Integrated Report

2018

DNP will realize its“Third Corporate Founding”
by synergizing its internaland external strengths
to create value that
leads to the solving ofissues facing society.

These are photographs of the employees introduced in the fiscal
2017 Group in-house magazine (published four times per year).

DNP Integrated Report 2018

CONTENTS
3
4
6
10

15

Vision/Code of Conduct/ Three Corporate Responsibilities/Editorial Policy
Our Products and Services
Overview of Performance
Top Interview~Creation of New Value That Leads to the Solving of Issues Facing Society~

30
34

38

ESG Section
55
60
71

72

About the Cover Illustration
Our design reflects the corporate
philosophy espoused in DNP Group Vision
2015: “ The DNP Group connects
individuals and society and provides newvalue.” It is a collage of related motifs,
which include businesses based on four
growth areas, the environment and society,and TAIWA (dialogue) and cooperation,
expressed in a visual embodying the futureof society. The letters “ D,” “ N ” and “ P ”
are hidden within the graphic.

Management ʼs Discussion and Analysis
Selected Financial Data (unaudited)
Consolidated Financial Statements
Independent Auditors ʼ Report
Major Subsidiaries and Affiliates
Investor Information

Business
VisionGuiding
Principles

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

Taiwa (dialogue)
and cooperation

1. Value Creation

2. Integrity in Conduct

3. Transparency (Accountability)

The first and most fundamental
responsibility of a corporation to society
is “ providing new value to society.” Wemust make a connection between theoffering of products and services
necessary to the sustainable developmentof society and the growth of the company.
DNP will continue to provide high value
which contributes to the solution of social
issues through our Business Vision.

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

Finally, the third vital corporate
responsibility is “ being a company that isaccountable and highly transparent.” DNP
achieves accountability by encouraging all
employees, during the course of theirregular duties, to engage in TAIWA withstakeholders, listen to their opinions andprovide correct information themselves.

1-1, Ichigaya Kagacho 1-chome, Shinjuku-ku, Tokyo 162-8001, Japan
Tel: +81-3-3266-2111
URL: http://www.dnp.co.jp/eng/©2018.DNP
PRINTED IN JAPAN

Integrated Report

2018

Financial Section
73
80
82
105
106
108

2

CSR Management
Corporate Governance
Board of Directors, Statutory Auditors and Corporate Officers

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 workplaceThree Corporate Responsibilities

I n te g r a te d R e p o r t 201854

DNP ʼs Business Portfolio
Information Communication
Lifestyle and Industrial Supplies
Electronics

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

Three important obligations DNP have to fulfil to remain a company that can always be fully trusted by its various stakeholders.

Business Activity Report
40
42
46
50

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

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

Todayʼs Innovation is“Tomorrowʼs Basic”
Sustainable Growth of DNP
DNP ʼs Value Creation Process
Risks and Opportunities
Promoting Business Commercialization in Growth Areas
Issues Driven Development:
Case 1: Digital Marketing for Shopping
Issues Driven Development:
Case 2: Creating a Food Value Chain
Issues Driven Development:
Case 3: Next-Generation Automotive Society

The DNP Group Code of Conduct

Corporate
Philosophy

Special Feature

16
20
22
24
26

DNP Group Vision 2015

Design by groovisions
Design studio established in 1993. Primarily
focused on graphics and video, groovisions
works in a wide variety of media includingmusic, print, product and interior design,
fashion and the Web. Main projects include
CD packages for RIP SLYME and FPM and otherrecording artists, and package design for
GRAND KIRIN and JINS SCREEN, art direction
for Metro min. magazine and other publications,art direction at exhibitions such as SAGAN GA,
and motion graphics production at Nippon TV ʼs
NEWS ZERO and gggʼs (Ginza Graphic Gallery ʼs)
301st exhibition, among others.

