THE DNP GROUPʼS VALUE CREATION STORY

Identifying Materiality

Identifying and analyzing risks (variables) closely associated with DNPʼs business activities

DNP believes that a healthy society and economy as well as comfortable and well-being lives for people can only be achieved ona sustainable earth. Toward realizing the “better future” envisioned by DNP, we will identify key issues (materiality) for thesustainable growth of both society and DNP.
In identifying materiality, DNP comprehensively ascertains social issues, identifies and evaluates medium- to-long-term risks(variable factors) for DNP in undertaking business activities, and identifies and prioritizes social issues with high materiality for
DNP, society and stakeholders.
Additionally, to create value and strengthen the management foundation that supports value creation, we have selected “CSRManagement Principal Themes” (pages 62-63) and are progressing with efforts to strengthen management across the entire
supply chain.

Short-term and medium- to-long-term variables in economic activity occurringin each country/region and in the global market

Economic risks

1

A “better future” aimed for by DNP

Comfort
Value

Value

• A society where people canlive safe, secure, healthy
and well-being lives• An information society that
• A society that realizes abalance between economic
growth and the global
environment• A society where people

mutually respect each other• Declining birthrates and aging population, labor shortage and acceleration of employment mobility• Changes in issues related to the dignity of diverse people living in diverse societies• Changes in various conditions needed for all people to live comfortably (mental and physical health, safety,
hygiene and others)• Increasing importance of responding to human rights risks throughout the supply chain, etc.

Variables in systems for building a healthy society and in market trends

Variables related to the sustainability of the global environment that form
the foundation of all corporate activities

Environmental risks

Sustainable
Sustainable
Environment,
Environment,
SocietyandSociety andEconomyEconomy• Changes in financial infrastructure due to reassessment of capitalism, the establishment of virtual economic
zones and other factors• Changes related to the information infrastructure (strengthening and loosening of various rules and regulations
such as GDPR, threats to information security and others)• Depletion of natural resources, shortages or restrictions in the supply of energy and resources, soaring prices, etc.

• Changes in legal and political systems in each country/region and strengthen responses to risks in the supply chain• Expansion of geopolitical risk/country risk
• Manifestation of various risks due to differences in culture, systems and rules, and other factors

connects real and digital

Sustainability
Sustainability

Variables in systems that form the basis of economic activities and in market trends

Variables related to human capital and human rights

Exciting

Social risks

Well-being
Well-being
lives
Enriched lifestyle• Accelerate development of business models/technologies/products/services, etc.
• Acceleration of digital transformation (DX) and establishment of a global network, etc.
• Rapid changes in various economic indicators (domestic and overseas economic conditions, industry trends,
consumer confidence, prices, exchange rates, GDP and others)• Changes in the balance as well as the fragmentation of the global economy due to geopolitical factors, etc.

Consumers’ perspective• Increased frequency and severity of natural disasters and increased water risks such as droughts and floods
due to climate change• Accelerating plastic pollution and biodiversity loss, etc.

Changing variables in market trends and systems related to global environmental
conservation• Strengthening and globalization of disclosure of climate change risks and nature-related information• Tightening of regulations on GHG emissions, revisions to Japanʼs energy policy and acceleration of thetransition to a circular economy• Expansion of market for environmentally positive products and services and acceleration of technology
innovation, etc.

Process for identifying materiality

Identifying andprioritizing social
issuesIdentifying
materiality

12

Related stakeholders

International frameworks considered

Employees, local communities, business partners,
shareholders/institutional investors, education/research
institutions, NPOs/NGOs, various organizations, etc.

SDGs, the GRI Standards, United Nations Global Compact,
SASB Standards, UN Guiding Principles on Business andHuman Rights, etc.

DNP identifies and prioritizes social issues with high materiality for DNP, society and stakeholders by identifying
the relationship of these issues with our Corporate Philosophy and Business Strategy, as well as by identifying
short-, medium-, and long-term risks and opportunities and assessing the impact of these on management.
DNP holds opinion exchanges with relevant internal departments, external experts and outside directors. We
identify DNP ʼs materiality after discussion with and approval by the Sustainability Committee, Management
Committee and Board of Directors.

Prioritization of issues

We identify and prioritize
key issues for society andstakeholders as well as
key issues for DNP.

Key issues for society

Ascertaining
social issues

DNP comprehensively ascertains social issues from the perspectives of market changes andmegatrends and the materiality of these for each stakeholder as well as international frameworks
such as SDGs, the GRI standards and ESG social evaluation items.

Key issues for DNP

DNP Integrated Report 202313

1 ｜ THE DNP GROUPʼS VALUE CREATION STORY

DNPʼs Value Creation Process
DNP recognizes it has a mission of creating a better future in keeping with its corporate statement “Creating future
standards.” To fulfill this mission, DNP will accurately identify and analyze changes and issues in the environment,
society and economy, draw the shape of the future hoped for by people throughout the world and then continuously
create indispensable value that exists as future standards.

