Integrated Report 2021

The DNP Group connects individuals and society, and provides new value.

Todayʼs Innovation is“Tomorrowʼs Basic”
DNP will continue to create “ Tomorrowʼs Basic” by making unceasing strides
toward realizing a sustainable, better society and more enjoyable lifestyles.

DNP will continue to create “Tomorrowʼs Basic” by making unceasing strides toward realizing
a sustainable and better society and more comfortable lives for people. DNP will make itself
an “indispensable company” for society and people by creating value that meets peopleʼs
expectations and making this value exist as “basics” while solving social issues. Breathing thisdesire into the corporate statement Todayʼs Innovation is “Tomorrowʼs Basic,” DNP recognizes it
has a mission of creating a better future.
DNP will fulfill this mission with passion by synergizing its unique strengths in P&I (Printing & Information)and deepening cooperation with partners. Looking toward the long term, DNP will make its utmost
efforts to realize a sustainable, better society and more enjoyable lifestyles while constantly thinking
about co-existence between its business activities and the global environment.

DNP Group Vision 2015

The DNP Group Code of Conduct

Three Corporate Responsibilities

The DNP Groupʼs basic management
policies announced in October 2015.
The vision is comprised of three mainelements, the first of which is central:
Corporate Philosophy, Business Vision
and Guiding Principles.

A set of codes underlying all types ofactivities aimed at achieving our Group Vision.
All DNP employees must adhere to these codes.

Three important obligations DNP has to fulfill toremain a company that can always be fully
trusted by its various stakeholders

Corporate
Philosophy
The DNP Group
connects individuals
and society, andprovides new value.

Business
VisionGuiding
Principles

Use P&I innovations to
expand business,
primarily around four
growth areas.

TAIWA (dialogue)
and cooperation

1. Contributing to the development of society
1. Social contribution as a good corporate citizen
1. Compliance with the law and social ethics
1. Respect for human dignity and diversity
1. Environmental conservation andrealization of a sustainable society
1. Realization of a “universal society”
1. Ensuring the safety and quality ofour products and services
1. Ensuring information security
1. Proper disclosure of information
1. Realization of a safe and vibrant workplace

1. Value Creation
The first and most fundamental
responsibility of a company tosociety is “providing new value tosociety.” We are working to link theoffering of products and services
necessary to the sustainable
development of society to the growthof the company. Through ourBusiness Vision, we will continue toprovide new value which contributes
to the solution of social issues andmeets peopleʼs expectations.

2. Integrity in Conduct
The second responsibility is “practicing
fairness and impartiality in value creation
processes.” No matter how superior or
useful to society the value produced is,value is compromised if, for example,
environmental damage occurs or laws arebroken during the value creation process.
Therefore, DNP seeks to fulfill this
responsibility by ensuring that all
employees always conduct businesswith integrity in accordance with the
DNP Group Code of Conduct.

3. Transparency (Accountability)
Finally, the third vital corporate
responsibility is “ being a company thatis accountable and highly transparent.”
DNP achieves accountability byencouraging all employees, during thecourse of their regular duties, to engage
in TAIWA with stakeholders, listen to
their opinions and provide correct
information themselves.

Passion & Mission

Purpose & Responsi bility
2

Sustainable Society & LifeDNP Integrated Report 2021

3

DNPʼs Business Portfolio That Creates
Net Sales/Operating Income by Segment

Creation of Strong Products and Services“Tomorrowʼs Basic”
Products and Services with Top Shares in Japan and Overseas
Domestic and overseas market-leading products and services created by synergizing DNPʼs unique “ P&I” strengths

197.0

51.4

Information Communication

Products and services withthe worldʼs top shares■ Publishing Business

721.8(Publishing & media services, publications distribution)■ Information Innovation Business(Marketing, BPO, information security)■ Imaging Communication Business

Net Sales
Income by
Segment

Display
Components
Business

top share in domestic financial markets□ Dye-sublimation thermal transfer printing media forphoto prints: World top share

368.0■ Packaging Business■ Living Spaces Business■ Industrial High-performance Materials Business

0.8
19.2
Operating
Income by
Segment

14.0

Industrial High-performance
Materials Business

Smart cards
Information
Innovation
Businessfor manufacturing volume of filling systems for PET plastic
bottles for beverages□ Building decorative materials: Top share of domestic
market for floor coverings□ Battery pouches for lithium-ion batteries: World top share(Color filters for liquid crystal displays, optical films, metal masks fororganic light-emitting diode (OLED) displays, others)■ Electronic Devices Business(Photomasks for semiconductors, others)

Products and services with top shares□ Optical films for displays: World top share□ Metal masks for OLED display manufacturing: World top share(Hokkaido Coca-Cola Bottling Co., Ltd.)■ Beverages Business

Building
decorative
materials(floor coverings)

Aseptic fillingsystems for
PET bottles
Packaging
Business

Living Spaces
Business

Creation of Value Centered on Growth Areas in the Medium-term Management Plan
Focus businesses in four growth areas

Knowledge and Communication

Optical films

BPO

Metal masks

Lifestyle and Mobility
Mobility interior andexterior materials

Authentication/security
Information trust banks

Photo media/
service creation

IoT and next-generation
communications business

Mobility business
Educational business

Beverages

Imaging Communication
Business

Image of an OLED display
manufactured using a metal mask

Products and services with top shares in Japan□ Aseptic filling systems for PET bottles: Top share in Japan■ Display Components Business

Dye-sublimation
thermal transfer
printing media forphoto prints

Battery pouches
for lithium-ion
batteries

Products and services with top shares

Electronics(¥ billion)

Data
distribution-related
business
Medical/healthcare

Food and Healthcare

4

Display
Components
Business□ Smart cards: Top share overall in Japan andLifestyle and Industrial Supplies

Information Communication
Lifestyle & Industrial Supplies
Electronics
Beverages

Optical films fordisplays

Products and services with top shares(¥ billion)

36.7

Metal masks
for OLED display
manufacturing

New 5G-related products(Vapor chambers, transparent
antennas, etc.)

Eco-friendly packaging

Battery pouches forlithium-ion batteries

Environment-related
business

Industrial high-performance materials

Environment and Energy

DNP Integrated Report 2021

5

CONTENTS

DNP Integrated Report 2021

7

DNP ʻs Reason for Existence
Editorial Policy / DNP Groupʼs Information Disclosure

8

TOP MESSAGE

12VALUE CREATION AT DNP

2

12
18
23
26
30
34
36
40
42
44
46
48
50

Editorial Policy
To realize our business vision and raise corporate value over the medium and long term, DNP is undertaking
integrated business activities through swift and accurate decision-making based on the concept of utilizing
financial and non-financial capital in an integrated manner. Moreover, to ensure this leads to gaining theunderstanding and empathy of our stakeholders, we are working to disclose appropriate information in atimely manner. This report is an annual report that provides multifaceted and integrated coverage not only offinancial information but also of DNP ʼs overall business activities, including environmental, social andgovernance (ESG) criteria. DNP will fulfill our accountability and deepen communications with stakeholders
through this report in addition to the DNP website and such publications as the Yuho securities report,
shareholdersʼ report and environmental report as well as through various opportunities for various dialogue.

DNPʼs Value Creation Process
Medium-term Management Plan, Directorʼs Message
Financial Strategies, Directorʼs Message
Growth Trajectory: Corporate History----Long-term Vision
Providing Concrete Value in Four Growth Areas
Management That Turns Risk into Opportunity
Expanding DNPʼs Business Areas by Applying and Developing Technologies
DNPʼs Unique Commitment to Digital Transformation (DX)
Focus Business ① IoT and Next-Generation Communications Business
Focus Business ② Data Distribution-Related Business
Focus Business ③ Mobility Business
Focus Business ④ Environment-Related Business◇ Period covered by this report: April 1, 2020 to March 31, 2021
However, reporting is not confined to this period regarding some contents.
◇ Scope of report: All companies and divisions of the DNP GroupIn this report, “ DNP ” refers to the entire DNP Group, and “ we” refers to DNP or the DNP management team.
(In the section on Corporate Governance (pages 73-83), “ DNP ” refers to Dai Nippon Printing Co., Ltd.)◇ Issued: October 2021 (Next scheduled issue: October 2022)
Note: This report is aimed at providing information about DNPʼs businesses, management vision and business results. Opinions and forecasts
contained in the report were based on the best judgment of management at the time the report was prepared, so we cannot guarantee that
all information contained in the report is completely infallible.
* Trademarks mentioned in this report in connection with DNP products or services are registered in Japan.

DNP Groupʼs Information Disclosure

The DNP Groupʼs corporate website

BUSINESS RESULTS

https://www.dnp.co.jp/eng/(FINANCIAL AND NON-FINANCIAL INFORMATION)58

INITIATIVES FOR SUSTAINABILITY
60
62
62
68
70
73

CSR Management
Environmental Vision / Natural Capital, Directorʼs Message
Initiatives for Climate Change
Human Resources Strategy, Directorʼs Message
Initiatives for Human Resources and Human Rights
Corporate Governance
76 Board of Directors
84 Interview with an Outside Director

86

DATA
87
88
91
98
123
128
130

Summary of Financial Results
Financial and Non-financial DataManagement ʼs Discussion and Analysis
Consolidated Financial Statements
Independent Auditorʼs Report
Major Subsidiaries and Affiliates
Investor Information

About the Cover Design
Based on the concept of “connect tothe future,” we use DNP ʼs newgraphic elements that symbolize our
Corporate Philosophy, “ The DNPGroup connects individuals andsociety, and provides new value.” Thegraphic elements were supervised byart director Haruka Misawa.

Haruka Misawa, Art Director
Haruka Misawa heads the Misawa Design
Institute, Nippon Design Center, Inc. Misawa
Design Institute continuously uses anexperimental approach, attempting toobserve the principles that lie deeply
within things and visualize the unknown
possibilities to be found there. Her major
projects include waterscape, whichredesigned an underwater environment into
new aquatic landscapes, and visual identity
for KITTE and TOKYO BIG SIGHT, projects
notable for exploring logo versatility.
Awards: JAGDA New Designer Award (2017),
ADC Award (2019), JAGDA Award (2020),
2019 Mainichi Design Award (2020)

6

Investor Relations

Sustainability

https://www.dnp.co.jp/eng/ir/

https://www.dnp.co.jp/eng/sustainability/

Financial Statements, etc.
Various data

Environmental Report, etc.
Various data

Non-finance52

Our Products and Services
Financial Highlights and Business Strategies

Finance50

Integrated Report

Integrated Report“ Investor Relations” website“ Sustainability” website

Environmental Report

DNP publishes an integrated report eachyear covering its growth strategies andbusiness activities that make use of financial
and non-financial capital in an integrated
manner for sustainable value creation.

The “ Investor Relations” website has
been established on the corporatewebsite for shareholders andinvestors for the timely andappropriate disclosure of information.

The “ Sustainability ” website has been
established on the corporate website tocommunicate non-financial informationin detail for the timely and appropriate
disclosure of sustainability information.

With regard to environmental
management, environmental activities
are summarized in PDF format eachfiscal year, and DNP publishes“ The DNP Group Environmental Report.”

Cautionary Note Regarding Forward-Looking Statements
This report contains statements regarding the future outlook of the DNP Group. These statements are
outlooks determined by DNP based on currently available information. Actual results may differ
materially from our outlook due to changes in various factors such as latent risks and uncertainties.

DNP Integrated Report 2021

7

TOP MESSAGE

Bring innovative value for a better tomorrow
while taking a long-term perspective andsteadily building on its achievements!
Yoshinari Kitajima

T O P ME S S AG E

President

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation

Over the past year and a half, the world has been profoundly
affected by the novel coronavirus (COVID-19). Even amidsuch circumstances, the DNP Group has focused on a variety
of initiatives to provide further value to society and people
while placing top priority on assuring the health and safety of
its customers, business partners, employees and theirfamilies.
Although vaccination rates are increasing in Japan andoverseas as of summer 2021, an array of risks such as new
infectious diseases could emerge in the future. DNP will
firmly identify these variable factors (risks) not just to curb
their negative impacts but to also create new value that isahead of the times to contribute to “realizing a sustainable,
better society and more enjoyable lifestyles.”DNP has prescribed its Corporate Philosophy as “ The DNPGroup connects individuals and society, and provides newvalue.” DNP works to prevent disconnections within societythat have become apparent due to COVID-19 while pushingahead with initiatives to further create “connections between
people and society.” We have also communicated bothinternally and outside the company our Business Vision “use
P&I Innovations to expand business, primarily around four
growth areas” and will create new value that is indispensable
to society and consumers by synergizing our unique strengths
in P&I (Printing & Information) cultivated independently anddeepening collaboration with numerous partners.

Knowledge and Communication

INITIATIVES FORSUSTAINABILITYDATA

For example, DNP creates value that connects “people andmedical care,” “people and education” and “people andclothing, food and housing”. DNP also provides mechanisms
for people to safety and security connect with family, friends
and colleagues.
Besides these, there is a need to connect those of us living
today with people of the next generation. To make thisconnection, we must raise sustainability such as by reducing
impacts on the global environment and preserving
biodiversity. In addressing rapidly evolving environmental,social and economic conditions as well, DNP will provide
products and services that continuously connect people andsociety not only by addressing these changes but also byconstantly promoting changes ourselves.
We will strive to ensure that DNPʼs products and services
continuously exist as “indispensable value” in the daily life ofeach and every consumer and are communicating our brandstatement Todayʼs Innovation is “Tomorrowʼs Basic.” In
advocating this, we believe our ongoing mission is to take theinitiative in creating a “better future.”
Specifically, we will draw the shape of the “ future” weseek to create in each business growth area (see the figure
below). In working to realize this envisioned shape, we will
formulate and set long-term strategies and intermediatetargets and concentrate management resources on effective
initiatives.

Lifestyle and Mobility

A future where people worldwide can expand
opportunities for safe and secure communications
and share and inherit knowledge

A future that safely and securely protects allliving spaces where people worldwide are mobileand lead their lives

DNP will provide value for nurturing culture and supporting
peopleʼs lives through comfortable communications. By
producing information media services and content andenhancing services protected by information security, DNP will
provide people with the information they want when they needit in an optimal format and will convey knowledge fromgeneration to generation.

DNP will provide value in the form of high levels of safety andcomfort in all spaces where people lead their daily lives,
including at home, stores, offices and hospitals, as well as incars and railway cars. We will add functions that create
comfortable spaces and develop superbly designed products andcombine these with the Internet of Things (IoT) to contribute to
the realization of a smart society.

Food and Healthcare

8（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

Environment and Energy

A future where people around the world no longer
have anxieties about their own lives and can lead
lifelong safe, secure and high-quality lives

A sustainable future that reduces environmental
impacts and enables people worldwide
to co-exist harmoniously with the earth

Amid a shift in global demographics and the ongoing decline inbirthrates and aging of society in Japan, DNP will create valuethat supports safe and high-quality lives and helps people
maintain their health throughout their lives. DNP will support
the food value chain through its functional and hygienic
packaging while also taking on the challenge of extending
healthy lifespans through its life science-related businesses.

DNP will accelerate the development of diverse products andservices toward the realization of a sustainable society that
achieves compatibility between economic development andprotection of the global environment. We will combine strengths
such as our highly functional films that control light and heatwith our information technologies to provide value that enables
resource and energy savings and helps preserve biodiversity.

DNP Integrated Report 2021

9

TOP MESSAGE

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITYDATATOP MESSAGE

growth in demand for use in both mobile devices and electricvehicles. In addition, we offer environment-conscious
Eco-Friendly Packaging that includes the “ DNP plant-derived
packaging materials” series and single material(mono-material) packaging that is suitable for recycling. By
offering these products and services, DNP will reduce GHG
emissions, improve energy efficiency and realize sustainable
raw material procurement.

Among these activities focused on the long term, DNP iscurrently promoting its Medium-term Management Plan that
articulates our targets through fiscal 2024. To raise theoutcomes of our efforts, we must first of all ascertain major
trends (megatrends) in the environment, society andeconomy.
DNP has identified trends centering on “ digitaltransformation (DX),” as well as “longer human lifespans,”“moving toward smart cities” and “building a decarbonizedsociety.” In responding, DNP will concentrate its resources on
the areas of “ Data distribution-related business,” “IoT andnext-generation communications business,” “Mobility
business” and “ Environment-related business” as focus
businesses that will provide value unique to DNP.
For example, from the perspective of hygiene management,
DNP is expanding its safe communications services that bring
together face-to-face and remote communications, driven bya rising need for non-contact and remote meetings, coupledwith the tailwind provided by the spread of DX. DNP is
promoting a diverse array of businesses in this area, including
educational ICT (information and communication technology)
that provides optimal teaching materials for individual children
and students; an image correction service that supports
online medical examinations; VR/AR in virtual showrooms;
and information trust banks that promote the distribution of
personal data with the consent of individuals. DNP is also
focusing on developing antibacterial and antiviral productsthat reduce the risk of infection.
In March 2020, DNP formulated the DNP Group
Environmental Vision 2050 as a declaration of our intention
to create new value aimed at realizing a decarbonized society,a recycling-oriented society and a society in harmony withnature. As one of our environment-related businesses, ourbattery pouches for lithium-ion batteries, which command
the worldʼs largest market share, are enjoying significant

Providing New Value by Promoting Businesses andStrengthening Our Foundation
DNPʼs value creation process begins with identifying social
issues and peopleʼs expectations. We create new value thatmeets peopleʼs expectations while solving social issues bypromoting our business vision “P&I innovation.” Our strengths
in P&I (Printing & Information), which we have cultivated withthe printing process as our starting point, are unique to DNP
and distinguishes us from other companies. We will hone ourstrengths that include such technologies as information
processing, microfabrication, precision coating andpost-processing technologies as well as our sales, planning,
manufacturing and staff while synergizing these to expand our
possibilities infinitely. Our connections with numerous domestic
and overseas partners, beginning with tens of thousands ofclient companies, serve as DNPʼs unique social andrelationship capital. We will broaden the scope of andaccelerate value creation by strengthening these partnerships.
To promote such businesses, we must utilize financial
capital and non-financial capital consisting of human,
intellectual, manufacturing, natural, social and relationshipcapital in an integrated manner. We will focus on
strengthening our financial base and non-financial capital toaccelerate business expansion and grow sustainably.

DNPʼs two predecessor companies were founded in 1876
and 1907, respectively, and expanded their business centeredon publication printing. Subsequently, after World War II, in1951 we established a five-year reconstruction plan andexpanded our business domain by applying and advancing ourprinting technologies. We call this period our Second
Corporate Founding. During this phase, we provided individual
products and services mainly in response to the needs ofcorporate clients. Today, however, DNP needs to take adifferent approach and interact with society and consumers
directly. As circumstances in Japan and abroad evolve

dramatically, we need to take the lead in realizing our brandstatement Todayʼs Innovation is “Tomorrowʼs Basic” and we
regard this major shift as our Third Corporate Founding.
In the past, we could respond by demonstrating individual
strengths for each client company. However, during our “Third
Corporate Founding,” we will not only utilize each individual
strength alone but also actively combine these to enhancesynergies. In doing so, we will reform the awareness andbehavior of employees and change the organizations andsystems that support their activities to ensure this enables us
to deploy the total strengths of “All DNP.”

DNP will synergize its
unique strengths andtogether with its numerous
partners will provide
indispensable value tosociety and people.

What the DNP Group Aims To Be
Corporate Philosophy

The DNP Group connects individuals and society, and provides new value.

1950s

21st Century
TowardSecond Corporate Founding“ Third Corporate Founding”

1. Social issues andpeopleʼs expectations

DNP
thus far

2. P&I
Innovations

1

2

DNP
from
now onBusiness promotion

All DNP

Providescustomized
solutionstailored tocustomer needs

Reinforcing business base

4
4. Strengthening
non-financial capital

DNP ʼsunvarying strengths

103
3. Strengthening
financial base

Resolving social
issues while providing

new valuethat meets peopleʼs
expectations

TodayʼsInnovationis“Tomorrowʼs
Basic.”“ Culture of continuously taking on the challenge of promoting change”“ Desire to provide indispensable value to society and people.”“ Synergies from P&I strengths” “ Sincere approach and high transparency”

Toward a Bright Future with Diverse Employees andPartners as Assets
The society we interact with today is made up of truly diverse
people. To continuously provide the value that society andpeople desire, DNP itself first thoroughly promotes “ diversity& inclusion.” For example, while closing any gender gaps, wewill synergize the strengths of all employees in Japan andoverseas regardless of whether they have disabilities andcooperate deeply with our numerous partners to raise thetotal strengths of “All DNP.”
Taking this to heart, we formulated the Human Rights
Policy in March 2020. After communicating the DNP Diversity

Declaration internally and outside the company in July, we
agreed with the Male 100% Childcare Leave Declaration ofWork-Life Balance Co., Ltd. in December. In April 2021, weissued the DNP Group Declaration on Health to strategicallyencourage employee health promotion and revitalize ourorganization.
At DNP, we have a corporate culture of continuously
taking on the challenge of promoting change. Looking aheadto the long term, we will continue to create new value so thatpeopleʼs healthy lives will continue to shine in a sustainable
society. To do so, I would like to deepen TAIWA (dialogue)
with numerous stakeholders that include shareholders. Goingforward, I ask for your further support as we work to achieve
our objectives.
DNP Integrated Report 2021

11

VALUE CREATION AT DNPTOP MESSAGE

DNPʼs Value Creation Process

Value creation
process

Medium-termManagement Plan

BUSINESS RESULTS

Initiatives forvalue creation

Production
andmanufacturing

DNP will spur innovation through the integrated use of theleading-edge technologies it has continually advanced and its
diverse know-how in sales, planning and production as well as
the strengths of its partners. DNP ʼs unique strengths that it has
advanced in both P&I are unmatched by any other company.
By deploying the total strengths of All DNP, we will create
unprecedented value that is indispensable to people and society.

Sales

Total
strengths of
All DNPManagement
andoperation

Technologies
and R&D

DNP ʼs assets and strengths that serve
as a foundation for value creation

Society and People / Global Environment

1

1Business

Promote strategic investments
DNP will expand financial and non-financial capital through corporate
activities and make investments toward new value creation.
(Business development investments/environment-related investments/
investments in human resources)

4

Manufactured capital

4
12

Natural capital2

promotion

ALL

DNP

Reinforcing

business base

OUTPUTOUTCOME

IMPACT

Various types of products
and services● Various types of business models

Resolving social issues whileproviding value that meets
peopleʼs expectations

Realizing a sustainable,
better society and moreenjoyable lifestyles

Along with its financial capital, DNP will work to expand various types of non-financial
capital that is unique to DNP and will promote integrated management that synergizes thestrengths of each type of capital.

Strengthen and thoroughly execute corporate

Improving ROE3&
P36-39, P58-85

2

Creating value through “P&l Innovations”

Boost asset
efficiency

Promoteintegrated
business
activities

Social andrelationshipcapitalStrengthen non-financial capitalP17-22, P40-49

DNP will synergize its unique strengths in P&I (Printing & Information) and deepen its ties
with partners to create new value that connects people and society and will concentratethese efforts mainly in its “ four growth areas” and “ focus businesses.”

P16, P30-31●

Intellectual capital

Profits inreturn for value

P&I Innovations

DNP will take the initiative and directly interact with society and people, ascertain andanalyze major trends (megatrends), and utilize DNPʼs strengths and capital to create
value that meets peopleʼs expectations while solving social issues.

Human capital

Dialogue and cooperation
with partners

Society and People / Global Environment

Provide value

Social issues andpeopleʼs expectations

DATA

Project
planning anddesignP&I Innovations

DNPʼs value creation process involves realizing a sustainable, better society and moreenjoyable lifestyles through a virtuous cycle that entails ascertaining and analyzingsocial issues and peopleʼs expectations, specifically: ( 1 ) developing and providing value
unique to DNP through “P&I innovation” and ( 2 ) strengthening its financial base andnon-financial capital for the creation of further value ( 3 and 4 ).

INITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

Synergize
financial andnon-financial
capitalShareholder returns
Raise EPS on the basis of stabledividends giving consideration to
all stakeholders.

Strengthen
financial capitalStrengthen our financial baseP23-25We are strengthening our financial base by managing targets via segment
ROA, reducing strategic shareholdings and reducing idle assets in addition to
implementing various capital strategies.

governance (corporate governance and internal control)

3

DNP Integrated Report 2021

13

TOP MESSAGE

DNPʼs Value Creation Process

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS

Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

DATA

Input and Business Model

Accelerate P&I Innovations by Strategically Utilizing
Financial and Non-financial Capital
DNP works toward a sustainable expansion of corporate value by promoting its Value Creation Program thatinvolves making integrated use of its financial capital and non-financial capital, which are its strengths,
verifying value hypotheses, building business models and creating profits in return for these efforts.

1

Social issues and peopleʼs expectations

P&I Innovations

Megatrends on which DNP focuses

2

DNP ʼs business model

Ascertaining and analyzing social issues and peopleʼs expectations

Accelerate P&I Innovations through the Value Creation Program
Value Creation Program

P22

DNP ʼs non-financial capital ＝ input

Strategically utilize our strong non-financial capital
As one of DNPʼs unique strengths, we will work to strengthen and expand “non-financial capital,” which is also
called “pre-finance,” that is linked to our future finance and will reinvest for further value creation.

HumancapitalStrengthen the compensation and training of personnel for DX● Promote diversity & inclusion● Total number of employees: 37,062 ( 33,308 in Japan, 3,754 overseas)
Business creation-type R&D system
Number of Japanese patents heldPatent rights: 11,525, design rights: 1,395, trademark rights: 1,192● R&D expenditures: 32.6 billion yen

Intellectual
capitalManufactured
capital1

Business

Long-term relationships of trust with diverse stakeholders● Build a sustainable value chain

ALL
4

Reinforcing• Tens of thousands of business partners • Regional and local governments• Education and research institutions• NPOs/NGOs/various organizations• Start-up companies• Others

Stable product and service supply system
Global production bases: 61 bases in Japan, 16 bases overseas● Capital investment: 71.6 billion yen●●

Formulation of DNP Group Environmental Vision 2050,
the Biodiversity Declaration● Reduce greenhouse gas (GHG) emissions: 30.3%
reduction compared with FY2015● Amount of recycled water usage: 231,630 thousand m 3,
usage multiple: 31.1 times● Promote the assurance of traceability and sustainable paper
procurement with the aim of achieving a 100% compliance rate with
the Guidelines for Procurement of Paper for Printing and Converting.
●Naturalcapital4

Price paid for value

promotion

2

Strengthen non-financial capitalStrengthen and thoroughly execute corporate(barometer of value)

Profits in return for

1

Ability to change | Business hypothesis

2

Value proposition

Ability to test | Verify hypotheses

3

Delivery method

4

Earnings model

DNP
business basevalue from products and services

Ability to discover | Seeds of value

Customer

responding to peopleʼs
expectations andproviding new value that
resolves social issues

Deploying the total strengths of “All DNP”
(Combining P&I strengths leveraging marketing perspective × partner alliances)

3

DNP will implement the Value Creation Program under which it promotes “All DNP” that deploys our
total strengths synergizing the strengths of the entire Group, discovers “seeds of value,” repeats value
hypothesis verifications and builds optimal business models. We will provide value to all stakeholders
by leveraging our unique strengths in “ P&I,” our strengths derived from collaboration with numerous
business partners and the strengths of our employees who continually tackle challenges. At the sametime, in return for this value that we provide, we will expand DNP ʼs profits and increase corporate value
in the medium to long term and contribute to the realization of a sustainable society.

Creating value through“P&l Innovations”

Improving ROE

Boost asset
efficiency

Promote integrated
business activities&
Synergize financial andnon-financial capital(Year ended March 2021, as of March 31, 2021)

14

Profits

Method for realizing●●

Social andrelationshipcapitalBusiness model

Potential valueof products and services●●

Value hypothesis

governance (corporate governance and internal control)

Shareholder
capitalStrengthen
financial capitalStrengthen our financial base

3

DNP Integrated Report 2021

15

TOP MESSAGE

DNPʼs Value Creation Process

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS

Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

DATA

Megatrends 〜 Outputs and Outcomes

Respond to Social Issues andPeopleʼs Expectations with “Tomorrowʼs Basic”
DNP will accurately grasp domestic and overseas megatrends and economic, social and environmental issues, andclarify the value created by each business on the two axes of market growth and profitability and will concentrate
its management resources on “ focus businesses” that can achieve high effects that only DNP can attain.

1

Social issues and peopleʼs expectations

P&I Innovations

Starting point for value creation

DNP Creation Value = Output/Outcome

Create “Tomorrowʼs Basic" from growth areas

Identify growth areas starting from megatrends
DNPʼs business environment and “key issues” for DNP

Risks

Faster innovation
Greater development competition
Personnel shortages due to hiring issues
Risks

Focus businesses in four growth areas

Acceleration of sharing economy

Knowledge and Communication

Lifestyle and Mobility

Knowledge and Communication

Social issues to be resolved and value provided

Megatrends

Shift to data
economySecure transactions, safe and secure society
Accurate credit review
Streamline supply chain

Moving toward
smart cities

Megatrends

Streamline functions and services incities and regions
Ensure the availability and means of transport,balanced with environmental concerns

Megatrends

Domestic population
decline and global
population growth

Digital transformation
Social issues to be resolved and value provided

Social issues to be resolved and value provided

Expanding the diversity of human resources
Food shortages, food losses

Society5.0
Building a new normal in society

Information trust banks

1

ALL

Megatrends

Building decarbonizedsociety

Megatrends

Social issues to be resolved and value provided

Social issues to be resolved and value provided

Longer human
lifespans

Extend healthy life expectancy
Changes in public health

Reduce GHG emissions
Expand use of renewable energy

Food and Healthcare

Business

4

Reinforcing

promotion

2

DNP
business base

Photo media/
service creation

Educational business

Data
distribution-related
business
Medical/healthcare

3

Response to climate change
Review energy initiatives

Worsening marine pollution
Exhaustion of natural resources

Mobility businessNew 5G-related products(Vapor chambers, transparent
antennas, etc.)

Eco-friendly packaging

Battery pouches forlithium-ion batteries

Environment-related
business

Industrial high-performance materials

Environment and Energy

Food and Healthcare

In Value Creation Process 1, DNP identifies “key issues” by ascertaining and analyzing global social issues, theexpectations of people and megatrends and considering stakeholdersʼ interests and impacts and DNPʼs priorities.
In Value Creation Process 2, we reconsider the value generated by DNPʼs businesses using the two axes of
profitability and market growth potential and have identified the growth businesses on which we will focus in the
future. DNP will build a strong business portfolio by optimally allocating management resources centered onthese “ focus businesses.” At the same time, DNP will implement the Value Creation Program and earn profits inreturn for reliably providing tangible value to society and people.

Promote strategic investment
DNP will accelerate value creation efforts through concentrated development investment
in its focus businesses. Looking to the long term, we will set milestones (interim goals)
and successively accumulate concrete results. This will ensure that DNP ʼs growth issustainable and will contribute to the realization of a sustainable society.

16

Mobility interior andexterior materials

IoT andnext-generation
communications
business

Environment and Energy
Risks

4

Lifestyle and Mobility

Metal masks

Authentication/security

Social issues to be resolved and value provided

P32-33

Optical films

BPO

Megatrends

2

Human capitalIntellectual capital

Manufactured capital

Natural capitalStrengthen non-financial capitalSocial andrelationshipcapitalStrengthen and thoroughly execute corporate

Creating value through“P&l Innovations”

Improving ROE

Boost asset
efficiency

Promote integrated
business activities&
Synergize financial andnon-financial capital

governance (corporate governance and internal control)

Shareholder
returns

Strengthen
financial capitalStrengthen our financial base

3

DNP Integrated Report 2021

17

VALUE CREATION AT DNPTOP MESSAGE

BUSINESSSTRATEGIES
Medium-term Management Plan

Value creation
process

Basic Strategies ofthe Medium-termManagement Plan
1. Social issues andpeopleʼs expectations

By taking a long-term viewand continuing to create
new value, we will make
DNP an essential part ofsociety and peopleʼs lives.
Hirofumi Hashimoto
Managing Director

At DNP, we embrace our corporate philosophy of “connecting
individuals and society, and providing new value,” and strive toachieve a sustainable, better society and more enjoyable lifestyles
through our business activities. We see “new value” as innovative
things that have never been done before that solve issues while
exciting people. Instead of the conventional focus on receiving
orders, we will focus on making DNP itself an essential part ofsociety into the future by reaching out to society and consumers
directly to lead change and create the value where it is needed.
To achieve this, DNP will take a long-term view in setting specificinterim goals (milestones) detailing what it will do, to what extent,
and by when, and steadily build upon those accomplishments one
step at a time. Having established management goals for FY2024,
we are currently promoting a three-year medium-term management
plan running from FY2020 to FY2022.
We are implementing a wide range of measures in keeping withtwo basic strategies under the plan, to create value through P&I
Innovations, and to strengthen business infrastructure to support
growth (see pages 19 to 22 for more details). In terms of FY2024
targets, we plan to achieve net sales of 1.44 trillion yen, operating
income of 75 billion yen and an operating income margin of 5.2%,
while maintaining an ROE of 5.0% or higher. This is predicated on
the economy gradually recovering due to the global spread of
COVID-19 vaccinations. Additionally, to achieve these managementtargets we will gradually increase the percentage of sales from ourfocus businesses, which have been set based on market growthpotential and profitability, expanding these businesses from 35% in
FY2019 to 45% in FY2024 while also raising their contribution tooperating income from 61% to 72%.
DNP employees are all professionals, each with their own uniquestrengths. By pursuing more in-depth dialogue with internal andexternal partners while proactively collaborating and combining ourstrengths, we will continue to create entirely new and innovative
products, services and business models.

BUSINESS RESULTS（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITYDATA

Basic Strategy 1

Create value through “P&I Innovations”
１ - 1

Create value primarily in growth areas
Re-evaluate the value created by businesses and establish “ focus businesses” fromthe perspective of “ four growth areas” using the two axes of “profitability andmarket growth potential.”

2. P&I
Innovations

1

１ - 2

Provide value optimized to each country and region
Provide value that is optimized not only to Japan but also to individual countries andregions and that is fined-tuned to address public expectations and social issues.

2

１ - 3

Business promotion

Increase value using all available restructuring approaches
Improve profitability by optimizing management resources through the selection andfocus of businesses according to the value created by each business.

All DNP

Basic Strategy 2Strengthen business infrastructure to support growth

Reinforcing business base

4

3

2

- 1 Strengthen financial and non-financial capital
Pursue capital strategy aimed at strengthening financial capital and combine
financial capital/non-financial capital to promote integrated management.

4. Strengthening
non-financial capital

3. Strengthening
financial base2

- 2 Strengthen corporate governance
Build robust corporate governance system and structures to increase corporate value.

Management Targets for the Year Ending March 31, 2025
New revenue recognition standard will reduce
sales by around ¥30 billion from FY2021.

Management targets (Net sales / operating income / ROE)
Net sales
Operating income
Operating income
marginROE

1,401.9

1,440.0

1,380.0

1,350.0

1,335.4

5.2%
4.0%

3.7%

56.3

49.5

（ ¥ billion）

4.2%

4.5%
75.0

62.0

57.0

FY2019FY2020

FY2021

FY2022

7.3％

2.6％

5.0％

Continuously achieve above 5.0%

FY2024Composition of focus businesses
Net sales

Operating income

Existing businesses
Focus businesses
Composition ratio

35％

37％

FY2019FY2020

FY2021

FY2022

45％

61％

75％

FY2024FY2019FY202072％

FY2021

FY2022

FY2024

Basic strategies for each segment of the printing business<Segment><Basic Strategy>

Information Communication• Pursue digital transformation (DX) aimed at adding value to customer experience• Downsize paper media production bases

Lifestyle and Industrial Supplies• Leverage converting technology to strengthen new product development and sales• Push ahead with review of low value-added productsElectronics

18

Medium-termManagement Plan

• Develop and supply key components that contribute to sophisticated integration of real and digital• Rebuild businesses where competitiveness has declined

DNP Integrated Report 2021

19

TOP MESSAGE

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITYDATA

BUSINESS STRATEGIES | Medium-term Management Plan

Basic Strategy １

Examples of principal structural reforms in each business segment

Create value through “P&I Innovations”

Strategy

1 -1Create value primarily in growth areas

DNP has examined the many issues to be solved amid thedrastic changes to the environment, society and the economy,
selected those through which we can provide value by
leveraging our unique strengths in P&I and positioned them asbusiness growth areas. Across the four growth areas ofknowledge and communication, food and healthcare, lifestyleand mobility and environment and energy, we will provide
entirely new and essential value, solving social issues whileliving up to peopleʼs expectations.
We have also analyzed megatrends with a long-term viewto set key issues in consideration of stakeholder interest andimpact as well as the degree of importance to DNP. In
addition, we have reconsidered the value generated by DNPʼsbusinesses using the two axes of profitability and market
growth potential, and have identified the growth businesses
we will focus on expanding in the future. We aim to build astrong business portfolio by optimally allocating management
resources to concentrate on these focus businesses.
For example, we see digital transformation (DX) as one ofthese megatrends. DNP is endeavoring to create value that
other companies cannot imitate by utilizing the digitaltechnologies and expertise we have been working on sincethe 1970s, and by combining digital and analog, real andvirtual and the strengths of manufacturing and services. We
believe that P&I innovation itself will drive DX at DNP.

Information
Communication

Lifestyle andIndustrial
Supplies* Please refer to pages 42-49 for specific examples of our focus businesses.

Provide value optimized to each country and region

As the COVID-19 pandemic has clearly shown, value chains
and information networks currently span the globe and areclosely connected. Under these conditions, DNP will leverage
the strengths of its products and services that have captured
world-leading market shares and respond carefully to thecharacteristics and needs of each country and region by
providing individually optimized value.
Approximately one out of every eight Group employees

works at an overseas site, and we are promoting our overseas
businesses centering on those shown in the chart below. In thefiscal year ended March 2021, overseas sales accounted for
18.4% of the Groupʼs total sales. We will make further efforts tostrengthen our structure, such as by having a global marketing
department explore overseas markets and acquire cutting-edge
technologies, and will make every effort to provide further value
by enhancing synergies in Japan and overseas.

Information
Communication

Lifestyle andIndustrial Supplies

Electronics

EuropeAsia

North
America

Latin
America

Imaging Communication Business

High-performance Film
Business, etc.
(Battery pouches, barrier films,
photovoltaic module components,
interior and exterior decorative
materials for living spaces, etc.)

Display Components BusinessElectronic Devices Business

FY2020 conditions
Photography/
photo-printing
products andservices

Overseas sales and % of total sales

Provides globallycompetitive products(¥ billion)
226.7

238.4 246.2 245.8

202.5

Battery pouches
for lithium-ion
batteries

Optical films fordisplays

14.4%

16.1% 17.0%

Basic Strategy 2

2 -1

Review low
value-added
products andrestructurebusiness locations

Downsize
color filter
business

17.6% 18.4%

20• Closed Nagaoka prepress site
• Closed Book Factoryʼs Akabane Plant in Publishing business andbegan consolidating facilities at Kuki and Shiraoka plants(scheduled completion within FY2021)

Expanding BPO locations

Expand production lines
for battery pouches,barrier films, eco-friendly
packaging materials, etc.

