULVAC views compliance as a vitally important issue. In addition to conducting awareness-raising activities sothat each person in the ULVAC Group acts with a spirit of compliance, we are establishing and operating a range
of institutions and regulations to ensure thorough compliance.

We believe that consideration for human rights is an important management issue for further global businessdevelopment. We will support international norms and strengthen promotion of the protection of and respect forhuman rights.

Corporate Code of Conduct

Whistleblowing System

Approach to Human Rights

We have established a Corporate Code of Conduct
comprising 18 items, conducted education, anddistributed booklets to inculcate a culture ofcompliance, in order to ensure that the execution of theduties of officers and employees is compliant with laws
and regulations and internal rules, and that we fulfill our
corporate social responsibility.

We have adopted a whistleblowing system operated
through the Manager of the Internal Auditing Office,which is an independent body. We have also establishedan external whistleblowing contact to enhance thesystem. The Manager of the Internal Auditing Officealso serves as the secretariat for the Compliance
Committee, and the system is structured to give fullconsideration to confidentiality throughout the processof investigating the content of reports. This systemdoes not prevent the person making the report fromselecting other institutions or organizations within the
Company as the destination for the report, and in suchcase, the report shall also be handled appropriately.
Individuals making reports are not treatedunfavorably in any way. Reports can also be submitted
anonymously.
After a whistleblower report has been received,
the initial response is for the Compliance Committeeof ULVAC, Inc. to conduct an investigation in order toestablish the facts. This investigation is particularly
mindful of fairness, and is conducted judiciously andthoroughly. If necessary, assistance may be soughtfrom external experts, and thorough interviews that are
as wide-ranging as necessary may be conducted andanalyzed.
The president chairs the Compliance Committee andthe members of the Committee observe a strict duty ofconfidentiality in carrying out their duties.

We will support international norms on human rights,
and respect basic human rights based on the laws andregulations of each country and region.
ULVAC has signed the UN Global Compact, which isa global initiative advocated by the United Nations, andis promoting initiatives in the areas of human rights,
labor, environment and anti-corruption based on “TheTen Principles of the UN Global Compact” that are
universal principles to be adhered to by companies inthese four areas.
ULVAC has established the standards for employees
to follow in its Corporate Code of Conduct.
The Corporate Code of Conduct specifies the policyof protecting human rights by respecting human rights
and prohibiting all forms of discrimination, and serves
as a guideline on whether employees’ operations
infringe upon human rights. Furthermore, it specifies
policies on respecting the personality and individualityof employees, and on creating workplaces offering
job satisfaction along with the Basic Policy for Human
Resources Development. P.49 Furthermore, it
stipulates the provision of safe products and services
to customers by engaging in safety and health activities
based on laws and regulations, complying with safety
standards and performing risk assessment of our
products. P.52 P.53

Compliance Education
We are working to create a culture of compliancethrough awareness-raising activities. As part of thiseffort, we conduct periodic and ad hoc online training
and face-to-face training on corporate ethics, export
compliance, prevention of insider training, preventionof harassment, and other topics, and test the degree ofcomprehension.

47

Corporate Code of Conduct (Excerpt)
7. Respect for Employees’ Personality and Individuality

Handling of Violations
In the event that, based on the results of aninvestigation by the Compliance Committee, it isdeemed that a violation of laws or regulations has beencommitted, then the opinion of an external expert,
such as a lawyer, may be sought as necessary, steps
will be taken to ensure that the violation ceases withimmediate effect and improvement measures will be
implemented, and those involved in the violation will be
dealt with after deliberation by the appropriate bodies.
In addition, the root causes of the violation are also
investigated in order to formulate effective measures forpreventing recurrence.

Based on the respect for personality and the individuality of eachof our employees, ULVAC will make an effort to upgrade andmaintain the personnel system, labor conditions, and the fluid
system wherein workers may achieve affluence and a sense ofaccomplishment. Also, we will evaluate personnel objectively andfairly, fostering creative human resources with expertise and richindividuality at the same time.

9. Respect for Human Rights and Nondiscriminatory Treatment

ULVAC will assure a healthy work environment where bothharassment and discrimination are never acceptable for reasonsof race, credo, complexion, sex, religion, nationality, language,
bodily features and description, handicap or not propertied ornot, location or birthplace and sexuality . Also ULVAC will take no
involvement in forced labor and child labor. ULVAC will especiallystrive to prevent sexual harassment, coercion, abuse, or harassing
behavior by taking advantage of workplace authority and job
function (harassment through official authority). In the eventof such a problem, we will immediately and promptly start aninvestigation to take resolute action for relief of the victim andprevention of a recurrence.

11. Compliance with Laws or Ordinances

Law on Occupational HealthWith the cooperation of all employees, ULVAC will perform healthand safety activity through risk assessment and will ensurecompliance to the occupational safety and health related laws andULVAC occupational health and safety relevant provisions. ULVAC will
provide safe products and services to users implementing productrisk assessment and ensure compliance to various safety standards.

Reporting and Consultation Desk for Human
Rights Issues
We have adopted a whistleblowing system operated
through the Manager of the Internal Auditing
Department, which is an independent body. P.47
The Compliance Committee will implement
appropriate measures with adequate consideration
for confidentiality, anonymity and protection ofwhistleblowers, and strive to promptly resolve issues
and prevent their recurrence.

Freedom of Association
ULVAC promises to conclude labor agreements withlabor unions and sincerely work together to adhere tothese for the establishment and development of labormanagement relations based on mutual faith and trust.
Furthermore, we engage in close dialogue with labor
unions on management plans and measures, in addition
to labor conditions.

Supply Chain Initiatives
We endeavor to comply with the RBA Code of
Conduct, which is a CSR promotion group focused on
the electronics industry. In addition to implementing,evaluating and correcting self-evaluations andthoroughly managing labor hours in major production
bases, we will ask business partners to work with us as
we engage in initiatives. Along with the implementationof questionnaire surveys mainly for major business
partners, we have incorporated the questionnaire
items into the evaluation at the time of registration andperiodic renewal. Furthermore, we have establisheda policy on the handling of conflict minerals and conduct
due diligence. P.54

Due Diligence on Human Rights
We will incorporate international norms into policies
as well as build human rights due diligence processes
according to these procedures, making an effort tofurther ensure awareness, prevention, responses andrelief mechanisms to address the negative effects ofbusiness activities on human rights.

ULVAC VALUE REPORT 2021

48

Strengthening of Foundation for Value Creation

Human Resources

Developing the Next Generation of Leaders

To achieve sustained growth, vitalized organizations must serve as a foundation enabling diverse humanresources to fully demonstrate their potential. Although there was the impact of COVID-19 in FY 2020, we
created educational opportunities by holding online training and utilizing our unique e-learning system (ULVAC
Academy Portal). ULVAC will continue to strengthen its management base by actively engaging in organizationand human resources development and focusing on cultivating the leaders of tomorrow.

Basic Policy
Amid intensifying global competition, ULVAC, whose
overseas sales account for over 60% of total sales,cannot grow business sustainably unless it provides anenvironment where people with diverse personalities
and strengths can maintain physical and mental
health, bring their differing capabilities into full play,and enhance each other’s capabilities through friendly
competition.
At ULVAC, people with different backgrounds, interms of nationality, ethnicity, philosophy, culture,
language, gender, age, and specialty, are flourishing.

We respect such diversity and promote inclusion, andinnovate to resolve customers’ and society’s issues. By
doing so, we aim to continue to deliver new value that
also leads to the personal growth of each employee.
Based on this approach, we are reinforcing thedevelopment of global human resources who areresilient to changes in the external environment andcapable of working globally with an eye to the futurefrom a broad perspective including the earth, society,markets and customers.