Editorial Policy
In order to realize our corporate philosophy, it is essential toconduct integrated business activities based on the concept ofutilizing financial and non-financial capital in an integrated
manner as well as swift and accurate decision-making. Also, togain the understanding of our stakeholders, we believe in theimportance of disclosing information with sincerity about our
integrated thinking and corporate activities. In the firstIntegrated Report for DNP, we provide multifaceted andintegrated coverage not only of financial information but also
DNP ʼs overall business activities, including environmental,social and governance (ESG) criteria. DNP will fulfill our
accountability by disclosing information in a timely andappropriate manner through a variety of tools in addition tothis report, including our corporate website, “ Yoho ”annual
securities report, shareholders ʼ report, CSR report andenvironmental report, etc.

◇ Period covered by this report: April 1, 2017 to March 31, 2018
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 60-70), “ DNP ” refers to Dai Nippon Printing Co., Ltd.)◇ Issued: October 2018 (Next scheduled issue: October 2019)
Note: This report is aimed at providing information about DNP ʼs 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.

DNP Integrated Report 20183

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

1

2

3

4

5

6

7

8

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

48

●

Information Innovation Business●

Marketing

4 Flyers and catalogs
6 Electronic paper●

5 Point-of-purchase advertising

7 Energy-efficient digital signage

BPO (Business Process Outsourcing)

8 DNP ʼs Kamiya Solutions Center

Information Security
10 Smart cards and magnetic cards
11 SIM card
12 Cloud payment services
13 Transparent hologram ribbon●

9 Personalized mailImaging Communication Business
14 Dye-sublimation thermal transfer printing media and thermal masstransfer printing media

15 Dye-sublimation photo printer

16 Ki-Re-i ID photo kiosk

Lifestyle & Industrial Supplies
Packaging Business
17 Packaging

18 In-mold label container

19 Barrier film for packages

20 Biobased packaging materials

21 PET plastic bottles (left and center) and preforms (right)

22 Aseptic filling systems for PET plastic bottles

23 Comprehensive packaging evaluation services
24 Film medium for microorganism testing

Living Spaces Business
25 Residential interior materials (floor coverings)

26 Residential interior materials (wall coverings)
27 Exterior materials for buildings

28 Automotive interior materials

29 Interior coverings for railway cars (Hokuriku Shinkansen)

Industrial Supplies Business
30 Photovoltaic module components

31 Lighting film (left: with film, right: without film)

32 Lithium-ion battery components

Electronics
Display Components Business33 Color filter for liquid crystal display

34 Large-scale photomask
35 Touch panel sensor

36 Optical films used for displays

37 Electrode film for capacitive touch panels

38 Digital shelves

Electronic Devices Business
39 Semiconductor photomask

40 Master template for nanoimprinting
41 Hard disk drive suspension

42 Lead frame for compact semiconductor package

43 Metal substrate for LED light

44 Camera module

45 Image enhancement LSI

46 NFC (near field communication) module
47 Electronic paper display system

48 MEMS (micro electro mechanical systems) products

4■ ■ ■ Numbers correspond to photographs on pp. 4-5.

DNP Integrated Report 20185

Overview of Performance

Summary of Financial Results
Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31

2018

2017

2016

U.S.dollars inthousands except
per share amounts

Statements of Operations (¥ million)

Net sales($ thousand)¥Operating income
Ordinary income
Income before income taxes
Net income attributable to parent company shareholders

1,412,252
46,37250,97145,39627,501¥

1,410,173
31,411
36,74039,831
25,226¥

1,455,916
45,47252,651
54,84033,587$ 13,323,122
437,472
480,858
428,264
259,443

Balance Sheets (¥ million)

Total net assets¥

Total assets

1,102,551
170,105
1,810,499¥

1,081,286
169,135
1,741,904¥

1,063,241
189,820
1,718,636$ 10,401,424
1,604,764
17,080,179

Cash Flow Statements (¥ million)¥

Cash flow from financing activities
Free cash flow*1

48,457
23,075(42,771)
71,532¥

71,94514,012(45,223)
85,957¥

72,629(60,883)(47,166)
11,746$Per Share Data (¥)*2, 3

Net income –– fully diluted
Net assets
Cash dividend

Operating Income(¥ billion)(¥ billion)

2,000

60

1,500

EBITDA margin
Net income to net sales

2.0 %
0.6 %
3.9 %

457,142
217,688(403,500)
674,830

ROA (%)
D/E ratio (%)
Interest coverage ratio (times)