Reviewing low value-added products,
restructuring business locations• Consolidating Kansai area production facilities in Tanabe plant(scheduled completion within FY2021)

Expanding production lines• New Tsuruse plant battery pouch production line began operatingin March 2021, one more line to be added in FY2022

Expand optical film
production lines
Invest in Electronic
Devices business

Downsizing color filter business• Ceased production at Mihara plant in June 2020
• Himeji plant scheduled to end production in December 2021

Strengthen financial and non-financial capital
three-year Medium-term Management Plan up to FY2022. As
sources of capital for these business investments, DNP will
use both its own funds and third-party capital to fund growthinvestments and will also reduce idle assets. Furthermore, wewill comprehensively consider various capital policies such as
improving capital efficiency, stabilizing our financial base andpromoting shareholder returns.
Through these measures, we will nurture an organizational
culture of continuing to take on the challenge of innovations
toward the creation of value and build a foundation that
supports the sustainable growth of the DNP Group.
* Please refer to pages 23-25 for financial strategies, pages 62-67 for environmental initiatives,
pages 68-72 regarding human capital and human rights, and pages 40-41 for more on DX promotion.

Value Creation Program
FY
FY
FY
FY
FY
2016 2017 2016 2018 2019

FY
2024

Increase value using all available restructuring approaches

DNP will promote various Group-wide structural reforms tobuild a robust business portfolio and increase profitability withthe value created by each business as one evaluation criterion.
We will strive to transform and strengthen the businessstructure and further expand value by downsizing andExpand BPO locations

Downsizing printed media production bases

Strengthen business infrastructure to support growth

Capital policy initiatives
Environmental initiatives

1 -3

Expand data distributionrelated business

DNP will strengthen its management foundations that support
medium-to-long-term growth by utilizing financial andnon-financial capital in an integrated manner. We will
strengthen non-financial capital classified into five types,
namely human capital, intellectual capital, manufactured
capital, natural capital and social/relationship capital, andboost synergistic effects by combining it with financial capital.
In particular, we will strengthen initiatives related to capital
policy and efforts related to the environment, human capital,
human rights and DX promotion, while formulating andexecuting concrete action plans.
In addition, as a part of capital policy initiatives, we will
pursue investment in focus businesses and plan to makeannual investments on the scale of 100 billion yen during theMain businesses undertaken in the global market
AfricaDownsize
paper media
production bases

Specific initiatives and plans• Opened Makuhari Solutions Center in June 2020

Electronics

1 -2

Pursue selectivity and focus

restructuring businesses that cannot avoid a decline indemand, and by intensively allocating human capital, R&D
investment and management resources such as land andequipment to focus businesses with high market growthpotential and profitability.

Valuehypothesis

Value-creating corporate culture (dialogue)

Businessmodel

DX promotion initiatives
Human capital andhuman rights initiatives

Structure that continues to offer value (mutual learning)

Achieving sustained growth for DNP Group

Realizing a sustainable, better society and more enjoyable lifestyles
DNP Integrated Report 2021

21

TOP MESSAGE

BUSINESS STRATEGIES | Medium-term Management Plan

2 -2

Strengthen corporate governanceonce a year, and the analysis results are discussed by Outside
Directors and shared with the Board of Directors.
DNP also actively promotes environmental, social andgovernance (ESG) initiatives and these efforts have earned
high acclaim from outside the company. For example, DNP has
been selected for 21 consecutive years for the FTSE4Good
Global Index, a global socially responsible investing (SRI)
index, and has also been selected as a constituent of the ESG
indices adopted by Japanʼs Government Pension Investment
Fund (GPIF) (as of July 2021).
* Please refer to pages 73-85 for details on corporate governance.

TO

PI

CS

DNP works to strengthen corporate governance as one of its
crucial management issues. DNP has built and operated astrong structure for quick and accurate management
decision-making and business execution and for auditing andmonitoring these functions. At the same time, DNP isaccelerating initiatives in conjunction with various measures
such as thoroughgoing employee training and education.
At the General Meeting of Shareholders in June 2021, a
resolution was approved for the election of 12 Directors, oneof whom is a female Director, and of which four, or a third of
the board, are Outside Directors. An analysis and evaluationof the effectiveness of the Board of Directors is implemented

Strengthening the Effectiveness of the Medium-term Management Plan: DNP Awards Initiative
With regard to the value that DNP creates, it is necessary to thoroughly formulate and verify hypotheses, design and build the findings as
business models, acquire consideration in the form of profits and expand the business. As part of the improvements with this in mind, in FY2020
we significantly revised our award system and established the “DNP Awards.” The DNP Awards will accelerate the Value Creation Program (referto page 15) and objectively review the ability to form value hypotheses (ability to discover, ability to change, ability to test) and the ability to build
business models (based on customer, value proposition, delivery method and earnings model). Excellent value-based initiatives will be selected
and commended, with the award-winning efforts shared beyond divisional boundaries as “All DNP” to ensure that we can learn from each otherʼswisdom and ingenuity, and actively spread that insight across the organization. Through these activities, we will promote further improvements toour organizational culture and continue to create new value as a company that is always taking on the challenge of change.

Value Creation Program

Value hypothesis

Business model

Profits

Potential value

Method for realizing

Price paid for valueof products and services

value from products and services(barometer of value)

Initiatives to advance Value Creation Program: New DNP Awards
President ʼs Prize (previous award system)(sales/profits)

Evaluating
earnings
contribution

Award fortop-ranked
project ineach businessResults-focused, process not shared
Siloed organization results in little interest except
by award winners, limited synergy effects
Earnings

Earnings
criteria bybusiness

Challenges

A business B business C business D business E business

DNP Awards program
All DNP(including earnings
criteria)

Results

22

Potential
applications toother businesses/
lessons learned(triggers for
dialogue)

DNP Awards
program
Teach-in meetings(lessonsfrom dialogue)

Creating
new value as“All DNP ”(build organizational
culture)Awards for
projectswith highoverallscore

Earnings

Main focus issuperior
value perspective/
project process

DNP Group

Spreading wisdom
and ingenuity acrossthe organization
through teach-inmeetings andother activities

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

Initiatives forvalue creation

BUSINESS RESULTS（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITYDATA

FINANCIALSTRATEGIES
Through the optimal
allocation of management
capital, we will enhance ourcash generating capability
and asset efficiency tomaximize corporate value.
Masafumi Kuroyanagi
Managing Director

To continue to create value over the long term, the DNP Groupneeds to establish solid management foundations. We strive topractice integrated management that combines the strengths offinancial and non-financial capital, and I would like to explain
about financial strategy focused on capital policy initiatives.
DNP currently implements capital policy initiatives based on
the two broad themes of improving ROE and shareholder returns.
Looking to the long term, we want DNP to play a central role inexpanding business activities and enhance corporate value in astable fashion while providing the results of those efforts toshareholders and all our stakeholders in the form of value thathas grown even larger.
On the theme of improving ROE, we are pursuing the following
three initiatives to become a company able to continually achieve
an ROE of at least 5.0% toward FY2024. First, we will expand
value and boost earnings by making targeting investments infocus businesses across four growth areas. Next, we will promote
improved asset efficiency. We will undertake a broad review of
the assets we hold domestically and overseas, reducing any idle
assets while continuing efforts to decrease strategic
shareholdings. We will also promote the strengthening of financial
capital. In addition to making every effort to enhance a stablefinancial position backed by retained earnings, we will use bothour own and low-interest third-party capital while trying hard to
reduce capital costs.
On the other theme of shareholder returns, working within ourbasic policy of stable dividends, we will issue dividends that take
into account factors such as earnings and will also consider sharebuybacks depending on circumstances.
We will strive to maximize corporate value in a way that
contributes to a sustainable, better society and more enjoyable
lifestyles through these capital policy initiatives, and will link thisto the sustainable growth of the DNP Group.

Foster organizational culture readily creates value through dialogue = major synergies

DNP Integrated Report 2021

23

VALUE CREATION AT DNPTOP MESSAGE

Value creation
process

Medium-termManagement Plan

BUSINESS RESULTS

Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

DATA

FINANCIAL STRATEGIESCapital Policy Initiatives to Maximize Corporate Value
Strengthening initiatives based on the themes of improving ROE and shareholder returns
As part of efforts to promote its Medium-term Management
Plan aimed at maximizing corporate value, DNP has now
formulated and implemented capital policy initiatives based on
the two themes of improving ROE and shareholder returns.
Particularly with regard to value creation, we expect togenerate cumulative operating cash flow of around 330 billion

yen between FY2021 and FY2024, in part through targeted
investment in focus businesses. In addition, regarding efforts
to boost asset efficiency and strengthen financial capital, we
will work to minimize risk and maximize results by flexibly
combining a range of measures while keeping abreast of
conditions in Japan and abroad.

Create value primarily in growth areas

Managing targets via segment ROA■ Reducing strategic shareholdings■ Boosting asset efficiency by reducing idle assets

Boost asset
efficiency■

Strengthen
financial capital■Fund growth investments using both own andthird-party capital■ Stable financial position backed by retained earnings

Return profits to shareholders via stable dividends, consider earnings/payout ratio■ Share buybacks to increase EPS■

Generating cash through value creation, and optimum allocation for growth investment and
DNP will work to generate cash by increasing operating cash
flow through value creation and improving capital efficiency.
By pursuing specific measures such as utilizing third-party
capital, reducing capital costs and optimizing shareholdersʼ1equity, we will aim to reach our FY2024 numerical targets of
net assets around 1 trillion yen and a D/E ratio of around 0.25.
We have also established a cash allocation strategy which
promotes the optimum allocation toward growth investment

Optimizing capital structure

FY2020 balance sheet results
Other Liabilities¥567.8 billion

Use ofthird-party
capital¥158.5 billion

billionNet Assets¥1,098.6
billionD/E Ratio: 0.15 Shareholdersʼ equity ratio: 57.2％

Reducing costof capital
Optimizing
shareholdersʼ
equityMinimize
working capital

Reducestrategic
shareholdings
Reduce idle
assetsInterest-bearing Debt

Use with awarenessof financial discipline
Net Assets

Around ¥1 trillion
Streamline capital
structure while
ensuring stablefinancial position

FY2016FY2017FY2018FY2019FY2020

FY2021*
TargetDividend payout ratio(consolidated)

60%

79%

71%

ー

27%

72%

33%

Total return ratio

119%

138%

125%

ー

113%

72%

89%

Return profits to shareholders via stable dividends, consider earnings/other factors

Dividends

Factor in payout ratio based on earnings

Buyback

Appropriate judgement based on business conditions and business investments

Retirement

Retire treasury stock based on ratio of treasury stock held

＊ Details of buyback• Stock to be acquired: Common stock• Number of shares: Up to 17 million shares, equivalent to
6.05% of shares outstanding excluding treasury stock• Total acquisition price: Up to ¥30 billion• Purchase period: May 14, 2021-December 20, 2021
＊ Details of treasury stock retirement• Number of shares to be retired: 7 million shares(2.16% of shares outstanding prior to retirement)• Retirement date: May 24, 2021

shareholder returns
and shareholder returns, and are pursuing a number of
initiatives in this area. From FY2021 to FY2024, we aim togenerate cash of at least 480 billion yen, and plan to allocate
50% or more for growth investment, including investment infocus businesses across four growth areas and efforts tostrengthen our management foundations.

Cash creationstructure

3

Cash allocation strategy

FY2021-2024

Growth investment

Growthstrategy
Capitalstrategy

Generate operating cash flow

Shareholder returns

Stable dividends

Generate cash of at least¥480 billion

Other Liabilities

Total Assets

FY2015

Shareholder
return policy

2

FY2024 balance sheet targets

Interest-bearing Debt

24

20
0

Shareholder
returns¥1,825.040

restructuring business locations

ROE above
5.0%

Total Assets■ Total acquisition price of buyback

60

Targeted investment in focus businesses in four growth areas
Creating■ Provide value optimized to each country and region
value through■ Increase value using all available restructuring approaches“P&I Innovations”
Turning around low-profitability/growth businesses,

Consistently
achieve■ Total dividend paid

80■

Improving ROE

investment to make appropriate decisions regarding thebuyback and retirement of treasury stock. For FY2021, we
have announced the buyback of 30 billion yen in treasury
stock and the retirement of 7 million shares.

(¥ billion)
100

FY2021-2024 Cumulative operating
cash flow around ¥330 billion

Maximizing
enterprisevalue

In terms of shareholder returns, we regard the return ofprofits to shareholders as one of our key management
policies, and will return profits to shareholders based on ourbasic policy of stable dividends while considering earnings,
dividend payout ratio and other factors. We will also lookclosely at the management environment and business

Share buybacks
Streamlining existing
businesses¥30 billion buyback
in FY2021¥330 billion
Investment in growth areas
Use of third-party capital

Reduce strategic shareholdings,
idle assets, etc.
¥150 billion

Targeted investment in focus
businesses in four growth areas

Strengthening business baseCreating value by promoting DX

50% ormore ofgrowthinvestment

D/E ratio: around 0.25 Shareholdersʼ equity ratio: At least 50%

DNP Integrated Report 2021

25

VALUE CREATION AT DNPTOP MESSAGE

Value creation
process

Medium-termManagement Plan

BUSINESS RESULTS（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITY

DATA

Growth Trajectory:
Corporate History---Long-term Vision
1876

1935

1907

1951

● 1868: Meiji Restoration〜 Civilization and enlightenment

1973● 1945: End of war〜Toward a period of rapid economic growthStarting from a“Civilized Business”

Broadening BusinessDomains throughExpansion Printing

1935

Merger of Shueisha and Nisshin
Printing to form Dai Nippon Printing

1943

Net sales
trends andhistory
DNP (non-consolidated)
DNP (consolidated)(Year ended May 1977 〜 )(¥ million)

10,000300,000

5,000

150,000

1935

P&I Solutions

Since its founding, DNP has
continued to create a diversity of
products and services by safely
and reliably handling the valuable
information of companies andpeople. The Company also
anticipates trends in digitizationand networking and undertakes avariety of businesses bysynergizing paper printed
materials and information services
that are protected bysophisticated security.
We are expanding our business tosuch domains as packaging andbuilding (decorative) materials by
broadening our printed items tofilms, metals and other items as well
as forming items after printing. We
are providing packaging for foods,
daily-use items and other items,
interior and exterior materials forbuildings, automobiles and others,
and battery materials and life
science-related materials, thereby
providing value that is indispensablein peopleʼs lives and in company
business processes.
DNP is further expanding its
business domains by sophisticating
technologies such as its etching
technologies that form fine patterns
on metals. Since contributing to thebirth of Japanʼs first domestically
produced color TV, DNP has beendeveloping and providing materials
for use in various types ofhigher-definition, higher-quality
displays and electronics devices
that respond even to nanometerminiaturization.

1983

On the occasion of its 125th anniversary, DNP announced
its Vision that expresses the direction of DNP ʼs growth. This
Vision prescribes our business philosophy as “contribute to
the development of a society based on emergent evolution
in the 21st century,” while designating “ P&I Solution DNP,”
which will solve various issues by combining our strengths
in printing (P) and information (I), as the concept
watchwords for the entire Vision. In addition, the initials“ DNP,” which we had used from the past, will serve as thebrand for the entire Group and we accelerated efforts toraise the value of this brand.

1983-85

Development of smart cards→ Expansion to today ʼs cash cards,
credit cards, transportation cards
and accreditation (ID) cards

Development of thermal mass anddye-sublimation thermal transfer
printing media → Expansion to
Imaging Communication Business

2003
Development of photovoltaic
module components → Expansion
into energy-related businesses
along with the commercializationof battery pouches for lithium-ion
batteries in 1999

1951

2004

1951

Full-scale entry into paper containerand soft packaging field → Expansion
into Packaging BusinessSuccessful formation ofcapillary patterns

Began development of decorative
paper for buildings → Expansion into
Living Spaces Business2014
Business and capital tie-up with
PSP, a major player in medical
imaging management systems→ Expansion toward life
science-related businesses

1958
Succeeded in thetrial productionof shadow masks
for color TVs→ Advance into
the Display
Components
Business

2009

1959
Successfully developed photomasks
for semiconductors → Advance into
Electronic Devices BusinessStarting work style reform activities

We commenced work style reform activities in three-year increments andinitially aimed for a thorough reduction in working hours. After achieving
certain results, from the second phase that began in 2012, we areadvancing these activities to raising job motivation and the added valueof our work. During the fourth phase that began in 2018 as well, we arepromoting the creation of workplaces that can fully deploy the abilities ofeach and every employee by effectively utilizing time resources.

DNP Net sales 12,763 thousand yen(¥ thousand)0

Information Communication

Founding of Nisshin Printing● 2001: Announced “ DNP Group Vision for the 21st Century ”

Information Processing Business ―Information Communication Business

Lifestyle and Industrial Supplies

Founding of Shueisha● 2011 (March): Great East Japan Earthquake“DNP Group Vision for the 21st Century”

Electronics

Second Corporate Founding

Founding

1876● 2008: Collapse of Lehman Brothers● 1987: Began transforming toward information processing businessComprehensive Printing Business

1907

26

● 1973: Surpassed U.S.-based R.R. Donnelley & Sons Company tobecome the worldʼs largest comprehensive printing company

Publication Printing Business

Amid the dramatic changes in the
postwar period, based on the thinking
that “our company can no longer
prosper by relying only on businessfields to the present,” the Company
strived to expand its business inanticipation of the ways of life ofpeople in the future.
Accordingly, the Company
promoted “expansion printing” aimed
at diversifying its businesses,
especially by means of applying andadvancing its printing technologies in
addition to stabilizing
labor-management relations,cultivating customers bystrengthening sales capabilities andimproving production efficiency andquality. DNP significantly broadened
its business domains by expanding its
business, which until this time wascentered on publication printing, tocommercial and securities printing aswell as printing for packaging,building materials and electronics
products.
DNP believes that its growthstrategy of expanding business bycontinually honing such technologies
as information processing,microfabrication, precision coating
and post-processing technologies toensure these remain at the cuttingedge will allow DNP to realize its
current business vision “ P&I
Innovation.”2015● 1991: Bursting of the bubble economy〜Toward the “ lost decade”● 1876: Founding of Shueisha,● 1935: Merger of Shueisha and Nisshin Printing to form Dai Nippon Printing
DNPʼs predecessor● 1907: Founding of Nisshin Printing● 1951: Start of five-year reconstruction plan

Dai Nippon Printing Co., Ltd. was formed in1935 through a merger between Shueisha,founded in 1876, and Nisshin Printing Co.,
Ltd., established in 1907. Starting with
Shueisha, which prescribed “running abusiness that contributes to civilization” in
its company prospectus, the Company
carried out business centered on
publication printing for approximately 75
years up to the postwar period.

2001

1987

1940

0

Year ended May 1976
Net sales (non-consolidated)
268,529 million yen

Year ended May 1977
Consolidated net sales
338,144 million yen

1,200,000

Year ended March 2021
Consolidated net sales
1,335,439 million yen

600,000

1946

1950

1960

1970

1975＊1

0

1977

1980

1988＊2 1990

2000

(Notes) ＊1 The May 1975 fiscal year was a six-month settlement period due to the transition to a May fiscal year-end.
＊2 The March 1988 fiscal year was a ten-month settlement period due to the transition to a March fiscal year-end.

2010

2021

DNP Integrated Report 2021

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VALUE CREATION AT DNPTOP MESSAGE

Value creation
process

Medium-termManagement Plan

BUSINESS RESULTSINITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

Initiatives forvalue creation

DATA

Growth Trajectory: Corporate History --- Long-term Vision

2015

2018

2019

2020

● Adoption of Sustainable Development Goals (SDGs)

at the United Nations Summit● Adoption of Paris Agreement to combat climate change at COP21● 2015: Formulating DNP Group Vision 2015

2021

● Global spread of COVID-19● 2018 (June): Inauguration of● FY2019 〜: Change of personnel● 2020 (March): Formulation of● Start of fourth phase of work style● 2019 (April): Declared support● 2020 (March): Formulation of DNP

Yoshinari Kitajima as President
reform commenced in 2009

systems and others

for TCFDDNP Group Human Rights PolicyGroup Environmental Vision 2050

2025

2030

2050

● 2030: Attainment of SDGs

● 2021: Holding of the 2020 Tokyo● 2030: Domestic GHG emissions

Olympics and Paralympics● 2025: Resource recycling ratio● 2021 (April): Announcement of the

DNP Group Declaration on Health● Toward a more

● 2050: Domestic carbon

reduced by 46%

FY2020-FY2022 Medium-termManagement Plan moved forward

2101
sustainability-conscious
22nd century

neutrality accomplishedMoving the Medium-term Management Plan forward while also

clarifying milestones with an eye toward long-term objectives
increased by 5% and water usage
reduced by 35% (vs. FY2015)● 2030: GHG emissions reduced by 40%● 2050: GHG emissions attributable● Sales weighting of super-eco
to the Groupʼs business activities(emissions attributable to the Groupʼs own
products increased to 10%
reduced to practically zerobusiness activities/vs. FY2015)● Increasing

more sustainablecorporate value

P&I Innovation

Corporate Philosophy

Brand Statement

Creating new value that evolves into

The DNP Group connects individuals and society,and provides new value.
Todayʼs Innovation is “Tomorrowʼs Basic”“ Tomorrow ʼs Basic”

Following the establishment of its
Vision in 2001, DNP established a
new Group Vision amid anincreasingly severe businessenvironment after the Lehman
Brothers bankruptcy and the Great
East Japan Earthquake. With its
Corporate Philosophy of “ The DNPGroup connects individuals andsociety and provides new value,”
DNP clarified the social issues that
it is uniquely capable of solving aswell as the expectations of people
and expressed the four businessthemes it must address as “ four
growth areas.”

DNP will now synergize its unrivalled and unique strengths in P&I (Printing& Information) as well as deepen cooperation with its numerous partners
and solve social issues while focusing on the creation of new value thatmeets the expectations of people. DNP, which has continued to “ Take on
the challenge of promoting change” in any era, will deploy the total
strengths of “All DNP” with the entire Group working as one to attain its“ Third Corporate Founding” and ensure this leads to sustainable growthboth for DNP and society.

Corporate
Philosophy
The DNP Group
connects individuals
and society, andprovides new value.

28

Business
VisionGuiding
Principles

Use P&I innovations to
expand business,
primarily around four
growth areas.

TAIWA (dialogue)
and cooperation

Toward Our “Third Corporate Founding”

For Realizing Our “Third Corporate Founding”* Refer to pages 30 to 33.

Growing as a company
Solving social issues and meeting peopleʼs expectations

DNP will continue to create “ Tomorrowʼs Basic” by making unceasing strides toward realizing a sustainable, better society and more enjoyable lifestyles.

DNP Group Vision 2015

Knowledge andCommunication

Management targets (Net sales / operating income / ROE)

A future where people worldwide
can expand opportunities for safe
and secure communications andshare and inherit knowledge

New revenue recognition standard will reduce sales by around ¥30 billion from FY2021

1,440.0

1,380.0

1,350.0
Net sales
Operating income
Operating income
margin
ROE

5.2%
4.5%

4.2%

75.0

62.0

57.0

Food and Healthcare(¥ billion)
Toward“ Third Corporate Founding”
1. Social issues
and peopleʼs
expectations

2. P&I
Innovations

1

2

Business promotion

All DNP
Reinforcing business base

4
4. Strengthening
non-financial
capital3
3. Strengthening
financial base

DNP
from
now onResolving social
issues whileproviding

new valuethat meets peopleʼs
expectations“Culture of continuously taking on the challenge ofpromoting change”

DNP ʼsunvaryingstrengths

FY2021

FY2022

5.0％

Continuously achieve above 5.0%

Composition of focus businesses

TodayʼsInnovationis“Tomorrowʼs
Basic.”“ Desire to provide indispensable value to society
and people.”“ Synergies from P&I strengths”“ Sincere approach and high transparency”

Realizing a sustainable,
better society and moreenjoyable lifestyles

Allocating management resources optimally to thefocus businesses of “ IoT and Next-Generation
Communications,” “ Data Distribution,” “ Mobility ”
and “ Environment ” to build a robust portfolio

FY2024Mid- to long-term objectives in the
DNP Group Environmental Vision 2050
Reducing GHG emissions by2030, versus FY2015

40% reduction
Decarbonizedsociety

Net sales

37 %

45 %

Operating income

75 %FY202072 %FY2024

A future where people around theworld no longer have anxieties about
their own lives and can lead lifelong
safe, secure and high-quality lives

Super-eco products toaccount for 10% of 2025 sales

Lifestyle and Mobility
A future that safely and securely
protects all living spaces where
people worldwide are mobile andlead their lives

Increase 2025 resource recycling
ratio by 5% versus FY2015
Reduce 2025 water usage by
Recycling-oriented
35% versus FY2015
society
Guidelines for Procurement ofPaper for Printing andSociety in harmony Converting 100% of purchased
products are compliant
with nature

Environment and Energy
A sustainable future that reduces
environmental impacts and enables
people worldwide to co-exist
harmoniously with the earth

DNP Integrated Report 2021

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VALUE CREATION AT DNPValue creation
process

BUSINESS RESULTS（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

Initiatives forvalue creation

Medium-termManagement Plan

INITIATIVES FORSUSTAINABILITYDATA

Providing Concrete Value inFour Growth Areas
The DNP Group will seek to drive businesses to leverage DNPʼs unique strengths and provide
society and people with new value in four growth areas. By clarifying target markets andbusiness commercialization themes, it will continue to take concrete steps forward with a view
toward the realization of a sustainable, better society and more enjoyable lifestyles.

Businesscommercialization
themes related to
all growth areas¥

3.3

trillion

Work style reformrelated businesses
Work styles that maximize
the strengths of individuals
and raise synergies＊2022 domestic work style reform ICT

billion¥

2.7

trillion¥33

trillion76＊ 2022 Japanese market for music, broadcast, publishing, game, andvirtual reality (VR)(Ministry of Economy, Trade and Industry (METI) Study Group for theContent Business Era Report)

Education and humanresources developmentrelated businesses
Advancement of STEAM
education/ICT/lifelong learning＊ Total market size of the domestic education industry

1.9¥

trillion126¥

trillion

5.2

trillion＊ Outlook for 5G Market Global Demand in

2025 (Japan Electronics and Information
Technology Industries Association)

Toward a safe andsecure cashless society

Achieving safe, securedata distribution platform＊ 2024 domestic Big Data Analytics

180.6

¥

(BDA) market (IDC Japan)

billionLifestyle and Mobility
A future that safely and securely protects allliving spaces where people worldwide aremobile and lead their lives＊ FY2024 omni-channel

commerce market(Nomura ResearchInstitute Ltd.)

17.6＊ FY2023 cashless

payment market
in Japan(Yano ResearchInstitute Ltd.)¥

trillion

Sharing economy-related businesses

Smart city-related businesses
Realization of more-comfortable andfunctional living spaces＊ 2022 smart city-related global market (IDC Japan)¥

Lead the social change from “owning to using”＊ FY2024 cashless payment market in Japan (Yano Research Institute Ltd.)

6.4

trillion

Next-next generation
smart mobility
Realize a smart mobility society
with no mobility-impaired people＊ 2030 domestic MaaS market(Yano Research Institute Ltd.)(Forecasts in FY2020) (Yano Research Institute Ltd.)(STEAM=Science, Technology, Engineering, Art,
Mathematics)

163

Medical/healthcarerelated businesses¥

Extend healthy lifespans andraise quality of life

trillion

Businesses related to measures forcarbon neutrality
Toward the realization of a decarbonized society＊ Global renewable energy market in 2025 (Allied Market Research)＊ Industry group of non-public insurance services

that support public insurance in 2025
(Ministry of Economy, Trade and Industry(METI)-commissioned project)

Life science-related businesses
Advance of regenerative
medicine/telemedicine, etc.

0

Inclusive design/
universal designrelated businesses

8.5 billion persons

Development and provision of
products and services that areeasy to use by numerous people＊ Aim to realize a society where

no one is left behind by 2030
under the Sustainable
Development Goals (SDGs)
adopted by the United Nations＊ 2030 world population of 8.5
billion (United Nations
estimate)¥

495
trillion

Environment-related business
Creating value to reduce environmental impact
and achieve a recycling-oriented society
Economic output generated by circular economy by 2030
(2016 Accenture survey report)＊ 2030 domestic and overseas regenerative medicine peripheralindustry markets (Ministry of Economy, Trade and Industry (METI))

Food and Healthcare
A future where people around the world no longer
have anxieties about their own lives and can lead
lifelong safe, secure and high-quality lives

30

Payment servicesrelated businesses

Data distributionrelated businesspersons¥

Digital transformation thatraises the experiential
value of “shopping”

trillionContents business-related businesses

64.0

Digital marketingrelated businesses¥

Inherit and advance knowledge and deploy
experiential value globally

Creating hardware andsoftware value for 5G

Business commercialization themes undertaken by DNP ＊＝ Related markets and targets

Knowledge and Communication

US$trillionmarket (IDC Japan)

Four Growth Areas and Business Commercialization Themes

A future where people worldwide can expand
opportunities for safe and secure communications
and share and inherit knowledge

77.3

¥

Next-generation
telecommunicationsrelated businesses

50%
reduction

Manufacturing 〜
logisticsʼ supply chainrelated businesses
Provide stable supplies of foodand reduce food loss throughmonozukuri (manufacturing)and ICT＊ Food loss reduction target by 2030

(Ministry of the Environment)¥

3

trillion

Various businesses for the realizationof a recycling-oriented society
Resources and plastics recycling that also
contribute to ecosystem conservation＊ Global bioplastics market in 2025 (MarketsandMarkets)

Environment and Energy
A sustainable future that reduces
environmental impacts and enables people
worldwide to co-exist harmoniously with the earth

DNP Integrated Report 2021

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VALUE CREATION AT DNPTOP MESSAGE

Value creation
process

Medium-termManagement Plan

BUSINESS RESULTS

Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITYDATA

Providing Concrete Value inFour Growth Areas

DNP specifically seeks to develop and provide the following products and services, with a focus
on “Knowledge and Communication,” “Food and Healthcare,” “Lifestyle and Mobility” and“Environment and Energy,” or business segments that DNP positions as growth areas. By doingso, it will solve social issues while creating new value that meets the expectations of people.

Sustainable Development Goals
In September 2015, the 2030 Agenda for Sustainable Development was
adopted by all United Nations member states (193 countries). The Agenda sets
Sustainable Development Goals (SDGs) as an action plan and strives to realizea world where “ No One is Left Behind” through initiatives for attaining 17
goals and 169 targets. We will utilize the SDGs as a “ yardstick for creating aneven better society” and will fulfill our corporate social responsibility toward
the realization of a prosperous and sustainable society.

Examples of Focused Businesses in the Four Growth Areas

IoT and next-generation
communications businessKnowledge and Communication

Lifestyle and Mobility

A future where people worldwide can expand
opportunities for safe and secure communications
and share and inherit knowledge

A future that safely and securely protects allliving spaces where people worldwide aremobile and lead their lives

Data distribution-related business

Production of high resolution VR content that supports 8K(VR video of the inner sanctuary of the Ninna-ji Temple)

Virtual experience (virtual model rooms)
Photo-related services and solutions

Mobility business

Ultra-thin heat-dissipating
components for 5Gcompatible smartphones(vaper chambers)

Identification services

ICT-based learning support system

Next-generation decorative panels that realize
advanced seamless designs

Environment-related business
Battery pouches for lithium-ion batteries
Online healthcare

Sheet-type wirelessEV charging coilFood and Healthcare
A future where people around the world no longer
have anxieties about their own lives and can lead
lifelong safe, secure and high-quality lives

32

Eco-friendly packaging

Photovoltaic module component(back sheets and encapsulants)

Environment and Energy
A sustainable future that reduces
environmental impacts and enables people
worldwide to co-exist harmoniously with the earth

DNP Integrated Report 2021

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TOP MESSAGE

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

Initiatives forvalue creation

BUSINESS RESULTS（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITYDATAManagement That Turns
Risk into Opportunity
In recent years, environmental, social and economic risks (variables) have become increasingly volatile and diverse,
and the extent of their impact has also spread around the world. DNP identifies and analyzes these risks, seeks tominimize their adverse impacts and at the same time treats change as a tailwind and strives to expand new
business opportunities by effecting change on its own. To expand an opportunity, we look closely at the cause andimpact of fluctuations, concentrate on discovering social issues and peopleʼs expectations as a result and direct
those findings into developing business models that materialize value that is unique to DNP. We promote
Group-wide integrated risk management initiatives with value creation and improvements to the infrastructure that
supports it working in tandem.

Identifying and analyzing risks (variables) closely associated with DNPʼs value creation

Management that minimizes the negative impact of fluctuations and turns them into positive business opportunities

Economic risks

Accelerating changes to the way we work and live
• Acceleration of digital transformation (DX)• Accelerating changes to peopleʼs workstyle and lifestyles• Accelerating fusion of digital and analog, reality and virtual reality in education, learning, healthcare and nursing care

Major changes in economic conditions, consumption trends,
exchange rate and other factors in Japan and overseas• Growing needs to newly establish and upgrade information infrastructure and social infrastructure• Acceleration of changes to the building and operating environments of the global supply chain• Changes in supply-demand balance in terms of raw materials procurement

Expanding impact of faster and more diverse technological innovations,and intensifying development competition• Growing risk of intellectual property and personal information leaks or infringements due to cyber attacks and other threats• Sudden drops in the business performance, ratings or other qualities of corporate clients and business partners (other)

Value Creation○ Changes to how people work and live in Japan andoverseas have changed traditional businessframeworks. DNP will stay a step ahead of change toexpand business opportunities by creating value
utilizing its unique strengths.

○ With regard to our business base, we are working tobuild and maintain a resilience that can stand up to
unexpected changes, by developing stable businessactivities with tens of thousands of client companies
without focusing on any particular industries orcompanies, and engaging in responsible procurement
based on CSR procurement guidelines with several
business partners.

Expanding business opportunities– Turning risks into opportunities and also
contributing to the achievement of the SDGs
DNP will expand business opportunities basedon the recognition that risks (variables) aredirectly linked to social issues and peopleʼsneeds. We will solve social issues and fulfill
peopleʼs expectations through our businessactivities in the four growth areas.

Knowledge and Communication
Food and Healthcare

Expanding issues and needs faced when fulfilling corporatesocial responsibility (CSR)

Social risks• Increased risks to a companyʼs reputation due to compliance-related issues, unauthorized use of data,

product or service quality issues and so on

Increasingly broad challenges and needs associated with enhancing human capital• Expanding challenges and needs associated with promoting diversity & inclusion and securing and enhancing human capital• Expanding challenges and needs regarding employeesʼ mental/physical health and safety

Vast and rapid changes in domestic and overseas megatrends• Changing role of society due to the global spread of various infectious diseases• Increase of country risks• Major changes in population demographics• Growing disparities on various fronts (other)○ We are focusing on promoting diversity & inclusion (D&I)

to provide value to the wide range of people living in adiverse society. We are making renewed efforts torespect human rights, while enhancing and thoroughly
implementing D&I, such as with the establishment of the
DNP Group Human Rights Policy in March 2020 and the
DNP Diversity Declaration in July.

Environmental risks
34• Changing requirements (strengthened regulations, climate change mitigation and adaptation measures, etc.)

related to global environment issues and climate change action• Increase in the frequency of abnormal weather events and natural disasters, and the damage they cause• Accelerating demands to reduce greenhouse gas emissions• Revisions to Japanʼs energy policy, expansion of renewable energy, sharp fluctuations in energy prices• Marine pollution due to waste plastic, worsening soil pollution, increased water risks• Loss of biodiversity, degradation of ecosystems, depletion of natural resources (other)

Environment and Energy○ DNP endeavors to permeate and rigorously uphold

corporate ethics throughout the Group. We strive to earn
the trust of society and people not only by ensuring that
DNP and our employees comply with laws andregulations but also by always remaining fair andequitable and acting under high ethical standards tostrengthen the foundation for value creation.

○ DNP continuously strives for coexistence between our

Growing challenges and needs toward realizing a decarbonized,
recycling-oriented society in harmony with nature

Lifestyle and Mobility

business activities and the global environment, and in
March 2020 we formulated the DNP Group
Environmental Vision 2050. By ensuring that all
employees are strongly aware of their relationship withthe environment, we have accelerated initiatives toachieve a decarbonized, recycling-oriented society inharmony with nature.

○ To address risks such as increasingly severe natural

disasters and new infectious diseases, we promotebusiness continuity management (BCM). We will also
give top priority to the health and safety of employees as
we undertake corporate activities based on the DNPGroup Safety and Health Charter and the DNP Group
Declaration on Health.

Foundation to Support Value Creation

Measures for minimizing the impactof assumed risks
For activities to serve as a “ foundation to
support value creation,” DNP has selected thefollowing seven Principal Themes (representing
material issues). Based on these themes, wehave been promoting initiatives for integrated
risk management and rotating theplan-do-check-act (PDCA) cycle.
Fair Operating Practices

Human Rights and Labor

Environment

Responsible Procurement

Product Safety and Quality

Information Security

Corporate Citizenship(Refer to pages 60-61)

DNP Integrated Report 2021

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VALUE CREATION AT DNPTOP MESSAGE

Value creation
process

Medium-termManagement Plan

BUSINESS RESULTS

Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITY

DATA

Expanding DNPʼs Business Areas by
Applying and Developing Technologies

Process 1

Editing, Manuscript Submission and Layout
We design the most effective information media in accordance with the content
and user, select the number of colors, format and type of paper and printing
methods, as well as perform design and layout. At this stage, we consider themost efficient production processes in addition to undertaking such work as
preparing the necessary manuscript and materials and processing data.
Technologies cultivated through this printing process

Project
planning
anddesignInformation
processing

Manuscript
Submission
and Layout
This includes such processes asplanning printed products, selecting
materials and printing methods,
designing processes up to delivery,
managing and operating themanuscript, inputting andprocessing text and image data,and creating layout data.

DNP plans and designs a production process suited to thedesired layout. DNP continuously handles large volumes oftext, still images, videos, voice and other data and arranges
data formats and color tones, and also undertakes
processing and storage. DNP is raising its know-how forsafely and properly handling large volumes of data as it
expands into various types of important information
processing and analysis and security technologies.

Examples of printing such as publication printing and commercial printing

Product delivery

1
Editing,

Printing Processes

Effectivenessassessment

Basic

Feedback

DNPʼs strength is derived from combining a variety of technologies in printing andinformation. With technologies created from basic printing processes as a base,we continually refine these into cutting-edge technologies and apply and advancethese technologies to create a diversity of businesses.

4
Binding andPost-Processing

Process 4

Binding and Post-Processing
Multiple pages of a book are printed on large sheets of paper that are
folded to ensure pages are in order and layered for binding. Subsequently,
the edges of the pages are trimmed down to the final shape. This is a
crucial process for stabilizing product quality and improving productivity,
while providing the functions needed according to the application.
Technologies cultivated through this printing process

Postprocessing

Printed paper is stacked and boundto create the shape of a book. Box
making and three-dimensional
processing such as for confectionary
packages are also undertaken.

Post-processing technologies are derived from various
processes that follow printing, such as bookbinding. These
technologies are applied to make printed products easy to
use and suitable for the purpose of the finished product andare also outstanding for use in three-dimensional processing
such as die cutting and assembly. These technologies haveenabled the creation of packaging for such items as foods,
beverages and daily necessities; the development of systems
for the aseptic filling of contents; and the inspection,measurement and analysis of various products.