Basic Policy for Human Resources Development
We are conscious that the most important resources for corporate vitality and competitiveness are thepersonnel and the organizations in which they work. We are conducting the following human resources
development, based on our corporate philosophy and basic management policy.
1. Human resources who respect other individuals,
trust each other and fulfill their responsibilities
2. H uman resources who can see the true nature ofeach issue and create revolutionary technologies andprojects with passion and tenacity

3. H uman resources who are full of aspirations toimprove themselves and take voluntary actions toachieve goals
4. H
 uman resources who have a global perspective andaim to take leadership in exploring the world

UL-GAIA 2020
ULVAC has held UL-GAIA for the purpose of enabling
individuals to pursue productivity improvement, sharing
the outcomes and awarding their activities. The name
UL-GAIA, which is short for ULVAC Global Awards of
Improved Achievement, was chosen to liken the ULVACGroup to Gaia (the Earth) and create an award for the
pursuit of integration and productivity improvement ona global scale.
It was held online for the first time in FY 2020.
Presentations were made on the results (effects) andprocess to tackle issues concerning value creation
through the improvement and innovation of the value
chain process based on the theme of “Production
Technology/Manufacturing Technology/Business
Improvement,” the creation of mechanisms andmeasures to inculcate ULVAC’s management policies
in day-to-day work, maximizing groupwide synergy, andstrengthening cross-organizational functions to support
resolution of issues relevant to two or more Group
companies.
Under the slogan Breakthrough: Passion andChallenge, our aim is to ensure all employees areaware of the importance of putting the Basic Corporate
49

Philosophy and the Management Policies into practicein their work and linking their work to outcomes that
contribute to achieving ULVAC’s vision.

ULVAC conducted the ULVAC Executive Program (UEP)with the aim of cultivating leaders who will persistently
and aggressively grapple with global change. The
participants selected from among candidates at ULVAC,
Inc. and domestic and overseas Group companies
participated in the program over a period of six months.
By combining UEP with the ULVAC Leadership Program(ULP), an education program for young leaders, we will
focus on developing the next generation of leaders.

Groupwide Education and Training
ULVAC has long provided level-specific education,
starting with an introductory program for new employees
and a program for employees in their third year. In FY
2020, we established a manufacturing education centerand administration education center to gradually enhance
the specialized skills of employees for the future, andaim to ensure systematic acquisition of basic knowledge
through manufacturing education and administration
education. Furthermore, to provide training to employees
from Group companies in Japan and overseas, wewill establish a course on the history, culture, andmanagement strategy of ULVAC as well as other subjects
and implement global personnel exchanges.

Human Resources Rotation
We are vigorously promoting human resources rotationin the Group, especially between ULVAC Head Officeand overseas Group companies, as a measure topromote the diversity and inclusion mentioned above.
Moreover, by vigorously promoting assignment of
ULVAC employees to companies outside the Group on
loan and vice versa, we are striving to vitalize humanresources and establish human networks while also
expecting to achieve innovation through technicalexchange.
Human resources rotation between ULVAC Head Office and Group
companies
Number of expatriates in Japan(overseas Group companies ULVAC Head Office)Number of employeestransferred (Persons)Productivity
improvement
Further
improvement

Competitions

46

UL-GAIA 2020

(Production Technology/
Manufacturing Technology/
Business Improvement)

Number of expatriates overseas(ULVAC Head Office overseas Group companies)

60

35

37

2016

2017

58

46

51

41

2018

2019

15
61
2020

(FY)

*In FY 2020, restrictions were placed on entry into Japan from abroad to preventthe spread of COVID-19, and the number of expatriates in Japan decreased.

e-Learning System ULVAC Academy Portal
Training
Daily business

Administration

Engineering

SkillsThe portal began operation in 2016, and it currently
provides an education story according to each person’s
conditions and preferences on “when and what toprioritize” in learning amid the significant changes inlearning caused by COVID-19. It offers an environment
as a database that can be used for learning anywhereat any time, thereby increasing the motivation to learn.
Some 6,000 ULVAC employees have registered and areusing the portal, which now supports Japanese, English,
simplified Chinese, traditional Chinese, and Korean, andis used for publishing around 1,700 pieces of content.
Principal contents

Message from the President
Cross-cultural understanding
Video clips of internal seminars and online lectures
Engineering education on development,
technology, design, manufacturing, etc.
Mandatory education for onsite employees, suchas service safety education and basic productsafety education
Mandatory education for all employees suchas compliance education, information security
education and education on security trade control

Creating an Excellent Working Environment
We are creating a working environment in which
employees can demonstrate their strengths andoriginality while enhancing their productivity.
Furthermore, we are developing conditions andprograms that minimize the impact of life events, sothat diverse human resources can flourish and perform
well.
Improvement of systems for flexible workstyles
ULVAC, Inc. offers a staggered working hour system anda flextime system. We also introduced an hourly annual paid
leave system in 2020 that is used by many employees. The
average number of days of annual paid leave taken is 12.0. We
have also taken steps such as the introduction of shortened
working hours and the establishment of satellite offices.
Retention of human resources and transfer oftechnological expertise
Mindful that technological innovation is triggered by the
integration of accumulated technology, new knowledge,
and creativity, ULVAC emphasizes human resources
development, the retention of employees, and the transfer
of technological expertise. For example, we conduct aquestionnaire survey of new employees six months after
they join ULVAC, Inc. and their superiors, and any gaps inperception are promptly followed up.
The system for rehiring senior employees after mandatory
retirement has taken root, and furthermore, we have set
up a special employee system for post-retirement senior
employees (after retirement at the age of 65) to create
an opportunity for experienced employees to display theirabilities and transfer their technological expertise to the next
generation.
Active participation of women
ULVAC believes that active participation of women is a key
issue as it aims to create an environment in which diverse
human resources can exhibit their skills and grow. In addition
to launching a project conducting activities promoting theactive participation of women, we are engaging in initiatives
such as holding gatherings for management and female
employees.
ULVAC VALUE REPORT 2021

50

Strengthening of Foundation for Value Creation

Occupational Safety and Health

Human Resources (Continued)
Employment of people with disabilities
We proactively employ people with disabilities, and people
with a variety of disabilities work at ULVAC. They aim toachieve personal growth and contribute to business, and byaccumulating experience they have become indispensable
in the workplace. After they join the company, ULVAC
works with job assistance organizations, conducts regularinterviews, offers support in the departments where theywork and makes improvements to the working environment,
providing follow-up according to the characteristics of eachdisability to ensure each employee becomes well establishedin the workplace. In addition, students with disabilities arealso accepted from local educational institutions for on-thejob training.

Promotionof HealthManagement

Employee gender ratio
Male

The ULVAC Group has made “Safety First” the fundamental philosophy of business management. By operating
our Occupational Safety and Health Management System (OSHMS) focused on risk assessment, we endeavor toensure safety of the products and services used by our customers and create dynamic workplaces where Group
employees can work in good physical and mental health.

Management gender ratio
FemaleMale

913 female
employees

1,493 male
employees

108 female
employees

15%

Female

93.3%

6.7%

5,150
male
employees

85%

Making further progress in creating a working environment that enables employees
in excellent physical and mental health and good spirits to demonstrate their abilities
to the fullest is important for the ULVAC Group’s future development. At ULVAC,
Inc., the president, the Chief Health Promotion Officer, the senior manager of theGeneral Administration Department, the senior manager of the Personnel Department,
occupational health physicians, and occupational health nurses act in unison to promotehealth management activities. In addition to legally prescribed health checks, stresschecks, and face-to-face guidance for employees who work long hours by an occupational
health physician, the Company pursues initiatives for general health improvement, such aswellness improvement and reduction of health risks.