33.6
46.4

45.5

30
25.6

40

26.9

25.2

27.5

31.4
20

1,000
20

($)

¥

90.77
90.71
3,493.79
48

¥

81.57
81.55
3,361.10
32

¥

53.10
53.06
1,618.63
32

$

0.86
0.86
32.96
0.45

10

500

0

–32.6 %
64.7 %–5.4 %–16.8 %
11.3 %
11.2 %
3.9 %
––

3.28
7.70
1.95

2.23
7.34
1.79

3.12
8.42
2.31

3.28
7.70
1.95

1.05
0.36
0.16

2.63
1.55
16
23.60

2.46
1.46
16
16.59

3.20
1.90
19
20.79

2.63
1.55
16
23.6

0.17
0.09
––
––

24.22
0.63
5.30
7.48
2.18

29.43
0.71
6.69
8.52
2.67

18.84
0.62
5.23
6.36
3.20

24.22
0.63
5.30
7.48
2.18

––
––
––
––
–0.49

Financial Ratios

ROE (%)

48.2

1,448.6 1,462.1 1,455.9 1,410.2 1,412.3

0

0

14

15

16

17

18

14

15

16

17

18

Net Income per Share

ROE

ROA

(¥)

(%)

(%)

100

90.77

14

15

1.6

1.6

2.8

2.5

14

15

1.6

18

17

18

1.9

2

1

0

0

17

1.5

2.6

1

20

16

18

3

2.7

2

39.82 41.82

15

17

4

53.10

14

16

3.2
3

60

40

4

81.57

80

Profit Margins (%)

Operating income margin

Net Income Attributable toParent Company Shareholders(¥ billion)
40

50.1

($ thousand)Cash flow from investing activities

Net income –– primary

0.1 %47.6 %
38.7 %
14.0 %
9.0 %Net Sales($ thousand)Interest-bearing debt

Cash flow from operating activities

Change2018 2018/2017

0

14

15

16

17

18

16

Valuations (against share price on March 31)

PER (times)
PBR (times)
EV/EBITDA (times)
PCFR (times)
Dividend yield (%)
Values of shares repurchased

Returns to shareholders (¥ million)
Dividend payout ratio (%)

14,99978.50

19,99860.30$

141,491
70.50

––
––

OthersLong-term credit rating (R&I)
Foreign ownership (%)

Net Assets per Share(¥ billion)

(¥)

150

3,500

60

54.8
48.6

51.1

125.0
45.4

103.5

39.8

40

AA–
24.58

AA–
23.91

AA–
22.01

AA–
24.58

––
––

*1. Free cash flow = net cash from operating activities + net cash from investing activities*2. DNP implemented a share consolidation in which two shares of common stock were consolidated into one share effective October 1, 2017. Accordingly, DNP has estimated net
income per share and diluted net income per share assuming this share consolidation was implemented at the start of the previous consolidated fiscal year.
*3. Cash dividends per share of ¥48.00 for the fiscal year through March 2018 is the combined total of interim cash dividends per share of ¥16.00 and year-end cash dividends per
share of ¥32.00.

3,361.1

108.7

100

2,500
2,000
1,500

20

3,493.8

3,000

120.5 122.6

30

U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥106=U.S.$1, the approximate Tokyo foreign exchange market rate as of March 31, 2018.

6

EBITDA(¥ billion)50($ thousand)

14,99870.50

Income before Income Taxes

50

1,448.0

1,675.6 1,618.7

1,000

10

500

0

0

14

15

16

17

18

0

14

15

16

17

18

14

15

16

17

18

DNP Integrated Report 20187

Non-Financial Highlights (As of March 31, 2018)
Total Net Assets

Interest-bearing Debt

Total Assets(¥ billion)(¥ billion)(¥ billion)

250

2,000

1,200
1,000

1,124.1

1,063.2 1,081.3

1,102.6

976.4

182.6 187.9

1,718.6 1,741.9

1,810.5

Waste emissions (1,000 tons)
Emissions per-unit value (kg/million yen)