Risks & business opportunities/
Input/Management resources

Business Strategy/Business model/

Social issues that will be solved by DNP

Economicrisks

Social Issues & Megatrends

InformationsocietySocialrisks

A society where realand digital seamlessly
connect, with robotics
and AI blending in

Imbalance of supply
and demand ofresources, electricity,water and food
The balance of supply anddemand of resources,
electricity, water and food issignificantly affected byclimate change, the population
problem and advancement of
an information society

Population
problemEnvironmental
risks

While the population ofJapan decreases andglobal population
increases, the birthrate
is decreasing andsociety is aging
worldwide

ClimatechangeWorld continuing tomove toward preventionof global warming anddecarbonization

Business model
The DNP Group aims to realize a sustainable society, andits corporate philosophy is to connect individuals andsociety and provide new value. Based on this philosophy,
DNP will conduct business activities that create a better
future with a long-term view in order to realize asustainable, better society and well-being lives.

Creating new value
by promoting
business
Business Strategy

P&I Innovations
INPUT (management resources)
Utilize various types of content (text, images, video, audio)
and confidential information and important information
backed by the strong relationships of trust built withcompanies, organizations and consumers in Japan andoverseas and our highly advanced information security
infrastructure.
• Create new value by synergizing the DNP Groupʼs diverse

Securely and seamlessly connect real and digital,
contributing to the evolution of an information society

Printing & Information
DNPʼs core values
developed through printing

The DNP Group operates a business model that utilizes inputs such as diverse management resources andappropriate and important information entrusted by domestic and overseas companies, organizations and consumers
and delivers the value (outcome) that is created by the output of products and services to the most-suitable partners.
By building on the achievements of this model and ensuring these continuously have a positive impact on theenvironment, society and economy, we will realize a sustainable, better society and well-being lives.

OutcomeNew value creation

The “better future” aimed for DNP

Total
strengths of
All DNPManagement
andoperation

Sales

Technologies
andR&D

Non-financial capital

Production
andmanufacturing

Financial capital
Human capitalIntellectual capital

Financial Strategy

Manufactured capital
Natural capitalSocial and relationship capital

Non-financial Strategy

Creating future standards
Well-being lives
Enriched lifestyleBusiness Strategy

Promote concentrated investment and business structuretransformation in focus business areas
Transform risks into growth opportunities
Financial Strategy

Non-financial Strategy

Generate funds for growthinvestment through businessactivities and maximizing
capital efficiency

Expand investment in people
based on the Human Capital
PolicyMaintain financial stability
for sustainable corporate
activities

or r

eve

Sustainability
Sustainable, better society

Enhance intellectual capitalutilizing DNPʼs uniquestrengths and external
partnerships

Improve capital efficiency
through treasury shareacquisition, etc.

Accelerate environmental
initiatives

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Brand Statementwith an ROE target of 10% and expedite
achieving a PBR of more than 1.0X.

Contributing to a sustainable society where
people can live safe, secure and healthy lives

Strengthening
business base

Impact on the environment,
society and economy

Value for people

The DNP Group will create sustained
business value and shareholder value,

strengths and assets, which serve as our business base
• Integrated usage of financial capital and non-financial capital• Generate funds for growth investment through corporate activities
Project
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bet DNP Integrated Report 202315

1 ｜ THE DNP GROUPʼS VALUE CREATION STORY

DNPʼs Strengths Beginning with Technologies
Creating new value by combining diverse strengths
We are constantly refining our most advanced technologies, suchas microfabrication, precision coating and post-processing, basedon printing processes, which is the basis of manufacturing, as
well as planning and design, information processing, materials
development and assessment and analysis. These in turn createsynergies with our know-how in sales, planning, manufacturing,
management and other practices, as well as with our partnersʼ
strengths, to create new value.
Especially for the promotion of DX, we will leverage DNPʼshybrid strengths in both analog and digital technology, reality and

1Strengths such as P&I technology

virtual reality, manufacturing and services. (See pages 54 and 55.)
We are also strengthening collaboration with diverse external
partners to speed up value creation. There are endless such ways
in which our strengths can be combined, and we will continue topursue the many possibilities to achieve a better future.
DNPʼs unique strengths that it has advanced in both P&I(Printing & Information) are unmatched by any other company.
By deploying the total strengths of All DNP, we will create
unprecedented value that is indispensable to people andsociety.