Priority Activity Wellness Improvement
ULVAC, Inc. has set a wellness improvement target of“An increase of 20% in the number of people who work
energetically by FY 2020 compared with FY 2014,” andintroduced a resilience program to top management in
FY 2020 with the aim of forming habits that improvephysical, emotional, mental and spiritual condition. We
also provided wellness support during the COVID-19
pandemic by distributing to employees information on
subjects such as how best to physically and mentallycope with stress caused by change in the working
environment and on the promotion of good habits. As
a result of these activities, the percentage of employees
who work energetically*1 has increased compared with
FY 2014 (Fig.1). In future, the entire ULVAC Group will
work as one to conduct measures to increase work
engagement.
Health Risk Reduction
Priority Activity
We have set a health risk reduction target of “Healthage*2 3.0 years lower than actual age by FY 2020.” Weprovide lifestyle improvement support to all employees,
such as an online education program that includes
education about long working hours, nutrition education,
women’s health education, and pre-health checkeducation, and a walking program that utilizes the PepUp
healthcare platform. Thanks in part to the effects of thesemeasures, the health age of employees has gradually
improved (Fig. 2). We will continue to implement
measures to lower health age in future.
As a result of implementing these measures,
ULVAC, Inc. has been certified by the Ministry of
Economy, Trade and Industry as a Certified Health and51

Human Resources Data

Fig.1 Percentage of Employees Who
Work Energetically*1
150

Fig.2 Health Age
0

124
100

-0.8

100

-0.8

-1.9
0

2014

2020

(FY)

-2.4

2016

Aiming to Maintain Zero Accidents

In the execution of development, manufacturing,transport, installation, maintenance and other businessprocesses, everyone in the ULVAC Group, from senior
management to line workers, is encouraged to seize
the initiative in continuously undertaking improvements
placing the highest priority on safety, striving tomaintain and improve the safety of everyone involved
and ensure a healthy working environment.

To ensure the safety and good health of its customers
and employees, the ULVAC Group regularly holds
meetings of the Global Safety Committee, and all Group
companies promote safety and health activities in an
integrated manner. Furthermore, we have established a
network of the safety personnel in each Group company
and promptly share, discuss or implement safety
information such as revisions of laws and effective
accident prevention measures.
Each Group company operates the OSHMS, andeveryone is engaged in safety and health activities, suchas management reviews conducted by the president
and other executives and risk assessments performedby each employee. For example, hazards associatedwith chemical substances have been attracting
attention, as indicated by frequent revisions of laws inrecent years. We identify risks at phases from transportand storage to disposal at the work planning stage andare strengthening measures to ensure safety.

Basic Policy on Occupational Safety and
Health Management System (OSHMS)
1. Compliance to the code/regulations, andimplementation of risk assessment
Comply with Codes of Occupational Safety & HealthManagement and Rules according to ULVAC’s
OSHMS, and conduct Risk Assessment in order toperform Occupational Safety & Health Management
activities with the help of all the employees.

2. Assure safety of ULVAC’s products

-1.6

50

Approach to Occupational Safety and Health

2020

(FY)

*1 The average score for all items of the percentage of people answering “5. I
strongly agree” for five items concerning vitality toward work (five-point scale)in a survey at the time of application for a health check, with the value for FY
2014 as 100.
*2 An index developed by JMDC Inc. based on the medical checkup data andmedical expenses of 1.6 million people. ULVAC, Inc. began measurement in
FY 2016.

Productivity Management Organization (White 500),ULVAC EQUIPMENT SALES, Inc. and the ULVAC Health
Insurance Association have been certified as CertifiedHealth and Productivity Management Organizations(Bright 500), and ULVAC TECHNO, Ltd., ULVAC-PHI,
Inc., TIGOLD CORPORATION and REJ Co., Ltd. havebeen certified as Certified Health and Productivity
Management Organizations. ULVAC will continue
pursuing various initiatives at domestic Group companies
to maintain and promote the health of employees.

Comply with ULVAC’s standard for safety design andperform risk assessment of our products, in orderto deliver our safe products and services to ourcustomers.

Safety Management System
Companies in Japan
Companies in South
Korea

President and CEOULVAC, Inc.

Companies in Taiwan

Global Safety
Committee

Companies in China
Companies inSoutheast Asia

3. Planned education about Occupational
Safety & Health & Product Safety
For all the employees and contractor’s employees,
perform Occupational Safety & Health training basedon ULVAC Safety Management system, while offeringscheduled Product Safety training for our users.

4. Promotion of mental health care
Promote mental health care to achieve a healthy,
vigorous workplace environment.

Companies in Europe
and North America

Frequency ratio of occupational accidents
Group as a whole

Japan

China

South Korea

Taiwan

1.50

1.00

1.00

1.05

1.11

2017

2018

0.97

0.92

2019

2020

0.50

5. Global expansion of ULVAC group
Through the Safety & Health promotion activities of
the Global Safety Committee, we will try to create an
appropriate work environment for the whole ULVAC
group and contribute to prosperity of our businesses.

0

2016

(FY)

*This graph shows the rate of occupational accidents for each fiscal year, with the value for
FY 2016 (as of June 2017) as 1.00. We have maintained a low frequency ratio of accidents
by preventing accidents through various safety activities.

ULVAC VALUE REPORT 2021

52

Strengthening of Foundation for Value Creation

Quality Assurance and Product Safety

Procurement

The ULVAC Group is engaging in initiatives worldwide to meet customer expectations for high-level, safe ULVAC
quality through total quality management (TQM).

Suppliers are our important partners for manufacturing. We are working with them to enhance efficiency of theentire supply chain (from design, procurement, manufacturing, and sales, through to customer support), always
being conscious of the environment and society.

Quality Policy
Improve quality & reduce costs and leadtime to half
Maximize profits and customer
satisfaction
Quality Assurance System
34 ULVAC Group companies are ISO9001: 2015
certified. The Global Quality Assurance Committee ledby the president of ULVAC, Inc. spearheads a Groupwide effort to align quality policies and are addressing
quality issues and deploying improvements globally.
Global Quality Assurance Committee(Central secretariat: ULVAC, Inc.)

Quality Management Education

Procurement Policy

Communication with Business Partners

With the aim of ensuring basic knowledge on
quality is obtained, educational materials on quality
management for new employees and for employees
engaged in engineering, design, and quality assurance
are registered on the ULVAC Academy Portal*2 sothat they can be accessed remotely. In FY 2020, we
promoted new managers and encouraged obtaining
internal auditor qualifications to strengthen the quality
assurance divisions responsible for business divisions.
Furthermore, we have also conducted awarenessraising activities such as distributing news to the entire
Group every month in order to raise awareness about
quality.

We have established and observed a Basic Procurement
Policy and are promoting CSR procurement incooperation with our business partners. Furthermore,“Requests to Our Business Partners” states ourrequest for business partners in areas such as theenvironment, human rights, labor and compliance as wellas compliance with the RBA*1 Code of Conduct. With
regard to promoting CSR procurement, we conductedquestionnaire surveys with reference to the RBA Codeof Conduct targeting 171 major suppliers (accounting
for approximately 70% of the value of procurement)
in December 2020, and confirmed that there were
no incidences of child labor, forced labor, inhumane
treatment, fraud or bribery, which are particularly
emphasized in the RBA Code of Conduct, and thehandling of conflict minerals. Furthermore, we reviewed
the assessment methods and items for registrationof new business partners and periodical renewals,
incorporated the items that had been implemented inquestionnaire surveys into the management system,
and changed to a system enabling the monitoring ofcompliance of all business partners.
Furthermore, we revised the basic transaction
agreement in April 2020 and explicitly mentioned
understanding the content of “Requests to Our Business
Partners” and its observance. In FY 2020, we promoted
the conclusion of renewals with this agreement.

We have been holding operations briefing meetings
once a year as a forum for our management to directly
explain to business partners the business environment
and prospects and supplier meetings three times a year
for the person in charge to communicate productionplans in a timely manner. In FY 2020, we have cancelledthese meetings in view of the COVID-19 pandemic, but
launched and started operating a membership-based
website. We intend to enrich the content of this website
to promote sharing of information and collaboration withour business partners.