Process 3

2

Process 2

Film Making and Platemaking
Color separation of printing data is produced and then output onto film (film making)followed by the creation of a plate (platemaking) that is set to a printing machine.
We are also promoting the spread of Computer to Plate (CTP), a method that outputs
different plates for each printing method directly from data without film output.
Technologies cultivated through this printing process

Film Making andPlatemaking
Film making: Print data is color
separated into the four colors of
CMYK* (cyan, magenta, yellow,
black) and output on film.
＊ C (cyan≒blue-green), M (magenta≒red-purple),

Y (yellow), K (black)

Microfabrication

In the printing process, extremely minute processing is
performed to ensure that halftone dots of printed ink are
difficult to discern with the naked eye. We have further
advanced this technology to enable microfabrication for such
substrates as metals, glass and plastics. This technology is
being applied in numerous leading-edge electronics products
and in such fields as hologram anti-counterfeiting and security.

Fine patterns areformed to create a seal.
Laser

36

Exposure

ErosionPrinting

Platemaking: Data is transcribed froma film made into a plate to a metal
sheet to produce the printing plate.

Printing

3

A printing plate with the necessary
number of colors is wound arounda roll, ink is applied and high-speed
and high-precision printing on
paper or other items is carried out.

Ink is put onto the printing plate and applied thinly and uniformly topaper and films. Printing methods include letterpress printing,lithographic printing (offset printing), intaglio printing (gravure printing),
stencil printing (silk printing) and digital printing (direct output). Each ofthese methods requires a different printing plate.
Technologies cultivated through this printing process

Precision
coating

Precision coating is a technology that forms a coating film
on materials with a variety of features, in either single ormultilayers, in a homogenous and uniform manner on thesurface of substrates such as paper as well as plastic film,
metal and glass. A variety of functions that include opticaland barrier properties and heat resistance can be added,
giving this technology widespread applications in suchareas as packaging and building materials, photographic
print materials, battery materials and optical films.

Coating technologies for
applying a thin, uniform layerof ink and other materials

DNP Integrated Report 2021

37

TOP MESSAGE

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITY

DATA

Expanding DNPʼs Business Areas by
Applying and Developing Technologies

Creating New Value by Combining Technologies,
Ideas and Know-How
DNP has cultivated new business domains by applying andadvancing technologies cultivated through diverse printing
processes. DNP established the Central Research Institute in1961 and started system development for computerized
typesetting in the early 1970s. We have been ahead of digitaltransformation (DX), a current megatrend.
We are constantly refining our most advanced technologies
such microfabrication, precision coating and post-processing,which is the basis of manufacturing, as well as planning andProvide XR Communication Spaces
Combining Real and Virtual

design, information processing, materials development andassessment and analysis. These in turn create synergies with
our know-how in sales, planning, manufacturing and otherpractices, as well with our partnersʼ strengths to create newvalue. As DX accelerates, we will leverage DNPʼs hybrid
strengths in both digital and analog technology, reality andvirtual reality, manufacturing and service. Further, we willbuild a business model based on the ideas for realizing abetter, sustainable society and more enjoyable lifestyles.

DNP ʼsIdeas & Know-How

Ideas

Partnersʼ strengths(technologies & ideas & know-how)

DNPʼs P&I technologies

Knowhow

Printing(in a narrow
sense)

Etching
processing

Precision
engraving

Microfabrication

Photolithography

Coating

Precision
coating

Vacuumdeposition

Branding

Molding

HologramMedia
conversion
technologies

Publishingsolutions

Project
planning
anddesignLivingspace
designFonttechnologies

Information
processing

Image
processing
andrecognition

PackagingdesignSales
promotion

OpticaldesignDataanalysis

Information
security

Exploration, Cultivation andUtilization of Technologies
Leveraging DX Trends
In collaboration with venture companies and research
institutes, we explore and acquire the most advanced
technologies and stay focused on the development
and cultivation of leading-edge technologies unique
to DNP. We leverage DX trends and utilize AI-based
data analysis and cloud environments to enhance thevalue of our existing businesses and to create value
from our new businesses.

Ideas

Knowhow

Bookbinding
processing

EB andUV curing

Dispersion
andcomposition

Technologies

Aseptic
filling
processing

Postprocessing

Plastic
forming

Organicsynthesis
technologies

Laminating
technologies

Transfer
processing

AssaydesignMaterials
development

Pigments
andphotosensitive
materials

Processandmaterial
diagnosis

Assessment
andanalysis

Polymermaterials

Databaseanalysis

Utilization oftechnologies
Utilization of technologies by new
business creation divisions andexisting business divisions in
products and services

Utilization of the cloud | AI | Data analysis

Exploration oftechnologies

Cultivation oftechnologies

Partnership with technologicalventure companies

Strengthen already-strong
technologies

Partnership with outside
research institutes

Image processing, massive dataprocessing, information security,
assessment and analysis, etc.

Planning
anddesignInformation
security

Image
processing
andrecognition

AdvancedCG
production
technology

DNP started the extended reality (XR) communication
business to develop virtual towns and facilities in parallelwith real towns, which is officially authorized bymunicipal governments and by facility managers. By
using virtual reality (VR), augmented reality (AR), mixed
reality (MR) and other technologies, we promote
PARALLEL CITY, a community- and XR-based
co-creation of cities to augment the value and functionof real communities and facilities, provide citizens withnew value of experience and lead it to regional creation.
We are planning to open an authorized XR
communication space in a total of 30 areas within a fiveyear period following the opening of Sapporo Cityʼs Kita
3-jo Plaza in Hokkaido and Shibuya Wardʼs Miyashita
Park in Tokyo in 2021.
Actual Sapporo City ʼs Kita 3-jo Plaza (top) and virtualized PARALLEL SAPPOROKITA3JO (bottom) lead to seamlessness.

Key points of the
XR communication
business

1: Regionally co-created XR spaces that are safe and secure
2: Creation of new cultural value through augmentation of expressions
and dissemination of good-quality content
3: Creation of new communication and economic activities

Process
simulation

Development of “DX Marker” toAccurately Detect Positions ofGoods and Other Objects in
Pursuit of a Smart Factory
In May 2020, DNP developed “ DX Marker,” which
involves the use of image processing software and acamera to accurately control the movements of an
automatic conveyance robot for logistics and any othermoving object and is capable of performing sensing toan accuracy of a ±1 degree angle or less. The
product is a 0.7-millimeter-thick glass substrate, 40
mm or 80 mm on a side. It is placed on a pallet, awarehouse shelf, a building door, a corner post, an
automatic conveyance system or an unmanned moving
object and the camera reads a marker to accurately
detect its position.
We pursue improvements in productivity by
developing and offering these products and services
and promoting digital transformation at our
manufacturing sites.

DX Marker (left: 80 mm angle, right: 40 mm angle)
Marker coordinate
Resultant position y
Resultantposition zyResultantposition x(1) z axis coordinate(4) Yaw axis angle(2) x axis coordinate(5) Roll axis angle

Camera coordinatez38(3) y axis coordinate(6) Pitch axis anglex

Accurately determine the position andposture of a robot from all six axes.

DNP Integrated Report 2021

39

TOP MESSAGE

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS

DNPʼs Unique Commitment toDigital Transformation (DX)
DNP calls for “ P&I Innovation” in our business vision. This
represents our attitude of creating value indispensable forsociety and people by combining our unique strengths inprinting and information to bring about change. Since ourfounding in 1876, DNP has earned a great deal of trust by
keeping large quantities of important, undisclosed andconfidential information, including personal information, andby deploying many different media. We were also among thefirst to embark on the shift to digitalization and networks.
Early in the 1970s, DNP began developing computerized
typesetting systems and, in 1985, successfully created theworldʼs first CD-ROM dictionary. These achievements link
directly to the current digital transformation (DX). Keeping
deeply updated on the DX megatrends, DNP harnesses ourtechnologies and know-how in the opposing aspects of“ digital and analog,” “service and manufacturing” and“virtual and real.” In this way, we promote what we call“hybrid DX ” as no other company can do.
Digital networks spread all over the world in thequarter-century after 1995, when commercial use of theInternet got fully underway. In the current COVID-19
pandemic, DX has played a significant role in facilitating
effective communication among people and preventing themany disruptions. Staying true to its Corporate Philosophy,“ the DNP Group connects individuals and society, andprovides new value,” as well as strives to create value toconnect “people and education,” “people and medical care”
and “people and clothing, food and housing” by leveragingof these growth areas requires a combination of digital andvirtual ICT services with the advantages of, for example,
analog and actual practices of manufacturing. It is importantto hone our cutting-edge technologies and to pursue products

and services that diverse individuals can feel comfortableusing.
Today, DX has the potential to change how an industrial
structure or an organization exists and how people live.
Accurately sensing trends, DNP combines them with thestrengths unique to P&I. In doing so, we enhance the value of
our existing businesses and act to create new businesses.

We will create new value by synergizing our unique strengths in P&I (Printing andInformation) and deepening cooperation with partners.

tionof services andpr oDigitaltechnologies

Services

Internal
systeminfrastructure
innovation

Reinforcing
infrastructure

Productivity
revolution• Skills improvements inaccordance with ITSS＊3

se

Understanding ofsice

g p r o du c t s with

ICT personnel• Centralized
management of skills
in our possession andwork experience throughtalent management

Structuring and Operating the DX Promotion System
Under the President ʼs leadership, the Chief Digital Officer (CDO) supervises
company-wide efforts relating to DX. Under the CDOʼs leadership, the head
office and business divisions cooperate with one another to develop andoperate systems for using DX to revitalize different corporate activities. In
2014, we set up an organization specializing in the creation of new
businesses with the use of our strengths in digital technologies. In this way,
DNP seeks to create value from a medium- to long-term perspective.

Improving ICT personnel

ICT personnel

Multiplication of products to boost the shift to high added value

rv

M

ly in

As telecommuting becomes increasingly common, wedevelop a zero-trust security＊2 model with the aim of reacting
effectively to changes in our network environment on theassumption that no access will be trusted. We also restructure
our infrastructure environment so that it is commonly available
at our overseas sites in order to strengthen our security andgovernance.

Top management

systematically pursue a number of different initiatives tostrengthen our human resources.

AnalysisDefinition of

Use of digital technologies in the creation of new services

AI, next-generation
communications, XR anddata collection andanalysist ip

Aiming to ensure quick and data-based decision making, DNP isdeveloping an information system to visualize management
situations and to collect and use information that supportsbusiness activities. The development of our systeminfrastructure is aimed at continuously raising our efficiency, ourcapability to handle technological innovation and our security
levels in accordance with the principle of cloud-by-default＊1.

Understanding of
ICT personnel

ct s

Mu
ltip
l

All DNP

Changing the in-house system infrastructure

DNP clarifies the definition of digital and ICT personnel,
regularly updates itself on the situations and leads it to thecreation of value with the maximization of DX. We
duica

Multiplying services and improving added value

40

Business
promotion

Improving human resources to support the promotion of DX

OperationulExisting
businesses
transformation*1 A principle for pursuing improvements in efficiency, security levels, capability to handle technological innovation and availability, which considers the use of cloud service as the first candidate*2 A concept of information security that can be achieved by defining what should be protected as “data” and not trusting any access to data

Create new value primarily in growth areas

Use of digital technologies to strengthen QCD

Newbusinesscreation

the momentum of DX. As workstyles and lifestyles change, thescope of use of digital technologies is expanding. DNP seeks toinvest in areas such as improving ICT personnel and focuses on
displaying the comprehensive strengths of “All DNP” throughthe development of optimal systems. In particular, we analyze
different data to facilitate rapid decision-making and pursue thestructuring of a stronger business portfolio on the basis ofmarket potential and profitability. Moreover, DNP is building asafe and secure internal system infrastructure and promoting
the shift to smart factories with the use of its innovative
production system. These initiatives will lead to dramatic
improvements in our productivity.

Strengthening the Foundation for the Promotion of DX“ Knowledge and Communication,” “ Food and Healthcare,”“ Lifestyle and Mobility” and “ Environment and Energy” aregrowth areas for DNPʼs business operations. Excelling in any

Products

DATA

DX-driven value creation

Utilizing DX in Promoting Businesses

Providing work design andoperations services

INITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

Initiatives forvalue creation

Analyzing gaps
between current
facts about ICT
personnel andfuture demandfor human
resources

Building
systems andgroundwork

Stepping up
efforts

Maximizing internal capabilities

Leveraging external capabilities• Introduction of an ICT professional
system to secure and appropriately
compensate ICT personnel• Introducing fixed-term contracts forhigh-quality external hires with superior
knowledge/skills• Building and implementing
systematic training programs basedon ICT personnelʼs skill maps

• Use of external consultants/project
managers• Strengthen cross-divisional
collaboration using technologies(AI, 5G, XR, agile development, etc.)• Collaborative innovation with leading techfirms to accelerate business development
and offer greater value• Educating all employees to build
their IT literacy• Improving project development quality via
personnel exchanges with Nihon Unisys*3 An index of skills and careers required of IT personnel, clarifying and systematizing individualsʼ IT-related skills by job type and by area of specialization

CDO
DX promotion unit

Efforts to dramatically improve productivity

Information Communication

To date, we have achieved significant success in the shift toautomation and energy saving with the use of IT and theintroduction of robots in our production processes. In addition,
we are structuring a system in which, with the use of IoT
devices, we can gather an enormous volume of data

Lifestyle and Industrial Supplies
Electronics
New businesses

R&D

generated from manufacturing and use that data for purposessuch as improving our product quality and predicting device
failures. Currently, we are conducting inspections in advanceat our domestic key plants and will roll them out to otherplants.
DNP Integrated Report 2021

41

TOP MESSAGE

Focus Businesses 1
IoT and Next-Generation Communications Business

Developing Key
Components and New
Services to Facilitate a
Digital Transformation
in Society

As evidenced by the popularization of the 5th
generation (5G) technology and progress in
preparations for the 6th generation (6G) international
telecommunication standards, changes are underwaythat will create a society in which everything isconnected to the Internet, driven by rising transmission
speeds in the telecommunications environment. DNPʼsbusiness involves semiconductors that realize
ultra-high-speed, low latency and multiple
interconnections in telecommunications, displays thatconnect reality with virtual reality and other products.
The Company is developing a wide range of products
and services to enhance the value of peopleʼs lives.
These products include vapor chambers, or slimmer

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS

Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITYDATA

DNPʼs business model (products and services)heat-dissipating components that increase flexibility inthe design of information devices, and 5G-compatible
products such as transparent antenna films that can be
attached to various types of displays, interior walls andceilings, buildings and automobile glazing. In addition,by enhancing and combining its unique strengths inprinting and information (P&I), DNP seeks to develop
materials that offer new value. Among these are metalmasks used for the manufacture of OLED displays,
which are being incorporated into glass-type
telecommunication terminal devices, or smart glasses,
and optical films that offer an array of functions forbetter, more eye-friendly displays.

Net sales (¥ billion)• “ Vapor chambers,”
ultra-thin heatdissipating components• Transparent
antenna films• Broad array of
optical films, etc.

130.9 135.0 140.0

FY2020Results

FY2022
TargetFY2024
TargetPRODUCT / SERVICE

Optical films

Upbeat performance driven by stay-at-home/teleworking demand due

Social issues /megatrends

to COVlD-19

DNPʼs strength

Larger, slimmer and more energy efficient displays
Diversification of display design

Anti-reflective films
for LCD displays
Backlight films

Solutions leveraging DNPʼs unique P&I technologies and the strengths of its partners

Color filters

DNP products used in LCD displays
OpticaldesignMicrofabrication

Precision
coatingLaminating
technologies

DNP developed world-first components andmaterials for displays, which are evolving toinclude flexible LCDs, OLEDs and e-paper
Films that prevent reflection,scratches and dirt on displays

New ultra-wide 2,500mm line at the Mihara plant
enables consistent high quality and productivity
irrespective of display size, enabling DNP to meetcustomersʼ quality/supply requirements

Social impact
Achieves high contrast, superior color reproduction for all display types in all situations
High transmittance reduces power consumption
Future initiatives
Securing market share in China with the ultra-wide line
Expanding sales of high value-added optical films for
OLED applications
Improving the competitiveness of products

42

Ultra-wide lines (conceptual image)FY2024 targets
Sales:¥100 billion

Anti-reflective films

Mihara plant (Hiroshima Prefecture)

DNPʼs strengths honed
over many years

High-level production capacity utilizing equipment
capable of coating wider areas

DNP creates value by harnessing key
technologies, expertise and patents such asa coating technology that applies andattaches polymer materials to films thinly
and uniformly; an optical design technologythat controls the transmission, reflection anddiffusion of light by combining materials thathave specific optical characteristics andsurface profiles; and a patterning andshaping technology that creates an uneventexture on the surface of base materials withthe use of metal-based molds.

DNP has improved the productivity of films for large-screen
television sets with the worldʼs first 2,500 millimeter-wide line forcoating installed in the Mihara plant in 2018 to produce opticallyfunctional films.

Rich product ranges and high global market shares
We enjoy high market shares in a range of optically functionalfilms, such as those that remove reflections from the surface of
displays, expand the viewing angle of displays or control thetransmission or cut-off level of light.

DNP Integrated Report 2021

43

TOP MESSAGE

Focus Businesses 2
Data Distribution-Related Business

Building Various Types ofPlatforms for Advanced
Information Security,
Thereby Providing Value
Indispensable to New
Workstyles and Lifestyles

Triggered by the COVID-19 pandemic, a further
acceleration in the pace of change is taking place inhuman communication, which had been advancing
through digitization and networking. A digitaltransformation (DX) is underway across society,reflecting a range of measures such as telecommuting,online shopping, online education, online medical
consultation and the holding of events in virtual spaces,
all implemented in a short span of time to reduce
human contact.
DNP has been working for many years to establish
advanced security technologies and system platforms,
while simultaneously operating a range of businesses
that retain important corporate and personal

VALUE CREATION AT DNPValue creation
process

BUSINESS RESULTS

Initiatives forvalue creation

Medium-termManagement Plan

information. It started to work on digitization in the
1970s and has been strengthening cyber security inrecent years. By leveraging these technologies andknow-how, it provides new educational ICT schemes,
engages in the authentication and security business,such as the DNP Secure Communication Service whose
applications include secure telecommuting and an
eKYC (electronic Know Your Customer) identification
service, and operates showrooms and model rooms
that feature the adoption of virtual reality (VR) andaugmented reality (AR) technologies, as well as the
PARALLEL CITY in which the fusion of reality andvirtual reality is created, with a view to creating value
pertaining to safe and secure data distribution.

（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITYDATA

DNPʼs business model (products and services)
Net sales (¥ billion)
• BPO
• BPO
• 情報銀行 trust banks• Information• 教育 ICT ICT• Educational• スマート健診• Smartmedicalexaminations
etc.
など

133.7 135.0

FY2020Results

FY2022
Target150.0

FY2024
TargetPRODUCT / SERVICE

Educational business

Strengthening collaboration with NTT West and NTT East toSocial issues /megatrends

promote educational ICT platforms for universities jointly nationwide.

DNPʼs strength

Shift to student-centric education, guidance optimized to individual students
Recommends hybrid education combining face-to-face and remote learning that helps to prevent infection
Establishment of a remote environment to ensure that progress in classes andattendance of students can be monitored.

Printing DX

Universities DX

Promote online marketingand digital textbooks

Promote digitalization
including hybrid education

Solutions leveraging DNPʼs unique P&I technologies and the strengths of its partners

Information
processing

Marketingnetwork

Universities

Publishingsolutions

NTT WESTNTT EAST
DNP

High-quality
ICT
foundation

Provision of optimal
educational environmentsthat respond to the needsof individual learners●●

Digitaltext
books,
etc.

Digitaltextbooks, etc.
Reflection of results
Visualization oflearning

Provision oflearning programs

High-quality
ICT foundation

Learning logs

Social impact
Creation of a new education scheme featuring a mix of the advantages of digital and analog
technologies to improve usability, raise education quality and provide equal opportunities
Promotion of services nationwide through collaboration among the DNP Group, NTT West and NTT East
Future initiatives

44

Nationwide
marketing platform

Students

Textbooks and teaching materials may be purchased online and used on multiple devices
Provision of services such as the management of learning-related information

Promoting DX in universities and DX in publication to facilitate DX,
namely, digital technology-leveraged initiatives for change,
thereby contributing to the enhancement of university education

Know-how increating/distributing
educational content

FY2024 targets
Sales: more than

¥10 billion

Demonstration of the total
strengths of “All DNP”

DX in publication: Provision of ICT-leveraged
comprehensive services to publishing companies

The DNP Group is combining its
strengths to create value, for instance,in the provision of a digital textbook
and teaching material distribution
system (co-development with Nihon
Unisys, Ltd.), operation of digitalagency services (MobileBook.jp Inc.)and production of video andaudio-based teaching materials(Maruzen Yushodo Co., Ltd. and DNPMedia Art Co., Ltd.).

DNP is introducing services by establishing a large network of
publishing companies, universities and textbook sales companies
and bookstores to ensure that teachers can select books and registersyllabuses easily when deciding on textbooks and teaching materials
at universities or vocational schools.

DX in universities: Support for the enhancement ofvalue in education through digitization
DNP supports efforts to analyze and improve the content of educationand classes by visualizing progress in classes through digitization.

DNP Integrated Report 2021

45

TOP MESSAGE

Focus Businesses 3
Mobility BusinessToward the Realization of a
Next-Generation Mobility Society---

Provision of Security, Safety,
Comfort and Environmental
Consciousness, Which are
Essential Values That are
Needed at All Times

The mobility market is currently undergoing a major
shift. As a company that has been providing a range of
products and services for vehicles and railway cars formany years, DNP seeks to build on its achievements
and provide new value indispensable to the realizationof a next-generation mobility society.
DNP currently operates mobility-related businesses
such as battery pouches for lithium-ion batteries,
optical films for displays and decorative films forinterior-use. Going forward, it will expand into the areasof CASE＊1 and MaaS＊2 to facilitate global businesses,
taking into consideration the fact that values likesecurity, safety, comfort and environmental
consciousness are required all over the world.

VALUE CREATION AT DNPValue creation
process

With an eye on the popularization of electric vehicles(EV) and progress in self-driving vehicles, DNP willseek to develop and provide value that helps solve
issues and enrich peopleʼs lives, such as the protectionof privacy, improvement of the design and functionalityof interior and exterior settings, and development of
products and services that raise comfort levels, by
combining manufacturing technologies and theadvantage of information services in collaboration with
automobile manufacturers and partner companies.
＊1 CASE: The abbreviation of Connected, Autonomous/Automated, Shared and Electric anda key word that shows the direction of the automotive industryʼs businesses.
＊2 MaaS: The abbreviation of Mobility as a Service and a concept in which movement

through the means of transportation is considered to be a service with the use of ICT.

BUSINESS RESULTS

Initiatives forvalue creation

Medium-termManagement Plan

（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITYDATA

DNPʼs business model (products and services)
Net sales (¥ billion)• Battery pouches forlithium-ion batteries

100.0(only those for in-vehicle use
are included)• Decorative films/panels• Side visor• Resin glazing

71.0
39.5

(plastic resin glass)• Security solutions, etc.

FY2020Results

FY2022
TargetFY2024
TargetPRODUCT / SERVICE

Battery pouches for lithium-ion batteries

Strong performance inSocial issues /megatrends

line with green recovery (shift to electric vehicles) and 5G-related demand growth

DNPʼs strength

Building decarbonized society (shift to electric vehicles)
Uptake of next generation communications
Reducing lithium-ion batteriesʼ weight/thickness

DNP has been driving
the market as the leader
in battery pouches.

Battery module

Structure of a lithium-ion battery towhich a battery pouch is applied
Battery pouch(exterior material)

Solutions leveraging DNPʼs unique P&I technologies and the strengths of its partners

Tab
Battery pouch (exterior material)

Coatingtechnology

Laminated
electrodeLaminating
technology

Firmly maintaining the

top global market
share through theLightweight battery
Materials
Development

Assessment
andanalysispouches featuring

Social impact
Provision of solutions to issues related to mileage and installation spaces through further weight
reductions and increased flexibility in shaping
Contribution to the realization of a decarbonized society and measures against climate change
Future initiatives

46

Negative
electrode

Global standards

Top global market share

DNP ʼs battery pouches earn high marks as
the standard model in the battery industry
in Japan and abroad.

Reflecting favorable evaluations for high quality, long-standingachievements, DNP ʼs battery pouches have been maintaining
the leading market share in the global market and include
products for use in smartphones and other IT devices andin-vehicle applications.

Stable quality achieved in pouches
for large-size battery applications
FY2024 targets
Sales:

Separator

establishment of de facto
industry standards and the
expansion of applications

superb durability
and safety

Planning to expand manufacturinglines at the Tsuruse plant(Saitama prefecture) in 2022

Positive
electrodeBattery cell¥100 billion(Battery pouches overall, including those for IT applications)

Our battery pouches have been installed in
more than two million electric vehicles(approximately 400 million cells) and thisachievement in the market is highly rated.

Acquisition of IATF16949 certification for
quality management system forthe automotive industry
Our products are manufactured in a clean room to meet thehigh management level required by the automotive industry.

DNP Integrated Report 2021

47

TOP MESSAGE

Focus Businesses 4
Environment-Related BusinessToward the Realization of a Sustainable,
Better Society

Providing Value
That is Friendly to the
Global Environment
and Indispensable
to Daily Lives

DNP has been striving to realize a sustainable, better
society, taking into consideration the necessity ofoperating business activities in an eco-friendly manner,for example, developing environmentally friendly
products and services and reducing the environmental
footprint at facilities in Japan and overseas. It
developed the DNP Group Environmental Vision 2050
in March 2020, and under this Vision, it has been
taking steps to ensure that all employees strive torealize a decarbonized society, a recycling-oriented
society and a society that is in harmony with nature,
while maintaining a strong awareness of the impact of
their businesses on the environment.
Specifically, DNP has been stepping up efforts to

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

Initiatives forvalue creation

make plant-based packaging materials the de facto
standards for a range of applications, including thosefor food products, daily goods and pharmaceutical andmedical products. In addition, it has been advancing
the development of photovoltaic module components
with an eye toward the expansion of renewable energy
and the DNP Multifunctional Insulation Box thatmaintains a certain temperature for many hours without
using electric power. DNP seeks to provide value thatis indispensable to comfortable lifestyles for people
and business processes for companies, and that areecological, by combining its outstanding manufacturing
technology and the advantages of information services.

INITIATIVES FORSUSTAINABILITYDATA

DNPʼs business model (products and services)
Net sales (¥ billion)• Eco-friendly packaging• Encapsulants andback sheets forphotovoltaic cells• DNP Multifunctional
Insulation Box, etc.

150.0

175.0

114.5

FY2020Results

FY2022
TargetFY2024
TargetPRODUCT / SERVICE

Eco-friendly packaging materials

Increase in demand for eco-friendly

Social issues /megatrends
Building adecarbonized society

products and services, reflecting growing awareness of the need to reduce the burden on the global environment

DNPʼs strength
Reducing greenhousegas emissions

Increasing the use ofrenewable energy

Eco-friendly packaging

Solutions leveraging DNPʼs unique P&I technologies and the strengths of its partners

With the keywords of “ 3R” (reduce, reuse, recycle) and“renewable” (sustainable resources), DNP reduces theenvironmental load in packaging-related businesses and, in
addition, seeks to provide three types of value, namely,
resource circulation, CO 2 reduction and conservation of thenatural environment by offering its original products andservices with the aim of realizing a sustainable society.

Eco-friendly packaging Providing three types of value
Coatingtechnology

Laminating
technology

PackagingdesignAssessment
andanalysisResource circulation

CO 2 reduction

Facilitating resource circulation Reducing CO 2 emissions by
by offering recycling friendly
decreasing the use ofmaterials and shapes
petroleum-based plastics

Natural environment
conservation
Facilitating sustainable raw
material procurement toconserve natural resources

Social impact
Providing three types of value, namely, the circulation of resources, reduction of CO2 andconservation of the natural environment
Reducing 3,300 tons of CO2 in FY2020 by offering plant-based packaging materials
Advancing initiatives overseas to provide mono-material packaging materials

DNP plant-based packaging materials

DNP mono-material packaging materials

DNP plant-based packaging materials

DNP mono-material packaging materials

DNP is reducing CO 2 emissions at least 10%
throughout the product lifecycle compared topetroleum-based plastics by switching part of the raw
materials for plastics from petroleum-based toplant-based materials. We are contributing to therealization of a decarbonized society by enhancing thelineup of products in the series.

DNP is improving recyclability by making packages
with a single material (mono-material). We offer alineup of products that are adaptable to diverse
shapes and contents, with functions such as thepreservability and sturdiness realized by our
original converting technology, despite the use of
single materials (mono-materials).

Future initiatives
Expanding the lineup of the Biomatech materials and paper-based packaging materials tocontribute to reductions in CO2
Expanding the lineup of recycling-friendly products such as mono-material packaging materials
Building an ecosystem (recycling value chain)

48

Replacing packaging gravure ink with biomass ink
We are facilitating the replacement of gravure ink with biomass ink, which makes partial use of plant-based raw
materials. We are moving forward with the replacement at all plants nationwide in soft packaging for film printing,anticipating a CO 2 reduction of at least 800 tons a year.

DNP Integrated Report 2021

49

VALUE CREATION AT DNPTOP MESSAGE

Value creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation（FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITY

DATA

8

仁和寺「金堂」内陣のVR

Our Products and Services
Information Communication
Publishing Business

1

2

3

4

5

6

7

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

Publishing & Media Services
1 Books and magazines 2 Hybrid bookstore network “ honto”● Publications Distribution
3 Maruzen & Junkudo Bookstore in Shibuya (Tokyo)●

Information Innovation Business
Marketing
4 Flyers and catalogs 5 LINE flyer
BPO (Business Process Outsourcing)
6 BPO● Information Security
7 Solar-powered outdoor LCD digital signage /universally designed touch screen multilingual signage ActivisionTM
8 Virtual reality 9 Business forms 10 Smart cards and magnetic cards
11 Identity verification service 12 Transparent hologram ribbon●●

Imaging Communication Business
13 Dye-sublimation thermal transfer printing media andthermal mass transfer printing media

14 Dye-sublimation photo printer

15 Photo-related services and solutions

Lifestyle & Industrial Supplies
Packaging Business
16 Plant-based packaging materials

17 Mono-material packaging materials

18 Transparent vapor deposition film “ IB-Film”

19 Super high-barrier paper packaging materials

20 Functional film complex PET bottle “ COMPLEX BOTTLE ”
21 PET plastic bottles

22 Aseptic filling systems for PET plastic bottles

Living Spaces Business23 Olefin-based sheets for flooring

24 Antibacterial and antiviral products

25 Exterior materials for buildings

26 Curved resin glazing

27 Interior coverings for railway cars (Hokuriku Shinkansen)

Industrial High-performance Materials Business
28 Battery pouch for lithium-ion batteries

29 Photovoltaic module components

30 Lighting film (left: with film, room brighter)
31 Multifunctional insulation box

Electronics
Display Components Business
32 Optical films used for displays

33 OLED display-related products

34 Color filter for LED display

35 Viewing angle control film for in-vehicle displays(right: with film, no background reflection)

36 Electronic shade

37 Electrode film for capacitive touch panels

38 Transparent screen

39 Large scale curved OLED display-driven digital signage

Electronic Devices Business
40 Photomask (left: for semiconductors, right: for large displays, etc.)
41 Master template for nanoimprinting

42 Hard disk drive suspension

43 Lead frame for compact semiconductor package

44 Diffractive optical element (DOE)
45 Vapor chamber

46 Near field communication (NFC) module

47 Micro electro mechanical systems (MEMS) products

50

DNP Integrated Report 2021

51

VALUE CREATION AT DNPTOP MESSAGE

Value creation
process

Medium-termManagement Plan

BUSINESS RESULTS（FINANCIAL AND
NON-FINANCIAL INFORMATION）

Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITY

DATA

Financial Highlights and Business Strategies

Information Communication
Medium-term Management Plan
Targets for net sales and operating income
800

752

737

722

600

0
■ Net sales

Strengths• Maintaining a publishing value chain from printing and manufacturing to
distribution and sales• Advanced security environment and management system• Expansion of hybrid business combining real and digital etc.

19
FY2020Results

24

27

Risks
and
opportunities• Developing new ways to work and live, rapid changes in economic activities• Outflow or infringement of intellectual property, personal information leaks,
increase in cyber attacks• Deteriorating human resource retention due to rapid changes in theemployment situation etc.

40
20

FY2022
Targets

FY2024
Targets0■ Operating

incomeFY2020 Financial Highlights

Business Strategies and Main Initiatives toward Achieving Medium-term Goals

Sales and Operating Income Fell due to Stay-at-Home Policies
and the Cancellation of Events and Promotional Campaigns

1(¥ billion)

Net Sales-6.6%
Operating Income-36.9%

762.3

800

2019.32020.32021.3

Net sales

762.3

773.1

721.8

Operatingincome

24.8

30.4

19.2

Operatingincome margin

3.3 %

773.1

721.8

400

40

30.4

24.8

19.2

200

3.9 %

(¥ billion)
80
60

600

20

2.7 %
0
■ Net sales

2019.32021.32020.30■ Operating
income[Net Sales][Operating Income]Sales related to ID cards such as individual number cards
and the business process outsourcing (BPO) businessincreased, as did sales of e-books and library-related
services. However, sales declined in the area of printed
media, including publication printing and commercial printing,as well as in the Imaging Communication Business. Overall,
net sales declined 6.6% year on year, or 51,265 million yen.

While we worked to reduce costs and improve the terms ofreceived orders, in part due to a decline in sales from thehigh-margin Imaging Communication Business, there was adecrease of 36.9% year on year, or 11,231 million yen. As
such, our operating income margin decreased 1.2 percentage
points year on year, from 3.9％ to 2.7%.

Impact on the segment from the COVID-19 pandemic
Information Communication

Business conditions
key words

Government
stay-at-homerequests

Negative52• Promote digital transformation aimed at adding value to thecustomer experience (CX)
• Downsize paper media production cases etc.

60

400
200

(¥ billion)
80

Basic policy

Information Innovation
Business

Pamphlets, catalogs andother printed media

Imaging Communication
Business

Photo shooting andprinting services

Publishing Business

Printing orders formagazines and books

Economic
stimulusmeasuresEvents andpromotional
campaigns

RemoteOn track
Digital marketing
Business Process Outsourcing (BPO)

E-book sales in the “ honto”
hybrid bookstore network●

Create value primarily in growth areas
Supporting the knowledge of consumers andcontributing to the development of publishing culture

We will enhance the business of our “honto” hybrid bookstore
network that links an e-commerce website where customers
can buy e-books and paper books with the brick-and-mortar
stores operated by Maruzen Junkudo Bookstores Co., Ltd. In
addition, we will support consumersʼ knowledge through avariety of channels, including the consigned operation oflibraries and the provision of electronic library services.
●

Maximizing the value of the customer experience (CX)
through hybrid marketing

We will seamlessly connect real with digital and advancecorporate marketing methods in Japan and overseas. Fromdeveloping marketing measures to providing systems to operatethem smoothly, we will broadly support hybrid marketing in orderto energize communication between companies and consumers
and maximize the value of the customer experience (CX).
●

Efficiently solving companyʼs business issues with BPO

We use advanced security environments, expertise inbusiness design and information management and the latest
technologies including AI and RPA* to efficiently solve the
myriad of business issues that companies face, from labor
shortages and work style reforms to business continuity plans(BCP) in anticipation of emergencies.
* Robotic Process Automation (RPA): Business automation using robots (software) that utilize AI●

Providing a wide range of settlement options to
support a cashless society

In the field of increasingly diverse cashless payments that
adapt to the needs of customers, including smart cards,
smartphones and 2D barcodes, we will facilitate the expansionof the cashless society by providing a secure payment
infrastructure and multi-payment terminals in addition to card
manufacturing and app development.

●

Promoting digital transformation and accelerating therollout of new photo services

Utilizing approximately 7,000 networked “ Ki-Re-I” ID photo
printing machines across Japan, we will support electronic
application procedures for official certificates and various
qualification certificates while promoting even more usage
applications. In addition, we will make use of the technologies
and other aspects enhanced through M&A and provide
consumers in Japan and abroad with a range of services thatenhance the experience value of photography at theme parksand events.
2

Provide value optimized to each country
and region

In the field of smart cards, we will work with our business/
capital alliance partners among major card manufacturers in
Vietnam and Indonesia to strengthen our business for financial
institutions and ID card businesses, primarily in the Southeast
Asia region.
In Imaging Communication, we will further enhance ouroverseas manufacturing, sales and service systems, continue
to develop markets with a focus on developing countries androll out the latest technologies in photographing, image
processing and authentication on a global scale.
3

Maximize corporate value through all mannerof structural reforms

We will enhance marketing that uses data frombricks-and-mortar bookstores, and utilize the publishing value
chain we maintain to drive reforms to our manufacturing anddistribution systems to provide books in a timely fashion. In
addition, we will optimize our manufacturing system as
demand for paper media shrinks, including in publication
printing and commercial printing. In the BPO business, we will
strive to improve productivity and quality by introducing
artificial intelligence (AI) and robotic process automation (RPA)
while introducing digital workflow and supporting coroprate
activities with the optimum systems unrestricted by personnel
or location by utilizing domestic and overseas sites efficiently.
DNP Integrated Report 2021

53

VALUE CREATION AT DNPTOP MESSAGE

Value creation
process

Medium-termManagement Plan

BUSINESS RESULTS（FINANCIAL AND
NON-FINANCIAL INFORMATION）

Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITY

DATA

Financial Highlights and Business Strategies

Lifestyle & Industrial Supplies
Medium-term Management Plan
Targets for net sales and operating income
800(¥ billion)
80

600

60

400
200
0
■ Net sales

14
FY2020Results

21
FY2022
Targets

30• Leverage converting technology to strengthen new product development
and sales• Push ahead with review of low value-added products etc.

Strengths• Maintaining unique converting technologies such as coating and laminating• Development technologies for high value-added products including
environmentally conscious products and barrier films• Leading global share in battery pouches for lithium-ion batteries etc.

40
20

FY2024
Targets0■ Operating

incomeRisks
andopportunities• Shift to a decarbonized society, response to climate change,
conservation of biodiversity• Tackling food loss, ensuring that food is safe and secure• Dealing with various infectious diseases through anti-bacterial andanti-viral products etc.

FY2020 Financial Highlights

Business Strategies and Main Initiatives toward Achieving Medium-term Goals

We Sought to be Selective in Our Business Focus,
Successfully Increasing Income despite a Decline in Sales

1(¥ billion)

Net Sales-6.0%
Operating Income+25.3%Net sales

2019.32020.32021.3

397.2

391.4

368.0

(¥ billion)
80

600

60

397.2

400

Operatingincome

8.4

11.1

14.0

Operatingincome margin

2.1 %

2.8 %

3.8 %

●

800

200

391.4

368.0

8.4

11.1

14.0

2019.32020.32021.340
20
0

0■ Net sales■ Operating

income[Net Sales][Operating Income]Sales of battery pouches for lithium-ion batteries increased for
notebook PCs, tablet devices and smartphones in addition toelectric vehicles. However, due to factors including stay-at-homepolicies under COVID-19, commercial packaging materials forsouvenirs and restaurants, interior and exterior furnishings forhomes and cars and photovoltaic module components saw declines
in sales. Overall, sales fell 6.0% year on year, or 23,351 million yen.

In part due to growth in battery pouches for lithium-ion
batteries and falling raw material prices, operating
income rose 25.3% year on year, or 2,821 million yen.
As such, our operating margin increased 1.0
percentage point year on year, from 2.8% to 3.8%.