Technologies cultivated through printing processes

Project
planning
anddesignMicrofabrication

Precision
coating

In the printing process, extremely minuteprocessing is performed to ensure thathalftone dots of printed ink are difficult todiscern with the naked eye. We havefurther advanced this technology toenable microfabrication for such
substrates as metals, glass and plastics.
This technology is being applied innumerous leading-edge electronics
products and in such fields as hologramanti-counterfeiting and security.

Precision coating is a technology that forms acoating film on materials with a variety of features,in either single or multilayers, in a homogenous
and uniform manner on the surface of substrates
such as paper as well as plastic film, metal andglass. A variety of functions that include opticaland barrier properties and heat resistance can be
added, giving this technology widespread
applications in such areas as packaging andbuilding materials, photographic print materials,
battery materials and optical films.

Information
processing

DNP plans and designs a process suited tothe desired layout. DNP continuously
handles large volumes of text, 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 for safely andproperly handling large volumes of data as
it expands into various types of important
information processing and analysis andsecurity technologies.

Ability to create new value

2

Anticipate the future and quickly provide the value created by applying our own
technologies to the entire world
Project
planning anddesignProduction
andmanufacturing

to find value

Totalstrengths of
All DNPManagement
andoperation

Application
capabilities

Foresight

Sales

to create value

Foresight to perceive future potential
Develop products and services fromthe two time perspectives of 10 years
in the future and the present

Ability to apply our own
technologies and shift
this to other applications

Sales
capabilities
to expand value

No.1

global shareNo.1

domestic share

Globally deploy businessmodels establisheddomesticallyFoundation cultivated in the printing business3

Highly functional products and services and relationships of trust with business
partners and customers

Technologies
andR&D

Information gathering
capabilities
Relationships of trust with tens of thousands ofbusiness partners and customers and useful
information obtained from these relationships

Pursuit offunctionality

Cultivate anddeepen development
capabilities

Create new functionality andvalue based on the technologies
cultivated in the printing process

Form a wide range of businessareas through repeated “cultivation”
and “deepening”

1

2

Editing, manuscript
submission and layout

Film making and platemaking• Film making: Print data is color separated into the four colorsof CMYK* (cyan, magenta, yellow, black) and output on film.

This includes such processes as planning
printed products, selecting materials andprinting methods, designing processes up
to delivery, managing and operating themanuscript, inputting and processing text
and image data, and creating layout data.

Feedback*C (cyan≒blue-green), M (magenta≒red-purple), Y (yellow), K (black)• Platemaking: Data is transcribed from a film made into aplate to a metal sheet to produce the printing plate.

Printing processes

Effectiveness assessment

Examples of printing such as publication
printing and commercial printing

Product delivery

3
4

DNPʼs P&I technologies
Combining DNPʼsdiverse ideas andknow-how withtechnology

Ideas

Combining partnersʼ strengths(technology & ideas & know-how)

Know-howwith DNPʼs strengths

Printing(in a narrow
sense)

Etching
processing

16

Printing

Binding andpost-processing

Precision
engraving

Microfabrication

Photolithography

Coating

Precision
coating

Business
designMolding

HologramMedia
conversion
technologies

Vacuumdeposition

Publishingsolutions

Project
planning
anddesignLivingspace
designInformation
processing

Image
processing
andrecognition

PackagingdesignSales
promotion

OpticaldesignDataanalysis

Information
security

Font
technologies

Ideas

Dispersion
andcomposition

Aseptic
filling
processing

Postprocessing

Plastic
forming

Organicsynthesis
technologies

Laminating
technologies

Transfer
processing

AssaydesignMaterials
development

Pigments
andphotosensitive
materials

Process andmaterial
diagnosis

Assessment
andanalysis

Polymermaterials

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.

Know-howTechnologies

Bookbinding
processing

EBand
UV curing

A printing plate with thenecessary number ofcolors is wound arounda roll, ink is applied andhigh-speed andhigh-precision printing
on paper or other items
is carried out.

Postprocessing

Databaseanalysis

Process
simulation

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 and are also
outstanding for use in three-dimensional processing such as die
cutting and assembly. These technologies have enabled thecreation of packaging for such items as foods, beverages anddaily necessities; the development of systems for the aseptic
filling of contents; and the inspection, measurement andanalysis of various products.

Materials
development

Assessment
andanalysis

This technology, which works tosynthetize, disperse and mix materials,
is applied in the design and manufactureof materials such as ink, adhesives,photosensitive materials, coatings, etc.
In order to maximize performance as theprinting accuracy becomes sophisticatedand products become highly functionaland diversified, the development process
begins with materials.

Through analysis of the manufacturing
process, this technology boosts
productivity, consistency of productquality, improvement of the work
environment and more. Incorporating
elements of theory in the latest sensing
technology, we find mechanisms toidentify the materials and processes
impacting product quality, as well as torealize functionality and performance.

DNP Integrated Report 2023

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