Product Safety Activities

Group-wide implementation of the quality policy
Companies
in JapanCompaniesin South
Korea

Companies
in Taiwan

Companies
in China

CompaniesinSoutheast
Asia

Companiesin Europeand North
America

Individual companies’ quality policies and target deployment activities in accordance with the Group’s policy
Sharing of case studies and horizontal deployment of achievements and effective approaches

Quality management is promoted by way ofthorough analysis of nonconformities that occurred
at a process within the process, implementation ofrecurrence prevention measures, feedback of findings,
implementation of preventive measures, and process
standardization activities.
In FY 2020, in connection with manufacturing
innovations, we unified the approach to nonconformity
throughout the Group companies, and created a system
for integrally managing information in a databaseenabling centralized management. Using this, wewill promote the visualization of events that occur,
identify and analyze areas for improvement, implement
measures to prevent recurrence without omission, andshare this throughout the Group to achieve total quality
management.

To deliver safe and secure ULVAC brand products tomarkets around the world, qualified safety assessors*3
play a leading role in product safety assessments andcontinuously engage in activities to verify the required
safety and quality at the drawing release and productshipment phases. In line with expansion of productionin Asia, in order to establish an independent verification
system at overseas production bases, we are promoting
not only periodic information exchange but alsogroup-based education in each area and exchanges of
personnel. Non-Japanese quality safety assessors atoverseas sites have started to play active roles. ULVAC
is promoting product safety activities throughout theGroup, which will lead to greater customer satisfaction.
Number of qualified safety assessors

Basic
Procurement
Policy(Persons)
60

Promoting global
procurement
Sound, good
relationships withbusiness partners
and affiliates

40

Front Loading0

Feedback

Total Quality Management (TQM) System
Quality Assurance

53

Customers

Services

Installation

Logistics

Inspection

Assembly

Purchasing

Parts
manufacturing

Sales

Product
development

Concept design
Mass-production design

Value Chain
Detailed design

Processdevelopment

Maintaining andpromoting fair andfree competition

Purchasing Code of Conduct

Purchasing Code of Conduct

Total quality management

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

(FY)

*1 “Front Loading” ordinarily refers to arranging or planning so that a large
portion of work occurs in the initial phase. At ULVAC, it is an activity to create
quality by identifying issues as soon as possible.
*2 ULVAC’s e-learning system. See P.50 for details.
*3 S afety Assessor (SA) Qualification is a qualification scheme based on thirdparty certification of machine safety knowledge and competence underinternational safety standards.

Conflict minerals are minerals that are sourced fromconflict-affected and high-risk areas (CAHRAs) andwhose extraction and sale directly or indirectly serve assources of funding for armed groups or are root causesof serious human rights abuses and poor working
conditions. Our policy is not to purchase or use 3TGs*2and cobalt raw materials derived from conflict minerals.
In particular, we manufacture and sell sputteringtargets and various tantalum wrought products inthe materials business. We conduct due diligence inaccordance with the guidance of OECD and RMI*3
through conflict minerals surveys covering raw materials
suppliers in order to ensure transparency of transactions.
In FY 2020, no procured items that use 3TGs or cobalt
derived from conflict minerals were detected.

Green Procurement Initiatives

Compliancewith laws andregulations

Promoting green
procurement

20*1

Promoting CSR
procurement

Policy on Conflict Minerals

We established the Purchasing Code of Conduct, a setof principles emphasizing compliance for employees
engaged in procurement, in 2019 with an aim to maintainsound, good relationships with business partners. Inhouse education such as case studies on the Act against
Delay in Payment of Subcontract Proceeds, Etc. to
Subcontractors is provided twice a year for employees
engaged in ULVAC, Inc.’s procurement and that of Group
companies in Japan.

In August 2020, we revised the Green Procurement
Standards, and requested suppliers to share information
on chemical substances in commercial components
used for products through the chemSHERPA*4. In
FY 2020, we conducted activities with focus on
creating internal structure, implementing systems
and penetration of the Green Procurement Standards
among business partners. Going forward, we will set
specific targets and promote initiatives in cooperation
with our business partners.
*1 Responsible Business Alliance. CSR promotion group focused on theelectronics industry in global supply chains*2 Tantalum, tin, tungsten, and gold
*3 R esponsible Minerals Initiative. An organization that inspects smelters andrefiners handling 3TGs to certify that they are not using conflict minerals*4 Scheme for enabling sharing of information on chemical substances containedin products throughout the supply chainULVAC VALUE REPORT 2021

54

Strengthening of Foundation for Value Creation

Environment
We are strengthening efforts to address climate change based on our new environmental policy. We willcontribute to reducing environmental impacts through the products and services provided to customers andtheir manufacturing processes. Furthermore, as the Company has built a strong governance structure in thecourse of acquiring integrated ISO 14001 certification, we are ensuring information sharing among Group
companies, promotion of reduction of greenhouse gas emissions and swift implementation of instructions
issued by top management.

Environmental Philosophy
The ULVAC group understands that the conservation of the global environment is one of themost important issues facing humanity. While effectively utilizing resources in all aspects of ouroperations, we take into consideration biodiversity so as to contribute to bringing about a better
living environment and a more prosperous society.

Reducegreenhousegas emissions

93,781
t-CO2

40

%

56,269
t-CO2

2020

55

by

Net zero

2050

2030 (compared with 2020) and effectively zero in 2050.
We will take action against climate change throughefforts to curb greenhouse gas emissions through allactivities such as making an effort to conserve energy
in Japan and overseas, introducing renewable energy
with low greenhouse gas emissions and developing
environmentally friendly products.

We will work to expand our disclosure of informationon the risks and opportunities climate change poses
to our business in line with the Task Force on Climaterelated Financial Disclosures (TCFD) established by the
Financial Stability Board (FSB).
Governance structure
Under the supervision of the Board of Directors, theExecutive Officers in charge of sustainability andenvironment monitor the progress of targets. Meetingsof the Sustainability Promotion Committee attended
by the internal directors are held twice annually toacknowledge social trends and the Company’s current
condition, and discuss measures to address any issues.
The management and the Board of Directors deliberates

and makes management decisions as needed whensignificant issues related to management arise.
Furthermore, the Global Environmental Management
Committee sets targets for each Group company,
monitors progress and supports efforts to achieve thetargets.
Risks and opportunities
Utilizing the framework of the TCFD recommendations,
we identified the risks and opportunities presented
by the impact of climate change on business in themedium to long term. In the future, we will proceedwith the quantification of the impact on business, andconsider specific measures.

Major risks
Category

Elements

MarketIncrease in business costs due tochanges in customer behavior

Measures

Policies and legal
regulations

Carbon pricing

Engineering

Replacement of existing products
and services with those with lower
emissions

Research and development on products and services such as
manufacturing equipment that contributes to technological innovation invarious fields, and promotion of low power consumption of products

Acute/chronic

Business continuity risk due to disasters
caused by abnormal weather conditions
such as typhoons and heavy rains

Formulation of business continuity plan for natural disasters andimplementation of countermeasures

Introduction of renewable energy and ensuring the implementation ofenergy-saving measures in business activities

Major opportunities

greenhousegas emissions

2030

With the growing international awareness of climatechange, as seen by the widespread implementation of
SDGs and the adoption of the Paris Agreement, efforts
to address climate change have become one of ULVAC’s
key management issues. In order to actively engage
as a responsible member of society, the ULVAC Group
has set medium- to long-term greenhouse gas emission
targets in its business activities at a 40% reduction in

Our Efforts Corresponding to the Task Force on Climate-related Financial Disclosures (TCFD) Recommendations

Environmental Policy
Reducing greenhouse gas emissions
We reduce greenhouse gas emissions, a main cause of climate change, through all of our activities.
We are committed to developing products that conserve energy and reduce our environmental
footprint.
Preventing environmental contamination
In conducting business, we comply with environmental laws and regulations.
We manage hazardous chemical substances appropriately in our manufacturing processes to prevent
environmental contamination and health hazards.
Environmental targets and continuous improvement
We establish environmental targets and strive to improve our environmental performance by reviewing
these targets.
In addition, we continuously improve our environmental management system through routine review.
Environmental education and information disclosure
Through environmental education, we raise the awareness of each individual and appropriately disclose
environmental information.