Impact on the segment due to the COVID-19 pandemic
Lifestyle & Industrial Supplies

Business conditions
key words

Government
stay-at-homerequests

Housing starts

Automotive
industry

Telecommuting

Negative

On track

Packaging Business

Commercial packaging materials
for beverages, souvenirs andrestaurant use

Packaging for pharmaceuticals
and sanitary materials

Living Spaces Business

Interior and exterior decorative
materials for housing andautomotive applications

Industrial High-performance
Materials Business

54

440

400

368

Basic policy

Battery pouches for lithium-ion
batteries used in mobile handsets andautomotive applications

Create value primarily in growth areas
Striving to realize a decarbonized society,recycling-oriented society and society in harmony
with nature through “All DNP”

By enhancing products and services and promoting thedevelopment of mechanisms for eco-friendly packaging,including plant-based packaging materials andmono-material packaging materials, we provide three formsof value, namely resource circulation, CO 2 reduction andpreservation of the natural environment. In addition, as
demand for clean energy grows, we will develop and provide
products and services that reduce our environmental burden,such as back sheets and encapsulants for solar cells withexcellent power generation efficiency and long life.
●

Developing products and services for anext-generation mobility society

We will continue to provide high value-added products andservices to realize a next-generation mobility society. Thesemainly include battery pouches for lithium-ion batteries,
which are enjoying growing demand for use in electricvehicles, as well as decorative films and panels for interior
use that feature excellent design and functionality, newproducts such as curved resin glazing that helps reduce theweight of vehicle bodies, sheet-type coils for wireless power
supply that can charge without contact and Mobility as aService (MaaS).

Provide value optimized to each country
and region

With the aim of expanding our market share in Southeast
Asia, our Packaging Business will expand sales in Indonesia
and Vietnam, where our production bases are located, as wellas to neighboring countries such as Thailand and Myanmar.
This is part of our efforts to expand our share to global
companies.
Our Living Spaces Business is utilizing our global sales
network to expand our market share in Europe, the UnitedStates and emerging countries for metal panels and interior
and exterior materials for automobiles with excellent design.
Our Industrial High-performance Materials Business will
accelerate our expanding share in the global market forbattery pouches for lithium-ion batteries, photovoltaic module
components and industrial barrier films.

Providing high value-added products

Seeing not only homes and commercial facilities but also
vehicles and rail cars as living spaces that require comfort,
we will strive to expand our market share of highvalue-added products utilizing DNPʼs proprietary electron
beam (EB) coating technology. We will also enhance ourlineup of anti-bacterial and anti-viral products (construction
materials for home and non-home use, home renovation
products, etc.) expected to grow in demand to prevent
COVID-19 and other infections.
●

2

3

Maximize corporate value through all mannerof structural reforms

In the Packaging Business, we plan to consolidate multiple
facilities in the Kansai region at the Tanabe Plant (Kyoto
Prefecture) within FY2021 as part of a review of low
value-added products and site reorganization. In addition, in
the Industrial High-performance Materials Business, weestablished a new production line for lithium-ion battery
pouches at the Tsuruse Plant (Saitama Prefecture), which
entered operation in March 2021, and plan to add anotherline in FY2022.
Looking ahead, we will review our business portfolio from avalue perspective and promote enhanced productivity,
improved profitability and other advancements.

DNP Integrated Report 2021

55

VALUE CREATION AT DNPTOP MESSAGE

Value creation
process

Medium-termManagement Plan

BUSINESS RESULTS（FINANCIAL AND
NON-FINANCIAL INFORMATION）

Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITY

DATA

Financial Highlights and Business Strategies

Electronics
Medium-term Management Plan
Targets for net sales and operating income
800(¥ billion)
80

600

60

200
0
■ Net sales

FY2020 Financial Highlights(¥ billion)

Net Sales

Operating Income+7.5%

2019.32020.32021.3

Net sales

192.4

186.6

197.0

Operatingincome

36.9

34.1

36.7

Operatingincome margin19.2 %●(¥ billion)
80

600

60

36.9

400

192.4

200

18.3 %

1

800

34.1

36.7
197.0

186.6

40
20

18.6 %
00■ Net sales

2019.32020.32021.3■ Operating

income[Net Sales][Operating Income]With people spending more time at home due to telecommuting andother circumstances, optical films for tablet devices, monitors andtelevisions performed strongly. In addition, we saw stable sales ofmetal masks used in the manufacturing of OLED displays for
smartphones and other devices. Various products in the Electronic
Devices Business also had a solid showing. As a result, sales increased
5.6% year on year, or 10,418 million yen.

Due to higher net sales and the results of businessstructural reforms, operating income rose 7.5% year
on year, or 2,555 million yen. As such, ouroperating income margin rose 0.3 percentage pointfrom 18.3% to 18.6%.

Impact on the segment due to the COVID-19 pandemic
Electronics

Business conditions
key words

Auto industry

Negative
Display Components
Business
Electronic Devices
Business

FY2020Results

195
FY2022
Targets200
FY2024
Targets• Develop and supply key components that contribute to sophisticatedintegration of real and digital• Rebuild businesses where competitiveness has declined etc.

Strengths• Top global market share in optical films leveraging our strength in coating
technologies• Top global share in metal masks utilizing etching technologies and patents• Photo masks based on cutting-edge photolithography-related technologies etc.

Risks
and
opportunities• Initiatives to develop new ways to work and live
• Responses to acceleration and diversification of technological innovations,and intensifying development competition• Changes in economic conditions, consumption trends in Japan and overseas,
currency fluctuations and others etc.

40
20
0
■ Operating

incomeBusiness Strategies and Main Initiatives toward Achieving Medium-term Goals

Business Performance Expanded in a Stable Manner,in Part due to Growing Demand for Information Terminals

+5.6%

197

38

37

37

400

Basic policy

Automotive products
Projector screensInternationaltrade

5G/IoT

Telecommuting

On track
Optical films for tablets,monitors and TVs

Photomasks
Semiconductor packages

Create value primarily in growth areas
Developing and providing 5G compatible
communications devices and other new productswith enhanced added value

Using the etching surface processing technologies it has
accumulated through the manufacturing of high-precision
semiconductor components and other activities, DNP has
developed products just 0.25 millimeters thick that are around
30% thinner than previously using vapor chamber heatdissipating components that prevent the overheating of
5G-compatible devices and allow them to be make thinner. We
have also developed transparent antenna film, a product thatreceives radio waves by forming an invisible thin metal wire ontransparent film, then attaching it to the interior displays, walls,
windows, ceilings and glass of the car body. We will also work
to develop and provide new products like these, and create
value in the form of miniaturization and higher functionality of
information terminals for 5G/6G communication environments.
●

Strengthen development of products for OLED displays

In anticipation of growing demand for small and medium-sized
OLED displays for smartphones and tablet devices, we will increase
production capacity for metal masks used in manufacturing
OLED displays, for which we hold the top share in the world
market. We will also focus on developing products which meetvarious needs, including foldable displays and rollable displays.
For example, we will develop “ Blue Shift Control Film” that
improves the blue shift phenomenon in which a screen
appears blue when the OLED display of a smartphone, tablet
or PC is viewed from an angle. We will mainly provide the film
to display panel manufacturers.
●

Refine and commercialize next-generation
photolithography-related technology

We will provide EUV masks for cutting-edge semiconductors usedin extreme ultraviolet (EUV) lithography, a high-performancesemiconductor manufacturing technology that is essential for anadvanced information society. DNP was the first dedicatedphotomask manufacturer in the world to introduce multi-beammask writing (MBMW) tools. We have not only boosted the
productivity of next-generation photomasks for semiconductors,
but also build proprietary manufacturing processes, making DNP
the first dedicated photomask manufacturer to develop 5nm*
process node EUV masks. In the future, we will provide
cutting-edge EUV masks to semiconductor manufacturers,
research institutions and device manufacturers in Japan andaround the world. In addition, with the semiconductor industry
needing to further reduce energy consumption to achieve a
decarbonized society by the year 2050, DNP is focusing on thedevelopment of master templates for semiconductor nanoimprint
lithography (NIL), a decarbonization technology that dramaticallyreduces energy consumption during semiconductor
manufacturing. As the worldʼs only manufacturer of master
templates for semiconductor NIL, we will contribute to theformation of a decarbonized society through the supply of
micro-sized products for next-generation semiconductors.
2

Provide value optimized to each country and region

We will utilize our semiconductor photomask bases established in
Taiwan and China as a joint venture with Photronics, Inc., (USA)to develop products that incorporate our strengths. We will also
pursue cooperation on the technical side to launch even smaller
photomasks in East Asian and Western markets. In addition, we
will keep close watch on global trade issues and country risks,monitor the social issues and needs of people in each country
and region, and strive to provide the value they need.
3

Maximize corporate value through all mannerof structural reforms

We will continue to promote the transformation of our businessportfolio with consideration for market growth and profitability.
As part of this transformation, we will continue the shift awayfrom products such as color filters for LED displays, whichsuffer from declining competitiveness due to market changes,
to high value-added products related to OLED displays. We will
also advance the shift to products that support digital society
such as IoT and 5G to boost earnings strength. In particular, in
our overseas business, we will respond more flexibly tofluctuations in exchange rates and raw material prices in orderto minimize the impact on business results.
*nm: nanometer (10-9 meter)

56

DNP Integrated Report 2021

57

INITIATIVES FORSUSTAINABILITY
60

CSR Management

62

Environmental Vision / Natural Capital,
Directorʼs Message

64

Initiatives for Climate Change

68

Human Resources Strategy, Directorʼs Message

70

Initiatives for Human Resources and Human Rights

73

Corporate Governance
76 Board of Directors
84 Interview with an Outside Director

58

DNP Integrated Report 2021

59

TOP MESSAGE

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITYDATA

CSR Management

Foundation to support value creation

Value creation

DNP has set principal themes to be addressed as part of CSR management. In addition to identifying themes that
we deem important and a priority based primarily on our management strategy and business fields, we also include
themes that the international community views as critical, starting with the United Nations Global Compact Ten
Principles and the Sustainable Development Goals (SDGs), and comprehensively analyze them.

Indicators prioritized in an effort to achieve
medium- to long-term visionPrincipal themes

Medium- to long-term vision

Business toContribute to
SDGs
Achievement

We create new value through products andservices, which will contribute to theachievement of the SDGs, and help society growin a sustainable manner.

Fair Operating
PracticesWe help to maintain and develop orderly, freeand competitive markets based on laws andsocial ethics and by always remaining fair andequitable.

(1) Number of meetings of the Corporate Ethics Committee(2) Bases holding Autonomous Corporate Ethics Training(1) Hold meeting once a month (12 times a year)
or more.
(2) Achieve 100% (covering all applicable bases).

Human Rights andLabor

We place human dignity first and foremost andrespect diversity unique to all persons that includes
their culture, nationality, race, ethnicity, language,
religion, values, gender, age, gender identity, andsexual orientation or whether they have disabilities.
We accordingly respect working styles suited to thediversity of our employees and make efforts to createa safe, healthy and vibrant working environment
based on the assumption of acting with discipline.

(1) Ratio of female managers(2) Number of female managers and leaders(3) Ratio of employees with disabilities(4) Rate of annual paid leave taken(5) Frequency rate of lost workday injuries(1) Achieve ratio of female managers (section manager orabove) of 7% or more by the end of March 2022.
(2) Double the number of female managers and leaders
by the end of March 2022 compared with the number(430) in February 2016.
(3) Achieve the ratio not lower than 2.2%.
(4) Achieve an increase over the previous fiscal year (54.7%).
(5) Keep the rate not more than 0.2.

Environment

DNP targets the realization of a decarbonizedsociety, a recycling-oriented society and a society inharmony with nature by creating new value throughPrinting and Information (P&I) innovation designed
to achieve the emergence of a sustainable society.
(Refer to pages 62-67.)

Responsible
Procurement

For creating excellent value and cultivatingstrong compliance awareness at the same time,
we work jointly with our supply chain
stakeholders and conduct procurement thatgives due consideration to human rights, theenvironment and more.

Product Safety
and Quality

We seek to gain the trust of society byprioritizing the safety and quality of our products
and services as part of our responsibility as acompany that supplies these to society.

Information
Security

We ensure the exceptional security of personal
information and all other information assets
through management and protection as part ofthe social responsibility of a company handlingsuch information assets.

We contribute to society by resolving social
issues, conducting volunteer activities andthrough cultural activities as we look to deepen
our relationship with society as a good corporate
citizen that coexists with society.

Corporate
Citizenship

Medium- to long-term targets

FY2020 results(1) Achieve sales of 600 billion yen by FY2020.
(2) Achieve 10% by 2025.

(1) 578.1 billion yen(2) 87.1 billion yen (6.5%)(1) Sales of environmentally conscious products and services(DNP contributes to achieving the SDGs through all its business activities.
DNP set the above as one of the clear indicators to monitor progress.)(2) Ratio of Super Eco-Products* in total sales* Excellent eco-conscious products and services designated through
DNPʼs original certification system(1) Once a month (14 times)(2) 98.1% (105 bases)* Training not held at two bases outside
Japan as these locations were in a
lockdown due to COVID-19(1) 6.6%(2) Over 2.0 times the number(873)(3) 2.5%(4) 55.4%(5) 0.29

For details, see the ”Environmental Vision/Natural Capital (pages 62-63) and the Initiatives for Climate Change (pages 64-67).
For details, see page 16 of the DNP Group Environmental Report 2021 for Environmental Activity Targets and Results List.

(1) Average score of DNP Group CSR Procurement
Guidelines survey on key suppliers(2) Percentage of key suppliers that have obtained theconformance certificate of DNP Group Guidelines for
Procurement of Paper for Printing and Converting(1) Achieve the average score of 90 points or more
by FY2030.
(2) Achieve 100% by FY2030.

(1) 86 points in Japan,
84 points overseas(2) 92%(1) Achieve zero accidents.
(2) Achieve 100%.

(1) Zero accidents(2) 100% (350 products)(1) Rate of information security compliance assessments
conducted(2) Rate of inspections and instructions by executive officer incharge of divisions implementing priority measures for personal
information protection, etc.
(3) Participation rate of information security education and training(4) Rate of security vulnerability tests for publicly open websites(1) Achieve 100% (covering all business units andGroup companies).
(2) Achieve 100% (covering all applicable divisions).
(3) Achieve 100% (covering all business units andGroup companies).
(4) Achieve 100% (covering all applicable websites).

(1) 100% (87 units andcompanies)(2) 100% (82 times)(3) 100% (Approx. 41,000
persons)(4) 100% (425 systems tested)(1) Number of external participants in social contribution
activity programs(2) Number of employee participants in social contribution
activity programs(3) Number of fair trade-related products consumed in-house(4) Number of dishes served in company cafeterias to support
disaster areas and groups engaging in future generations
development(1) Achieve an accumulated total of 10,000 persons(2,000 per year) from FY2020 to FY2024.
(2) Achieve an accumulated total of 6,000 persons(1,200 per year) from FY2020 to FY2024.
(3) Achieve an accumulated total of 250,000 items(50,000 per year) from FY2020 to FY2024.
(4) Achieve an accumulated total of 70,000 dishes(14,000 per year) from FY2020 to FY2024.

(1) 1,293 persons(2) 674 persons(3) 39,190 items(4) 4,516 dishes(1) Number of serious accidents* caused by our products* Including cases where a defect in our products jeopardizes the userʼs life, causes
serious bodily harm or inflicts serious damage on the userʼs property (other thanthe product itself)(2) Percentage of newly developed products undergoingproduct safety and risk assessment＊ Those without a target fiscal year are the target values for each fiscal year.

60

DNP Integrated Report 2021

61

VALUE CREATION AT DNPTOP MESSAGE

Value creation
process

Medium-termManagement Plan

BUSINESS RESULTS（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITYDATAINITIATIVES FOR SUSTAINABILITYENVIRONMENTAL VISION /NATURAL CAPITAL
We are taking on thechallenge of creating newvalue towards realizing ourEnvironmental Vision for asustainable future.

DNP Group Environmental Vision 2050
In March 2020, DNP formulated the DNP Group Environmental Vision 2050 and defined what we expect to accomplish toward
the year 2050. We will continue to step up our efforts to create value with a view toward realizing a decarbonized society,a recycling-oriented society and a society in harmony with nature.

A Decarbonized Society
through Climate Change
Mitigation and Adaptation• We aim to achieve effective
net-zero greenhouse gas (GHG)
emissions from businessactivities at our own sites.
• We will contribute to create adecarbonized society throughour products and services.

A Recycling-Oriented
Society through the
Efficient use of
Resources

A Society in Harmony
with Nature via theConservation of
Biodiversity• We will provide maximum
value through the efficient
use and recycling ofresources throughout thevalue chain.

• We aim to minimize theimpact on biodiversity
throughout the entire value
chain and achieve harmony
with regional ecosystems.

SDGs to which our
initiatives correspond

Satoru Inoue
Managing Director

DNP is working to create value that people and society want, always
having our business activities coexist with the natural environment
as we have done in the past. In recent years, however, violent
storms, flooding and other abnormal weather phenomenon haveoccurred frequently, and there are concerns of new contagious
diseases spreading. There is an increasing need to think about whatkind of value to offer and in what order to offer it.
Initiatives toward becoming carbon neutral are accelerating bothin Japan and abroad, and a green recovery is needed, aimed at
economic revitalization from the COVID-19 pandemic while also
controlling climate change and preserving ecosystems. As a part ofthis, DNP established the DNP Group Environmental Vision 2050 inMarch 2020, aiming to speed up its specific activities in realizing adecarbonized society, a recycling-oriented society and a society inharmony with nature. We plan to achieve effectively net-zerogreenhouse gas (GHG) emissions from business activities at our own
sites by FY2050, aiming to create a decarbonized society.
In the Medium-term Management Plan, we establishedenvironment-related businesses as a focus business and willdevelop products and services with high added value and low
environmental burden, utilizing our unique strengths in P&I (Printing
and Information) and our diverse partnerships. In addition to
expanding our battery pouches for lithium-ion batteries, which we
hold the top market share globally, to electric vehicles andnext-generation solid-state batteries, we will develop photovoltaic
module components for renewable energy and packaging that
replaces some of the petroleum-derived materials with plant-basedmaterials. We will also develop information services that lead to
improvements in traceability, recycling of resources and thoroughtemperature regulation in transportation, and will work to reduce ourenvironmental footprint over the entire value chain.
We have set environmental conservation and the realization of asustainable society as one part of our Code of Conduct for all
employees, and in addition to establishing the DNP Group
Environmental Policy, we are moving forward with corporate activities
that are deeply cognizant of the environment, not to mention
complying with laws and regulations. We will focus even further on
providing diverse values to realize a sustainable, better society andmore enjoyable lifestyles.

62

Initiatives in the Medium-termManagement Plan (FY2020-2022)

Business development(value creation)

Transforming business portfolio
based on environmental impact
and value added
Identifying new environmental
themesTechnological innovations in
low-carbon raw materials andother materials
Creating recycling schemes

All
DNP

Efforts toaddress
environmental
issues forboth value
creation andfoundation
reinforcement

Strengthening
business baseClarifying environmental impact
Introducing renewable energy
Investing in energy-efficientfacilities, optimizing production
bases to address environmental
impactEnsuring use of paper fromcertified forests/traceability“ Environmental Medium-term targets”“ DNP Group Environmental Vision 2050”

Medium-term targets

Reducing

GHG emissions* 1
By 40% from FY2015
levels by 2030
Super eco-products* 2 toaccount for 10% ofsales in 2025

Increase 2025
recycling ratio by 5%from FY2015 levels

Reduce 2025
water usage by 35%

2050 targets
Reduce GHG emissions
from own businessactivities Net zero
emissions by 2050

100% of purchased
products arecompliantDecarbonizedsociety

Building decarbonizedsociety

Contribute via
products andservices

Efficientresource reuse

Response to
climate change

Recycling-oriented
societythroughout
value chain

from FY2015

Guidelines for
Procurement of Paper for
Printing and Converting

DNP ʼs vision for society

Efficientresource use

Minimizebiodiversity
impactSociety in harmony
with nature

throughout
value chain

Protect
biodiversity*1 In July 2018, DNP received certification from the SBT (Scientific Based Targets) initiative for its longer-term goal of a 25% reduction in GHG emissions by 2030 compared to FY2015, and again received SBT certification
after revising this goal to net zero emissions in 2050.
*2 Super eco-products are products and services that DNP deems to be exceptionally environmentally conscious based on its proprietary assessment criteria.

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VALUE CREATION AT DNPTOP MESSAGE

Value creation
process

Medium-termManagement Plan

BUSINESS RESULTSINITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

Initiatives forvalue creation

DATA

INITIATIVES FOR SUSTAINABILITY

Initiatives for Climate Change
The effects of climate change have become increasingly serious every year, having a large impact on theenvironment, society and the economy. There has also been an acceleration in action toward a green recovery thattackles environmental issues in conjunction with pandemic and post-pandemic policies, and in Japan, becoming
carbon neutral and achieving net zero greenhouse gas (GHG) emissions by 2050 was given as a goal. This has
attached greater importance to the roles companies should fulfill.
By working to resolve climate change and other environmental issues, DNP intends to make peopleʼs daily lives
sustainable, safe and secure, while at the same time creating value that is unique to DNP and meets peopleʼs
expectations. We will also proactively engage in dialogue with stakeholders about these initiatives by disclosing
information on our relevant efforts through the framework recommended by the Task Force on Climate-related
Financial Disclosures (TCFD), and will work to reduce GHG emissions across the entire supply chain.

Risk Management
DNP is in the process of facilitating integrated risk
management initiatives to minimize the negative impact ofsocial issues and variable factors (risks). The Sustainability
Committee identifies climate change-related risks in particular
based on business plans at least once a year from theperspectives of the interests of stakeholders, degree of
impact and probability of the occurrence of such an impact
Sustainable society

Decarbonizedsociety

and assesses and manages them.
For risks and opportunities that have been recognized as
particularly important as a result of assessments, they are
discussed by the Board of Directors after discussion among
the Sustainability Committee. Activities are prioritized, targets
are established, and they are then reflected in management.

Recyclingoriented society

Society in harmony
with nature

Governance

Air/Water/Soil
Energy/Water

DNP positions its response to environmental issues
including climate change as a key management
challenge. Under the management and supervision of
the Board of Directors, the Corporate Ethics Committee
overseeing internal control and the Sustainability
Committee, a committee of specialists in sustainability,
play a coordinating role in environmental matters.
The Sustainability Committee, which is chaired by adirector in charge of environmental issues, consists ofdirectors and corporate officers with assigned duties atthe Head Office. This Committee, which meets twice ayear and more if needed, discusses and decides policies,
objectives and plans regarding group-wide sustainability,
while also monitoring the progress of the plans and thestatus of the achievement of those objectives. The Boardof Directors discusses and makes decisions on theimportant matters discussed by the Committee alongwith management policies, management strategies andother important issues.

Board of Directors

Management
Committee*1

Raw materials

IN

Production
Division
Research
Division

Distribution
Division
Marketing Sales
Promotion Division
UndesiredRe-usematerials

DNP Group Environmental Management System

Corporate Ethics Committee

OUT

Offering value to society
Environmentally conscious
products and services

Recycling

Waste

Environmental Activity Targets
and Results are found on
page 16 of the DNP Group
Environmental Report 2021.

Strategy
Sustainability Committee*2

OfficeBusiness Unit & Group Company Environmental Committees
Promotion Office
Technical and
Manufacturing Group

Groups promoting eachenvironmental target

Business Unit & Group company sites

Roles of each organization

The demand and market for low-carbon products andservices, on the other hand, will grow further, pushing up theneed for accelerated technology development and mergers
and acquisitions (M&A). To address such changes, DNP is
working on value creation by combining P&Iʼs strengths anddeepening its collaboration with external partners.
Our Medium-term Management Plan identifies“ Environment and Energy” as one of the growth areas andspecifies environment-related, mobility and other businesses
as focus businesses from the perspectives of profitability andmarket growth potential. We expect future business expansion
for low-carbon products, such as those related to renewableenergy and battery pouches for lithium-ion batteries, and for
security solutions for the sharing economy. Moreover, we havebeen increasing the lineup of eco-friendly packaging, which isboth environmentally conscious and convenient, and havebeen joining collaborative efforts with the entire supply chain
to establish a recycling system and develop new recycling
technologies. We are also channeling management resources
and promoting strategic investments to create value in these
focus businesses.
At the same time, in dealing with the impact of short-term
physical risks, we have set up a business continuity
management structure and have been reinforcing our
response to disasters caused by climate change andenhancing supply chain management.

TO

PI

CS

*1 Deliberate and decide on important matters related to our response to climate change*2 Assess climate change-related risks and opportunities, deliberate and decide on
basic policies, targets, and plans and oversee progress

Climate change-related risks and opportunities include thoserelated to the shift toward building a decarbonized society,such as the enforcement of more stringent legal regulations forthe creation of a decarbonized society and growing demand forand market interest in low-carbon technologies, and thoserelated to physical effects resulting from rising temperatures.
As an effort to identify risks caused by climate change in the
promotion of businesses and to examine strategies to prepare
for long-term risks, DNP performs scenario analysis to assess
the financial impact and duration during which we will be
exposed to the impact (scenarios used: RCP 8.5 scenario in theFifth Assessment Report of the Intergovernmental Panel on
Climate Change (IPCC), the Sustainable Development Scenario
in the World Energy Outlook (WEO) from the International Energy
Agency (IEA) and Net Zero Emissions 2050 (NZE2050)).
Based on the scenario analysis results, DNP recognizes thatto build a decarbonized society, more stringent regulations on
GHG emissions and the introduction of a carbon tax are likely
and that a rise in operational costs is expected, and we arestrengthening our business base through the visualization of
the environmental impact and transforming our businessportfolio based on environmental impact and value added. We
also established targets for 2030 and are moving forward withfurther strengthening our energy-saving activities and theintroduction of renewable energy toward net-zero GHG
emissions from business activities at our own sites by 2050.

Establishment of a Reduction Target for Industrial Waste Using Resource Recycling Ratios*Creating a recycling-oriented society is given as an urgent issue alongside climate change. DNP revised its longer-term targets towards therealization of a recycling-oriented society through the efficient use of resources, as stated in the DNP Group Environmental Vision 2050.
In the new targets, an improvement of 5 points by 2025 compared to FY2015 levels for resource recycle ratios through material andchemical recycling for all unneeded materials (industrial waste and valuable), excluding paper valuables that are already 100% recyclable. Useof materials in energy recovery is not included, and we will focus on initiatives to use resources more effectively.
*The amount of resources recycled divided by the amount of unneeded materials, excluding paper

64

IPPC RCP scenarios
Future scenarios of the representative
concentration pathway shown in theFifth Assessment Report (announced
in 2014). Its RCP 8.5 scenario, whichassumes the sharpest temperaturerise, projects a 2.6 ℃ - 4.8ºC
increase in temperatures by 2100.

IEA WEO scenarios
Sustainable Development Scenario

Net Zero Emissions by 2050, NZE2050

Scenario in which clean energy policies and investments
are increased and sustainable energy targets get on
track to be achieved by 2070. It projects that solar,
wind and other forms of renewable energy will greatly
contribute toward an increase in power demand.

Shows measures that will be required in the next 10 years to expand the analysis
of sustainable development scenarios and stay on track toward having global
GHG emissions reach net zero by 2050. It also mentions major improvements inelectrification and energy efficiency and a rapid realization of behavior changes in
addition to the contributions of renewable energy.

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VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

DATA

INITIATIVES FOR SUSTAINABILITY

Main Risks, Initiatives and Opportunities in Response to Risks Associated with Climate Change

Targets and Indicators

1 Scenario where migration to a decarbonized society advances

C or 1.5°C)(scenario where rise in average temperature is limited to less than 2 °Affected
periodRisks to DNP

DNP ʼs initiatives and opportunities

Mediumtolong term• Enforcement of a carbon tax or anemissions trading system• Increase in operational costs due tothe introduction of renewable energy,etc.
• Increased investment in energy-saving
facilities• Transformation of business portfolio(selection and concentration of businesses)• Upgrade to highly efficient equipment and optimization of
production bases• Promotion of product and service designs that consider the life
cycle assessment• Promotion of the use of decarbonized and low-carbon energy

Regulations onplastics

Mediumterm• Tax on products that use fossil-basedmaterials• Rise in costs to switch to alternative
materials• Expansion of sales of DNP plant-based packaging materials• Development and expansion of sales of highly recyclable
products (shift to single materials, paper, etc.)• Creation of recycling schemes

Introduction ofwater intake
restrictions

Mediumterm• Shutdown of operations at
manufacturing bases• Reduction in loss through visualization and review of process,as well as reduction in amount used and recycling• Implementing a water risk survey for all bases, including thoseabroadPolicies, laws and regulations

Migration scenario

Regulations related tocarbon pricing

Value creation

Foundation of business activities

Under the Medium-term Management Plan, we will work to
expand our focus businesses and contribute to the creation ofa decarbonized society through our products and services.

We will reduce GHG emissions from businessactivities at our own sites.

Sales for environment-related businesses

Medium-term reduction target(refer to pages 48-49)

FY2020 Results

Mediumtolong term• Reduction in products and services
that are not low-carbon orenvironmentally conscious

Evaluation

MarketChanges in market
values and consumer
behavior

Mediumterm• Increase in operating costs• Decrease in competitiveness• Promotion of energy saving activities, such as saving power andusing higher efficiency equipment

Rise in costs of
raw materials

Mediumterm• Increase in procurement costs forprinting paper• Increase in procurement costs forfossil-based materials• Promotion of zero emissions(reduction in materials used, effective use of resources throughimprovements in product specifications and the manufacturing
process)

Mediumterm• Effects if initiatives are deemed to be
insufficient(worsening of corporate image, decline
in stock price, reduction in capital due tobeing excluded from investments, etc.)• Expanded disclosure of information and engagement• Monitoring of market trends• Initiatives toward reducing GHG emissions to achieve long-term
environmental vision

Evaluation ofworking on climatechange issues

114.5 billion yen• Development and market expansion of products aimed atrealizing a decarbonized society(battery pouches for lithium-ion batteries, DNP eco-friendly
packaging, etc.)• Development of products aimed at promoting the switch torecyclable resources (paper, etc.)• Active use of certified materials (FSC ®-certified paper, etc.)

Rise in energy costs

FY2020 Results

39.5 billion yen(Acquisition of SBTi approvals)

Long-term Environmental Vision
To achieve

net-zero GHG emissions

Projection for FY2024

100.0 billion yen

by 2050

GHG Emissions Reduction

2030 Target
A reduction of 40% from FY2015 levels by 2030
FY2020 Results

30%
reduction

DNP Group Environmental Vision 2050

GHG emissions results

We aim to achieve net-zero GHG emissions frombusiness activities at our own sites by 2050.

Increase in wind andflood damage fromheavy rainfall, flooding,typhoons, etc.

Short
term

• Shutdown of operations or disruptionof supply chain due to natural
disasters• Natural disaster risk measures at production bases• Enhancement of production backup systems with multiple
production bases• Diversification of suppliers• Enhancement of compensation and support systems for employees

Rise in temperature

Mediumterm• Hindrance to operations throughincreased occurrence of heat stroke• Increase in air conditioning costs• Visualization and reminders about the risks of heat stroke inproduction bases• Energy saving measures through the introduction of highly
efficient equipment

Changes in water
demand and supply

Mediumterm• Increase in the cost of water usage
and materials• Reduction in loss through visualization and review of process, aswell as reduction in amount of water used and recycling

Water-related risks
in coastal areas

Mediumterm• Shutdown of operations atcoastal bases• Implementing a water risk survey for all bases, including thoseabroad• Flooding measures in locations with high flood risk

2015

2020

2030

2040

2050

CS

DNP ʼs initiatives and opportunities

Established March 2020

PI

Risks to DNPTOUrgency
Chronic66

175.0 billion yen

To achieve a reduction of 40%
from FY2015 levels by 2030

(refer to pages 46-47)

C)(scenario where average temperature rises 4°
Affected
periodProjection for FY2024

Sales for mobility businesses

2 Scenario where the physical effects of climate change become tangible

Physical scenario

DNPʼs own facilities (Scopes 1 and 2), we are moving forwardwith reduction activities to meet the mid-term targets set forthe period up to 2030 to become carbon neutral by 2050. For
Scope 3, which accounts for 80% of our GHG emissions, weare conducting a survey on the status of the management of
GHG emissions exercised by our suppliers.

DNP has defined the following targets for maximizing
opportunities and minimizing risks resulting from climatechange. To minimize risk, we have monitored Scope 1 to 3
across the DNP Group, and are in the process of developing
strategies based on the collected data. Regarding GHG
emissions resulting from business activities undertaken at

New Medium-term Target for Reductions in GHG Emissions Receives Updated
Approval from the Science Based Targets (SBT) Initiative
DNP established a new target to reduce group-wide GHG emissions by 40% from FY2015 levels, up 15 points
from the previously established target set for FY2030. The original target received approval from the Science
C andBased Targets (SBT) initiative for achieving the Paris Agreement ʼs goal to keep global warming below 2 °for being a scientifically based standard. The newly established target was recognized for meeting the stricter
C target (a target standard to keep global warming well-below 2 °C), and this new target received
well-below 2 °updated approval from the initiative.

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TOP MESSAGE

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITYDATAINITIATIVES FOR SUSTAINABILITYHUMAN RESOURCESSTRATEGY
About DNPʼs Diversity and Inclusion as a management strategy focused onrebuilding the personnel system to accelerate value creation

68

Creating an organizationthat integrates diverse
human resources tocreate value for“ Tomorrow ʼs Basic”

Promoting diversity
is a significant
business challenge.
Cultivating a senseof involvement is key.

Kenji Miya

Minako Miyama

Senior Managing Director

Director

DNP has been working to intensively rebuild its personnel systemsince FY2019 and is expanding on a third round of measures startingin April 2021. What is required to create indispensable value that
constantly exists close to people is personnel who can create new
business ideas from global, unprecedented perspectives and amore flexible organization that can utilize these personnel. Recently,social changes have been rapid, and employment has become
fluid, meaning our conventional system cannot respond adequately
with only a partial revision. DNP has pursued a rebuilding of its
personnel system from scratch based on current and future social
issues and the management environment we are facing.
For example, we have drawn up a personnel portfolio that isconnected to our business portfolio and have established a hybrid
personnel system combining the merits of job-based andmembership-based systems. We also established a new system toenhance our ICT personnel in order to create value utilizing digitaltransformation, one of the current mega trends. (For details, referto page 41.)
We also believe it is important to create psychological teamsafety and make the workplace easy to work for employees toactively take action on their own and build “ Tomorrowʼs Basic.”
We will positively evaluate free speech and action among the teammembers to enable them to demonstrate their diverse strengths
and will promote the creation of new value by combining thesestrengths.
DNP is working on major reform through the rebuilding of its
personnel system, and we will build an organization that allows all
employees to demonstrate their skills not just to respond to thechanges of the times but also to create change itself. We willcontinue to foster a “culture of continuously taking on the challengeof promoting change” and will continue to offer new value tosociety and to consumers.

Having worked to promote active female participation early on,
DNP established the Diversity Promotion Department in 2018 andis accelerating its value creation initiatives that utilize diversity.
Since 2019, we have particularly supported more active roles not
only of women, but also of employees with disabilities, LGBTQ+
employees, employees of different nationalities and senior
employees, and our focus has been placed on matching andsynergizing the strengths of each employee.
In July 2020, our president announced the DNP Diversity
Declaration, announcing both internally and externally that wewould be working on diversity & inclusion (D&I) as a significant
business challenge. Based on the concept that cultivating a senseof involvement is essential, this Declaration laid out that each
employee with diverse strengths is a member that helps build
DNPʼs D&I and that each employee is an involved member.
We held Diversity Week, an internal event, for the first time in
February 2021 as a specific part of our D&I activities. We held 18
programs that would allow participants to experience each personʼsdifferences and foster their awareness of being someone involved
in D&I themselves. More than 7,000 employees participated, and in
the survey, about 70% of employees said that a new change intheir awareness and realizations had occurred. It is a good
response to mean that many employees not just gained knowledge
but truly appreciated and accepted that differences could be madeinto strengths. We will continue to make efforts to ensure
employees themselves establish issues as involved members,consider the promotion of D&I and connect these activities withreal action.
DNP will continue to promote and enhance initiatives to respect
the differences of each of our employees, accept these differences
mutually and utilize diversity as a strength of the organization inorder to create new value.

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VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITYDATAINITIATIVES FOR SUSTAINABILITY

Initiatives for Human Resourcesand Human Rights
For DNP to accelerate “Tomorrowʼs Basic,” an organizational culture that respects the differences of each employee,
accepts these differences mutually and utilizes this diversity is essential. We have made the mental and physicalhealth and safety of our employees a foundation and are moving forward with a variety of policies, including
enhancements to personnel development and the rebuilding of our personnel system. We are aware that protecting
the rights of all people involved in the DNP value creation process is a responsibility that we as a member of society
should fulfill, and we are working to enhance our human rights initiatives through dialogue with many stakeholders.

Principal Measures in FY2020
We focused on the following measures based on our three basic strategies.
Basic policies on diversity• Introduction of DNPʼs own value objective system, DVO (DNP Value Objectives), thatincorporates elements from the OKR (Objectives & Key Results) into the current MBO(Management By Objectives) system*

Initiatives for Human Resources
Developing diverse
human resources

Management
DNP believes that diversity & inclusion (D&I) is important forthe creation of new value, and we have established a Diversity
Promotion Department that is under the direct control of the
Head Office and led by the supervising Senior Managing
Director. This Department was established as a system tospread and establish D&I across the entire Group. We areaccelerating our activities in coordination with the Diversity
Promotion Committee established in each business segment
and Group company.

Principal measures in FY2020• Introduction of a dual-ladder career system for middle-ranking executives to autonomously
choose a managerial track or specialist track* and the expansion of a specialist work
system targeting mid-level employees* interlocked with the system• Introduction of an in-house dual job system in which employees can simultaneously work
for another department within the DNP Group if they voluntarily wish to do so*

Head Office

Coordination• Revising working conditions of employees stationed overseas*

Diversity Promotion Department
Share policy

Share results

Business units and head office development department/Group companies

Diversity Promotion Committee

Back-office operations

Front-office divisions

Administrative divisions• Hosting internal Diversity Week event
Fostering a corporate
culture to encourage
the active participation ofdiverse human resources• Support for The Valuable 500, a network ofmanagers working to promote more active rolesof persons with disabilities• Holding LGBTQ+ themed online video training

Strategies and Measures
In July 2020, DNP declared the DNP Diversity Declaration as
managementʼs commitment to promoting even greater diversity& inclusion (D&I). Specifically, we have declared that the
President will spearhead our efforts to promote D&I and that
we will transform awareness of those in managerial positions
and make ourselves a company where each and every
employee can actively take on challenges and create new value.
While working to intensively rebuild our personnel systemsince FY2019, DNP is mainly focused on the revision of oursystems for young employees, ICT personnel and our humanresources with diverse careers that they have worked todevelop inside and outside the company. We are also working
on other initiatives, including the introduction of a flexible
retirement system where senior employees can choose from avariety of working styles, revision to our system in response to
the concept of equal pay for equal work and promotion of newworking styles and management that combines online with

Top page of the internal Diversity Week website

offline. For programs related to diversity, we have expanded
programs related to spouses to include same sex and common
law partners, and have also expanded programs to support
career/life balance and programs offering shorter working
hours for nursing/child care, etc.

5.6%
70

7.0% or above(FY2021 target)

Realizing diverse
work styles

1. We will take the lead in working to promote diversity
and inclusion.
2. We will transform the awareness of managers into a"Dialogue style" that utilizes the differences of eachand every person as strengths.