1,500

2.00

100

100

80

80

1,574.8

189.8
169.1 170.1

800

Waste Emissions (Including International Operations)

GHG emissions (1,000 t-CO 2 )Emissions per-unit value (t-CO 2 /million yen)
1,809.5200

GHG Emissions (Including International Operations)

1,058

1,500

1,020

1,000

982

1.50
929

892

150
600

60

1,000
100
500

0

0

14

15

16

17

18

0.73

500

50

0

14

15

16

17

18

0.69

0.67

0.66

0.63

15

16

17

PBR (Price Book-value Ratio)

Capital Expenditures*(times)(times)(¥ billion)

40

1.5

100

97.3

80

29.43

14

15

16

60

24.22

20

0.68

0.70

18.84

0.71
0.62

0.63

57.1

55.0

34.3

34.9

0

0

14

15

16

18

17

Sales of Environmentally Conscious
Products and Services (by Segments)

Total Number of Employees(by Segments)

Number of Overseas Group
Company Employees (by Area)(¥ billion)(persons)(persons)
Corporate 2,088

Beverages
1,288Europe 319
America
680

Electronics
3,841

59.6

599.3

38,627

Lifestyle &Industrial
Supplies
10,801billion yen

40

0.5
10

35.4

34.7

20

18

17

Electronics
1,149

63.5

1.0

24.84

48

20

0.00

18

Others 356
27.94

49

40
38.1

0.50

0

14

PER (Price Earnings Ratio)

30

60

52

51

40

400
200

55

1.00

4,861

persons

persons

20

0

0

14

15

16

17

18

0

14

15

16

17

18

14

15

16

17

18

Lifestyle andIndustrial Supplies
1,778

Asia
3,862

Information Communication
20,609

Information Communication
2,710* Figures include capital expenditures for intangible fixed assets.

Research and Development Expenditures

Depreciation Expense

Free Cash Flow*

Percentage of Female
Managers(¥ billion)(¥ billion)(¥ billion)

(%)

40

100

100

Lost Time Work Accident
Occurrence Rate

Number of Japanese
Patents Held

0.35

16,000

4.7

30.8

31.7

31.8

31.4

4.5
86.0

33.2
80

30

73.5

80
67.0

65.3

61.5

61.1

60

60

71.5

40

35.2

3.0

3.1

3.3
0.25

20

0

15

16

17

18

11.7

0.20

2.0

0.15

15

16

17

18

12,000

15

16

17

18

11,85812,358 12,435

10,000

6,000

0.10

4,000

0.05

2,000

0

0

14

10,931 11,311

8,000

0.5

0

14

0.26

1.0

20

0

14

0.24

0.21

2.5

1.5
10

14,000

0.30

3.5
3.0

61.7

0.32

0.31

4.0

20
40

4.1

14

15

16

17

18

0

14

15

16

17

18

14

15

16

17

18

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

8

DNP Integrated Report 20189

Top Interview

Realization of Our“Third Corporate Founding”
Yoshinari Kitajima President (Assumed the position of president on June 28, 2018)“ The 40,000 employees comprising the DNP Group serve as valuable assets withunique strengths that we can synergize to create unlimited potentials. In addition,at the DNP Group, we are focused on combining our strengths with those of our partners tocreate value that contributes to society. By spreading this value across the entire world,
we are confident we can play a key role in realizing an even better future.”

Q. W
 hat kinds of strengths has

the Company cultivated since its
founding and how will you leveragethese in the future?

We will synergize our unrivalled strengths in
an integrated manner to create value thatsolves social issues.
DNPʼs predecessor, Shueisha, was founded in 1876 andduring the first approximately 70 years of operations carriedout business centered on publishing printing. Despite laterencountering a harsh management environment in thetumultuous post-war period, in 1951 we implemented the“five-year reconstruction plan” and promoted “expansion
printing” to broaden our business domains by applying ourprinting technologies. As we expanded printed materials frompaper to films, metals and others, we began printing for items,
ranging from financial securities to packaging, decorative
materials and electronics products, and subsequently evolved
into one of the worldʼs leading comprehensive printing
companies. We refer to this transformation as our “Second
Corporate Founding.” Moving forward to the 1970s, inpushing ahead with our ongoing transformation, we
continuously took on challenges that included acting early toengage in the digitization of information and expanding oursmart card and network-related businesses.
We are currently in the midst of dramatic changes. Until
now, we could achieve growth in business results merely byaddressing issues facing our corporate customers. Today,
however, even corporate customers themselves are unable toidentify issues, meaning that DNP must earnestly take theinitiative in identifying and finding solutions to issues facing