Environmental Targets
Greenhouse gas emission targets
Reduce greenhouse gas emissions in 2030 by
40% compared with 2020
Achieve net zero greenhouse gas emissions by
2050

Addressing Climate Change(CY)

Category

Elements

Measures

Products andservices

Heightened expectations for equipment
and technology contributing to low
power consumption devices, powerdevices and lithium-ion batteries,
and increased needs for low power
consumption products

Research and development on products and services such as
manufacturing equipment that contributes to technological innovation invarious fields, and promotion of low power consumption of products

Revision of Environmental Philosophy, Environmental Policy and Environmental Targets

Indicators and targets

As the technological innovation aimed at realization ofa smart society and carbon-free society has accelerated
in recent years, demand for semiconductors, electronic
components, and flat panel displays is increasing
more and more. Furthermore, in order to strengthen
the environmental management system while flexibly
responding to changes in the management environment

We revised our environmental targets in FY 2020 tofurther strengthen our initiatives to address climatechange. We will embody our Sustainability Policy, whichstates “ULVAC strives to create economic, social, andenvironmental value by comprehensively utilizing its
vacuum and peripheral technologies,” by supporting
the development of a smart society and a carbon-

such as enhanced measures to reduce greenhouse gas
emissions taken by various countries to counter climatechange and increased ratio of overseas production,
we have reviewed and revised our Environmental
Philosophy, Environmental Policy and environmental
targets.

free society through vacuum equipment and vacuum
application business as well as through our initiatives
aimed at achieving new targets.
Reduce greenhouse gas emissions in 2030 by 40% ascompared with 2020
Achieve net zero greenhouse gas emissions by 2050

ULVAC VALUE REPORT 2021

56

Strengthening of Foundation for Value Creation

Environment (Continued)
Initiatives at plants

Environmental Activities in FY 2020
In order to achieve the newly established targets,
we have started to reconsider initiatives such as
promotion of various energy-saving measures for
reducing greenhouse gas emissions, the introductionof renewable energy facilities and renewable energy
procurement. With regard to energy-saving measures,
we will actively consider the construction of ZEB*1
buildings when renewing aging buildings and facilities
based on the medium- to long-term facility plan.
Furthermore, the Group is working as one to reducegreenhouse gas emissions such as through modificationof facility operation, introduction of highly efficientfacilities, installation of renewable energy facilities andprocurement of renewable energy.
We estimated Scope 3*2 greenhouse gas emissions
in the entire supply chain in FY 2020, and determinedthat greenhouse gas emissions when using products
have a large impact. We recognize the importanceof developing products with low greenhouse gas
emissions during their operation, and have begun

working on an environmental impact reduction plan in
our business activities.
Total waste emissions did not change significantly
compared with the previous fiscal year, but the final
landfill disposal rate decreased by 1.2%, to which we
believe efforts made by the Taiwan Group contributed.
The Taiwan Group changed its method of sludge
treatment from disposing in a landfill to recycling(thermal recovery and reuse) and also improved theefficiency of the sludge dehydrator, which led toreduced moisture content in the post-treatment sludge
and ultimately less sludge waste.
The ULVAC Group will continue to promote
environmental management activities in order to reduce
environmental impacts derived from its businessactivities.
*1 Net Zero Energy Building. A building with the purpose of realizing net zeroenergy consumption.
*2 Indirect emissions from the value chain excluding direct emissions ofgreenhouse gases by the Company (Scope 1) and indirect emissions
associated from the use of electricity, heat and steam supplied by othercompanies (Scope 2). Classified into upstream activities (emissions related
to products and services purchased or acquired) and downstream activities(emissions related to products and services sold).

Gasconsumption

LPG:
LNG:
City gas:

OUTPUT

162,979 thousand kWh

224 t
683 t
1,275 thousand m3
15 kL
Heavy oil:
Kerosene oil: 11 kL
Diesel oil: 148 kL

Fuelconsumption
Water
consumption
Packagingmaterials

1,449 thousand m3



1,298 t90,933 t-CO2
CO2 emissions(Emissions due to consumption ofelectricity, gas, and fuels)

5,912 tTotal waste
emissions

800,000

892,939

600,000

618,034

615,652

1,064,001

1.4 %(t-CO2)100,000
80,000583,620

40,00020,000200,000

2016

2017

2018

Energy-saving activities in enhanced heat interchange ULVAC, Inc., Head Office/Plant

2019

2020

(FY)

Water consumption

31,53435,09635,202

34,27935,10558,69961,557

63,76959,50255,829

0

2016

2017

2018

2019

2020

Environmentally friendly
products

1,200
900

393

364

600
300
0

57

409

Group companies overseas

467

451

Total amount of waste recycled (t)Amount of valuable materials recycled (t)(t)
10,000
8,000

293

3.5

3.6

3.6

289

286

(FY)

742

899

2016

2017

2018

929

998

4,000
2,000

2019

2020 (FY)0

Amount of landfill (t)Final landfill disposal rate (%)

163

7,637

2,071

2016

6,504

1,767

2017

6,584

(%)
4.0

2.6

6,000

712

Building B

Air
conditioner

Air
conditioner

Production
equipment

Production
equipment

ReturnHeat source

Out

ReturnHeat source

10,000 EV chargers shipped / ULVAC KOREA, Ltd.

Waste emissions
Group companies in JapanOut

Building A

Solar power generation system at ULVAC COATINGCORPORATIONGroup companies overseas

Group companies in Japan*The emission factors use the Emissions Factors 2020 edition published by
the International Energy Agency (IEA)(Thousand m3)
1,500

Overview of construction

60,000400,000

0

Renewal of air conditioning heat source equipment

Energy-derived CO2 emissions(kwh)
1,200,000
1,000,000*Fan filter unit (FFU) is a high-performance filter unit with a fan.

The ULVAC Group has introduced solar power generation systems and utilizes
the power generated in its business activities. In FY 2020, we generated
1,064 thousand kWh, which contributed to the reduction of greenhouse gas
emissions. We will continue to consider the active introduction of solar power
generation systems and promote the use of renewable energy.

*The material balance covers 30 consolidated companies from the fiscal year under review. The figures for FY 2016 to FY 2019 have been recalculated accordingly.

Amount of solar power generated

aging heat source equipment for air conditioning in clean rooms with new ones,
and revising the operating hours and number of fan filter units (FFU)*. The
company will continue initiatives to improve environmental performance in the
future.

Utilization of renewable energy

Total amount ofwaste recycled: 4,936 t
Amount of landfill 80.1 t

Final landfill
disposal rateannually from 5,796 t-CO2 in FY 2019 to 5,538 t-CO2 in FY 2021 by replacing

New piping

Electricity
consumption

ULCOAT TAIWAN, Inc. is promoting energy-saving activities and working to
reduce greenhouse gas emissions. They have reduced CO2 emissions by 2%

The clean rooms in Building A and Building B of the
ULVAC, Inc. head office/plant supply cold water fromheat source equipment for the air conditioners installedin each building to provide air conditioning.
This initiative flexibly uses the most efficient heatsource equipment in Building B for both buildings to
reduce the total energy consumed at Buildings A and B.
Sending cold water produced in the electric refrigeration
system in Building B to Building A led to a reduction ingreenhouse gas emissions by 524 t-CO2 per year.

Material balance (Source: Aggregate data for FY 2020)

INPUT

Energy-saving activities in renewing air conditioning heat source equipment ULCOAT TAIWAN, Inc.

80

1.4
1,877 4,987
4,936
1,173
1,136

2018

2019

2020

UK-NC7W-TCE EV slow charger

UK-QC50ST rapid charger

ULVAC KOREA, Ltd. joined the Jeju Island EV Charger Installation
Consortium with the Korea Smart Grid Association and GS Caltex in2010, and shipped 10,000 units of the 7kW slow charger model in May
2021. In 2015, their charger was selected by Good Design and they
began selling 22kW and 43kW medium-speed chargers ahead of theindustry. Furthermore, the company joined a project for the city ofSeoul (South Korea) in April 2021 and received orders for 50kW rapid
chargers. We will continue to support the spread of environmentallyfriendly electric vehicles with the aim of obtaining standard certificationin various countries in anticipation of the growing EV business.