• Holding a seminar called “ Kangaroo Club ” to support balancing work with childcare online,
expanding participation to soon-to-be fathers and mothers• Expanding support for LGBTQ+ employees, including newly applying some of programs
related to spouses to same sex and common law partners• Expanding programs to support career/life balance*

Support of balance between work and hospital visit/treatment (infertility treatments, cancer treatments, etc.) andhigher education/commuting to school (training meant to improve skills)

3. We will make ourselves a company where each andevery employee can actively take on challenges andcreate new value.

July 17, 2020
Yoshinari Kitajima, President

PICS

The measures marked with * will be introduced in FY2021 as part of the rebuilding of the personnel system.

TO

DNP has established the following targets (KPIs) to increase the effects of enhanced management toward the promotion of D&I,
and we are working to meet these targets.

(FY2018)• Joining the Male 100% Childcare Leave Declaration promoted by Work-Life Balance Co., Ltd.

DNP Diversity Declaration

KPI / Targets

Ratio of female managers• Introduction of systems to normalize and establish telecommuting (working from home/remote work)*

Number of female managers
and leaders

Ratio of male employees
taking childcare leave

Targets double February 2016 level (430)by end-March 2022

54.3%
(FY2020)100%

DNP Group Declaration on Health
DNP has always promoted corporate activities that prioritize the health and safety of employees, and has accelerated initiatives aimed atensuring safety with the formulation of the DNP Group Safety and Health Charter in 2019. In 2020, we again acknowledged the importance ofgood physical and mental health of employees and their families partly motivated by the COVID-19 outbreak. We announced the DNP Group
Declaration on Health internally and externally to aim for DNPʼs unique health and productivity management and health-driven measures.
According to the declaration, we will reinforce our efforts in three fields, namely, maintaining and improving physical and mental health,developing psychological capital, or a positive mind of each employee, and building phycological safety based on the relationships of trust in
individual workplaces and teams. The goal is to boost employeesʼ level of happiness and enhance our corporate value.

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VALUE CREATION AT DNPTOP MESSAGE

Value creation
process

Medium-termManagement Plan

BUSINESS RESULTS（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITYDATAINITIATIVES FOR SUSTAINABILITY

Corporate GovernanceInitiatives for Human Rights

Policies and Structure / GovernanceGreater consideration of human rights by corporations isstrongly needed due to the globalization and sophistication of
the supply chain. After deliberations of the Board of Directors,
DNP established the DNP Group Human Rights Policy in 2020
based on the International Bill of Human Rights, theInternational Labour Organization (ILO) Declaration on
Fundamental Principles and Rights at Work and otherinternational rules. In line with this, each department at thehead office, including the Personnel & Employee Relations
Division, Diversity Promotion Department, Sustainability
Promotion Department, Purchasing Division, Strategic
Business Planning & Development Division and Legal andCompliance Department, is working together to promote
initiatives for human rights.

Human Rights Due Diligence
DNP has been engaged in responsible procurement initiatives
since 2006 to evaluate and improve the effects its own
business activities have on the international and local
communities. We revised the DNP Group CSR Procurement
Guidelines in both 2017 and 2020 based on the internationalsituation, expanding the scope of application for management
1) from domestic to global, 2) from suppliers to outsourcing
contractors and human resource agents, and 3) fromsuppliers of the first tier to suppliers of the second and third

tiers. We are working to ascertain and reduce major risks
including human rights through surveys on the status of supplierinitiatives and interview guidance, which are conducted annually.
We are also moving forward with evaluations of human rights
risks in our business segments, and in 2019, DNP conducteda survey and evaluation of nine Group companies doing
business in Southeast Asia, Europe and the United States byusing the Human Rights Compliance Assessment Quick Checkof the Danish Institute for Human Rights.

DNP regards enhancement of corporate governance as a top management priority in order to contribute tosustainable development of society, increase enterprise value and win the trust of our various stakeholders.
The Company endeavors to establish and operate systems that enable proper managerial decision-making,prompt and appropriate business execution based on these decisions, and supervision and auditing of processesof the proper managerial decision-making and prompt and appropriate business execution.

Overview of DNPʼs Corporate Governance
The DNP Groupʼs corporate philosophy is to “connect people
and society, and provide new value.” Based on thisphilosophy, we believe it is important to always be aware of
our social responsibilities as a company in order to ensurestable business expansion over the medium to long term, and
we endeavor to fulfill our three corporate responsibilities:“value creation,” “integrity of conduct ” and “ transparency(accountability).”
We believe that being able to boldly take on various
business opportunities based on a sound entrepreneurial spirit
and gaining the trust of our various stakeholders is essential
for improving business competitiveness going into the future,and that enhancement of corporate governance, includinginternal control systems, is an important management issue.

We have established and are operating a system that enables
accurate decision-making in management, appropriate andswift business execution based on that decision-making andthe supervision and auditing of such decision-making.
Moreover, we provide thorough training and education to raise
the compliance awareness of each individual.
Based on this basic concept, we ensure the Board of
Directorsʼ appropriateness, agility, flexibility and diversity byadopting the organizational structure of a company with a
Board of Statutory Auditors, by introducing outside directors
and corporate officer system and by establishing andoperating discretionary committees. We believe this will allow
the Company to sustain growth and increase enterprise value
over the medium to long term.

Structural Diagram of DNPʼs Corporate Governance and Internal Control System
General Meeting of Shareholders

Revamping of our internal information website andimproving access to employee consultation hotline

Preparing the description of DNP Group CSR Procurement Guidelines(Japanese and English version) to promote understanding amongsuppliersPreparing training related to business and humanrights for all employees (training to launch in FY2021)

Advisory Committee

Executive Directors• Supplier Hotline

Business units

Education and permeation

Activities to raise awareness and training in lecture and e-learning formats based on the DNP Group Human Rights Policy
Human rights training held for employees and suppliers alike as part of our CSR procurement activities(Autonomous implementation,
inspection, review, improvement)• Internal study groups for staff dealing with procurement• Study groups for major suppliers• Survey of the status of initiatives based on the DNP Group CSR
Procurement Guidelines, feedback on the evaluation sheet andinterview guidance(Oversight of compliance system)• Open Door Room
• Global Internal Whistle-blowing System• Consultation officeOpen Door RoomHead Office

Supplier contact

Audit

Operating Units

Internal contact

Accounting Auditors

Relief system

Including building a grievance mechanism, DNP is making group-wide efforts globally to establish an environment where employees andsuppliers can more easily report and consult on compliance-related issues and the Company is able to understand and identify any
infringements on rights. DNP protects the confidentiality of reported information as well as the anonymity of the whistleblower andoperates the system in a manner that ensures the whistleblower does not suffer any disadvantages.

Corporate
Officers
in charge

Group companies

72

ReportingCorporate Ethics Committee
Reporting• Training on diversity and harassment for all employees• Special training for staff involved with management

Management Committee

Audit

Information Disclosure Committee
Sustainability Committee
Information Security Committee

Audit

Quality Assurance & Product Safety Committee

Guidance

Legal and other main divisions(Sustainability Promotion Department, Personnel & Employee
Relations Division, R&D and Engineering Management
Division, Finance & Accounting Division, Strategic Business
Planning & Development Division, Intellectual Property
Division, IR and Public Relations Division, Corporate
Communication Division, Legal Affairs Department, etc.)

Check

ReportingAssistance

Board of Statutory Auditors

Full revision of the DNP Group CSR Procurement Guidelines. Expanding
management for suppliers of the second and third tiers while also
revising content on human rights and labor as well as safety and health

Audit

Audit Unit

Making preparations to ascertain talent risks, although
no major problems that needed urgent response wereidentified by nine overseas Group companies

Board of Directors

Audit

Supply chain initiatives

Auditing Department

FY2020 topics

Internal initiatives

BCM Promotion Committee

Guidance
Training

Central Disaster Prevention Council
Audit
Guidance
Reporting
Coordination

DNP Integrated Report 2021

73

VALUE CREATION AT DNPTOP MESSAGE

Value creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

DATA

INITIATIVES FOR SUSTAINABILITY

Roles and Responsibilities of the Board of Directors
Directors or Statutory Auditors who meet the

2 personsStatutory
Auditors

Directors

12 persons

5 personsManagement Committee

8 persons

3 persons(of which 1 Female Director)

Advisory Committee(of which 1 Female Statutory Auditor)

Skills and Experiences of the Companyʼs Directors and Statutory Auditors

As part of our efforts to strengthen the supervisory functionof the Board of Directors, the Company has established an
Advisory Committee consisting of Independent Outside
Directors and Outside Statutory Auditors to ensure thetransparency and objectivity of procedures related todecisions such as on the nomination and remuneration of theCompanyʼs Directors and Corporate Officers. In the fiscal year
under review, the Advisory Committee consisted of three (3)outside commissioners (Director Miyajima, Director Sasajima
and Statutory Auditor Ishii) and deliberated on the policy andamount of remuneration for Directors and Corporate Officers
as well as the skills of candidates for Directors to supervise
the management of the Company.

Directors

Corporate
Management,
Business
Strategy

ESG,
Diversity

Financial/
HR/Labor,
Legal Affairs,
Management
Human
Compliance,
Accounting,
Resource
Risk
Capital Policy
Development Management
Initiatives●●

Yoshinari Kitajima●●

Kenji Miya●

Masato Yamaguchi●

Satoru Inoue●

Hirofumi Hashimoto●●

Masafumi Kuroyanagi

●

●

●

●

Ryuichi Tomizawa

●

●

●
●

●

●

●

●
●

●

●

●
●

●

●

Kazuyuki Sasajima●●

Ikuo Morita
Naoki Hoshino●

Toshio Sano●

Kazuhisa Morigayama

R&D,
New
Business

●

●

●

●

IT
DX

●
●

Tsukasa Miyajima
OutsideOverseas
Business

Yoshitoshi Kitajima

Minako Miyama

Statutory Auditors

Board of Directors, in the fiscal year under review, we took
steps to enhance the reporting of summaries of the internal
discussions from the “perspective of the Group as a whole” inthe context of the Medium-term Management Plan andbusiness investment proposals. A questionnaire survey
focused on items to measure progress on last yearʼs
improvement issues was then carried out, and the results of
the analysis confirmed that improvements had been madeoverall.
At the same time, social changes, such as the new normal
and growing environmental awareness at a global level,
require the Board of Directors to further enhance discussions
on business risks and other issues across all Group
companies, and at the meeting of the Board of Directors in
May 2021, all Directors and Statutory Auditors shared theview that the Board of Directors would focus on further
addressing these issues.

OutsideStatutory Auditors

Internal Directors

In order to enhance the speed and efficiency of management
activities, the Company has established a Management
Committee consisting of Executive Directors to review anddeliberate on matters such as management policies,
management strategies and important management matters.

●

●

●
●
●
●

Makoto Matsuura
Taeko Ishii

74

Internal Statutory
Auditors

4 personsExchange and the Company. We believe that Independent
Directors and Statutory Auditors ensure transparency ofmanagement and protect the interests of generalshareholders by speaking out on agenda items at meetingsof the Board of Directors from a standpoint independent ofmanagement, based on their various specialized knowledge
and experience.

Evaluation of the Effectiveness of the Board of Directors Overall
The Company has evaluated the overall effectiveness of theBoard of Directors around April each year since Japanʼs
Corporate Governance Code became applicable in June 2015.
The aim is to improve the functioning of the Board of Directors
as a whole through an ongoing process of questionnaires to
Directors and Statutory Auditors and by taking appropriate
measures such as improving the issues identified andenhancing the strengths of the Board of Directors.
In the questionnaire conducted in March last year (2020),
based on the advice of a third-party institution, and including
efforts for themes considering social situations as a target forassessment, the Board of Directors was assessed as having
no issues with its effectiveness. However, one of the issues tobe addressed is the need to continue to improve and deepen
internal discussions from the “perspective of the Group as awhole” in the preparation of Board of Directorsʼ proposals.
In response to the results of last yearʼs evaluation of theOutside Directors“independence standards” stipulated by the Tokyo Stock

OutsideThe Companyʼs Board of Directors is structured to enable
Directors with specialized knowledge and experience in awide range of business fields to participate in management
decision-making aimed at realizing our corporate
philosophy, to carry out their duties with responsibility andauthority and to supervise the execution of duties by other
Directors.
In principle, the Board of Directors meets once a month,with Corporate Officers attending as rapporteurs whennecessary, to deliberate and decide on importantmanagement issues. The criteria for agenda items to besubmitted to the Board of Directors are clarified in the
Board of Directors Regulations, which were established incompliance with laws and ordinances and the Articles ofIncorporation. In terms of other decision-making andbusiness execution, the Company strives to improve
efficiency by delegating appropriate authority from the
Executive Directors to the Corporate Officers in charge ofeach basic unit or the head of each unit, in accordancewith the organizational rules, etc.
● The Company is a company with a Board of Statutory
Auditors, which consists of five (5) members, including
one (1) Statutory Auditor who has considerable knowledgeof finance and accounting. Each Statutory Auditor conducts
audits of the execution of duties by Directors in accordancewith the auditing standards and assignments determinedby the Board of Statutory Auditors, and requests reports on
the execution of duties from Directors, Corporate Officers
and others as necessary. Each Statutory Auditor attends all
meetings of the Board of Directors and makes necessarycomments on agenda items.
● The Company has four (4) Outside Directors and three (3)Outside Statutory Auditors, all of whom are Independent●

Composition of the Companyʼs Board of Directors (As of June 29, 2021)●●

DNP Integrated Report 2021

75

TOP MESSAGE

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITYDATAINITIATIVES FOR SUSTAINABILITY

Board of Directors
Yoshitoshi
Kitajima

Brief personal history, title, responsibilities and status of important concurrent offices
May 1963
Jul. 1967
Jul. 1970
Jan. 1972

Joined the Company
Director of the Company
Managing Director of the Company
Senior Managing Director of the Company

Aug. 1975
Dec. 1979
Jun. 2018

Director, Vice President of the Company
President of the Company
Chairman of the Company

Hirofumi
Hashimoto

ChairmanManaging Director(Aug. 25, 1933)(Jul. 8, 1957)

Yoshinari
Kitajima

Reasons for nomination as a candidate for Director

Reasons for nomination as a candidate for Director
Mr. Hirofumi Hashimoto is nominated as a candidate for Director as it is expected that he will work torealize the management strategy and capital policy, etc., for business growth and improvement of businessperformance, and also appropriately oversee the entire Group, based on his considerable management
experience in the DNP Group and his achievements in the business planning department of the Company.

Brief personal history, title, responsibilities and status of important concurrent offices
Apr. 1987
Mar. 1995
Jun. 2001
Jun. 2003

Jun. 2005 Senior Managing Director of the Company
Jun. 2009 Executive Vice President of the Company
Jun. 2018 President of the Company

Joined The Fuji Bank Ltd.
Joined the Company
Director of the Company
Managing Director of the Company

Masafumi
Kuroyanagi
Managing Director(May 4, 1960)(Sep. 18, 1964)

Reasons for nomination as a candidate for Director

Brief personal history, title, responsibilities and status of important concurrent offices
Apr. 1978 Joined the Company
Jul. 2003 General Manager of Personnel Dept.
of the Company
Jun. 2010 Corporate Officer (Yakuin),
General Manager of Personnel Dept.
of the Company

Jun. 2018 Managing Director of the Company
Jun. 2020 Senior Managing Director, in charge of Personnel &Employee Relations Div., IR and Public Relations Div.,
Recruiting and Training Dept., Diversity Promotion
Dept. and Corporate Administration Dept., Chairmanof BCM Promotion Committee of the Company

MinakoMiyamaDirector(Jan. 15, 1962)(Jun. 11, 1954)

Reasons for nomination as a candidate for Director

Senior Managing Director(Sep. 10, 1952)

Brief personal history, title, responsibilities and status of important concurrent offices
Apr. 1975 Joined the Company
Dec. 1994 General Manager of R&D 1st Dept., General
Production Research Center of the Company
Jun. 2008 Corporate Officer (Yakuin), Deputy General
Manager of Display Components Operationsof the Company
Jun. 2012 Senior Corporate Officer, General Manager ofFine Electronics Operations of the Company

Jun. 2017 Senior Executive Corporate Officer, in charge of Living
Spaces Operations, Mobility Operations and HighPerformance Materials Operations of the Company
Apr. 2021 Senior Executive Corporate Officer, in charge of R&D
and Engineering Management segment, Lifestyle andIndustrial Supplies segment and Electronics segment(General) of the Company
Jun. 2021 Senior Managing Director of the Company

Tsukasa
Miyajima

Managing Director(Jan. 14, 1955)

76

Brief personal history, title, responsibilities and status of important concurrent offices
Jun. 2015 Managing Director of the Company
Apr. 2021 Managing Director, in charge of R&D andEngineering Management Div. andTechnology Development Center, Chairmanof Sustainability Committee of the Company

Brief personal history, title, responsibilities and status of important concurrent offices
Apr. 2005 General Manager of VR Planningand Development Office, DB
Division, C&I Operations of theCompany
Jul. 2014 General Manager of Recruiting andTraining Dept. of the Company

Jun. 2018 Corporate Officer, General Manager of Recruiting
and Training Dept., and Diversity Promotion Dept. of
the Company
Oct. 2019 Corporate Officer, in charge of Recruiting and Training
Dept., and Diversity Promotion Dept. of the Company
Jun. 2021 Director of the Company

Reasons for nomination as a candidate for Director

Brief personal history, title, responsibilities and status of important concurrent offices
Apr. 1990 Professor of Keio University, Faculty of Law
Apr. 2003 Registered as an attorney at law at theDaini Tokyo Bar Association (current)
Jun. 2014 Director of the Company

Apr. 2016 Emeritus Professor of Keio University
Professor of Asahi University, Faculty of
Law and Graduate School of Law(currently serving)(Aug. 23, 1950)

Reasons for nomination as a candidate for Outside Director and expected role

Reasons for nomination as a candidate for Director

Apr. 1978 Joined the Company
Oct. 2008 General Manager of Technology
Development Center of the Company
Jun. 2013 Director, in charge of Technical &Engineering Div., Technology
Development Center, Environment &Product Liability Dept. of the Company

Reasons for nomination as a candidate for Director

Director

Mr. Tsukasa Miyajima is nominated as a candidate for Outside Director as it is expected that he will
provide advice and supervision over the Company ʼs management from an objective perspective
independent from the management executing the business, based on, among other things, his highlevel of insight and extensive experiences as a legal expert.

Mr. Masato Yamaguchi is nominated as a candidate for Director as it is expected that he will work to realize
business development, etc., for business growth and improvement of business performance, and also
appropriately oversee the entire Group, having considerable management experience in the DNP Group basedon his experience as a person responsible for technology, research and development, and manufacturing ofdisplay products, etc., as well as new business development using ICT.

SatoruInoue

Jun. 2015 Corporate Officer (Yakuin), in charge of Finance& Accounting Division of the Company
Apr. 2019 Senior Corporate Officer, in charge of Finance &Accounting Division of the Company
Jun. 2021 Managing Director of the Company

Ms. Minako Miyama is nominated as a candidate for Director as it is expected that she will work torealize human resources development strategies, etc., for business growth and improvement ofbusiness performance, and also appropriately oversee the entire Group, since she has a proven trackrecord as the Company ʼs first female Corporate Officer, leading the way in developing human resourcesand ensuring diversity, in addition to experience in the research, planning and development segments.

Mr. Kenji Miya is nominated as a candidate for Director as it is expected that he will work to realize thehuman resources and labor strategy, etc., for business growth and improvement of businessperformance, and also appropriately oversee the entire Group, based on his considerable experience asa management executive in the DNP Group.

MasatoYamaguchi

Brief personal history, title, responsibilities and status of important concurrent offices
Apr. 1983 Joined the Company
Apr. 2004 General Manager of Finance &Accounting 1st Dept., Finance &Accounting Division of the Company
Jun. 2010 President and Representative Directorof DNP Total Process Warabi Co., Ltd.

Mr. Masafumi Kuroyanagi is nominated as a candidate for Director as it is expected that he will work torealize financial strategies and capital policy, etc., for business growth and improvement of businessperformance, and also appropriately oversee the entire Group, based on his considerable management
experience in the DNP Group and knowledge of all aspects of financial accounting, including accountsettlement and taxation.

Mr. Yoshinari Kitajima is nominated as a candidate for Director as it is expected that he will work torealize the Company ʼs group strategy towards business growth and improvement of businessperformance, and also appropriately oversee the entire Group, based on his considerable experience asa management executive in the DNP Group.

Senior Managing Director

Jun. 2018 Senior Corporate Officer, in charge of Strategic
Business Planning & Development Div. of the Company
Statutory Auditor of Nihon Unisys, Ltd. (current)
Jun. 2020 Managing Director, in charge of Strategic Business
Planning & Development Div. and Value
Creation & Promotion Div. of the Company

Mr. Yoshitoshi Kitajima is nominated as a candidate for Director as it is expected that he will work toappropriately oversee the entire Group, based on his extensive knowledge as well as his considerable
experience and achievements regarding general management acquired in the course of having led the
DNP Group toward improvement of business performance during his term as President since 1979.

President

Kenji
Miya

Brief personal history, title, responsibilities and status of important concurrent offices
Apr. 1981 Joined the Company
Jun. 2015 Corporate Officer (Yakuin),
General Manager of Strategic
Business Planning Dept. of theCompany
Apr. 2016 Director of Maruzen CHI Holdings
Co., Ltd.

RyuichiTomizawa
Director(Aug. 21, 1941)

Brief personal history, title, responsibilities and status of important concurrent offices
Apr. 1965
Jun. 2002
Jun. 2004
Oct. 2005

Joined Mitsubishi Kasei Kogyo Corporation
President of Mitsubishi Chemical Corporation
Chairman of Mitsubishi Pharma Corporation
President of Mitsubishi Chemical Holdings
Corporation
Apr. 2007 Chairman of Mitsubishi Chemical Holdings
Corporation

Jun. 2011 Outside Director of Tokyo Gas Co., Ltd.
Jun. 2012 Senior Corporate Advisor of Mitsubishi
Chemical Holdings Corporation(currently serving)Jun. 2019 Director of the Company

Reasons for nomination as a candidate for Director

Reasons for nomination as a candidate for Outside Director and expected role

Mr. Satoru Inoue is nominated as a candidate for Director as it is expected that he will work to realize
the technical development strategy, etc., and proactively use digital transformation (DX) technologies
for business growth and improvement of business performance, and also appropriately oversee theentire Group, based on his considerable experience as a management executive in the DNP Group.

Mr. Ryuichi Tomizawa is nominated as a candidate for Outside Director as it is expected that he will
provide advice and supervision over the Company ʼs management from an objective perspective
independent from the management executing the business, since he has many yearsʼ experience andextensive knowledge as a management executive.

DNP Integrated Report 2021

77

TOP MESSAGE

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITYDATAINITIATIVES FOR SUSTAINABILITY

Board of Directors

Kazuyuki
Sasajima
Director(Aug. 8, 1953)

Brief personal history, title, responsibilities and status of important concurrent offices
Apr. 1982 Joined Tokyo Shibaura Electric Co., Ltd.
(Manufacturing Engineering Research Center)
Apr. 1989 Associate Professor of Saitama University,
Faculty of Engineering
Dec. 1999 Professor of Tokyo Institute of Technology,
Graduate School of Information Science andEngineering

Apr. 2016 Professor of Tokyo Institute of Technology,
School of Engineering, Department of
Systems and Control Engineering
Mar. 2019 Emeritus Professor of Tokyo Institute ofTechnology
Jun. 2020 Director of the Company

Compensation Paid to Directors and Statutory Auditors(1) Matters concerning policies regarding the amounts and calculation methods for determining compensation
for directors and statutory auditors
The policy for deciding the details of the compensation for each individual Director is as follows: Compensation for directors
is calculated within the compensation amount limit approved at the General Meeting of Shareholders.

Reasons for nomination as a candidate for Outside Director and expected role
Mr. Kazuyuki Sasajima is nominated as a candidate for Outside Director as it is expected that he will
provide advice and supervision over the Company ʼs management from an objective perspective
independent from the management executing the business, based on, among other things, his highlevel of insight and extensive experience as an academic expert in information science and engineeringand systems and control engineering in addition to his experience as a researcher in a company.

Ikuo
MoritaDate for Resolution

Details of Resolution

June 9, 2016

Compensation for board directors shall be within an annual amount of 1.4 billion yen(compensation for outside directors shall be within an annual amount of 80 million yen).

12

June 28, 2007

Compensation for statutory auditors shall be within an annual amount of 180 million yen.

5

Brief personal history, title, responsibilities and status of important concurrent offices
Apr. 1975 Joined the Department of Pharmacology, The
Tokyo Metropolitan Institute of Gerontology(TMIG) (current Tokyo Metropolitan Geriatric
Hospital and Institute of Gerontology (TMGHIG))
Apr. 2009 Trustee and vice-president at Tokyo Medical
and Dental University

Director(Mar. 18, 1950)

Apr. 2015 Emeritus Professor of Tokyo Medical
and Dental University
Jun. 2021 Director or the Company

Reasons for nomination as a candidate for Outside Director and expected role
Mr. Ikuo Morita is nominated as a candidate for Outside Director as it is expected that he will provide
advice and supervision over the Company ʼs management from an objective perspective independent
from the management executing the business, based on his achievements from many years of researchin the field of pharmacology and high level insight from his experience as a trustee of an administrative
university of the Tokyo Block of the All Nippon Diversity Network Organization.

Statutory Auditors and Corporate Officers
Standing Statutory Auditor

Senior Executive Corporate Officers

Senior Corporate Officers

Corporate Officers

Naoki Hoshino

Sakae Hikita
Motoharu Kitajima
Ryuji Minemura
Morihiro Muramoto

Toshiki Sugimoto
Naohiko Sugimoto
Kiyotaka Nakagawa
Nobuyuki Asaba
Mitsuru Tsuchiya
Kazuhiko Sugita
Yoshiki Numano
Osamu Nakamura
Toru Miyake
Mitsuru Iida

Ryota Chiba
Kazuhisa Kobayashi
Takahito Kanazawa
Go Miyazaki
Naohiro Nishizawa
Kazuo Murakami
Hiroyuki Matsumura
Takuya Goto
Minoru Nakanishi
Hiroyuki Sone

Standing Statutory Auditor

Toshio Sano
Standing Statutory Auditor

Kazuhisa Morigayama＊1
Statutory Auditor

Makoto Matsuura＊1
Statutory Auditor

Taeko Ishii＊1＊1 Outside Statutory Auditors

To determine a policy for deciding the details ofcompensation for each director, including the amountthereof, the Board of Directors established standards byreferring to objective compensation market data. The
Advisory Committee, which consists of independent
outside directors (two outside directors and one outside
statutory auditor), then went through a process ofdeliberation and examination. The Company took thedetails of this deliberation into consideration and passed
a resolution on a policy for deciding the details ofcompensation for the fiscal year ended March 31, 2021
at a meeting of the Board of Directors held on April 20,
2020.
In the fiscal year ended March 31, 2021, the Board of
Directors decided to entrust Yoshinari Kitajima, President
and Representative Director, with the task of deciding a
specific amount of compensation for each director, andMr. Kitajima, who accepted the task, decided eachamount. The Board of Directors entrusted him with thisauthority because the president and representative
director is best positioned to conduct the evaluation ofduties each director is responsible for while
simultaneously looking at results from broad
perspectives.
At DNP, the Advisory Committee conducts anassessment from many perspectives, including
consistency with a decided policy to make sure that thepresident and representative director exercises theentrusted authority appropriately, and the president andrepresentative director then decides the details ofcompensation for each director, taking into consideration
the results of such assessment.
The amount of compensation for each director was
decided, as mentioned above, after the Advisory
Committee conducted an assessment from multiple
perspectives including consistency with the determinedpolicy. Therefore, the Company considers that the detailsof compensation for each director for the fiscal year
ended March 31, 2021 are consistent with the policy.
[Executive directorsʼ compensation]
Executive directorsʼ compensation consists of fixedcompensation and performance-based compensation.
Fixed compensation is basically based on position andis determined taking into consideration such factors as job
duties handled and responsibilities. Performance-based
compensation is primarily determined taking into
consideration consolidated business results for the fiscal

78

Number of Members

year and the degree of contribution. Fixed compensationand performance-based compensation account for 70%
and 30%, respectively, in terms of the composition of
remuneration. Additionally, to ensure this remuneration
system is truly linked to medium- to long-term corporate
growth and to shareholder value improvement, a portion of
fixed remuneration for executive directors (10% in principle)
is contributed to the Company's directorsʼ shareholding
association every month for the purchase of treasury stockand these shares shall be held for the duration of the termof office. Taking these factors into consideration, for the
fiscal year ended March 31, 2021, fixed compensation andperformance-based compensation accounted for 65% and35%, respectively, in terms of the composition of
remuneration. Going forward, the ratio of performancebased compensation will be raised.
The indicators for performance-based compensation
are consolidated operating income, net income
attributable to parent company shareholders and returnon equity (ROE). These indicators were selected because
it clearly reflects consolidated business results for the
fiscal year in performance-based compensation. The
targets for the indicators for performance-based
compensation in the fiscal year (year ended March 31,2021) were 40.0 billion yen for consolidated operating
income, 21.0 billion yen for net income attributable toparent company shareholders and 2.3% for ROE, and theactual results were 49.5 billion yen, 25.0 billion yen and
2.6%, respectively.
[Compensation for outside directors and statutory
auditors]
Regarding outside directors and statutory auditors, fromthe perspective of maintaining their independence, no
performance-based compensation shall be provided, andonly fixed compensation shall be provided. Compensation
for statutory auditors is calculated within thecompensation amount limit approved at the General
Meeting of Shareholders and compensation for statutory
auditors is determined based on discussions by thestatutory auditors.

DNP Integrated Report 2021

79

TOP MESSAGE

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITYDATAINITIATIVES FOR SUSTAINABILITY(2) Total compensation paid by category of director/statutory auditor, total compensation by type and the number of
directors and statutory auditors covered
Total compensation by type (¥ million)

Number of directors
and statutory
auditors covered

Category of director/
statutory auditor

Total compensation(¥ million)

Fixedcompensation

Performance-based
compensation

Fixed
compensation

Directors (excluding outside directors)

772

562

210

−

7

Statutory auditors (excluding outside auditors)

57

57

−

−

2

Outside directors and auditors

146

146

−

−

7

Notes:
1. Amounts of performance-based compensation are provisions for bonuses for directors and statutory auditors for the fiscal year ended March 31, 2021.
2. There were six internal directors, two internal statutory auditors and six outside directors as of the end of the fiscal year ended March 31, 2021.

(3) Company directors and total compensation
Name

Total
compensation

Total compensation by type (¥ million)
Director typeCompany(¥ million)

Yoshitoshi Kitajima
Yoshinari Kitajima

356

Director

195

Director

Dai Nippon Printing Co., Ltd.
Dai Nippon Printing Co., Ltd.

Fixed
compensation

Performance-based
compensation

Non-monetarycompensation, etc.

276

80

−

138

−

57

Note:
1. Total compensation is shown only for those with compensation of at least 100 million yen.

Compensation Paid to Accounting Auditors(1) Compensation paid to accounting auditors
Fiscal year ended March 31, 2020
Category

Fiscal year ended March 31, 2021

Compensation for audit
certification (¥ million)

Compensation forother services (¥ million)

Compensation for audit
certification (¥ million)

Compensation forother services (¥ million)

122

3

122

0

Consolidated subsidiaries

133

−

146

0

Total

252

3

268

0

Dai Nippon Printing Co., Ltd.

(2) Compensation paid to individual member firms affiliated (6) Reason Board of Statutory Auditors consented towith the same network, to which auditors belong
compensation for the accounting auditor(excluding the compensation paid to KRESTON International (1))
The Companyʼs Board of Statutory Auditors considers
Nonesuch areas as details of the accounting auditorʼs audit
plan, the state of job execution in the previous fiscal year,(3) Other material compensation details
and the calculation basis of estimates of compensation byNone
obtaining necessary materials from and listening toreports from directors, relevant internal departments and(4) Details of services other than auditing work provided byaccounting auditors. As a result, the Board of Statutory
the accounting auditor to the submitting company
Auditors consented with the amount of compensation for
Services other than auditing provided by the accounting
the accounting auditor submitted by the Company.
auditor to the Company are formalities-related work.
(5) Determination of compensation for audit services
The Companyʼs compensation for auditing services isdetermined based on a variety of factors, including thenumber of expected days for the audit and the company
size.

80

Stockholdings(1) Basis of classification of investment securities andrationale
The Company does not possess investment securities forpure investment purposes aimed at obtaining profits
through fluctuations in stock prices or by receiving
dividends. The investment stocks acquired by the Company
are for the purpose of strengthening relationships withcustomers in implementing sales strategies andstrengthening collaborative relationships with partners forthe co-development of new technologies and new products
and these are classified as stocks held for reasons otherthan for pure investment purposes.

2. Number of stocks and amounts recorded on balance sheets
Number ofcompanies

Total amounts recorded onbalance sheets(Stocks)(¥ million)

Non-listed stocks

113

5,127

Stocks other than
non-listed stocks

150

351,850(Stocks for which number of shares increased in the fiscal
year ended March 31, 2021)(2) Stocks held for reasons other than for pureinvestment purposes
1. Stockholding policy, method for validating rationale forstockholdings and details of validation at Board of
Directors concerning the propriety of individual
stockholdings

Number ofcompanies(Stocks)

Total amount ofacquisition cost
pertaining to theincrease in
number of shares

Reason for increasein number of shares(¥ million)

The Company specifically closely examines individual
stocks based on trends in the status of business
transactions with the company issuing the stock, trends inbusiness results of that company, the Companyʼs own
business conditions and medium- to long-term economic
rationality and future prospects, and the Company
periodically verifies the significance and purpose of holding
a stock. As a result, the Company sells stocks it
determines have diminished significance.
In the fiscal year ended March 31, 2021, the numberof individual stocks held by the Company decreased by
61 stocks as listed on the right.

Non-listed
stocks

7454

For strengthening ourbusiness alliance

Stocks other than
non-listed stocks

11

75

For enhancing ourbusiness relationship(Stocks for which the number of shares decreased in thefiscal year ended March 31, 2021)
Number ofcompanies(Stocks)

Total amount of sale value
pertaining to the decrease in
number of shares(¥ million)

Non-listed stocks

7505

Stocks other than
non-listed stocks

54

4,854

Reduction of strategic shareholdings
As a result of efforts for strategic shareholding reductions in the fiscal year ended March 31, 2021, the Company decreased
the number of listed stocks by 41 and moved forward with the improvement of capital efficiency.
Stockholdings of listed stocks
Number of stocks

250

237

222

204

191
150

2016.32017.32018.32019.32020.3- 41 stocks

2021.3DNP Integrated Report 2021

81

TOP MESSAGE

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITYDATAINITIATIVES FOR SUSTAINABILITY

3. Holding category, company name, number of shares, amount recorded on the balance sheet and holding purpose of stocks
held for reasons other than for pure investment purposes
Company name

Stocks held for reasons other than pure investment purposes

Company nameFiscal year ended
March 31, 2021
Number of shares
Amount recordedon balance sheet(¥ million)

Recruit Holdings Co., Ltd.
The Dai-ichi Life InsuranceCo., Ltd.
Ezaki Glico Co., Ltd.

(¥ million)

40,100,000

40,100,000

216,580

112,119

6,606,600

6,606,600

12,565

8,558

1,617,783

1,617,062

7,191

7,341

3,140,665

3,140,665

6,780

7,264

3,125,000

3,125,000

5,912

2,181

1,293,743

1,293,743

5,162

4,004

Taisho Pharmaceutical
Holdings Co., Ltd.

692,700

692,700

4,945

4,599

FUJIFILM Holdings
Corporation

685,965

685,965

4,507

3,730

Lion Corporation
Dexerials Corporation
Aica Kogyo Co., Ltd.

Mizuho Financial Group, Inc.
Meiji Holdings Co., Ltd.
Toyo Suisan Kaisha, Ltd.
AI inside Inc.
Kobayashi PharmaceuticalCo., Ltd.
Hakuhodo DY Holdings Inc.
YAMATO HOLDINGS
CO., LTD.
Kikkoman Corporation
Asahi Group Holdings, Ltd.
YAKULT HONSHA CO., LTD..
TAKARA HOLDINGS INC.
Sapporo Holdings Limited
S&B FOODS INC.

82

Fiscal year ended
March 31, 2020
Number of shares
Amount recordedon balance sheet

2,713,431

27,134,319

4,338

3,353

564,400

564,400

4,018

4,334

794,980

794,980

3,696

4,149

100,000

100,000

3,555

1,610

318,272

317,645

3,287

3,176

1,720,000

1,720,000

3,173

1,874

830,300

830,300

2,519

1,409

350,940

350,940

2,312

1,616

480,029

480,029

2,239

1,684

350,500

350,500

1,962

2,239

1,200,000

1,200,000

1,808

972

759,277

759,277

1,741

1,513

344,400

344,400

1,673

1,413

Companyʼsownershipof DNP
sharesFiscal year ended
March 31, 2020
Number of shares
Amount recordedon balance sheet

393,000

393,000(¥ million)

Holding purpose, quantitative effect of ownershipand the reason for increase of number of shares

MORINAGA & CO., LTD.

(¥ million)

1,554

1,737

630,931630,931

1,429

1,268

TOKYO OHKA KOGYO
CO., LTD.

206,000

206,000

1,425

853

Mitsubishi UFJ
Financial Group, Inc.

2,399,760

2,399,760

1,419

967

947,500

236,875(Y/N)

Ajinomoto Co., Inc.

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified significance andpurpose of shareholding through close investigation of the transaction status and theprospects of businesses with the company. In the fiscal year ended March 31, 2021, thenumber of shares increased because of the enhancement of our business relationship.

Gakken Holdings Co., Ltd.

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.
We hold the companyʼs shares aiming to strengthen our business alliance. While thequantitative effect of ownership is not stated, we have verified significance andpurpose of shareholding through close investigation of the transaction status and theprospects of businesses with the company.

Hulic Co., Ltd.

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

Unicharm Corporation

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

Oji Holdings Corporation

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

N

We hold the companyʼs shares aiming to strengthen our business alliance. While thequantitative effect of ownership is not stated, we have verified significance andpurpose of shareholding through close investigation of the transaction status and theprospects of businesses with the company.

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified significance andpurpose of shareholding through close investigation of the transaction status and theprospects of businesses with the company. In the fiscal year ended March 31, 2021, thenumber of shares increased because of the enhancement of our business relationship.

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

TV Asahi Holdings
Corporation

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

Astellas Pharma Inc.

N

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

KADOKAWA CORPORATIONY

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

TAKARA HOLDINGS INC.

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

N

Fiscal year ended
March 31, 2021
Number of shares
Amount recordedon balance sheet

KADOKAWA CORPORATION

1,382

1,749

1,040,000

1,040,000

1,357

1,141

290,700

290,700

1,350

1,177

1,840,800

1,840,800

1,318

1,065

292,000

292,000

1,254

397

Companyʼsownershipof DNP
sharesHolding purpose, quantitative effect of ownershipand the reason for increase of number of shares

(Y/N)

N

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

N

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

Y

We hold the companyʼs shares aiming to strengthen our business alliance. While thequantitative effect of ownership is not stated, we have verified significance andpurpose of shareholding through close investigation of the transaction status and theprospects of businesses with the company.

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

N

We hold the companyʼs shares aiming to strengthen our business alliance. While thequantitative effect of ownership is not stated, we have verified significance andpurpose of shareholding through close investigation of the transaction status and theprospects of businesses with the company.

Y

We hold the companyʼs shares aiming to strengthen our business alliance. While thequantitative effect of ownership is not stated, we have verified significance andpurpose of shareholding through close investigation of the transaction status and theprospects of businesses with the company.

Y

We hold the companyʼs shares aiming to enhance our business relationship. Whilethe quantitative effect of ownership is not stated, we have verified the significanceand purpose of our shareholding through close investigation of the transaction status
and the prospects of businesses with the company.

Note:
1. Stocks held for reasons other than pure investment purposes and stocks held in trust with voting rights are not added together when selecting stocks with the largest amounts as recorded in the balance sheet.
2. The quantitative effect of ownership is not stated because of matters concerning business agreements with the business partner. In terms of the rationality of the holding, we have periodically verified thesignificance and purpose of shareholding through close investigation of the transaction status with the company, financial results of the company, business status of DNP, the medium- to long-term economicalrationality and the prospects.
3. In the companyʼs ownership of DNP shares, in case that the company is a holding company, the holding status of the parent company and its major subsidiaries is stated.
4. Mizuho Financial Group, Inc. consolidated every ten shares of its ordinary shares into one share on October 1, 2020.
5. Gakken Holdings Co., Ltd. split its ordinary shares four-to-one on April 1, 2020.
6. Among stocks held for reasons other than pure investment purposes, the 30 stocks with the largest amounts as recorded in the balance sheet are listed.

Stocks held in trust or other legal entity while retaining voting rights or voting instruction rights

Company nameFiscal year ended
March 31, 2021
Number of shares
Amount recordedon balance sheet

Fiscal year ended
March 31, 2020
Number of shares
Amount recordedon balance sheet

7,722,000
30,8804,030,000
8,386
2,284,000
3,887
1,000,000
2,125
266,304
1,143
500,000
753

7,722,000
28,7254,030,000
6,576
2,284,000
3,816
1,000,000
1,996
266,304362
500,000
405(¥ million)

Terumo Corporation

Japan Tobacco Inc.

(¥ million)

Companyʼsownershipof DNP
sharesHolding purpose, quantitative effect of ownershipand the reason for increase of number of shares

(Y/N)

Y

We hold voting instruction rights for shares in retirement benefit trusts.

N

We hold voting instruction rights for shares in retirement benefit trusts.

N

We hold voting instruction rights for shares in retirement benefit trusts.

N

We hold voting instruction rights for shares in retirement benefit trusts.

Y

We hold voting instruction rights for shares in retirement benefit trusts.

Y

We hold voting instruction rights for shares in retirement benefit trusts.

Note:
1. Stocks held for reasons other than pure investment purposes and stocks held in trust with voting rights are not added together when selecting stocks with the largest amounts as recorded in the balance sheet.
2. In the companyʼs ownership of DNP shares, in case that the company is a holding company, the holding status of the parent company and its major subsidiaries is stated.

(3) Stocks held for pure investment purposes
None
DNP Integrated Report 2021

83

TOP MESSAGE

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITYDATAInterview
withan Outside
Director

Reflecting on the End of a Big Role at DNP
A corporate culture allowing outside directors to function

Tadao Tsukada
Outside Director*(Professor Emeritus, Tokyo Institute of Technology)* Outside Director Tsukada retired when his term expired at the 127th Ordinary General Meeting of Shareholders on June 29, 2021.

―― We look back on the activities of Mr. Tadao Tsukada
at DNP, after he stepped down as outside director at theOrdinary General Meeting of Shareholders held in June
2021. First, thank you for your service.

The environment surrounding the company has undergone
considerable change, and the fact that I was able to take partin meetings of the Board of Directors making decisions totake on new challenges toward sustainable growth and could
freely express my views is thanks to the shareholders andinvestors of DNP, as well as the employees who supported an
outside director who was unfamiliar with the internal workingsof the company. Just how much I was able to contribute to
the growth of the Company during my term is something for
those who come after me to determine, but I am grateful forthe privilege of leading a life as a researcher.
―― I heard you attended almost every Board of
Directors meeting.

When I underwent clip surgery for a cerebral aneurysm and84

told the administrative office that I intended to attend a Boardof Directors meeting a few days afterward, I was told to rest
up and encouraged not to attend. Apart from that, I managed
to attend every one. Yasuharu Suematsu, a Professor
Emeritus from the Tokyo Institute of Technology who wasawarded the Order of Culture, said to me at the party
celebrating the award, “ Hey Tsukada, do you know why I got
this? ” When I didnʼt understand and failed to answer, heprovided the answer: “It ʼs because Iʼve lived a long, healthy
and energetic life.” To borrow this quote from Professor
Suematsu, I can say that “I was able to fulfill a big role at
DNP because above all, I could work in a healthy andenergetic way.”―― Where does that energy come from? What is thedriving force behind it?

After I finished my masterʼs degree, I went to work on cutting
tool design at Nachi-Fujikoshi Corporation. I even operated
machines that use cutting tools and became covered in oil. I
later transferred to the School of Engineering at the Tokyo

Institute of Technology and took on the challenge ofmeasurement and information, which was not my specialty. It
was through this experience that I developed the habit of“ thinking while running” in research, pursuing curiosity as a
“ jack-of-all-trades” instead of sticking within the confines ofa single area of specialty. Also, out of a desire to learn about
the manufacturing industry in the field, I asked the production
innovation consultant Minoru Nagaya and was able to takepart in guidance meetings for production innovation activities
at the plants of companies like Hitachi and Sony around once
every two or three months. This went on for around 10 years.
Each time, after the guidance meetings had ended, it was
tough having to offer critique, but it was also a valuable
learning experience. At DNP, I was asked for by members of
the General Production Research Center (now the Technology
Development Center), and sometimes we would discusstechnical issues like how to proceed with production
technologies or how to make use of personal contacts outside
the company. It was at those times that my experience inattending the production innovation activities I mentioned
above came in handy. When it comes to technologicaldevelopment, it is important to be able to “act from the neckdown,” which is to put an idea you have thought up into
immediate action, because that gives you the chance ofserendipity – making some lucky discovery. I explained thatyou need to think flexibly to accomplish this and discussed
the technical issues DNP was facing. Having said that, since
my specialty is so different from DNP, I looked over academic
journals from Japan and overseas and a bunch of technicaland business materials so that they would take me seriously.
These kinds of things became the driving force that kept me
running and were the basis for my comments at Board of
Directors meetings.
―― I think the role of an outside director is tocommunicate objective opinions from an outside
perspective to top management when they are making
management decisions. How did you find the Board of
Directors meetings at DNP?

In 2002, when I first served as an outside director of DNP,
there were 35 directors. Around this time, the DNP Group
Vision for the 21st Century had been announced the previous
year, and the whole company was making concerted efforts
to make that vision a reality. The fact that an engineeringresearcher like myself was able to freely communicate myviews to the Board of Directors as one of the people
responsible for steering the management of the company istestament to the broad-minded corporate culture that hasformed at DNP.
The DNP Board of Directors made efforts to slim down andimprove efficiency, such as introducing an executive officer
system (2005) and increasing the number of outside directors(2014 onwards), and in June 2020 there were 10 directors
on the board (6 of whom where internal directors, and 4 ofwhom where outside directors). Under this structure, I wasable to engage in free and open discussion, but I felt evenmore nervous. At the time, the Board of Directors would
decide on between 20 and 30 agenda items in the space ofaround two hours, but now the board deliberates over lessthan 10 items over two hours. Whatʼs more, we receive
information and briefings on the agenda items in advance,and remote meeting systems can now be utilized. In this way,

Scene from a meeting after touring the Kamifukuoka Plant (December 2018).
Mr. Tsukada is pictured third from the right.

a lot of progress has been made with the environment
enabling outside officers to discuss management strategy at
Board of Directors meetings. Since 2015 when the Corporate
Governance Code was adopted, I was appointed to chair theAdvisory Committee made up of outside officers, and in thatcapacity I delivered recommendations to the Company onmatters such as the constituent members of the Board of
Directors. During my tenure, the environment has changed,
including the composition of the DNP Board of Directors, but
I feel that DNPʼs corporate culture, which allows ajack-of-all-trades researcher such as myself to freely express
themselves, has not been lost, and is evolving in the directionof accepting diversity.
―― Please give some brief comments directed at the
future of DNP.

For DNP to continue to deliver innovation as it aims for“ Tomorrowʼs Basic” through the P&I business, it is crucial
that it does not become preoccupied with academic expertiseor past successes. I have never been top of my class inschool. Perhaps that is why I have been able to learn
whatever I want outside my area of expertise, without pride
being an issue, and how I have managed to avoid falling preyto blind spots in my thinking that hinder development. I think
it is also preferable for company management to embrace
wide-ranging dialogue instead of a know-it-all attitude, andthis is also true for the roles fulfilled by outside directors on
the Board of Directors. During my time on the board of DNP, I
think I have been able to continue to speak freely while taking
care not to be a “know-it-all.”
DNP has a corporate culture that respects diverse opinions
and addresses adversity with sincerity. I believe that going
forward, as long as the Board of Directors continues tochallenge unknown possibilities without pretending to know
everything, it can create “ Tomorrowʼs Basic.”―― Thank you very much.

DNP Integrated Report 2021

85

TOP MESSAGE

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITY

DATA

Summary of Financial Results
Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31
U.S. dollars inthousands except per
share amounts

2021

2020

2019

2021

Statements of Operations (¥ million)($ thousand)

1,335,440

1,401,894

1,401,506

12,030,991−4.7 %

Operating income

49,52956,27449,898446,207−12.0 %

Ordinary income

59,907

63,78658,259539,703−6.1 %

Income (loss) before income taxes

46,401

102,719(18,685 )418,027−54.8 %Net income (loss) attributable to parent company shareholders

25,08869,498(35,669 )

226,018−63.9 %Net sales

Balance Sheets (¥ million)

87

Summary of Financial Results($ thousand)

1,098,614

968,575

1,046,622

9,897,424

13.4 %

Interest-bearing debt

158,555

211,646

166,350

1,428,423−25.1 %

Stockholders' equity

1,043,977

915,779

996,162

9,405,198

14.0 %

Total assets

1,825,019

1,721,724

1,775,023

16,441,613

6.0 %Total net assets

DATA

Change2021 / 2020

Cash Flow Statements (¥ million)($ thousand)Cash flows from operating activities

61,682

93,937

68,972555,694−34.3 %Cash flows from investing activities(56,284 )

191,057(146,909)(507,063)––

Cash flows from financing activities(78,269 )(41,281 )(32,197)(705,126)

––

5,398

284,994(77,937)

48,631−98.1 %

89.32

235.18(118.22)0.80−62.0 %

3,716.85

3,260.38

3,300.52

33.49

14.0 %

64

64

64

0.58

––

Free cash flow＊

88

Financial and Non-financial Data

91

Managementʼs Discussion and Analysis

98

Consolidated Financial Statements

123

Independent Auditorʼs Report

128

Major Subsidiaries and Affiliates

Operating income

3.71

4.01

3.56

3.71

−0.30

130

Investor Information

EBITDA margin

7.38

11.32

3.03

7.38

−3.94

Net income (loss)

1.88

4.96

(2.54 )

1.88

−3.08

ROE (%)

2.56

7.27

(3.48 )

2.56

−4.71

ROA (%)

1.41

3.97

(2.00 )

1.41

−2.56

Equity ratio (%)

57.20

53.19

56.12

57.20

4.01

PER (times)

25.97

9.78

(22.39 )

25.97

––

PBR (times)

0.62

0.71

0.80

0.62

––

EV/EBITDA (times)

4.97

2.94

16.07

4.97

––

PCFR (times)

8.57

5.21

34.12

8.57

––

Dividend yield (%)

2.76

2.78

2.42

2.76

−0.02

Per Share Data (¥)
Net income (loss) - primary
Net assets
Cash dividend($)

As a Percentage of Net Sales (%)

Financial Ratios

Valuations (against share price on March 31)

Returns to Shareholders($ thousand)––

59,999––––––Dividend payout ratio (%)

71.66

27.21

––

71.66

––

Total return ratio (%)

71.7

113.1

––

71.7

––

Long-term credit rating (R&I)

AA−

AA−

AA–

AA−

––

Foreign ownership (%)

23.64

24.14

24.85

23.64

−0.50

Values of shares repurchased (¥ million)＊＊

OthersU.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥111=U.S.$1, the approximate Tokyo foreign exchange market rate as of March 31, 2021.
* Free cash flow = net cash from operating activities + net cash from investing activities** Treasury share acquired through requests for the purchase of odd-lot shares is not included.

86

DNP Integrated Report 2021

87

VALUE CREATION AT DNPTOP MESSAGE

Value creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

DATA

Financial and Non-financial Data
Net Sales

Operating Income(¥ billion)(¥ billion)

Net Income (Loss) Attributable toParent Company Shareholders

EBITDA

Book Value per ShareTotal Net Assets(¥ billion)(¥)(¥ billion)(¥ billion)
2,000

60
49.8

1,500

49.5

46.3
1,410.1 1,412.2 1,401.5 1,401.9

1,335.4

80

56.3

4,000
3,500

60
103.4

40

40

158.6

150

69.5

25.2

31.4

108.6
98.5

100

27.5

20

3,493.7

3,300.5 3,260.4

50

500

1,098.6
968.6

800
600

1,500

42.4

1,081.2 1,102.5 1,046.6

1,000

2,000

0

1,200

3,000
2,500

25.1

20

1,000

3,361.1

3,716.9

400

1,000
-20
0

0

17

18

19

20

21

­35.6

-40

17

18

19

20

200

500

21

17

18

19

0

0

0

20

21

17

18

19

21

20

17

18

19

20

21

17

18

19

Earnings (Loss) per Share

Operating Income to Net Sales

Net Income to Net Sales

Stockholdersʼ Equity

Total Assets

Capital Expenditures*

(¥)

(%)

(%)

(¥ billion)(¥ billion)(¥ billion)

235.18

250

4.01

4

200

89.32
2

1

2.23

1,000
1.95

1.88

1.79

1

­118.22

17

18

19

21

17

18

19

20

21

100

80

1,500

21

800
60

71.6
57.0

59.5

1,000

57.2
41.1

400
500

20

200
­2.54

0

-3

0

20

915.8

1,825.0

40

-2

-150

996.1

-1

-100

1,741.9 1,794.7 1,775.0 1,721.7

1,044.0

600

0

0
-50

2,000
1,033.8 1,053.6

2

50

1,200

3

3
81.57 90.76

5
4

3.28

150
100

3.71

3.56

4.96

20

17

18

19

20

21

0

0

17

18

19

21

20

17

18

19

20

21

17

18

19

20

21

* Figures include capital expenditures for intangible
fixed assets.

ROE

ROA

(%)

(%)
7.3

8

4.0

4
3

6

2
4
2.5

2.6

2

1.5

1.6

-4

17

18

19

20

31.3

33.2

33.7

33.6

32.6

Free Cash Flow*(¥ billion)(¥ billion)

100

300

39.8

46.4

45.3

­2.0

200
61.0

60

59.0

54.4

20

150
50.8

40
10

100

85.9

5.4

0
-50

­18.6

-20

17

18

19

20

21

17

18

0

19

20

21

0

17

18

19

20

21

71.5

50

20

0

285.0

250
80
61.4

20

-4

21

40

30

40

0

-3
­3.5

(¥ billion)

102.7

Depreciation Expense

60

-2
-2

(¥ billion)
100

1.4

-1

0

Research and Development
Expenditures

80

1

2.6

Income (Loss) before Income Taxes
and Non-controlling Interests

­77.9

-100

17

18

19

20

21

17

18

19

20

21

* Free cash flow = net cash from operating activities +net cash from investing activities

88

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VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITY

DATA

Financial and Non-financial Data

Sales of Environmentally Conscious
Products and Services (by Segment)

Total Number of Employees(by Segment)

Number of Overseas Group Company
Employees (by Area)(¥ billion) (As of March 31, 2021)(persons) (As of March 31, 2021)(persons) (As of March 31, 2021)

Others 41.3
Electronics
115.4

Europe 422

Corporate 2,446

Beverages
1,250

578.1

37,062

Information
Communication
218.6

persons

Information
Communication
19,053

Lifestyle andIndustrial Supplies
10,672Emissions per-unit value(t-CO 2 /million yen)
100

100

80

80

1.50

1,027

961

916

Emissions per-unit value(kg/million yen)

Waste emissions (1,000 tons)

2.00

1,500

Asia
2,608

Waste Emissions (Including International Operations)

GHG Emissions (Including International Operations)
GHG emissions (1,000 t-CO 2 )Business Environment and Overview of Operating Results for
the Fiscal Year Ended March 2021

3,754

persons

Lifestyle andIndustrial Supplies
202.8

1,000

CONSOLIDATED

America
724

Electronics
3,641

billion yen

837

60
48

1.00

52

60

51

51

40
500

0.73

0.69

0.65

0.63

18

19

20

Percentage of Female Managers
(%)
7.0

6.6
6.1

6.0
4.7

5.0
4.0

0

0

18

Lost Time Work Accident
Occurrence Rate
0.32

0.29

14,00012,000

0.21

0.21

21

20

Net sales (¥ million)

16,000

0.25

4.1

19

The environment surrounding the DNP Group during the fiscal year under review was
harsh, with restrictions on the movements of people and goods and a significant
impact on individual consumption and corporate activities due to the COVID-19
pandemic. Although economic activity began to gradually resume in various
countries and regions from around summer 2020, a further increase in infections
was seen globally from autumn through to winter. In 2021, state of emergency
declarations in Japan added to the uncertainty over the end of the pandemic.
Under these conditions, the DNP Group strived to solve social issues and create
new value to meet peopleʼs expectations in order to achieve a better, sustainable
society and contribute to more comfortable lives. We combined our uniquestrengths in P&I (Printing and Information), deepened coordination with many
partners and optimized the allocation of management resources in our focus
businesses related to data distribution, IoT and next-generation communications,mobility and the environment, which are especially promising in terms of highprofitability and market growth. We also tackled structural reforms to enhancecompetitiveness and promoted the development of a strong business portfolio.
While demand for printed materials and similar products fell due to people andorganizations refraining from engaging in events, exhibitions and various
promotional activities, there were advances in telecommuting, an expansion of
online education and online medical consultations and an accelerated uptake ofvarious internet services which led to growth in other areas, such as information
services utilizing DNPʼs advanced information security infrastructure and IT
equipment-related products. Additionally, amid a growing global awareness of theneed to reduce the impact on the environment, the demand for environmentallyconscious products and services also expanded.
Additionally, to strengthen management foundations supporting the overall
long-term growth of the DNP Group, we recognized major trends (megatrends)
such as digital transformation (DX) and endeavored to accelerate initiatives toimprove productivity by utilizing ICT, enhance our internal information systems
infrastructure and address the environment, human resources and human rights.

Number of Japanese Patents Held

0.33

0.30

5.6

38.5

36.3

20

21

0.35

36.9

20

0.00

0

40
34.3

0.50

Management ʼs Discussion
and Analysis

12,358 12,435 12,392 12,226
11,525

10,0000.20

2021.32020.32019.3

1,335,440

1,401,894

1,401,506

Gross profit margin20.7 %

20.9 %

20.1 %

Operating income margin

3.7 %

4.0 %

3.6 %

Ordinary income margin

4.5 %

4.5 %

4.2 %

Net income margin

1.9 %

5.0 %

−2.5 %

8,000
3.0

0.15

2.0

0.10

1.0

0.05

17

90

18

19

20

21

4,000
2,000
0

17

18

19

20

21

(Year ended March 31, 2021)
Electronics
14.7%

Beverages
3.8%

Lifestyle andIndustrial Supplies
27.5%

Information
Communication
54.0%

Operating Income by Segment(Year ended March 31, 2021)
Information
Communication
27.1%

Beverages
1.2%Electronics
51.9%

Lifestyle andIndustrial Supplies
19.8%

DNP ʼs Overseas Sales(¥ billion)
250
200

226.7

238.4 246.2 245.8

202.5

150

6,000

0

0

Net Sales by Segment

17

18

19

20

21

Overseas sales for the DNP Group as a whole were ¥245,830 million, on parwith the previous fiscal year. Due to the decline in domestic sales, overseas sales
accounted for 18.4% of total sales, a 0.8 percentage point rise from 17.6% in theprevious fiscal year. By region, including Indonesia and Taiwan, sales in Asia
increased by 8.4% compared to the previous fiscal year, to ¥183,929 million. In
other regions including the United States and Europe, sales decreased 19.1% to¥61,901 million.

100
50
0

17

18

19

20

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DNP Integrated Report 2021

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VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITYDATAManagement ʼs Discussion and Analysis

Information Communication•Net Sales:¥721,814 million (down 6.6% YoY)
•Operating Income:¥19,185 million (down 36.9% YoY)
•Operating Income Margin: 2.7% (down 1.2 percentage points)

Publishing Business
Market Publication sales in Japanʼs publishing industry in the fiscal year
ended March 2021 were ¥1,240.1 billion (up 1.5% year on year). As a resultof positive effects that increased time spent reading due to the COVID-19
pandemic, sales of magazines rose 2.1% year on year to ¥567.2 billion, whilebook sales also rose 1.0% year on year to ¥672.8 billion, according toJapanʼs Research Institute for Publications.
The number of bookstores declined from a peak of about 22,000 in 1999
to around 11,100 in 2020, according to Almedia. In contrast, the market sizefor electronic books increased 20.1% year on year to ¥375.0 billion in thefiscal year ended March 2020, and is expected to grow 1.5 times the 2020
level to ¥566.9 billion by the fiscal year ending March 2025, according to
Impress Corporation.
DNP DNP has worked to reduce costs by improving the terms of orders
involving integrated production and sales, cutting costs and promoting
in-house production, but we were unable to absorb negative factors
associated with the COVID-19 pandemic such as the decline in advertising
pages, and printing orders decreased for magazines and other publications.
However, revenue has increased from our “honto” hybrid bookstore network,
which comprises bookstores, e-commerce and e-book sales, and membershiphas grown to 6.38 million members. Our library support business has also
grown, with more contracted libraries (1,676 libraries as of January 31, 2021,
up 187 year on year), and sales also exceeded the previous year.

Information Innovation Business: Marketing
Market Domestic advertising demand for the fiscal year ended March 2021
declined significantly by 12.8% overall, with newspapers, magazines,
television, radio and direct mail advertising all down from the previous year,
according to Japanʼs Ministry of Economy, Trade and Industry.
DNP Sales of paper media such as leaflets and catalogs declined
significantly, mainly in the distribution and travel industries due to COVID-19.
The sales promotion field including events and campaigns was also hit hard.
Although software services increased due to the rapid advancement of digitaltransformation including increased non-face-to-face and online interactions,overall sales fell short of the previous fiscal year.

Information Innovation Business: Information Security
Market The individual number card point program was launched to popularize
the adoption of individual number cards, and Business Process Outsourcing(BPO) demand also grew in connection with government-led economic measures.
DNP While revenue related to ID cards such as individual number cards andthe BPO business increased, direct mail and form-related sales declined,
resulting in an overall decline in revenue.

Lifestyle and Industrial Supplies
Net Sales:¥368,006 million (down 6.0% YoY)
Operating Income:¥13,965 million (up 25.3 % YoY)
● Operating Income Margin: 3.8% (up 1.0 percentage point)●●

Packaging Business
Market Demand for packaging materials for pharmaceuticals and hygiene
goods increased, but there was a decline in demand for commercial
packaging for souvenirs and restaurants due to people voluntarily remaining
at home in connection with COVID-19.
DNP We have worked to develop and sell eco-friendly packaging and also
made progress with structural reforms including the streamlining of
manufacturing and business operations; however, there was a decline insales of commercial packaging due to COVID-19-related stay-at-homepolicies, and sales of our aseptic filling systems for PET bottles also fell shortof the previous year, resulting in a decline in revenue overall.

Living Spaces Business
Market Domestic new housing starts decreased by 8.1％ year on year to
approximately 810,000 in the fiscal year ended March 2021. Among these,owner-occupied houses decreased 7.1%, apartments and other rental housing
decreased 9.4％ and condominiums decreased 7.9％ year on year,
respectively, according to Japanʼs Ministry of Land, Infrastructure, Transport
and Tourism.
DNP In addition to highly functional environmentally conscious products
using our proprietary Electron Beam (EB) coating technology, we also
expanded our lineup of products with antibacterial and antiviral features tocombat the spread of COVID-19. However, overall sales were down from theprevious year, in part due to the postponement or pause of home construction
and renovations up to the second quarter.

Industrial High-performance Materials Business
Market Worldwide demand for lithium-ion batteries for use in electricvehicles has expanded in response to increasingly strict environmental
regulations aimed at reducing CO 2 emissions. In the fiscal year ended March
2021, the global market for lithium-ion batteries for use in electric vehicles
increased 22% year on year on a shipped capacity basis, according to Yano
Research Institute Ltd. Demand for battery pouches used in electric vehicles
grew, while there was also higher demand for battery pouches for tablet andsmartphone devices, in part due to the growth in telecommuting.
DNP There was significant growth in pouches for lithium-ion batteries fortablet and smartphone devices in addition to electric vehicles. As a result,sales increased year on year.

Imaging Communication Business
Market Demand for photo printing declined significantly in connection with
COVID-19 due to people voluntarily remaining at home, the cancellation or
postponement of events and curbs on the use of amusement facilities.
DNP Demand for thermal transfer printing media for photo printers andphotography-related services fell, resulting in a decline in revenue.

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VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITYDATAManagement ʼs Discussion and Analysis

Electronics
Net Sales:¥197,020 million (up 5.6% YoY)
● Operating Income:¥36,690 million (up 7.5% YoY)
● Operating Income Margin: 18.6% (up 0.3 percentage point)●

Display Components Business
Performance in the 2020 display market was strong, with anincrease in general demand for notebook PCs, tablet devices, monitors andtelevisions due to the spread of telecommuting and online classes, andpeople spending longer periods at home. Demand for polarizing plates, a
key component in display panels, also expanded, with worldwide production
volume increasing 4.7% year on year to 573.9 million m2, according to Yano
Research Institute Ltd.
DNP There was steady performance in metal masks for the manufacturing of
OLED displays overall despite demand for smartphone development declining
temporarily due to U.S.-China trade friction. In optical film-related products,
we increased sales of our mainstay surface films for LCD polarizing plates fortablet devices, monitors and televisions, driving an increase in revenue forthe business overall.
MarketElectronics Devices Business
Market Global semiconductor sales for 2020 increased by 6.8% year on year
to US$440.3 billion, according to the World Semiconductor Trade Statistics.
Looking at each field, semiconductor memory shipments were up 12.2%
from the previous year.
DNP Sales of lead frames and similar products increased significantly andsemiconductor photomask sales were also strong, resulting in increased
revenue for the business overall.

Cost of Sales/Selling, General and
Administrative Expenses/Operating Income
The cost of sales totaled ¥1,058,526 million, down 4.6%, or ¥50,526 million fromthe previous fiscal year. The gross profit margin was 20.7%, down 0.2 percentage
point from the previous year.
Among our primary raw materials, prices for domestic naphtha (crude gasoline)
used as the main ingredient in petrochemical products remained on an upward
trend throughout the fiscal year, while the procurement cost of synthetic resinsdecreased during the period due to sluggish demand for polyethylene andpolypropylene. In contrast, printing paper has long been in short supply, and since
the price rose in January 2019, it has remained high ever since.
Selling, general and administrative expenses totaled ¥227,385 million in thefiscal year under review, down ¥9,184 million, or 3.9%, from the previous fiscal
year. Selling, general and administrative expenses were 17.0% of net sales, up 0.1
percentage point from the previous fiscal year.
As a result, operating income totaled ¥49,529 million in the fiscal year underreview, down ¥6,745 million, or 12.0%, from the previous fiscal year. The
operating income margin was 3.7%, down 0.3 percentage point from the previous
fiscal year.

Gross Profit Margin(%)
25
20.1 20.9 20.7
18.9 19.9

20
15
10
5
0

17

18

19

20

21

SGA Expenses to Net Sales(%)
20

Non-operating Income (Expenses) and Income (Loss)before Income Taxes and Non-controlling Interests

15

Non-operating income totaled ¥15,623 million in the fiscal year under review,
down ¥39 million, or 0.2%, from the previous fiscal year. Non-operating expenses
totaled ¥5,245 million, down ¥2,905 million, or 35.6%, from the previous fiscal
year. As a result, net non-operating income came to ¥10,378 million, up from
¥7,512 million in the previous year.
Ordinary income totaled ¥59,907 million, down ¥3,879 million, or 6.1%, fromthe previous year.
As a result, income before income taxes and non-controlling interests totaled¥46,401 million, down ¥56,319 million, or 54.8%, from the previous fiscal year.

10

16.7

16.6

16.6

16.9 17.0

17

18

19

20 21

5

0

Operating Income Margin(%)

Beverages
Net Sales:¥51,443 million (down 7.0% YoY)
● Operating Income:¥840 million (down 59.0% YoY)
● Operating Income Margin: 1.6% (down 2.1 percentage points)●

Demand for beverages fell due to stay-at-home policies, a decline intourists and closures in related industries, primarily hotels and restaurants.
DNP Despite an increase in sales of the alcoholic beverage Lemondo , net
sales declined due to reduced demand for beverages in connection withstay-at-home policies, fewer tourists and closures of businesses including
hotels, Japanese-style inns and restaurants.
Market94

Net Income Attributable to Parent Company Shareholders
Net income attributable to parent company shareholders totaled ¥25,088 million,
down ¥44,409 million, or 63.9%, from the previous fiscal year. Net income pershare was ¥89.32 (compared to net income per share of ¥235.18 in the previousyear).

4.0

4
3.3

3.6

3.7

19

20 21

3

2

2.2

1

0

17

18

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VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITYDATAManagement ʼs Discussion and Analysis

Liquidity and Capital Resources

Balance Sheet

Cash Flow

Total assets (¥ million)
2021.32020.32019.3

Cash flow from operating
activities (¥ million)

61,682

93,937

68,972

Cash flow from investing
activities (¥ million)−56,284

191,057−146,909

5,398

284,994−77,937

Free cash flow(¥ million)

Regarding consolidated cash flow in the fiscal year ended March 2021, net cash
provided by operating activities totaled ¥61,682 million, due mainly to ¥46,401
million in income before income taxes and non-controlling interests and ¥50,893
million in depreciation.
Net cash used in investing activities amounted to ¥56,284 million, mainly due
to payments of ¥50,992 million for purchases of property, plant and equipment
and payments of ¥10,992 million for purchases of intangible fixed assets.
Net cash used in financing activities amounted to ¥78,269 million, mainly due
to ¥52,490 million from the redemption of bonds and ¥18,527 million in dividend
payments.
As a result of these activities, cash and cash equivalents at the end of the fiscal
year in the consolidated cash flow statement totaled ¥304,223 million.
Free cash flow in the current fiscal year, which is the sum of cash flow fromoperating activities and cash flow from investing activities, amounted to revenue of¥5,398 million.

Capital Expenditures, Depreciation, Research andDevelopment Expenditures, etc.
Capital Expenditures andFree Cash Flow(¥ billion)
Capital expenditures
Free cash flow
300

285.0

250
200
150
100
50

86.0
57.1

59.6

71.5
41.1

57.2

71.6

5.4

0
-50
-100

96

−77.9

17

18

19

20 21

Capital expenditures in the fiscal year ended March 2021, which were mainly
focused on the establishment of new battery pouch manufacturing equipment,
totaled ¥71,649 million, up ¥14,487 million, or 25.3%, from the previous fiscal
year. By segment, capital expenditures in the Information Communication segment
were ¥26,067 million, up ¥6,058 million from the previous year and accounting for
36% of total capital expenditures. The Lifestyle and Industrial Supplies segment
was ¥30,025 million, up ¥8,760 million and accounting for 42%. The Electronics
segment was ¥11,988 million, up ¥186 million and accounting for 17%. The
Beverages segment was ¥1,931 million, down ¥736 million and accounting for 3%.
Adjustment was ¥1,638 million, up ¥219 million and accounting for 2%. Necessary
capital for the above investment was covered by funds on hand.
Depreciation in the fiscal year ended March 2021 was ¥50,893 million, down
¥3,582 million, or 6.6%, from the previous fiscal year. By segment, depreciation in
the Information Communication segment was ¥20,101 million, down ¥3,446
million from the previous fiscal year and accounting for 39% of total depreciation.
The Lifestyle and Industrial Supplies segment was ¥16,518 million, up ¥495
million and accounting for 32%. The Electronics segment was ¥9,416 million,
down ¥239 million and accounting for 19%. The Beverages segment was ¥2,891
million, up ¥102 million and accounting for 6%. Adjustment was ¥1,967 million,
down ¥494 million and accounting for 4%.
In addition, research and development expenditures for the fiscal year ended
March 2021 totaled ¥32,623 million, falling ¥980 million short of the total¥33,603 million in the previous fiscal year.

2021.32020.32019.3

1,825,019

1,721,724

1,775,022

Interest-bearing debt (¥ million)

158,555

211,646

166,350

Stockholdersʼ equity (¥ million)

1,043,977

915,779

996,162

Book value per share (¥)

3,716.85

3,260.38

3,300.52

DNPʼs total assets at the end of this fiscal year amounted to ¥1,825,019 million,up ¥103,295 million, or 6.0%, from the previous fiscal year.
Among current assets, cash and cash equivalents totaled ¥301,162 million,
down ¥71,851 million, or 19.3%, from the previous fiscal year. Trade receivables
totaled ¥324,625 million, down ¥6,173 million, or 1.9%. Inventories ofmerchandise and finished products, work in process, raw materials and supplies
totaled ¥126,771 million, down ¥7,509 million, or 5.6%. As a result, current
assets totaled ¥805,818 million, down ¥78,193 million, or 8.8%.
Among fixed assets, net property, plant and equipment totaled ¥420,030 million,up ¥10,662 million, or 2.6%, from the previous fiscal year. Intangible fixed assets
totaled ¥25,207 million, up ¥2,491 million, or 11.0%. Investments and other assets
totaled ¥573,964 million, up ¥168,335 million, or 41.5%. As a result, fixed assets
totaled ¥1,019,201 million, up ¥181,488 million, or 21.7%.
Current liabilities totaled ¥408,125 million, down ¥72,526 million, or 15.1%,
from the previous fiscal year. Long-term liabilities totaled ¥318,280 million, up¥45,782 million, or 16.8%. As a result, total liabilities amounted to ¥726,405
million, down ¥26,744 million, or 3.6%.
As of March 31, 2021, net assets totaled ¥1,098,614 million, up ¥130,039
million, or 13.4%, compared with the end of the previous fiscal year. This was due
mainly to an increase of ¥91,966 million, or 83.6%, in the valuation difference on
available-for-sale securities.
As a result, the equity ratio in the fiscal year under review was 57.2%, anincrease of 4.0 percentage points from the previous fiscal year.
As of March 31, 2021, a total of 324,240,346 shares of common stock have been
issued, of which 43,363,670 shares, or 13.37%, are held as treasury stock. The
total number of shares in treasury stock increased by 4,326 from the previous year.

ROE
(%)
8

7.3

6
4
2.5

2.6

2.6

2
0

Type ofsharesShares at
beginning offiscal year

Increase insharesduringfiscal year

Decrease Shares atin shares
end ofduringfiscal year fiscal year

SharesIssuedCommonStock324,240,346−−

324,240,346

Treasury
Stock

CommonStock43,359,344

4,444

118

43,363,670

Notes
1. The increase of 4,444 shares of common stock in treasury stock is due to the purchase of shares less than one unit.
2. The decrease of 118 shares of common stock in treasury stock is due to the sale of shares less than one unit.

-2
−3.5

-4

17

18

19

20

56.1

53.2

19

20

21

Equity Ratio
(%)
80

60

59.4

58.7

57.2

40

20

0

17

18

21

DNP Integrated Report 2021

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VALUE CREATION AT DNPValue creation
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Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

DATA

Consolidated Financial Statements

CONSOLIDATED BALANCE SHEETS
Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
March 31, 2021 and 2020
Thousands of
U.S. dollars (Note 3)

Millions of yen

Assets

2021

2021

2020

Current assets:
Cash and cash equivalents (Notes 4, 7 and 16)

Thousands of
U.S. dollars (Note 3)

Millions of yen

Liabilities and Net Assets

2021

2021

2020

Current liabilities:¥

304,223¥

377,367$

2,740,748

5,939

3,646

53,505Trade receivables (Notes 10 and 16)

324,625

330,799

2,924,550

Allowance for doubtful receivables(716 )(1,362 )(6,450 )Inventories (Note 6)

126,771

134,280

1,142,081

Prepaid expenses and other current assets (Notes 5, 10 and 16)

44,97639,280405,188805,818

884,010

7,259,622

Time deposits (Note 16)

Total current assets

Short-term bank loans (Notes 7 and 16)¥

37,321¥39,052$336,225

6,115

59,49855,090Trade payables (Notes 10 and 16)

226,607

238,066

2,041,505

Accrued expenses (Note 10)

44,37943,553399,811

Income taxes payable (Note 13)

7,124

16,62264,180Reserve for repairs

17,68820,636

159,351

Other current liabilities (Notes 7 and 10)

68,891

63,224620,640

408,125

480,651

3,676,802

Long-term debt (Notes 7 and 16)

115,119

113,098

1,037,108

Net defined benefit liability (Note 8)

35,17535,687

316,892

Other long-term liabilities (Notes 7, 10 and 13)

167,986

123,713

1,513,387

318,280

272,498

2,867,387

114,464

114,464

1,031,207

Capital surplus (Note 9)

145,025

145,024

1,306,532

Retained earnings (Note 9)

683,784

676,346

6,160,216

Treasury stock, at cost 43,363,670 shares in 2021 and
43,359,344 shares in 2020 (Note 9)(122,920)(122,911)(1,107,387)

820,353

812,923

7,390,568

202,018

110,052

1,819,983

Current portion of long-term debt (Notes 7 and 16)

Total current liabilities
Investments and advances:Non-consolidated subsidiaries and associated companies (Notes 10 and 16)

68,55964,108617,649

Investment securities (Notes 5, 7 and 16)

362,780

241,246

3,268,288

Other
Total investments and advances

624

485

5,621

431,963

305,839

3,891,558

Property, plant and equipment, at cost (Notes 7, 14 and 15):

Long-term liabilities:

Total long-term liabilities

Land

141,808

141,423

1,277,550

Buildings and structures

533,513520,308

4,806,423

Machinery and equipment

811,669

808,678

7,312,333

Leased assets and right-of-use assets

16,965

19,446

152,838

Construction in progress

13,23916,429119,270

Total
Accumulated depreciation
Net property, plant and equipment

Contingent liabilities (Note 18)
Net assets

1,517,194

1,506,284

13,668,414

Stockholdersʼ equity(1,097,164)(1,096,916)(9,884,360)

Common stock -420,030

409,368

3,784,054

Authorized: 745,000,000 shares;
Issued: 324,240,346 shares;

Other assets
111,933

Net defined benefit asset (Note 8)
Other (Note 13)
Total other assets

64,6891,008,406

55,27557,818497,973

167,208

122,507

1,506,379

1,721,724$ 16,441,613

Total stockholdersʼ equity
Total assets¥

1,825,019¥

Accumulated other comprehensive income
Valuation difference on available-for-sale securities (Note 5)
Net deferred gains (losses) on hedges (Note 17)
Foreign currency translation adjustments

12

6

108

(5,083)(3,449)(45,793 )Remeasurements of defined benefit plans (Note 8)

26,678(3,752)

240,342

Total accumulated other comprehensive income

223,625

102,857

2,014,640

Non-controlling interests

54,636

52,795492,216

Total net assets

1,098,614

968,575

9,897,424

1,721,724$ 16,441,613

Total liabilities and net assets¥

1,825,019¥

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF INCOMECONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020
Thousands of
U.S. dollars (Note 3)

Millions of yen

2021
Net sales (Note 19)¥

Cost of sales
Gross profit
Selling, general and administrative expenses (Note 11)
Operating income (Note 19)

1,335,440

2021

1,401,894$ 12,030,991

1,058,526

1,109,052

9,536,270

276,914292,8422,494,721

Valuation difference on available-for-sale securities

227,385

236,568

2,048,514

Net deferred gains on hedges

49,52956,274446,207¥

Other income (expenses) (Note 12):Interest and dividends income

4,342

5,587

39,117

Interest expenses(1,256)(1,466)(11,315)

Equity in earnings of affiliates

6,742

6,051

60,739Net income

Remeasurements of defined benefit plans

31,272(8,894)

281,731

(448)

(174)

(4,039)

Share of other comprehensive income (loss) in associates
accounted for using the equity method(3,004)50,087(27,063)

Non-controlling shareholders

Loss on devaluation of investment securities(2,905)(7,233)(26,171)

Impairment loss on fixed assets (Note 14)(4,102)(26,517)(36,955)

365

−

3,288

(1,446)(3,691)(13,027)(3,128)46,445(28,180)

46,401

102,719

418,027

134,008

4,561

33,815

18,62830,624

167,823

27,77372,095250,204

Net income
Net income attributable to non-controlling shareholders
Net income attributable to parent company shareholders

2,685
¥

25,08824,186

2,597¥

69,498$1,085,183(69,558)¥

148,228

¥

2,537

$

1,335,387¥

145,856

¥

(528)

$

1,314,019

Attributable to:2,372

21,368

3,064

Yen

U.S. dollars (Note 3)

2021

2021

2020

Per share information:
Net assets

26,063

120,455

Total other comprehensive income (loss)
Comprehensive income

Net gain (loss) on sales of investment securities

3,753

828,354(60,054)

79

Parent company shareholders

14,87591,947(20,942)

4,198

Current

250,204

10(20,991)

Deferred

$

(446)

(800)

Income taxes (Note 13):

72,095924,427

Income before income taxes and non-controlling interests¥(2,325)

466

Other

27,773Foreign currency translation adjustments(2,330)Compensation income

2021

2020

Other comprehensive income (loss)

Net gain (loss) on sales or disposal of property, plant and equipment

Foreign exchange translation gain (loss)

¥

DATA

Thousands of
U.S. dollars (Note 3)

Millions of yen

2021

2020

INITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）¥

3,716.85¥

3,260.38$

33.49

Net income

89.32

235.180.80

Diluted net income

89.28

235.080.80

The accompanying notes are an integral part of these consolidated financial statements.