0.0

(FY)

ULVAC VALUE REPORT 2021

58

Financial Data/Corporate Information

11-year Financial Data
Financial Data

(Unit)FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY20202011.62012.62013.62014.62015.62016.62017.62018.62019.62020.62021.6

Key financial results
Net sales*1

Millions of yen

232,040

196,804

163,351

173,878

179,174

192,437

231,831249,271

220,721

185,402

183,011

Operating profit

Millions of yen

1,850(6,384)

6,115

11,996

11,132

17,86429,46835,351

23,82815,95817,197

Ordinary profit

Millions of yen

1,441(6,497)

6,264

13,384

12,475

18,37329,71636,90725,57518,052

17,966

Net income attributable to owners of parent*2

Millions of yen(8,706)(49,984)(3,807)

11,538

8,874

16,69824,46935,904

18,665

10,76914,830Net assets

Millions of yen

92,023

41,18759,436

72,23884,92878,032

104,917

154,069

157,588

161,093

173,699

Total assets

Millions of yen

313,616

249,651

243,289

230,791

242,348

219,561

245,306

297,418

282,302282,350

292,761

Cash flows from operating activities

Millions of yen

17,730(8,492)

22,35732,213

21,992

23,70837,81819,086

18,282

18,73825,520Cash flows from investing activities

Millions of yen(14,833)(11,328)(4,506)(3,023)(4,055)(5,593)(13,713)(1,564)(9,448)(4,143)(6,925)

Cash flows from financing activities

Millions of yen

2,159

12,616(3,619)(16,881)(14,895)(32,448)(22,580)(10,734)(5,844)

7,455(16,061)

Cash and cash equivalents at end of period

Millions of yen

35,722

28,18044,20457,012

61,67044,86247,55554,34855,85977,94883,061

Net assets per share

Yen

1,787.51

751.00806.381,040.23

1,398.66

1,477.29

2,002.90

2,994.12

3,062.39

3,132.22

3,388.87

Net income per share

Yen(176.43)(1,012.94)(87.79)223.18172.73338.37496.35728.68378.78218.54301.12Equity ratio

%

28.1

14.8

22.7

29.2

32.8

33.2

40.2

49.5

53.5

54.6

57.0

ROE (return on equity)*3

%

—

—

—

18.8

12.1

21.9

28.5

29.2

12.5

7.1

9.2

Ratio of ordinary profit to total assets*4

%

0.5

—

2.5

5.6

5.3

8.0

12.8

13.6

8.8

6.4

6.2

Price-earnings ratio*5

Times

—

—

—

9.66

10.91

9.21

10.88

5.82

9.02

14.23

18.70

Capital expenditureBillions of yen

17.8

12.7

6.8

6.2

6.7

7.0

8.3

12.9

12.9

10.3

10.0

R&D expenses

Billions of yen

8.3

7.1

5.0

5.2

5.6

6.3

6.9

8.3

9.2

8.4

8.4

Interest-bearing debt

Billions of yen

105.1

120.2

106.1

89.6

82.6

62.7

42.7

35.7

35.6

49.8

39.5

Key performance indicators

Other indicators

Dividends

Yen

—

—

—

—

10.0

30.0

50.0

95.0

105.0

80.0

95.0

Dividend payout ratio

%

—

—

—

—

5.8

8.9

10.1

13.0

27.7

36.6

31.5

Number of employees

Persons

7,878

6,981

6,579

5,971

5,904

5,886

6,072

6,439

6,424

6,370

6,063

*1 Net sales do not include consumption taxes.
*2 The Company applies the “Revised Accounting Standard for Business Combinations” (ASBJ Statement No. 21, September 13, 2013) and “net income attributable to ownersof parent” is presented instead of “net income.”*3 ROE (return on equity) figures for FY2010 to FY2012 are not presented because the Company recorded a net loss for these periods.
*4 The ratio of ordinary profit to total assets for FY2011 is not presented because the Company recorded an ordinary loss for FY2011.
*5 Price-earnings ratios for FY2010 to FY2012 are not presented because the Company recorded a net loss for these periods.

59

ULVAC VALUE REPORT 2021

60

Financial Data/Corporate Information

Financial Overview
Forward-looking statements contained in this document are based on the current assumptions and beliefs of the ULVAC Group
in light of the information available to it as of September 29, 2021.

Management’s Recognition, Analysis and Discussion of Financial Position and Operating Results

Financial Position

For the fiscal year ended June 30, 2021 (FY 2020),
net sales amounted to ¥183,011 million, a decreaseof 1.3% year on year. Although orders received for
FPD production equipment increased due to active
investment in LCDs resulting from an increase indemand for panels and continued investment in
OLEDs such as those for smartphones and tablets, net
sales was below the level of the previous fiscal year
due to decreases in orders received in the previous
fiscal year. Net sales of semiconductor and electronic
device production equipment increased from theprevious fiscal year due to the resumption of memory
investment, continued investment in logic, in addition
to an increase in orders received for electronic device
production equipment including power devices, opticaldevices and communication devices.
Operating profit margin was 9.4%, up 0.8 percentage
points from the previous fiscal year. This was mainly
attributable to the enhancement of manufacturing
capabilities, which is an initiative under the mid-term
management plan, beginning to produce results.
R&D expenses totaled ¥8,375 million, a decreaseof ¥22 million from the previous fiscal year. The ratioof R&D expenses to net sales was 4.6%, an increaseof 0.1 percentage points from the previous fiscal year
due to a decrease in net sales. Although the amount of
R&D expenses was on par with the previous fiscal year
owing to continuation of restrictions on movement andso on because of the COVID-19 pandemic, the ULVAC

Total assets at the end of FY 2020 amounted to¥292,761 million, having increased ¥10,411 million
compared with the figure at the previous fiscal year-end.
The main factors were increases of ¥10,850 million in
cash on hand and in banks due to an improvement in
operating cash flow resulting from strengthening of
cash flow management, which is an initiative underthe mid-term management plan, and ¥2,052 million
in inventories mainly due to an increase in orders
received, which were partially offset by a decrease of¥4,509 million in investment securities mainly due tothe sale of listed shares held in order to improve capitalefficiency and strengthen financial position.
Total liabilities amounted to ¥119,062 million, having
decreased ¥2,194 million compared with the figure
at the previous fiscal year-end. The main factors werea decrease of ¥10,392 million in short-term loans
payable and long-term loans payable due to repayment,Group is continuing to emphasize investment with aview to future growth.
Regarding objective indicators for evaluating thedegree of achievement of the management policies,
management strategies, and management objectives,
we are implementing a new mid-term management
plan, “Breakthrough 2022,” which covers three
years from FY 2020. The basic policy of this midterm management plan is twofold: “investment indevelopment for growth (selection and concentration)”and “profit-oriented management through structuralchange.” Under this policy, the ULVAC Group will use
net sales, gross profit margin, operating profit margin,
return on equity (ROE), and operating cash flow as key
performance indicators.
Quantitative targets of the third year (FY 2022)of the mid-term management plan were revised inAugust 2021 due to favorable market conditions. Twotargets were revised upward: net sales to ¥235.0 billion(¥210.0 billion before revision) and operating profit to¥38.0 billion (¥34.0 billion before revision). Other thanthese, we have maintained the figures announced inAugust 2020 with gross profit margin of 35% or above,
operating profit margin of 16% or above, ROE of 13%
or above, and operating cash flow of ¥29.0 billion. The
Group aims to achieve further growth from a mediumto long-term perspective by implementing specificinitiatives to attain the targets of the new mid-term
management plan.

Management’s recognition, analysis and discussion of operating results by business segment are as follows.