226,018

The accompanying notes are an integral part of these consolidated financial statements.

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Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITYDATACONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020
Millions of yen
Stockholders' equity
Number ofshares issued(in thousands)

Balance at April 1, 2019
Cumulative effects of changes in accounting policies
Adjusted balance at April 1,2019
Changes of items during the period
Cash dividends paid
Net loss attributable to parent company shareholders
Change in ownership interest of parent due to transactions with non-controlling interests
Change in treasury stock arising from change in equity in entities accounted for using equity method
Purchases of treasury stock
Disposal of treasury stock
Changes in valuation difference on available-for-sale securities
Changes in deferred gains (losses) on hedges
Changes in foreign currency translation adjustments
Changes in remeasurements of defined benefit plans
Changes in non-controlling interests
Total changes of items during the period
Balance at March 31, 2020
Balance at April 1, 2020
Changes of items during the period
Cash dividends paid
Net income attributable to parent company shareholders
Change of scope of consolidation
Change in ownership interest of parent due to transactions with non-controlling interests
Purchases of treasury stock
Disposal of treasury stock
Changes in valuation difference on available-for-sale securities
Changes in deferred gains (losses) on hedges
Changes in foreign currency translation adjustments
Changes in remeasurements of defined benefit plans
Changes in non-controlling interests
Total changes of items during the period
Balance at March 31, 2021

324,240
324,240

Capitalsurplus

Commonstock¥

114,464
114,464

Accumulated other comprehensive income¥

144,766
144,766

Treasurystock,
at costRetainedearnings¥

626,949(821)
626,128¥(62,898)(62,898)

Valuationdifference on
available-for-salesecurities

Net deferredgains (losses)on hedges

Foreign currencytranslation
adjustments

Remeasurementsof defined
benefit plans

Non-controllinginterests

Total net assets

¥

¥

¥

¥

¥

¥

170,073(54)
170,019(1)(1)(2,399)(2,399)

5,209
5,209

50,45950,4591,046,622(875)
1,045,747

324,240
324,240

114,464
114,4642580
258
145,024
145,024(19,280)
69,49850,218676,346
676,3460(60,013)0(60,013)(122,911)(122,911)(59,967)(59,967)
110,052
110,0527
7
6
6(1,050)(1,050)(3,449)(3,449)(8,961)(8,961)(3,752)(3,752)

2,336
2,336
52,79552,795(19,280)
69,498258
0(60,013)
0(59,967)7(1,050)(8,961)
2,336(77,172)
968,575
968,575

324,240

114,4641(0)
1145,025(17,977)
25,088
327
(0)
7,438
683,784(9)0(9)(122,920)

91,966
91,966
202,0186
6
12(1,634)(1,634)(5,083)30,43030,43026,6781,841
1,841
54,636(17,977)
25,088327
1(9)
0
91,966
6(1,634)30,4301,841
130,039
1,098,614

¥

¥

¥

¥

¥

¥

¥

¥

¥

¥

Thousands of U.S. dollars (Note 3)
Stockholders' equity
Number ofshares issued(in thousands)

Balance at April 1, 2020
Changes of items during the period
Cash dividends paid
Net income attributable to parent company shareholders
Change of scope of consolidation
Change in ownership interest of parent due to transactions with non-controlling interests
Purchases of treasury stock
Disposal of treasury stock
Changes in valuation difference on available-for-sale securities
Changes in deferred gains (losses) on hedges
Changes in foreign currency translation adjustments
Changes in remeasurements of defined benefit plans
Changes in non-controlling interests
Total changes of items during the period
Balance at March 31, 2021

324,240
324,240

1,031,207$

1,031,207

Retainedearnings

Capitalsurplus

Commonstock$

Accumulated other comprehensive income$

1,306,523

$

9
(0)
9
1,306,532

Treasurystock,
at cost$6,093,207$ (1,107,306)$(161,955)
226,0182,946(0)67,0096,160,216

(81)
0
(81)
$ (1,107,387)

Valuationdifference on
available-for-salesecurities

Net deferredgains (losses)on hedges

Foreign currencytranslation
adjustments

Remeasurementsof defined
benefit plans

Non-controllinginterests

Total net assets$

991,459$54$(31,072)$(33,802)$475,631$8,725,901$

828,524
828,524
1,819,983

$

54
54
108

$

(14,721)(14,721)(45,793)$274,144274,144
240,342$

16,585
16,585492,216$(161,955)
226,018
2,946
9
(81)
0
828,524
54(14,721)274,144
16,585
1,171,523
9,897,424

The accompanying notes are an integral part of these consolidated financial statements.

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INITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

DATA

CONSOLIDATED STATEMENTS OF CASH FLOWS
Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020
Thousands of
U.S. dollars (Note 3)

Millions of yen

2021

2021

2020

2021

Cash flows from operating activities:
Income before income taxes and non-controlling interests

Thousands of
U.S. dollars (Note 3)

Millions of yen

2021

2020

Cash flows from financing activities:¥

46,401¥

102,719$

418,027

Adjustments to reconcile income before income taxes
and non-controlling interests to net cash provided by operating activities:

Net decrease in short-term bank loans(1,929)(3,424)(17,378)

Proceeds from long-term debt

4,295

2,700

38,694

Repayments of long-term debt

(3,404)(2,521)(30,667)

Proceeds from issuance of debentures-

99,496-(52,490)(51,490)(472,883)(11)(60,212)(99)

Depreciation

50,89354,475458,495

Payments for redemption of debentures

Impairment loss on fixed assets

4,102

26,51736,955

Payments for purchases of treasury stocks

Allowance for doubtful receivables

(235)

(186)

(2,117)

Interest paid

(1,448)(1,570)(13,045)

Dividends paid

(17,976)(19,283)(161,946)

Net defined benefit asset(3,381)(7,441)(30,459)

Net defined benefit liability

363

2,170

3,270

Equity in earnings of affiliates
Amortization of goodwill(6,742)(6,051)(60,739)

994

1,659

8,955

(552)

(510)

(4,973)(4,754)(4,467)(42,829)(78,269)(41,281)(705,126)

(416)

(118)

(3,748)Net increase (decrease) in cash and cash equivalents(73,287)

243,595(660,243)

377,367

133,772

3,399,703

143

-

1,288

Dividends paid to non-controlling shareholders
Other financing activities
Net cash used in financing activities

Interest and dividends income(4,342)(5,587)(39,117)

Interest expenses

1,256

1,466

11,315Net loss (gain) on sales of investment securities

3,004(50,087)

27,063

Loss on devaluation of investment securities

2,905

7,233

26,171

Net loss (gain) on sale or disposal of property, plant and equipment

2,411(24,368)

21,721

Cash and cash equivalents at beginning of year

Trade receivables

6,253

22,19556,333

Increase in cash and cash equivalents
resulting from merger with unconsolidated subsidiaries

Inventories

7,066(1,286)63,658Cash and cash equivalents at end of year (Note 4)(11,531)(9,011)(103,883)(111)

10,236(999)

99,306124,653894,649

Payments for repair costs(8,116)(14,077)(73,117)Extra retirement payments

(450)

(336)

(4,054)

Payments of income taxes(29,058)(16,303)(261,784)

61,682

93,937555,694

Net decrease (increase) in time deposits(2,255)

135,777(20,315)

Payments for purchases of property, plant and equipment(50,993)(39,932)(459,396)

Proceeds from sales of property, plant and equipment

2,025

46,104

18,243

Payments for purchases of investment securities(945)(1,028)(8,514)

Proceeds from sales of investment securities

5,504

58,112

49,586

Payments for purchases of stock in subsidiaries
resulting in a change in the scope of consolidation(2,552)(1,155)(22,991)

Proceeds from purchases of stock in subsidiaries
resulting in a change in the scope of consolidation

21

39

189

(10,992)(9,775)(99,027)

Changes in assets and liabilities

Trade payables
Other assets and liabilities
Sub-total

Net cash provided by operating activities

Effect of exchange rate changes on cash and cash equivalents¥

304,223¥

377,367$

2,740,748

The accompanying notes are an integral part of these consolidated financial statements.

Cash flows from investing activities:

Payments for purchases of intangible assets
Interest and dividends received

8,260

9,197

74,414

Other investing activities(4,357)(6,282)(39,252)(56,284)

191,057(507,063)

Net cash provided by (used in) investing activities

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Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITY

DATA

Notes to Consolidated Financial Statements
Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
March 31, 2021 and 2020

1. Basis of Presenting the Consolidated Financial Statements
Dai Nippon Printing Co., Ltd. (hereinafter referred to as the "Company") and its domestic subsidiaries maintain their books of account and prepare
their financial statements in conformity with accounting principles and practices generally accepted in Japan ("Japanese GAAP"), which are different
in certain respects as to application and disclosure requirements from International Financial Reporting Standards("IFRS"). And its foreignsubsidiaries maintain their books of account and prepare their financial statements in conformity with either IFRS or accounting principles generally
accepted in the United States of America ("US GAAP"), with adjustments for the specified five items required by the Practical Issues Task Force
No.18, issued by the Accounting Standards Board of Japan ("ASBJ"), as applicable.
The accompanying consolidated financial statements have been compiled from the consolidated financial statements filed with the Financial
Services Agency of Japan as required by the Financial Instruments and Exchange Act of Japan. Certain reclassifications of accounts andmodifications have been made in the accompanying consolidated financial statements to facilitate understanding by readers outside Japan. Certain
reclassifications have also been made in the 2020 financial statements to conform with current year presentations. In addition, the notes to theconsolidated financial statements include additional information that is not required for disclosure under Japanese GAAP.
2. Significant Accounting Policies
Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its significant majority-owned subsidiaries. All
significant intercompany accounts and intercompany transactions have been eliminated in consolidation.
Consolidated financial statements include the accounts of the Company and 119 consolidated subsidiaries. Some subsidiaries are consolidatedwith their fiscal year ends that differ from that of the Company. Significant transactions that took place between their fiscal year ends and theCompanyʼs fiscal year end are reflected in the consolidated financial statements.
Investments in non-consolidated subsidiaries are stated at cost and, for valuation of such investments, the equity method has not been applied
since these investments are considered immaterial in the aggregate. However, investments are devalued if the decline in value is judged to be otherthan temporary.
Investments in 20% to 50% associated companies are principally accounted for by the equity method.
The differences between costs and underlying net assets at the date of investment in consolidated subsidiaries are included in other assets andare amortized over a period of mainly five years.
Translation of foreign currency accounts
Monetary assets and liabilities denominated in foreign currencies of the Company and its domestic subsidiaries are translated into Japanese yen at
the exchange rates at the balance sheet date. Revenues and expenses denominated in foreign currencies are translated at the exchange rates
prevailing during the year. The resulting translation gains or losses are included in other income (expenses).
The translation of foreign currency financial statements of foreign consolidated subsidiaries into Japanese yen has been made for consolidation
purposes in accordance with the translation method prescribed in the accounting standard for foreign currency transactions. The balance sheet
accounts of the foreign consolidated subsidiaries are translated at the exchange rates at the balance sheet date, except for common stock andcapital surplus, which are translated at historical rates. Revenue and expense accounts are translated at the average exchange rates prevailing
during the year. The resulting translation adjustments are presented as "foreign currency translation adjustments" as reported in a separate
component of accumulated other comprehensive income and "non-controlling interests" in the consolidated balance sheets.
Cash and cash equivalents
Cash and cash equivalents include all highly liquid investments, generally with original maturities of three months or less, that are readily convertible
to known amounts of cash and are so near maturities that they present an insignificant risk of changes in value.
Inventories
Inventories are stated at cost that is determined substantially by the average method being written-down to reflect the decline of profitability.
Marketable securities and investment securities
Debt securities that are held to maturity with positive intent and ability ("held-to-maturity debt securities") are stated at amortized cost.
Available-for-sale securities with available fair market values are stated at fair value. Unrealized gains and losses on available-for-sale securities, netof applicable taxes, are reported in a separate component of accumulated other comprehensive income in the consolidated balance sheets.
Non-marketable securities are stated at cost determined by the average method. For other than temporary declines in fair value, the carrying
amount of investment securities is reduced to net realizable value by a charge to income.
Property, plant and equipment and depreciation
The Company and its domestic consolidated subsidiaries mainly use the declining-balance method. However, depreciation of buildings (excluding
facilities attached to buildings) acquired on or after April 1, 1998 and of facilities attached to buildings and structures acquired on or after April 1,2016 is computed by the straight-line method.
Assets with an acquisition cost of ¥100,000 ($901) or more but less than ¥200,000 ($1,802) are depreciated equally over three years.
Foreign consolidated subsidiaries mainly use the straight-line method.
The estimated useful lives are summarized as follows:
Buildings and structures
Machinery and equipment

2 to 60 years
2 to 17 years

Leased assets
Leased assets with transfer of ownership are depreciated using the same depreciation method applied to owned fixed assets.
Finance leases that do not transfer ownership are capitalized. Depreciation for leased assets is computed on a straight-line basis over the lease
period with a residual value of zero.
Right-of-use assets
Depreciation for right-of-use assets is computed on a straight-line basis over the lease period with a residual value of zero.
106

Intangible assets
Intangible assets included in other assets are carried at cost less accumulated amortization calculated by the straight-line method over theirestimated useful lives. Software for internal use included in intangible assets is amortized by the straight-line method over five years.
Impairment loss on fixed assets
The Company and its subsidiaries review fixed assets for impairment whenever events or changes in circumstance indicate the carrying amountof an asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or asset groupexceeded the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of the asset or asset
group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, whichis the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition.
Employeesʼ retirement benefits
The Company and domestic significant consolidated subsidiaries applied the accounting standard for employeesʼ retirement benefits. Under theaccounting standard, accrued pension and liability for employeesʼ retirement benefits has been provided based on the estimated amounts of projectedpension and severance obligation and fair value of plan assets at the end of the fiscal year. The benefit formula basis is applied for the method of
attributing expected retirement benefits to periods. Prior service cost is being amortized as incurred by the straight-line method over the period within
the average remaining service periods (primarily six years) of the eligible employees. Actuarial gains and losses have been amortized from the following
fiscal year by the declining-balance method over the periods within the average remaining service periods (primarily nine years) of the eligible employees.
Research and development expenses
Research and development expenses are charged to income as incurred.
Income taxes
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted tax
laws to the temporary differences.
Derivatives and hedging activities
The Company and certain consolidated subsidiaries use derivative financial instruments ("derivatives") for foreign currency forward contracts, tomanage the risk arising from fluctuation in foreign currency exchange rates. The Company and its subsidiaries do not enter into derivatives contracts
for speculative purposes.
Derivatives are carried at fair value and changes in fair value are recognized as gains or losses, unless the derivatives qualify for the "alternative
method" of hedge accounting as described below.
If derivatives meet certain hedging criteria, recognition of gains or losses resulting from changes in the fair value of derivatives is deferred until
the related gains or losses on hedged items are recognized.
In cases where foreign currency forward contracts meet certain hedging criteria, the hedged items are stated by the contracted rates ("alternative
method").
Per share information
Net assets per share were computed based on the number of shares outstanding after deducting treasury stock at March 31, 2021 and 2020,
respectively.
Net income per share was computed based on the average number of shares of common stock outstanding after deducting treasury stocks during eachyear. Necessary adjustments were made to the net income or the number of shares for diluted net income per share in order to reflect dilutive effects.
Reserve for repairs
The reserve for repairs is provided based on a reasonable estimate of the amount of repair costs that will be required in the future to repair defects
for certain products.
Significant Accounting Estimates
1. Reserve for repairs(1) The reserve for repairs as of March 31, 2021 was ¥67,179 million.
(2) Other information
The Company has recognized the reserve for repairs.
The reserve for repairs is provided based on a reasonable estimate of the amount of repair costs that will be required in the future,by conducting scientific testing and analysis of defects for certain wallpaper products.
The reasonable estimate is calculated based on the unit repair costs and the quantity of repairs. The unit repair costs are based on the past
repair costs and include fluctuation risks of the future payroll costs and the material costs. And the quantity of repairs is estimated based on thequantity of the production of the product that may be subject to repair in the future.
Therefore, the amount of the reserve for repairs may be affected by fluctuations in the payroll costs and the material costs, etc. and by theconditions of defects occurrence, etc.
If the amount of actual payments differs from the estimates, it may have a significant impact on the amount of the reserve for repairs
recognized in the consolidated financial statements of the next fiscal year.
2. Deferred tax assets(1) Deferred tax assets as of March 31, 2021 were ¥41,118 million.
(2) Other information
Deferred tax assets are recognized for deductible temporary differences, tax loss carryforwards and tax credits carryforward to the extent that is
expected to be recoverable by future taxable income based on business plans, etc. The timing of recovering and the amount of deferred tax assets
are reasonably estimated and calculated.
When the company calculates deferred tax assets, the estimate is based on the business plans approved by the Board of Directors. While it is
not possible to accurately predict when the COVID-19 pandemic will settle down and its effect on the business environment, accounting estimatesare based on the assumption that the effect of COVID-19 on the business will continue for a certain period.
If the main assumption that is used to calculate the amount recognized in the consolidated financial statements of the current fiscal yearchanges, it may have a significant impact on the amount recognized in the consolidated financial statements of the next fiscal year.
DNP Integrated Report 2021

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Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

DATA

Standards and guidance not yet adopted"Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020)"Implementation Guidance on Accounting Standard for Revenue Recognition" (ASBJ Guidance No. 30, March 26, 2021)

The acquisition cost and aggregate fair value of marketable and investment securities classified as available-for-sale securities including thosewith no fair value as of March 31, 2021 and 2020 were as follows:

1. Overview
The above standard and guidance provide comprehensive accounting principles for revenue recognition. Under the standard and guidance,
revenue is recognized by applying the following five steps:

March 31, 2021

Acquisition cost

Unrealized gains

Unrealized losses

Stocks¥72,981¥

290,047¥

931¥

83,344¥290,066¥

931

Millions of yen

Total

19

¥

372,479-

March 31, 2021

Acquisition cost

Unrealized gains

Unrealized losses

Stocks

$

$

$

Total

3. Effects of the application of the standards
The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects of the standard andguidance on the consolidated financial statements.

657,486
93,361Others

10,382$

750,847

Additional information(Accounting estimates on the effect of Coronavirus Disease ("COVID-19"))
The Company and its consolidated subsidiaries estimate the possibility of realization of deferred tax assets, etc. reasonably based on the available
information as of the time of preparing the consolidated financial statements.
Accounting estimates are based on the assumption that the effect of COVID-19 on the business will continue for a certain period.
Actual results may differ from those estimates due to uncertainties in estimation.
3. Basis of Translating Financial Statements
The consolidated financial statements are expressed in Japanese yen in accordance with Japanese GAAP. The Japanese yen amounts have beentranslated into U.S. dollar amounts, solely for the convenience of the readers, at the rate of ¥111 = U.S.$1, the approximate exchange rate on theTokyo Foreign Exchange Market at March 31, 2021. Such translations should not be construed as representations that the Japanese yen at that or
any other rate could be converted into U.S. dollars.

$

Thousands of
U.S. dollars (Note 3)

304,223¥

2,613,207

377,367$$

Unrealized gains

Unrealized losses

Stocks

¥

¥

¥

Total

83,321

161,399

10,293

Others¥93,614

301

¥

300

Difference¥¥

Carrying amount

Others$March 31, 2020

Carrying amount

Others¥

2,712

161,407

¥

2,703

(1)

Due in one
year or less

¥

-

¥

10,00010,301¥

250,944

Due after one year
through five years

Over five years

¥

331

¥

¥

331

10,000

OthersDue in one
year or lessMarch 31, 2021

$

-

-

¥

-

Due after one year
through five years

Over five years

$

$

2,982

90,090$-90,090

$

2,982

-

$

-

Millions of yen

Due in one
year or lessCorporate bonds¥-

Due after one year
through five years

Over five years¥¥

10,000¥Difference

$

4,077

240,643

Millions of yen

OthersFair value$

Fair value¥

The redemption schedules for securities with maturities at March 31, 2021 and 2020 were as follows:

March 31, 2020

Thousands of U.S. dollars (Note 3)

March 31, 2021

93,532-Millions of yen¥

3,355,667

The acquisition cost is the amount after recognizing a loss on devaluation of investment securities. Loss on devaluation of investment securities
for the years ended March 31, 2021 and 2020 was ¥2,905 million ($26,171 thousand) and ¥7,082 million, respectively.
If the market value of the security declines by 50% or more from its acquisition cost as of the end of the fiscal year, a loss on devaluation of
investment securities is recorded for the difference between the market value and the acquisition cost as an impairment loss. If the decline ranges
between about 30% and 50%, a loss on devaluation of investment securities for the amount deemed necessary is recorded considering its
recoverability, etc.

The carrying amount and aggregate fair value of marketable and investment securities classified as held-to-maturity debt securities as of March 31,
2021 and 2020 were as follows:

Others4,077

8

OthersFair value$

The proceeds from sales of available-for-sale securities for the years ended March 31, 2021 and 2020 were ¥5,423 million ($48,856 thousand)and ¥55,730 million, respectively. The gross realized gains on these sales for the years ended March 31, 2021 and 2020 were ¥1,874 million($16,883 thousand) and ¥51,450 million, respectively, and the gross realized losses on these sales for the years ended March 31, 2021 and 2020
were ¥4,878 million ($43,946 thousand) and ¥1,363 million, respectively.

Corporate bonds

Carrying amount

3,262,135

Thousands of U.S. dollars (Note 3)

2,740,748

5. Marketable Securities and Investment Securities

March 31, 2021

8,387

Acquisition cost

2021

2020

Fair value$-

March 31, 2020

Corporate bonds

Cash and cash equivalents as of March 31, 2021 and 2020 were comprised of the following:
2021

8,387

171

March 31, 2021

4. Cash and Cash Equivalents

Millions of yen

2,613,036

Millions of yen

Application of "Accounting Standard for Disclosure of Accounting Estimates"“Accounting Standard for Disclosure of Accounting Estimates" (ASBJ Statement No. 31, March 31, 2020) was applied starting at the fiscal year
ended March 31, 2021 and the significant accounting estimates were reported in the consolidated financial statement.
However, the significant accounting estimates of the fiscal year ended March 31, 2020 were not reported in accordance with transitional
treatment set forth in the proviso of Paragraph 11 of “Accounting Standard for Disclosure of Accounting Estimates.”¥

362,097

Thousands of U.S. dollars (Note 3)

2. Effective date
Effective from the beginning of the fiscal year ending March 31, 2022.

Cash and deposits (excluding time deposits and short-term investments (securities)
with a maturity over three months)

10,363

OthersStep 1: Identify contract(s) with customers.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the separate performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

Fair value¥

10,000

332
-

¥

332

-

¥

-

(9)

Millions of yen

108

302

Fair value¥

300

Difference¥(2)

DNP Integrated Report 2021

109

TOP MESSAGE

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

DATA

6. Inventories
Inventories at March 31, 2021 and 2020 consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

2021
Merchandise and finished products

¥

2020

75,540¥78,199$The aggregate annual maturities of finance lease obligations after March 31, 2021 were as follows:

2021

Years ending March 31

680,541

2022

Millions of yen

¥

3,059

Thousands of
U.S. dollars (Note 3)$

27,559Work in process

27,81032,232

250,541

2023

2,542

22,901

Raw materials and supplies

23,421

23,849210,999

2024

1,246

11,224¥

126,771¥

134,280$

1,142,081

7. Short-term Bank Loans and Long-term Debt
Short-term bank loans at March 31, 2021 and 2020 were represented by bank loans and bank overdrafts, etc., bearing interest at an average rate of
0.48% per annum for 2021 and 0.46% per annum for 2020.
Long-term debt at March 31, 2021 and 2020 consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

2021

2021

2020

Unsecured debentures
0.270~0.580% due 2027 and thereafter¥

100,000¥

100,000$

900,9010.180~0.290% due 2024

2,500

2,500

0.160~0.180% due 2023

1,050

1,050

22,5239,459

0.100~0.376% due 2022

3,570

3,570

32,1620.150~1.358% due 2021-

52,490-Collateralized loans, maturing 2022~2027

2,608

1,964

23,495

Unsecured loans, maturing 2022~2027

11,506

11,022

103,658

121,234

172,596

1,092,198(6,115)(59,498)(55,090)

2025

892

8,036

2026

617

5,559

2027 and thereafter

572

5,153

¥

8,928

$

80,432

8. Retirement Benefits
The Company and its domestic consolidated subsidiaries have a lump-sum retirement plan, defined benefit corporate pension plan and defined
contribution pension plan. In some cases, additional retirement benefits were paid when an employee retired. In addition, certain foreign subsidiaries
have a defined benefit pension plan. Upon retirement or termination of employment for reasons other than the cause of dismissal, employees areentitled to lump-sum payments based on the current rate of pay, length of services and accumulated number of points determined based on theemployment services.
Under the Defined Benefit Pension Plan Law, the Company established new defined benefit pension plans on March 1, 2005 under which most of
the retirement benefit liability of the Company and some of its subsidiaries is covered by the employeesʼ pension fund. In addition, the Company
established retirement benefit trusts.
Of consolidated subsidiaries, 48 adopt a defined benefit corporate pension plan, 7 adopt a defined contribution pension plan, and 53 adopt a
lump-sum retirement plan. Certain consolidated subsidiaries apply the simplified method for the calculation of net defined benefit liability andretirement benefit costs.
Reconciliation of the beginning and ending balance of the projected benefit obligation at March 31, 2021 and 2020 was as follows:

Current portion of long-term debt¥

115,119¥

113,098$

1,037,1082021
Finance lease obligations

¥

8,928
(3,059)Current portion of lease obligations
¥

5,869

2021

2020
¥

9,961

$

6,571

80,432(27,559)(3,390)¥

Balance at the beginning of year¥$

52,873

2021

2020

272,576¥

268,929

Interest rates on collateralized loans ranged from 0.15% to 0.84% per annum for 2021 and from 0.15% to 0.84% per annum for 2020, whileinterest rates on unsecured loans ranged from 0.00% to 4.75% per annum for 2021 and from 0.40% to 1.85% per annum for 2020.
The aggregate annual maturities of long-term debt after March 31, 2021 were as follows:

13,496

13,656

121,585

1,318

1,075

11,874

901

(930)

8,117

(11,195)(10,378)(100,856)

Change in scope of consolidation
Other
Balance at the end of year

¥

1

121

9

(240)

103

(2,162)276,857¥

272,576

Millions of yen

Years ending March 31

2022

¥

2023

$

2,200

Thousands of
U.S. dollars (Note 3)

2021

Change in plan assets:
Balance at the beginning of year

¥

7,364

66,342

1,628

14,667¥3,800

34,234

100,127

902,045

121,234

2021

2020

301,578¥

305,576$

2,716,919

Expected return on plan assets

7,700

7,807

69,369Actuarial gain/loss

43,948(12,307)395,928

Contributions by the employer

9,176

9,252

82,667

Benefits paid

(8,699)(8,813)(78,369)

Balance at the end of year(87)¥353,616

(784)

63
¥

301,578$

3,185,730

55,0902024
2026

2,494,207

19,8202025
2027 and thereafter

110

6,115

$

Reconciliation of the beginning and ending balance of the plan assets at March 31, 2021 and 2020 was as follows:

Other
Thousands of
U.S. dollars (Note 3)

2,455,640

Service cost

Millions of yen

The assets pledged as collateral for the Company and its consolidated subsidiariesʼ indebtedness, such as property, plant and equipment andother assets, were ¥7,194 million ($64,811 thousand) and ¥6,129 million at March 31, 2021 and 2020, respectively.

$Interest cost
Benefits paid
Thousands of
U.S. dollars (Note 3)

Millions of yen

2021

Change in projected benefit obligation:

Actuarial gain/loss

Finance lease obligations at March 31, 2021 and 2020 that are included in other long-term liabilities consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen$

1,092,198

DNP Integrated Report 2021

111

TOP MESSAGE

Reconciliation of the projected benefit obligation and plan assets to net defined benefit liability and asset recognized in the consolidated balance
sheets as of March 31, 2021 and 2020 was as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2021¥

Funded projected benefit obligation
Plan assets
Unfunded projected benefit obligation¥

Net amount of liabilities and assets recognized in consolidated balance sheets

241,787¥¥$

2,178,261(301,578)(3,185,730)(111,829)(64,527)(1,007,469)

35,07035,525315,946(76,759)¥(76,758)(29,002)$(1,008,406)(64,689)¥(29,002)(691,523)
316,892

35,687(111,933)

Net defined benefit asset
Net amount of liabilities and assets recognized in consolidated balance sheets

237,051(353,616)

35,175Net defined benefit liability

2021

2020

$

(691,514)

The components of net periodic benefit costs for the years ended March 31, 2021 and 2020 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2021¥

Service cost (*1)(*2)

2021

2020

13,475¥

13,636$

121,396

Interest cost

1,318

1,075

11,874

Expected return on plan assets(7,700)(7,807)(69,369)

Actuarial gain/loss

1,155(1,842)

10,405458

Amortization of prior sevice cost¥

Net periodic benefit costs of the defined benefit plan

8,706

4,126

459
¥

5,521

$

78,432(*1) Employees' contribution to the corporate pension fund is deducted from "Service cost."(*2) Retirement benefit expenses booked by consolidated subsidiaries applying the simplified method are included in "Service cost."(*3) In addition to the retirement benefit costs listed above, additional retirement benefits were recognized as other expenses in the amount of ¥523 million for the year ended March 31, 2021.

Remeasurements of defined benefit plans, before income-tax effect, recorded under other comprehensive income (loss) for the years ended
March 31, 2021 and 2020 consisted of:Thousands of
U.S. dollars (Note 3)

Millions of yen

2021
Actuarial gain/loss

¥

Total

¥

(13,241)459

Prior service cost
¥

2021

2020

44,26644,725

$

4,135

459
¥

(12,782)398,793$402,928

Remeasurements of defined benefit plans, before income-tax effect, recorded under accumulated other comprehensive income at March 31, 2021
and 2020 consisted of:Thousands of
U.S. dollars (Note 3)

Millions of yen

2021
Unrecognized actuarial gain/loss

¥

Total

¥

9

Unrecognized prior service cost
¥

2021

2020

38,09038,099(6,176)$343,153$

343,234(6,625)INITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

DATA

Assumptions used for the years ended March 31, 2021 and 2020 were set forth as follows:
2021
Long-term expected rate of return on plan assets

2020

0.7%

0.7%

mainly 2.5%

mainly 2.5%

Discount rate
* The discount rates are presented based on the weighted-average of multiple discount rates.

The amounts of required contribution to defined contribution plans for the consolidated subsidiaries were ¥371 million ($3,342 thousand) and¥279 million for the years ended March 31, 2021 and 2020, respectively.
9. Net Assets
Japanese companies are subject to the Companies Act of Japan (the "Companies Act"). The significant provisions in the Companies Act that affectfinancial and accounting matters are summarized below;(a) Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at
the stockholdersʼ meeting. For companies that meet certain criteria such as; (1) having a Board of Directors, (2) having independent auditors, (3)having a Board of Corporate Auditors, and (4) the term of service of directors is prescribed as one year rather than two years of normal term in its
articles of incorporation, and the Board of Directors of such company may declare dividends (except for dividends in kind) at any time during the
fiscal year if the company has prescribed so in its articles of incorporation. The Company meets all the above criteria. However, its articles ofincorporation have not stipulated that the Board of Directors may declare dividends at any time during the fiscal year.
The Companies Act permits companies to distribute dividends-in-kind (non-cash assets) to stockholders subject to a certain limitation andadditional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of thecompany so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock.
The limitation is defined as the amount available for distribution to the stockholders, but the amount of net assets after dividends must be
maintained at no less than ¥3 million.
Cash dividends of ¥32.00 ($0.29) per share, ¥8,988 million ($80,973 thousand) in aggregate, were approved at the general stockholdersʼmeeting held on June 29, 2021 with respect to the year ended March 31, 2021.
(b) Increases/decreases and transfer of common stock, reserve and surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained
earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such
dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock. Under theCompanies Act, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also
provides that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can be transferred among theaccounts under certain conditions upon resolution of the stockholders.
(c) Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of
Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the stockholders that is determined bya specific formula.
Treasury stock increased by 4,326 shares, and this is comprised of an increase of 4,444 shares due to purchase of odd shares, and decreaseof 118 shares due to sales of odd shares for the year ended March 31, 2021.
Under the Companies Act, stock acquisition rights are presented as a separate component of net assets.
The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stockacquisition rights are presented as a separate component of net assets or deducted directly from stock acquisition rights. At present, theCompany has not issued such stock acquisition rights.

10. Accounts with Non-consolidated Subsidiaries and Associated Companies

Thousands of
U.S. dollars (Note 3)

Millions of yen

2021

2020
15%

18%

Stocks37%

36%

Alternative investments

33%

36%

Other

15%

10%

Total

100%

100%

(*1) The main plan assets in “Alternative investments” are hedge funds, multi-asset management, infrastructure funds, and investment in real estate.
(*2) The total amount of plan assets includes the retirement benefit trusts for a corporate pension fund representing 15% and 15% for the years ended March 31, 2021 and 2020, respectively.

112

BUSINESS RESULTS
Initiatives forvalue creation

Account balances with non-consolidated subsidiaries and associated companies as of March 31, 2021 and 2020 were summarized as follows:

The major categories of plan assets as of March 31, 2021 and 2020 were as follows:

Bonds

Medium-termManagement Plan

81

(449)
¥

VALUE CREATION AT DNPValue creation
process

Trade receivables
Other current assets
Investment securities
Long-term loans receivable
Other investments
Trade payables
Accrued expenses
Other current liabilities
Other long-term liabilities

¥

2021
7,834
339
60,019
1,464
7,076
3,415
320
1,233
10

¥

2020
6,989
346
57,649
140
6,319
3,588
322
1,053
-

$

2021
70,577
3,054
540,712
13,18963,74830,766
2,883
11,10890

DNP Integrated Report 2021

113

TOP MESSAGE

11.Selling, General and Administrative Expenses

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation

¥

¥

2021
66,443
7,145
1,839
11,34732,623
107,988
227,385¥¥2020
68,461
6,599
927
13,08933,603
113,889
236,568$$2021
598,586
64,36916,568102,225
293,901
972,865
2,048,514

12. Other Income (Expenses)
The following types of income from non-consolidated subsidiaries and associated companies were included in other income (expenses).
Thousands of
U.S. dollars (Note 3)

Millions of yen

2021
¥

2021

2020
7
0
7
53

¥

353
54

$

63
0
63
477

13. Income Taxes
The Company and its consolidated subsidiaries are subject to a number of different taxes based on income, which, in the aggregate, resulted in anormal effective statutory tax rate.
The actual effective tax rate reflected in the accompanying consolidated statements of income differs from the normal effective statutory tax rate
primarily due to the effect of permanently non-deductible expenses, current operating losses and different tax rates applicable to foreignsubsidiaries, etc.
The following is a reconciliation of the difference between the normal effective statutory tax rate and the actual effective tax rate for the year ended
March 31, 2021, although no reconciliation for 2020 was shown because the difference was not more than five percent of the statutory tax rate.
2021-

Expenses not deductible for income tax purposes

2.1-

Amortization of consolidation goodwill

0.3-

Change in valuation allowance

8.7-

Equity in earnings of affiliates

(4.4)

-

Per capita inhabitantsʼ taxes

1.2-

Tax credit

(0.8)

-

Tax rate differences in consolidated subsidiaries

1.1-

Undistributed earnings of subsidiaries

0.5-

The effective income tax rate change of subsidiaries

0.6

-

Other

0.2

-

40.1%

-

Actual effective tax rate

2021
Deferred tax assets:
Repair reserve provisions
Impairment loss on fixed assets
Tax loss carryforwards
Net defined benefit liability
Accrued bonuses
Loss on devaluation of investment securities
Accrued enterprise tax
Loss on write-down of inventories
Excess provision for doubtful receivables
Other
Total deferred tax assets
Valuation allowance for tax loss carryforwards (*2)
Valuation allowance for deductible temporary differences
Total valuation allowance (*1)
TotalDeferred tax liabilities:
Unrealized gain on available-for-sale securities
Net defined benefit asset
Undistributed earnings of subsidiaries
Reserve for special depreciation
Other
Total
Net deferred tax assets (liabilities):

¥

¥

¥

20,557
16,542
22,34914,052
5,914
3,661
413
1,378
647
16,312
101,825(21,327)(39,380)(60,707)
41,118

2021

2020
¥

¥

23,041
18,451
18,027
13,986
5,777
4,207
1,647
1,223
714
16,070103,143(17,528)(41,820)(59,348)
43,795

$

$

$

¥

¥

(87,766)(34,252)(3,503)(22)(1,595)(127,138)¥(47,969)(19,795)(3,251)(19)(1,694)(72,728)¥(86,020)¥(28,933)

185,198
149,027
201,342
126,595
53,27932,982
3,721
12,414
5,829
146,955
917,342(192,135)(354,775)(546,910)
370,432$(790,685)(308,576)(31,559)(198)(14,369)$ (1,145,387)(774,955)(*1) Valuation allowance increased by ¥1,359 million ($12,243 thousand). The main factor causing a change for tax loss carryforwards is the increase in tax loss which is expected to be non-recoverable. The
main factor causing a change for temporary differences is the decrease in valuation allowance caused by reversal of a part of deductible temporary differences related to impairment loss on fixed assets.
(*2) The amounts by the expiration period of tax loss carryforwards, related valuation allowance and the resulting deferred tax assets as of March 31, 2021 and 2020 were as follows:

2020

30.6%

Normal effective statutory tax rate

Thousands of
U.S. dollars (Note 3)

Millions of yen

Thousands of
U.S. dollars (Note 3)

Millions of yen

Contributions
Interest expense
Interest and dividends income
Rent income on facilities

DATA

Significant components of deferred tax assets and liabilities at March 31, 2021 and 2020 were as follows:

Selling, general and administrative expenses for the years ended March 31, 2021 and 2020 consisted of the following:

Salaries and allowances
Accrued bonuses
Provision for retirement benefits
Depreciation
Research and development expenses
OthersINITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

Millions of yen

March 31, 2021

2022
2023
2024
2025
2026
2027 and thereafter
Total

Tax losscarryforwards (*1)

¥

¥

336
1,903
1,689
1,985
1,402
15,034
22,349Valuation
allowance

¥

¥

(297)
(1,881)(1,673)(1,939)(1,340)(14,197)(21,327)

Deferredtax assets

¥

(*2)

¥

39
22
16
46
62
837
1,022

Thousands of U.S. dollars (Note 3)

March 31, 2021

2022
2023
2024
2025
2026
2027 and thereafter
Total

Tax losscarryforwards (*1)

$

$

3,027
17,144
15,216
17,883
12,631
135,441
201,342

Valuation
allowance$$(2,676)(16,946)(15,072)(17,469)(12,072)(127,900)(192,135)

Deferredtax assets

$

(*2)

$

351
198
144
414
559
7,541
9,207

(*1) Tax loss carryforwards are the amounts obtained by multiplying by the normal effective statutory tax rate.
(*2) For the tax loss carryforwards of ¥22,349 million ($201,342 thousand) (the amount multiplied by the normal effective statutory tax rate), the Company recognized deferred tax assets of ¥1,022 million ($9,207 thousand).
Deferred tax assets of ¥1,022 million ($9,207 thousand) above are recognized mainly because part of the tax loss carryforwards recorded by the Company is expected to be recoverable as a result of estimatedtaxable income in the future.