Vacuum Equipment Business
Segment net sales increased 2.3% year on year to¥151,269 million. This was mainly attributable to a
year-on-year decline in net sales of FPD production
equipment due to the impact of a decrease in orders
received for LCD and OLED equipment in the previous
fiscal year. Meanwhile, net sales of semiconductor andelectronic device production equipment were above
the level of the previous fiscal year largely because ofa recovery in orders received for memory and for logic
as well as an increase in orders received for powerdevices, optical devices and communication devices
in electronic devices. Segment profit margin improved
from 8.8% for the previous fiscal year to 10.3% for the
fiscal year under review. This was mainly attributable tothe enhancement of manufacturing capabilities, which
is an initiative under the mid-term management plan,
61

beginning to produce results in the FPD production
equipment and electronic device production equipment.
Vacuum Application Business
Segment net sales decreased 3.6% year on year to¥31,742 million. Although net sales decreased formask blank-related, an increase in net sales of surface
analyzers and an increase in net sales for sputteringtarget materials for LCDs associated with the recoveryof the facility utilization rate of customers’ plants
due to increased demand for panels resulted in an
increase in net sales for the segment. Segment profit
margin improved from 5.4% for the previous fiscal
year to 6.8% for the fiscal year under review. This was
mainly attributable to an increase in net sales of highly
profitable products.

whereas notes and accounts payable, trade, andadvances received increased ¥4,634 million and ¥1,090
million, respectively, mainly due to an increase in orders
received.
Net assets amounted to ¥173,699 million, having
increased ¥12,605 million compared with the figure atthe previous fiscal year-end. The main factors were an
increase of ¥11,002 million in retained earnings mainly
due to recording net income attributable to ownersof parent and an increase of ¥4,704 million in foreign
currency translation adjustment due to the impact of
the weak yen as well as a decrease of ¥3,127 million in
the valuation difference on available-for-sale securities
mainly due to the sale of listed shareholdings.
As a result, the equity ratio at the end of FY 2020
was 57.0%, an increase of 2.4 percentage points
compared with the end of the previous fiscal year.

Cash Flows
Cash and cash equivalents at the end of FY 2020 amounted to ¥83,061 million, having increased ¥5,114 million
compared with the figure at the previous fiscal year-end. The status of cash flows from operating, investing
and financing activities and major contributing factors were as follows.
Cash Flows from Operating Activities
Net cash provided by operating activities amounted
to ¥25,520 million due to the recording of income
before income taxes and depreciation, in addition to a
reduction of working capital through strengthening of
cash flow management with the objective of improving
capital efficiency while orders received increased.
Cash Flows from Investing Activities
Net cash used in investing activities amounted to¥6,925 million, and the main factors in the decrease

included purchase of property, plant and equipment
and intangible assets, which were partially offset byproceeds from sales of investment securities. As aresult, free cash flow was ¥18,595 million.
Cash Flows from Financing Activities
Net cash used in financing activities amounted to¥16,061 million. Generated free cash flow was allocatedto the repayment of short-term loans payable andlong-term loans payable and for the payment of cash
dividends.

Financial Resources and Liquidity
The ULVAC Group’s funding needs are principally for
R&D investment and capital investment, which will
underpin a new growth strategy, and for working capitalfor business operations. The Group intends to expand
investment for development in the semiconductor
and electronic device fields to strengthen growing
businesses. Such demand for funds is satisfied by cash
flows from operating activities and borrowings fromfinancial institutions. In fund procurement, the Groupendeavors to level the annual amount of repayment
in order to reduce refinancing risk and the repayment
burden.

While the outlook is unclear owing to the COVID-19
pandemic etc., in order to ensure preparedness forcontingencies, the Group has secured sufficient liquidity
in hand through increased borrowings and by othermeans. The Group has also put in place a system thatenables it to secure additional funds by concluding
commitment-line contracts. Thus, the Group is capableof stable operation for the time being. The Group will
maintain the system that ensures timely access tonecessary funds so as to be capable of responding torapid change in the business environment.

ULVAC VALUE REPORT 2021

62

Financial Data/Corporate Information

Consolidated Financial Statements
Consolidated Balance Sheets(Millions of yen)

FY2019FY2020FY2019FY2020(As of June 30, 2020)(As of June 30, 2021)(As of June 30, 2020)(As of June 30, 2021)

AssetsLiabilities

Current assets

Current liabilities

Cash on hand and in banks

80,69491,545

Notes and accounts payable, trade

31,43936,073

Notes and accounts receivable, trade

66,702

66,289

Short-term loans payable

11,266

8,508

Merchandise and finished goods

3,883

4,064

Lease obligations

666

722

Work in process

21,00422,785

Income taxes payable

1,340

2,182

Raw materials and supplies

10,217

10,309Advances received

11,56912,659

Other

6,903

7,858

Accrued employees’ bonuses

2,686

3,048

Allowance for doubtful accounts

(419)

(319)

Accrued directors’ bonuses

188,985

202,530

Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures

372

355

Accrued warranty costs

1,672

1,222

Provision for loss on order received

1,323

1,253

Other

9,952

11,797

Total current liabilities

72,28577,81981,85083,821

Accumulated depreciation(52,735)(55,500)

Buildings and structures, net

29,11528,321Long-term loans payable

38,57730,943

Machinery, equipment and vehicles

76,74079,326

Lease obligations

1,999

2,361

Accumulated depreciation(57,428)(60,073)

Deferred tax liabilities

Machinery, equipment and vehicles, net

19,312

19,253Net defined benefit liability

Tools, furniture and fixtures

13,93314,098

Accumulated depreciation(12,295)(12,651)

1,638

1,448

Land

8,344

8,480

Leased assets

3,851

4,516

Accumulated depreciation(1,284)(1,549)Leased assets, net

2,567

2,967

Construction in progress

4,213

5,617

Total property, plant and equipment

65,18966,086

Leased assets

53

34

Software

973

1,347

Other

2,251

2,115

Total intangible assets

3,278

3,496

Investment securities

11,869

7,360

Deferred tax assets

6,108

6,385

Other

9,343

8,763

Allowance for doubtful accounts(2,422)(1,859)Total investments and other assets

24,89820,64993,36590,231

282,350

292,761

Tools, furniture and fixtures, net

Intangible assets

Investments and other assets

Total non-current assets
Total assets

63(Millions of yen)

Long-term liabilities

27

42

7,363

6,968

Provision for board benefit trust

156

198

Asset retirement obligations

402

406

Other

447

326

48,972

41,243

121,256

119,062

Capital stock

20,873

20,873

Capital surplus

3,912

3,912

126,571

137,573

(349)

(343)

151,007

162,015

Valuation difference on available-for-sale securities

5,301

2,174

Foreign currency translation adjustment

(572)

4,132

Remeasurements of defined benefit plans(1,482)(1,422)

Total accumulated other comprehensive income

3,246

4,884

6,840

6,800

Total net assets

161,093

173,699

Total liabilities and net assets

282,350

292,761

Total long-term liabilities
Total liabilities

Net Assets
Shareholders’ equity

Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income

Non-controlling interests

ULVAC VALUE REPORT 2021

64

Financial Data/Corporate Information

Consolidated Financial Statements
Consolidated Statements of Income(Millions of yen)

FY2019FY2020FY2019FY2020(July 1, 2020-June 30, 2021)(July 1, 2019-June 30, 2020)(July 1, 2020-June 30, 2021)

185,402
134,805
50,596

183,011129,247
53,764

13,091
21,547
34,63815,95814,801
21,76636,567
17,197

171
634
316
150
494
1,747
3,511

199
650
586
328
569
828
3,160

437
—
980
1,418
18,052

498
373
1,520
2,391
17,966

3,261
47
3,308

4,998
55
5,053

64
175
—
—
239
21,122
4,790
4,596
9,386
11,736967
10,769

99
—
378
984
1,460
21,559
4,867
1,218
6,085
15,474644
14,830Consolidated Statements of Comprehensive Income(Millions of yen)

FY2019FY2020(July 1, 2019-June 30, 2020)

65(Millions of yen)

(July 1, 2019-June 30, 2020)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Selling expenses
General and administrative expenses
Total selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Insurance and dividends income
Subsidy income
Share of profit of entities accounted for using equity method
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of investment securities
Gain on sales of non-current assets
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Impairment loss
Loss on liquidation of subsidiaries and associates
Expenses for COVID-19 measures
Total extraordinary losses
Income before income taxes
Current income taxes
Deferred income taxes
Total income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent

Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted
for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests

Consolidated Statements of Cash Flows(July 1, 2020-June 30, 2021)

11,736

15,474(1,347)(759)
48(3,137)
4,748
58

(142)

342

(2,200)
9,536

2,010
17,483

8,626
910

16,467
1,016

Cash flows from operating activities
Income before income taxes
Depreciation
Impairment loss
Loss on retirement of non-current assets
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in accrued employees’ bonuses
Increase (decrease) in net defined benefit liability
Increase (decrease) in provision for board benefit trust
Increase (decrease) in accrued warranty costs
Increase (decrease) in provision for loss on orders received
Interest and dividend income
Interest expenses
Subsidy income
Loss (gain) on sales of investment securities
Loss (gain) on sales of non-current assets
Share of (profit) loss of entities accounted for using
equity method
Decrease (increase) in notes and accounts
receivable - trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable – trade
Increase (decrease) in advances received
Increase (decrease) in accrued consumption taxes
Other
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment andintangible assets
Proceeds from sales of property, plant and equipment
and intangible assets
Proceeds from sales of investment securities
Proceeds from subsidy income
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Repayments of lease obligations
Cash dividends paid
Purchase of treasury shares
Dividends paid to non-controlling interests
Other
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting frommerger with unconsolidated subsidiaries
Cash and cash equivalents at end of period

21,1227,849
175
64(2,053)(1,031)
(411)
10
34
224
(806)
437
(150)
(3,261)(47)

21,559
8,386
—
99
(823)
217
(402)
42
(508)
(70)
(850)
498
(328)
(4,998)
(55)

(494)

(569)

9,941

2,505

2,718
(7,985)(4,186)(370)
3,292
25,0711,111(450)(6,994)
18,738(2,568)
3,215
153
65
3,332
28,8991,178(505)(4,052)
25,520(3,728)3,707(11,033)5,338(8,828)(7,147)

1,175

277

3,371
150
10
(4,143)

5,346
134
161
(6,925)(3,785)
26,689(8,607)(787)(5,175)
(120)
(760)
—
7,455
39
22,08955,859(361)
3,750(13,689)(825)(3,945)
(1)
(984)
(5)
(16,061)
2,468
5,002
77,948—

112

77,94883,061ULVAC VALUE REPORT 2021

66

Financial Data/Corporate Information

Company Data/Stock Information
Stock Information

Company Profile As of June 30, 2021

Directors, Auditors and Executive Officers

Name

ULVAC, Inc.

President and Chief
Setsuo Iwashita
Executive Officer

Managing
Executive Officer

Tetsuya Shimada

Trademark

ULVAC

Director andExecutive Vice
President

Mitsuru Motoyoshi

Managing
Executive Officer

Sadao Aoki

Total number of shareholders ������������ 12,791

Senior Managing
DirectorDr. Choong Ryul
Paik

Senior Executive
Officer

Shigemitsu Sato

Major Shareholders

External Director

Hiroyuki Nishi

Senior Executive
Officer

Tomoyasu Kondo

External Director

Norio Uchida

Executive Officer

Yu Jer Tsai

External Director

Dr. Kozo Ishida

Executive Officer

Zheng Ming Zeng

External Director

Yoshimi Nakajima

Executive Officer

Dr. Koukou Suu

TAIYO HANEI FUND,L.P.

1,644

3.33

Auditor

Makoto Ito

Executive Officer

Shinji Takahashi

BBH (LUX) FOR FIDELITY FUNDS-GLOBAL TECHNOLOGY POOL

1,330

2.70

Auditor

Mitsuru Yahagi

Executive Officer

Yasuo Shimizu

STATE STREET BANK AND TRUST COMPANY 505103

1,171

2.37

STATE STREET BANK AND TRUST COMPANY 505227

1,121

2.27

J.P. MORGAN BANK LUXEMBOURG S.A. 381572

1,103

2.23

INDUS JAPAN LONG ONLY MASTER FUND, LTD

898

1.82

Head office 2500 Hagisono, Chigasaki,
Kanagawa Prefecture, Japan
Established August 23, 1952
Capital
Number of
employees¥20,873,042,500
Non-consolidated 1,294
Consolidated 6,063

As of September 29, 2021

External Auditor

Senshu Asada

Executive Officer

Kenji Yamaguchi

External Auditor

Isao Utsunomiya

Executive Officer

Dr. Ju Hoon Shin

Number of Shares Held by Shareholder TypeAs of June 30, 2021

Securities Companies
1,516,424 shares
3.07%

Total number of shares authorized ������ 100,000,000
Total number of shares issued ���������� 49,355,938

Number of shares(Thousands)

Shareholding
ratio (%)

Custody Bank of Japan, Ltd. (Trust account)

3,431

6.95

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

3,280

6.65

Nippon Life Insurance Company

3,242

6.57

TAIYO FUND,L.P.

2,838

5.75

Shareholder’s nameDomestic Companies
1,889,345 shares
3.83%
Individuals
and Other
5,775,780 shares
11.70%

Foreign Investors
30,182 shares
0.06%

Total
49,355,938 shares

Treasury stock
3,861 shares
0.01%
Foreign Companies
23,806,986 shares
48.24%

Financial Institutions
16,333,360 shares
33.09%

Note: Treasury stock (3,861 shares) is excluded from the calculation of shareholding ratios.

ULVAC Group Companies

As of September 30, 2021

Bases of ULVAC, Inc.
Bases of ULVAC Group companies in Japan/overseas

North America

R&D base

ULVAC Technologies, Inc.

Sales and service bases

Physical Electronics USA, Inc.

EuropeULVAC GmbHChina
ULVAC (CHINA) HOLDING CO., LTD.
ULVAC (NINGBO) CO., LTD.
ULVAC (SUZHOU) CO., LTD.
ULVAC Orient (Chengdu) Co., Ltd.
ULVAC Automation Technology (Shanghai) Corporation
ULVAC Tianma Electric (Jingjiang) Co., Ltd.

67ULVAC TECHNO, Ltd.
ULVAC KYUSHU CORPORATIONULVAC COATING CORPORATIONNISSIN SEIGYO Co., LTD.

ULVAC (Shenyang) Co., Ltd.

ULVAC TOHOKU, Inc.

FINE SURFACE TECHNOLOGY CO., LTD.

ULVAC Materials (Suzhou) Co., Ltd

ULVAC KIKO, Inc.

REJ Co., Ltd.

ULVAC EQUIPMENT SALES, Inc.

SHOWA SHINKU CO., LTD.

ULVAC (Shanghai) Trading Co., Ltd.

TaiwanSouth Korea

Southeast AsiaULVAC TAIWAN INC.

ULVAC KOREA, Ltd.

ULVAC SINGAPORE PTE LTDULVAC CRYOGENICS (NINGBO) INCORPORATEDULTRA CLEAN PRECISION TECHNOLOGIES CORP.

Pure Surface Technology, Ltd.

ULVAC MALAYSIA SDN. BHD.

ULVAC CRYOGENICS KOREA INCORPORATEDULVAC (THAILAND) LTD.

ULVAC Research Center SUZHOU Co., Ltd.

ULCOAT TAIWAN, Inc.

ULVAC CRYOGENICS INCORPORATED

Hong Kong ULVAC Co., Ltd.

ULVAC AUTOMATION TAIWAN Inc.

ULVAC-PHI, Inc.

ULVAC VACUUM EQUIPMENT (SHANGHAI) CO., LTD.

ULVAC SOFTWARE CREATIVE TECHNOLOGY, Co., LTD.

India

TIGOLD CORPORATIONULVAC Coating Technology (HEFEI) Co., Ltd.

ULVAC Materials Taiwan, Inc.

Ulvac Singapore Pte Ltd, India Branch
ULVAC VALUE REPORT 2021

68