114

DNP Integrated Report 2021

115

TOP MESSAGE

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

DATA

Millions of yen

Tax losscarryforwards (*1)

March 31, 2020

2021
2022
2023
2024
2025
2026 and thereafter
Total

¥

2,211
846
1,793
1,639
1,865
9,673
18,027¥

Valuation
allowance¥(1,862)(846)(1,786)(1,592)(1,865)(9,577)(17,528)¥

Deferredtax assets

¥

349
7
47
96
499

¥

(*2)

(*1) Tax loss carryforwards are the amounts obtained by multiplying by normal the effective statutory tax rate.
(*2) For the tax loss carryforwards of ¥18,027 million (the amount multiplied by the normal effective statutory tax rate), the Company recognized deferred tax assets of ¥499 million.
Deferred tax assets of ¥499 million above are recognized mainly because part of the tax loss carryforwards recorded by Maruzen CHI Holdings Co., Ltd., a consolidated subsidiary of the Company, is expected tobe recoverable as a result of estimated taxable income in the future.

2. Fair value of financial instruments
Fair value and differences compared to the carrying amounts reported in the consolidated balance sheets as of March 31, 2021 and 2020 were as
follows:
Millions of yen

March 31, 2021

(1) Cash and deposits¥

OthersPurpose of use

Information system-related
assetsCategory

Millions of yen

Software and others¥

Publishing business related
assetsBuildings and structures,
machinery, software and others

Business assets

Buildings and structures,
machinery, goodwill and others

2,312

Thousands of
U.S. dollars (Note 3)

$

1,497

20,82913,486293

2,640

The Company and its consolidated subsidiaries reviewed the fixed assets for impairment for the year ended March 31, 2021. Fixed assets were, in
principle, grouped at the business unit for impairment testing purposes. Idle assets were grouped in each asset.
As a result, the difference between book values and recoverable amounts was recorded as “ Impairment loss on fixed assets” in the amount of¥4,102 million ($36,955 thousand), which is comprised of buildings and structures of ¥168 million ($1,514 thousand), machinery of ¥615 million($5,540 thousand), goodwill of ¥155 million ($1,396 thousand), software of¥2,609 million ($23,505 thousand), and others of ¥555 million ($5,000
thousand), for the year ended March 31, 2021.
The recoverable amount of information system-related assets and publishing business-related assets has been measured at the value in use. And
the amount was assessed at zero because future operating cash flows cannot be generated.
The recoverable amount of other business assets has been measured at the value in use or the net selling value. The amount of assets which wasmeasured at the value in use was assessed at zero because future operating cash flows cannot be generated. The amount of assets which wasmeasured at the net selling value was calculated based on the estimated selling value, etc.
15. Leases
Finance Leases
Information concerning finance lease transactions has been omitted, due to the insignificance of such disclosure.
Operating Leases
The amounts of outstanding future payments under non-cancelable operating leases as of March 31, 2021 and 2020 were summarized as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2021

Future lease payments:
One year or less¥-

324,625-(3) Short-term and long-term investment securities

394,382439,958

45,576

Assets¥1,029,169¥

1,074,745¥

45,576(1) Trade payables¥

226,607¥226,607¥-(2) Short-term bank loans

37,321

37,321-(3) Long-term debts

121,234

120,145(1,089)¥385,162¥

384,073¥(1,089)

¥

(844)

¥

(844)

¥

-

¥

(830)

¥

(830)

14

[2] Hedge accounting is applied

Kuki City, Saitama,
Shiraoka City, Saitama and others

310,162

324,625[1] Hedge accounting is not applied

March 31, 2021

Kashiwa City, Chiba and others¥

Differences

Derivatives (*1)

Impairment loss on fixed assets for the year ended March 31, 2021 were as follows:

Location

310,162

Fair value(2) Trade receivables

Liabilities

14. Impairment Loss on Fixed Assets

Carrying amounts

¥

4,917

¥

6,994

More than one year¥

11,911

2021

2020
4,510

$

63,0098,328¥

12,83844,297$

107,306

16. Financial Instruments

Total

14

¥

-

Thousands of U.S. dollars (Note 3)

March 31, 2021

(1) Cash and deposits

Carrying amounts$

2,794,253

Fair value$

Differences

2,794,253$-(2) Trade receivables

2,924,550

2,924,550-(3) Short-term and long-term investment securities

3,552,990

3,963,584

410,594

Assets$9,271,793$

9,682,387$(1) Trade payables$

2,041,505$

2,041,505$

336,225(2) Short-term bank loans
Liabilities-

336,225

1,092,198(3) Long-term debts

410,594-

1,082,387(9,811)$

3,469,928$

3,460,117$(9,811)$(7,604)$(7,604)$-

Derivatives (*1)[1] Hedge accounting is not applied126[2] Hedge accounting is applied
Total

$

(7,478)126$(7,478)$-Millions of yen

March 31, 2020

Carrying amounts(1) Cash and deposits¥

381,013

Fair value¥

Differences

381,013¥-(2) Trade receivables

330,799

330,799-(3) Short-term and long-term investment securities

264,669

300,191

35,522

Assets¥976,481¥

1,012,003¥(1) Trade payables¥

238,066¥

238,066¥(2) Short-term bank loans

39,052(3) Long-term debts
Liabilities

39,052

172,596¥449,714¥-

171,788¥

35,522(808)

448,906

¥

(78)

(78)

¥

0

0

(808)

Derivatives (*1)[1] Hedge accounting is not applied[2] Hedge accounting is applied
Total

¥

(78)

¥

(78)

-

¥

-

(*1) Derivative assets and liabilities are presented on a net basis.

1. Management policy
The Company and its consolidated subsidiaries manage surplus funds through financial assets that have high levels of safety, and raise funds
through bank loans and bond issuances. The Company and its subsidiaries also utilize derivative financial instruments to hedge the risk of exchange
rate fluctuations and do not enter into derivatives for trading or speculative purposes.
The trade receivables are exposed to credit risk of customers and the Company and its subsidiaries minimize the credit risk in accordance withinternal rules for customer credit management.
Long-term investments are mainly equity securities. Market prices and the financial condition of issuers (business counterparties) of suchinvestments are obtained on a regular basis.
116

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Initiatives forvalue creation

INITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

DATA

Thousands of U.S. dollars (Note 3)

Note A: Fair value measurement of financial instruments, marketable securities and derivatives

March 31, 2021

Contracted amount

Assets(1) Cash and deposits and (2) Trade receivables
The carrying amounts approximate fair value because of the short maturities of these instruments.

U.S. dollars

$

Euro

$

(7,207)$(7,207)

16,289

(397)

(397)

36

0

0

U.S. dollars$(3) Long-term debts
The fair values of bonds issued by the Company and its subsidiaries are measured based on market price, if available. The fair values of bonds
without market price are measured at the present value of total principal and interest discounted by using a rate which reflects its remaining period
and credit risk.
The fair values of long-term debts are based on the present value of total principal and interest discounted by using the current borrowing rate forsimilar debt.
Derivatives
Information about the fair value for derivatives is included in Note 17.

157,730$(7,604)$(7,604)

Millions of yen

March 31, 2020

Contracted amount

Fair value

Unrealized gain (loss)

Foreign currency forward contracts
Receivables:
U.S. dollars

¥

Euro

16,085

¥

(86)

2,103

¥

(86)

8

8

Payables:Note B: Financial instruments whose fair value is extremely difficult to measure

Thousands of
U.S. dollars (Note 3)

Millions of yen

March 31, 2021

Unlisted equity securities

Carrying amounts

Carrying amounts¥$

38,100318

OthersU.S. dollars

0
¥

2,865

March 31, 2021

Unlisted equity securities¥

Foreign currency forward contracts
Receivables:
U.S. dollars
U.S. dollars
Payables:U.S. dollars
U.S. dollars
Euro
Euro
Swiss franc
Swiss franc
Sterling pound

43,977249

The above instruments are not included in "(3) Marketable and investment securities" because there is no market value and it is extremely difficult tomeasure the fair value.
17. Derivative Financial Instruments
Nature of derivative financial instruments:
The Company and certain consolidated subsidiaries enter into derivatives for foreign currency forward contracts to manage the risk arising fromfluctuation in foreign currency exchange rates. Derivatives related to currency are utilized to hedge foreign exchange risks associated with certain
trade receivables, trade payables and other debts, including forecasted transactions, denominated in foreign currencies. The Company and its
subsidiaries do not hold derivatives for speculative purposes.
Derivatives are subject to market risks and credit risks. Because the counterparties to those derivatives are limited to major international financial
institutions, the Company and its subsidiaries do not anticipate any losses arising from credit risks. The Accounting Department controls andexecutes derivatives based on the internal policies of the Company.
Fair value of derivatives:
The contracted amount and fair value of derivatives at March 31, 2021 and 2020 were as follows:

Contracted amount

Fair value

Unrealized gain (loss)

Foreign currency forward contracts
Receivables:
15,696

¥

1,808

(800)

¥

(44)

(800)
(44)

Payables:4¥

Hedged items

Contracted amount

Forecasted foreign currency transactions
Trade receivables¥

Forecasted foreign currency transactions
Trade payables
Forecasted foreign currency transactions
Trade payables
Forecasted foreign currency transactions
Trade payables
Forecasted foreign currency transactions¥

March 31, 2021

Millions of yen

U.S. dollars

(0)
¥

(78)

144
387
952
492
149
2
3
2
52
2,183

Fair value

¥

(4)
15
2
(0)
1
14

¥

Thousands of U.S. dollars (Note 3)

Derivative transactions to which the Company and its subsidiaries did not apply hedge accounting

¥

(78)

Millions of yen

Carrying amounts

Euro

(0)
¥

Derivative transactions to which the Company and its subsidiaries applied hedge accounting

March 31, 2020

Others

18,188343,243

Millions of yen

118

141,405

Payables:Liabilities(1) Trade payables and (2) Short-term bank loans
The carrying amounts approximate fair value because of the short maturities of these instruments.

U.S. dollars

Unrealized gain (loss)

Receivables:(3) Marketable and investment securities
The fair values of equity securities are measured at the quoted market price of the stock exchange and the fair values of debt securities aremeasured at the quoted price provided by financial institutions.

March 31, 2021

Fair value

Foreign currency forward contracts

17,508

0
¥

(844)

0
¥

(844)

Foreign currency forward contracts
Receivables:
U.S. dollars
U.S. dollars
Payables:U.S. dollars
U.S. dollars
Euro
Euro
Swiss franc
Swiss franc
Sterling pound

Hedged items

Forecasted foreign currency transactions
Trade receivables

Contracted amount$

Forecasted foreign currency transactions
Trade payables
Forecasted foreign currency transactions
Trade payables
Forecasted foreign currency transactions
Trade payables
Forecasted foreign currency transactions
$

1,297
3,486
8,578
4,432
1,343
18
27
18
468
19,667

Fair value

$

$

(36)
135
18
(0)
9
126

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Hedged items

Contracted amount

Fair value

Reportable segment

Foreign currency forward contracts
For 2021 :Receivables:
U.S. dollars

Forecasted foreign currency transactions

U.S. dollars

Trade receivables

356-

U.S. dollars

Forecasted foreign currency transactions

1,085

1

U.S. dollars

Trade payables

385

-

Euro

Forecasted foreign currency transactions

136

(1)

Euro

Trade payables

1

-

¥

178

¥

0

Forecasted foreign currency transactions

97
¥

2,238

Electronics

Beverages

Total

Adjustments (*1) Consolidated (*2)

Net sales
Outside customers$ 6,481,766 $ 3,310,973 $ 1,774,964 $Intersegment
Total
Segment income
Segment assets(0)¥Information
Communication

Lifestyle andIndustrial
Supplies

Net sales and operating income

Payables:Sterling pound

DATA

Thousands of U.S. dollars (Note 3)

Millions of yen

March 31, 2020

INITIATIVES FORSUSTAINABILITY（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

63,288 $ 12,030,991

21,073

4,405

-

162

25,6406,502,839

3,315,378

1,774,964

463,450

172,847

125,810

330,541

7,568$- $ 12,030,991(25,640)-

12,056,631(25,640)

12,030,991

636,766(190,559)

446,207$ 8,097,126 $ 3,994,378 $ 1,914,018 $

441,559 $ 14,447,081 $ 1,994,532 $ 16,441,613$

Others0

181,090 $

148,811 $84,829 $26,045 $Amortization of goodwill

3,442

5,468

-

45

8,955

-

8,955

Impairment loss

34,333---34,333

2,622

36,955Investments in equity method affiliates

12,396

5,063

152,676-

170,135

397,216

567,351

Increase in property, plant andequipment and intangible assets

234,839

270,495

108,000

17,396

630,730

14,756645,486

Depreciation and amortization

The fair values of foreign currency forward contracts subject to the alternative method are included in the fair values of trade receivables and trade
payables as hedged items.
The fair value of derivatives is determined based on forward exchange rates or information provided by financial institutions at the end of the fiscal year.
18. Contingent Liabilities

440,775 $

17,720 $458,495(*1) Adjustments represent as follows.
(1) Adjustment of segment income consists of basic research expenses not attributable to reportable segments and research expenses shared by each reportable segment.
(2) Adjustment of segment assets consists of corporate assets not allocated to reportable segments and intersegment eliminations.
(3) Adjustment of impairment loss consists of impairment loss for corporate assets not allocated to reportable segments.
(4) Adjustment of investments in equity method affiliates consists of the investments in equity method affiliates not attributable to reportable segments.
(5) Adjustment of increases in property, plant and equipment and in intangible assets consists of capital investments mainly for the head office building.
(*2) Segment income is reconciled to operating income in the consolidated financial statements.

It is common practice in Japan for companies, in the ordinary course of business, to receive promissory notes in settlement of trade accounts
receivable and to subsequently discount such notes at banks. At March 31, 2021 and 2020, the Company and its consolidated subsidiaries were
contingently liable on trade notes discounted in the amount of ¥387 million ($3,486 thousand) and ¥534 million, respectively.
19. Segment Information
Outline of reportable segments:
The Company and its consolidated subsidiaries' reportable segments are components of the group whose operating results are regularly
reviewed by the Board of Directors to make decisions about resources to be allocated to the segments and assess their performance, forwhich discrete financial information is available. The group's reportable segments consist of Information Communication, Lifestyle andIndustrial Supplies, Electronics, and Beverages, based on a classification by commonality in manufacturing and marketing method of products.
"Information Communication" involves production and sale of publication printing, commercial printing, business forms, photo materials, andeducation and publications distribution business. "Lifestyle & Industrial Supplies" involves production and sale of packaging materials, exteriormaterials for buildings and industrial supplies. "Electronics" involves production and sale of precision electronic components. "Beverages" involves
production and sale of carbonated drink and mineral water.
Accounting policies and methods used at reportable segments are the same as those described in Note 2 Significant Accounting Policies. Profit orloss of reportable segments is equal to operating income on the consolidated statement of income. Intersegment sales and transfers are based on
third-party transaction prices.
Information on sales and operating income, identifiable assets and other items by reportable segment

Lifestyle andIndustrial
Supplies

Beverages

Total

Adjustments (*1) Consolidated (*2)

Net sales¥Intersegment
Total

367,518 ¥

197,021 ¥

51,425 ¥ 1,335,440¥- ¥ 1,335,440

2,339

489

-

18

2,846

(2,846)-

721,815

368,007

197,02151,443

1,338,286(2,846)

1,335,440

840

70,681(21,152)

49,52919,186

13,96536,690¥898,781 ¥443,376 ¥

212,456 ¥¥

20,101 ¥

16,518 ¥

9,416 ¥

2,891 ¥

48,926 ¥1,967 ¥

50,893

382

607

-

5

994

-

994

Segment income
Segment assets

719,476 ¥49,013 ¥ 1,603,626 ¥

221,393 ¥ 1,825,019

OthersDepreciation and amortization
Amortization of goodwill

120

Electronics

Beverages

Total

Adjustments (*1) Consolidated (*2)

Net sales and operating income
Net sales
Outside customers¥

769,749 ¥390,272 ¥

3,330

1,086

-

21

4,437

773,079

391,358

186,60255,29230,416

11,144

34,135

2,047¥

796,797 ¥423,907 ¥208,397 ¥49,955 ¥ 1,479,056 ¥¥

23,547 ¥16,023 ¥9,655 ¥

Intersegment
Total

Depreciation and amortization
Electronics

Information
Communication

Lifestyle andIndustrial
Supplies

186,602 ¥55,271 ¥ 1,401,894¥- ¥ 1,401,894(4,437)-

1,406,331(4,437)1,401,894

77,742(21,468)

56,274

242,668 ¥ 1,721,724

Others

Net sales and operating income
Outside customers

For 2020:

Segment assets

Reportable segment
Information
Communication

Reportable segment

Segment income

Millions of yen

For 2021:

Millions of yen

Impairment loss

3,811

-

-

-

3,811

291

4,102

Investments in equity method affiliates

1,376

562

16,947-

18,88544,091

62,976

Increase in property, plant andequipment and intangible assets

26,06730,025

11,988

1,931

70,011

1,638

71,649Amortization of goodwill

2,789

52,014 ¥2,461 ¥

54,475

446

1,213

-

-

1,659

-

1,659

Impairment loss

16,188

2,546

5,206

1

23,941

2,576

26,517

Investments in equity method affiliates

1,679

653

16,162-

18,494

41,471

59,965

Increase in property, plant andequipment and intangible assets

20,00921,265

11,802

2,667

55,743

1,419

57,162(*1) Adjustments represent as follows.
(1) Adjustment of segment income consists of basic research expenses not attributable to reportable segments and research expenses shared by each reportable segment.
(2) Adjustment of segment assets consists of corporate assets not allocated to reportable segments and intersegment eliminations.
(3) Adjustment of impairment loss consists of impairment loss for corporate assets not allocated to reportable segments.
(4) Adjustment of investments in equity method affiliates consists of the investments in equity method affiliates not attributable to reportable segments.
(5) Adjustment of increases in property, plant and equipment and in intangible assets consists of capital investments mainly for the head office building.
(*2) Segment income is reconciled to operating income in the consolidated financial statements.

DNP Integrated Report 2021

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process

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Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITY

DATA

Independent Auditor ʼs Report

Related information
Information by geographic area
Millions of yen

For 2021:

Japan

¥

Net salesAsia

1,089,609¥

Other region

183,929¥

Total

61,902¥

1,335,440

Thousands of U.S. dollars (Note 3)

For 2021:

Japan

$

Net salesAsia

9,816,297$

Other region

1,657,018

$

Total

557,676$ 12,030,991

Millions of yen

For 2020:

Japan

Net sales¥Asia

1,155,716¥

Other region

169,659¥

Total

76,519¥1,401,894

Information about goodwill by reportable segments
Millions of yen

Reportable segments
For 2021:

Information
Communication

Lifestyle andIndustrial Supplies

Unamortized balance of goodwill

¥

¥

2,415

-

Electronics¥

Beverages

11

¥

Total

-

¥

2,426

Thousands of U.S. dollars (Note 3)

Reportable segments
For 2021:

Information
Communication

Lifestyle andIndustrial Supplies

Unamortized balance of goodwill$$

21,757-

Electronics$

Beverages

99

$

Total

-

$

21,856

Millions of yen

Reportable segments
For 2020:

Information
Communication

Lifestyle andIndustrial Supplies

Unamortized balance of goodwill

¥

¥

581

606

Electronics¥

Beverages

-

¥

Total

-

¥

1,187

(*) The amount of amortization of goodwill is omitted as it is disclosed in "Segment Information".

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124

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Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITYDATA

DNP Integrated Report 2021

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126

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITYDATA

DNP Integrated Report 2021

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Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITY

DATA

Major Subsidiaries and Affiliates(As of March 31, 2021)

Printing
DNP Hokkaido Co., Ltd.
DNP Tohoku Co., Ltd.
DNP Chubu Co., Ltd.
DNP Nishi Nippon Co., Ltd.
DNP Shikoku Co., Ltd

Capital(¥ million)
General affairs, accounting work and other business services
General affairs, accounting work and other business services
General affairs, accounting work and other business services
General affairs, accounting work and other business services
Film making, printing, bookbinding; production and sale of packaging

100
100
100
100
50

Ownership ratio ofvoting rights (%)
100.0
100.0
100.0
100.0
97.0

DNP High-performance Materials Co., Ltd.

Investment in operating companies
Sale of books, creation of data, library operation support and consulting
Education and academic businesses; retail stores; publishing; commercial facility/store interiors, etc.
Publishing
Sale of books, magazines and stationery
Management of group companies and related businesss
Operation of hybrid bookstore services
Development, sale and maintenance of computer software
Offset printing and bookbinding
Prepress and media production
Electronic publishing and distribution platform services; e-book distribution service
Editing and sale of textbooks and educational materials
Bookbinding
Film making, printing and bookbinding

3,000
266
100
50
50
100
100
50
200
180
100
60
49
(S$1,000)
4,600

53.5
53.5
53.5
53.5
53.5
18.4
100.0
87.0
100.0
100.0
63.8
48.2
100.0
100.0

(53.5)(53.5)(53.5)(53.5)(11.0)(15.1)

100.0

Production of display-related components
Production and sale of precision electronic components

400(Dkr1,000)
135,000

100.0
100.0

DT Fine Electronics Co., Ltd.
DNP Fine Optronics Co., Ltd.
DNP LSI Design Co., Ltd.
Photronics DNP Mask Corporation

Production and sale of precision electronic components
Production of precision electronic components
Design and production of drawings used in semiconductor production
Production and sale of semiconductor photomasks

65.0
100.0
100.0
49.9

Photronics DNP Mask Corporation Xiamen

Production and sale of semiconductor photomasks

DNP Photomask Europe S.p.A.

Production and sale of semiconductor photomasks

490
300
100
(NT$1,000)
2,198,185(US$1,000)
130,000(Euro 1,000)
47,200DNP Precision Devices Himeji Co., Ltd.
DNP Denmark A/SElectronic Devices

Development and maintenance of software
843
Planning, production and sale of artistic images and videos
300
Offset printing and bookbinding
100
Planning, production, film making and plate making
100
Production and sale of business forms and plastic cards, and business process outsourcing service
100
Planning, design, maintenance and operation of information systems
100
Planning and production of promotional materials
80
Production and sale of computers and peripheral devices; development, production and sale of software
40
Mailing of printed matter, etc.
20
Planning and production of printed materials
50
Planning, development and operation of online advertising and computer systems, etc.
10
Production and sale of all types of printed matter10
Production and sale of plastic cards and business forms(VND 1,000,000)
100,000
Card-issuing services(US$1,000)
2,000

50.7
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0 (100.0)
95.0
100.0
95.0
36.3

Nihon Unisys, Ltd.
DNP Fine Chemicals Co., Ltd.
DNP Fine Chemicals Utsunomiya Co., Ltd.
DNP Logistics Co., Ltd.
DIC Graphics Corporation
PSP Corporation
DNP Engineering Co., Ltd.
DNP Trading Co., Ltd.
CYBER KNOWLEDGE ACADEMY Co., Ltd.
CP Design Consulting Co., Ltd.*CAFI Corporation*
At Table Co., Ltd.*DNP Dexerials Consulting Co., Ltd.
DNP Corporation USA

45.0

DNP Holding USA Corporation

100.0
100.0
100.0
100.0 (100.0)
100.0 (100.0)
100.0

DNP Photo Imaging Europe SAS

Production and processing of thermal mass transfer media and dye-sublimation media
Sale of photo-related products; operation of ID photo booths and automated commemorative photo booths
Sale of government-affiliated smart card identification equipment and materials
Operation of photo studio and related equipment services
ID photo printing machine business
Production, processing and sale of thermal mass transfer media anddye-sublimation media; sale of photo-related products
Production, processing and sale of thermal mass transfer media anddye-sublimation media; sale of photo-related products
Sale of photo-related products

DNP Photo Imaging Russia, LLC

Sales of photo-related products

Sharingbox SA

Providing functional photo booths for event business

DNP Imagingcomm Europe B.V.

Processing and sale of thermal mass transfer media and dye-sublimation media

DNP Imaging Comm Co., Ltd.
DNP Photo Imaging Japan Co., Ltd.
DNP ID System Co., Ltd.
DNP hollyhock Co., LTD.
K Photo Image Co., Ltd.
DNP Imagingcomm Asia Sdn. Bhd.
DNP Imagingcomm America Corporation

100
100
60
90
10
(RM 1,000)
190,000(US$1,000)
71,980(Euro 1,000)
2,408(RUB1,000)
7,622(Euro 1,000)
3,588(Euro 1,000)
1,000

DNP Business Consulting（Shanghai) Co., Ltd.*

100.0(100.0)100.0
100.0(100.0)100.0(100.0)100.0

Lifestyle and Industrial Supplies
Packaging
Lifescape Marketing Co., Ltd.
DNP Technopack Co., Ltd
Sagami Yoki Co., Ltd.
Aseptic Systems Co., Ltd.
DNP Hoso Co., Ltd
DNP Field Eyes Co., Ltd.
DNP-SIG Combibloc Co., Ltd.
Dai Nippon Printing (Thailand) Co., Ltd.*

Research, compilation and provision of various kinds of information about purchasing and consumption of foods and beverages
Production, printing and processing of packaging materials
Production of plastic tubes
Manufacturing and sale of aseptic filling systems, and related consulting
Filling and processing of packages
Marketing research and consulting
Sale of sterile paper containers and filling equipment for beverages and liquid foods
Sale of packaging materials

DNP Vietnam Co., Ltd.

Production and sale of packaging materials

PT DNP Indonesia

Production and sale of packaging materials

430
300
200
100
80
50
75
(THB 1,000)
200,000(US$1,000)
31,500(US$1,000)
26,000

84.0
100.0
90.0
100.0
100.0
100.0
50.0
100.0
100.0
(20.0)
51.0

Sale of decorative products
Printing and processing of steel, aluminum and other metals
Production, printing and processing of decorative products

300
300
200

100.0
50.0
100.0

Manufacturing and sale of automotive accessories
Manufacturing of molds

60
5

100.0
89.0 (89.0)

Mobility Business
DNP Tamura Plastic Co., Ltd.
NTEC Co., Ltd.

DNP Asia Pacific Pte. Ltd.

Development and sale of software; computer system support services
5,483
Production and sale of chemical products
2,000
Manufacturing and sale of chemical materials, pharmaceutical ingredients, etc.
100
Packing, shipping, freight forwarding and warehousing operations
626
Production and sale of printing ink
500
Planning, research, development, sales and maintenance of internal information systems for hospitals and clinics
379
Manufacturing, repair and sale of printing equipment and other machinery
100
Buying and selling of printing paper and various other types of merchandise
100
Operation of academy for training and developing personnel to defend against targeted cyber attacks
70
Personal information protection and risk management consulting
40
Remote diagnostic imaging service
32
Research, consulting and planning related to production and sales promotions for supermarkets and other retailers
30
Business planning and proposals
10
Investment in operating companies(US$1,000)
62,164
Investment in operating companies(US$1,000)
100
Study of Chinese market and business feasibility(US$1,00)
8,780
Coordination of DNP business operations in the Southeast Asia/Oceania region(S$1,000)
2,000(US$1,000)
65,43920.6
100.0
100.0 (100.0)
100.0
33.4
30.9
100.0
94.3
100.0
92.5
51.1
66.7
50.0
100.0
(7.1)
100.0
(100.0)100.0

Building maintenance, cleaning and security; operation of sports and welfare facilities
Design, development and maintenance of information systems; production and sale of software
Planning, design, development, maintenance and support operations for information systems
Planning and management related to personnel plans
Accounting agency and consulting services
Studies related to patents; preparation of contracts
Office support businesss

350
100
100
90
30
20
10

100.0
100.0
100.0
100.0
100.0
100.0
100.0

(Krw 1,000)
800,000(NT$1,000)
10,000(CNY1,000)
39,301(US$1,000)
100(S$1,000)
350(Euro 1,000)
92(CNY1,000)
10,000(CNY1,000)
24,000

100.0

100.0

Personal Welfare, Facility Service and Others
DNP Facility Services Co., Ltd.
DNP Information Systems Co., Ltd.
DNP Metro Systems Co., Ltd.
DNP Human Services Co., Ltd.
DNP Accounting Services Co., Ltd.
DNP Techno Research Co., Ltd.*DNP Business Partners Co., Ltd.*(90.0）

Overseas Sales
DNP Korea Co., Ltd.*Sale of precision electronic components

DNP Taiwan Co., Ltd.

Sale of precision electronic components

DNP International Trading (Shanghai) Co., Ltd.*Sale of printed matter, etc.

DNP America, LLC

Sale of printed matter, precision electronic components and decorative materials

DNP Singapore Pte. Ltd.*Sale of precision electronic components and decorative materials

DNP Europa GmbH*

Sale of printed matter and decorative materials

DNP Living Space & Mobility (Shanghai) Co., Ltd.*Sale of printed matter (Products and services of Living Space and Mobility business)

DNP Imaging Communication (Shanghai) Co., Ltd.*Sale of printed matter (Products and services of the Imaging Communication business)

100.0
100.0
(100.0)100.0(100.0)
100.0
100.0
100.0
(100.0)100.0(100.0)Beverages

Living Spaces
DNP Lifestyle Materials Marketing Co., Ltd.
DNP Ellio Co., Ltd.
DNP Living Space Co., Ltd.

49.9
49.9
80.5

Other

Imaging Communication

128

200

Display Components

Information Innovation

PT. Wahyu DNP Bureau

Production of lithium-ion battery components

Electronics

Publishing

INTELLIGENT WAVE INC.
DNP Art Communications Co., Ltd.
DNP Graphica Co., Ltd.
DNP Communication Design Co., Ltd.
DNP Data Techno Co., Ltd.
DNP Digital Solutions Co., Ltd.
DNP SP Solutions Co., Ltd.
DNP HyperTech Co., Ltd.
NBC Co., Ltd.*DNP Plannning Network Co., Ltd.
DNP Social Links Co., Ltd.
DNP Media Support Co., Ltd.
MK Smart Joint Stock Company

Ownership ratio ofvoting rights (%)

Industrial Supplies

Information Communication
Maruzen CHI Holdings Co., Ltd.
TRC Library Service Inc.
MARUZEN-YUSHODO Company, Limited
MARUZEN PUBLISHING CO., LTD.
MaruzenJunkudo Bookstores Co., Ltd.
BOOKOFF GROUP HOLDINGS LIMITED
2Dfacto, Inc.
VISUALJAPAN Inc.*DNP Book Factory Co., Ltd.
DNP Media Art Co., Ltd.
MobileBook.jp Inc.
Kyoiku Shuppan Co., Ltd.
Oguchi Book Binding & Printing Co., Ltd.
Tien Wah Press (Pte.) Ltd.

Capital(¥ million)

Beverages
Hokkaido Coca-Cola Bottling Co., Ltd.

Production and sale of beverages

2,935

59.9 (6.4)

Notes: 1. Voting rights ownership ratios (in parentheses) indicate the percentage of shares owned through DNPʼs subsidiaries or affiliates.
2. Companies with an asterisk are neither consolidated nor accounted for by the equity method.

DNP Integrated Report 2021

129

TOP MESSAGE

VALUE CREATION AT DNPValue creation
process

Medium-termManagement Plan

BUSINESS RESULTS
Initiatives forvalue creation（ FINANCIAL AND
NON-FINANCIAL INFORMATION）

INITIATIVES FORSUSTAINABILITY

DATA

Nikkei Average

TOPIX

Investor Information(As of March 31, 2021)

Dai Nippon Printing Co., Ltd.
Head Office:1-1, Ichigaya-Kagacho 1-chome, Shinjuku-ku, Tokyo 162-8001, Japan

Stock Code: 7912
Administrator of Shareholder Register:Mizuho Trust & Banking Co., Ltd.
Stock Transfer Agency Department
2-1, Yaesu 1-chome, Chuo-ku,
Tokyo, Japan

Established: 1876
Number of Employees (consolidated): 37,062
Paid-in Capital: ¥114,464 million
Number of Common Stocks:
Authorized: 745,000,000 shares
Issued: 324,240,346 shares
Number of Trading Unit Shareholders (own 100 or more shares):29,085
Stock Exchange Listing: Tokyo Stock Exchange
Major Shareholders:

The Master Trust Bank of Japan, Ltd. (Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)
The Dai-ichi Life Insurance Co., Ltd
Employeesʼ Shareholding Association
Custody Bank of Japan, Ltd. (Trust Account 7)
Mizuho Bank, Ltd.
Nippon Life Insurance Company
STATE STREET BANK WEST CLIENT - TREATY 50234
GOVERNMENT OF NORWAY
Custody Bank of Japan, Ltd. (Trust Account 5)

Share Price Evolution (Tokyo Stock Exchange)＊1

Shares(thousands)

Percentage(%)

33,24913,659
9,264
7,967
5,957
5,706
4,735
4,089
3,730
3,704

11.84
4.86
3.30
2.84
2.12
2.03
1.69
1.46
1.33
1.32

Notes:
1. The ownership stakes are based on the total number of shares outstanding lesstreasury shares (280,887,788).
2. The number of treasury shares is excluded from the figures above.

DNP(between April 1, 2019 and March 31, 2021)
DNP Stock Price (yen)Increase (%)

50

American Depositary Receipts:
Ratio (ADR:ORD): 2:1
Exchange: OTC (Over-the-Counter)
Symbol: DNPLYCUSIP: 233806306
Depositary:
The Bank of New York Mellon
101 Barclay Street, New York,NY 10286, U.S.A.
Telephone: (201) 680-6825
U.S. toll free: 888-269-2377(888-BNY-ADRS)URL: http://www.adrbnymellon.com/

40

3,000

30
20
2,500

10
0

2,000

−10
−20

Fiscal Year-end:
March 31

19

Independent Auditor:
ARK LLC

20

−30

21

＊1 Index 100 = March 31, 2018

Annual Meeting of Shareholders:
The annual meeting of shareholders of DNP is
normally held in June each year in Tokyo, Japan.
Investor Relations:
Dai Nippon Printing Co., Ltd.
IR and Public Relations Division
Investor Relations Office
1-1, Ichigaya-Kagacho 1-chome, Shinjuku-ku,
Tokyo 162-8001, Japan
Tel: +81-3-6735-0124
Fax: +81-3-5225-8239

Total Shareholder Return＊2 (TSR)
Fiscal year ended

2017.3

DNP (%)TOPIX (%)

2018.32019.32020.32021.3123.20116.30141.95127.85131.95（114.69）（132.89）（126.20）（114.20）（162.32）＊2 Represents total investment return to shareholders, combining capital gains and dividends. The TSR calculation method is as follows: (Stock price at the end of each fiscal
year + the total amount of dividends per share up to each fiscal year starting from four fiscal years prior to the fiscal year ended March 31, 2021 ÷ the stock price at theend of the fiscal year ended March 31, 2016.)

Web Site:https://www.dnp.co.jp/eng/
Voting Rights (as of March 31, 2021)

Number of Stocks(stocks)

Type

Recognition from Society (As of June 30, 2021)
DNP has been highly evaluated by ESG evaluation agencies throughout the world and has been selected for inclusion in socially responsible investment (SRI) indices in Japanand overseas. DNP has been selected for the FTSE4Good Global Index for the 21st consecutive year since 2001 and for the MSCI ESG Leaders indexes for the 5th consecutive
year since 2017. In June 2021, DNP was selected for the Euronext Vigeo Eiris World Index 120 for the first time in seven years since June 2014. In addition, we were selected
for the second consecutive year by the CDP, an international non-profit organization that provides environmental information disclosure systems, as the highest rated theSupplier Engagement Leader Board in the Supplier Engagement Rating.

SRI indices
FTSE4Good
Global Index

Supplier Engagement Rating
MSCI ESG Leaders indexes

THE INCLUSION OF Dai Nippon Printing IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS,
TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP,
ENDORSEMENT OR PROMOTION OF Dai Nippon Printing BY MSCI OR ANY OF ITS AFFILIATES.
THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEXNAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

130ETHIBEL
Investment Register

Euronext Vigeo Eiris
World Index 120
CDP
SUPPLIERENGAGEMENTLEADER

Stocks with no voting rights
Stocks with limited voting rights (treasury stocks, etc.)
Stocks with limited voting rights (other)
Stocks with voting rights(treasury stocks, etc.)(Treasury held stocks) Common stocks

Stocks with voting rights (other)
Stocks with less than trading units
Outstanding shares
Total voting rights of stockholders

Common stocks
Common stocks

―

―

―

―

―

―

43,352,500―

280,623,300
264,546
324,240,346

2,806,233―

2,806,233

Treasury Stocks (as of March 31, 2021)
HolderDai Nippon Printing Co., Ltd.
Total

Number of Voting Rights(rights)――

No. of Stocks Held

Percentage of Holding to
No. of Outstanding Shares

43,352,558
43,352,558

13.37
13.37

DNP Integrated Report 2021131

1-1, Ichigaya Kagacho 1-chome, Shinjuku-ku,
Tokyo 162-8001, Japan
TEL: +81-3-3266-2111
URL: https://www.dnp.co.jp/eng/©2021 DNP