10

people and society.
Given these circumstances, Iʼm convinced the time is ripe for
us to realize our “Third Corporate Founding” that transcends our“Second Corporate Founding.” Specifically, we need toundertake integrated activities that synergize our unrivalledstrengths in printing and information, our financial capital andnon-financial capital such as technologies and human resources,
and the strengths of our partners. I believe these efforts will allow
us to continuously create “new value” for solving social issues
and drive our medium- and long-term growth.
Our “Third Corporate Founding” represents a challenge
whereby DNP strives to continue providing value that helps
solve challenges facing society and we will make our utmost
groupwide efforts to realize this goal.

Q. W
 hat important aspects of

DNP will be kept in place andwhat areas will be reformed?

We will never change DNP ʼ s strong determination
to contribute to a better future, our firm stanceon leveraging our strengths in P&I (printing andinformation), and our spirit of continually taking
on the challenge of promoting change.
Even in our “Third Corporate Founding,” we have a corporate
culture which we should never change. When we were
founded in 1876, the motto “Running a civilized business”
was prescribed in the company prospectus. DNP defines
civilization as being a peaceful society where people arebrimming with hope and dreams for the future. In keeping withthis motto, DNP continuously looks to the future and createsvalue in the form of products and services that can solve a

DNP Integrated Report 201811

Top Interview

variety of issues facing society. This determination to benefit
society will never change.
Whatʼs more, our firm stance on expanding businessleveraging our strengths in P&I as a foundation will also
remain unchanged. These strengths are the wellspring of ourcompetitiveness that creates DNPʼs originality and we havenever undertaken any businesses deviating greatly from ourcore strengths in P&I. I believe one of our most valuableassets is the trust we have built throughout our history. We
have gained this trust by never straying from DNPʼs uniquestrengths, continuously acting with integrity and always
providing genuine value. The word “founding” means to be
newly born. These numerous assets we have inherited will bea tremendous advantage as we take on the challenge ofrealizing our “Third Corporate Founding.”

We must change our ways of creating value
to ensure our sustainable growth.
On the other hand, along with the expected major changes inthe times in the future, DNP must also flexibly, boldly and quickly
change the ways it creates value to ensure sustainable growth.
Instead of only considering our own corporate customers as
in the past, we now need to also focus on society as a whole,consider the people actually living within society and identify
their latent concerns and needs. Broadening our perspectivein this manner will position us to quickly become aware ofnumerous social issues. From among these, we will thenselect target issues DNP is uniquely capable of solving andstrive to connect these endeavors to new businesses.
Rather than passively waiting to be presented with issues, wemust transform ourselves so that we can take the lead insolving issues via Taiwa (dialogue) with stakeholders. To do so,every employee should first of all make efforts to change theirown actions and awareness, and to support these efforts, I
would like to change our structures and systems as appropriate.

Q. W
 hat types of measures will

you implement to realize your“Third Corporate Founding”?

We plan to implement three measures for“ generating, providing and expanding value. ”
In reviewing the Group Vision in 2015, we extensively
discussed what kinds of social issues we could solve bysynergizing P&I, which is our forte. As a result of this
discussion, we identified Knowledge and Communication,
Food and Healthcare, Lifestyle and Mobility, and Environment
and Energy as areas where DNP was uniquely positioned tosolve social issues, while as our business vision we decided to“Use P&I Innovations to expand business, primarily aroundthese four growth areas.” To achieve our objectives we are
currently implementing the following three measures.

12

1

G
 enerate value by expanding business,
primarily in growth areas

DNP will combine its unrivalled strengths in P&I with thestrengths of its partners to generate value that enables
solutions to issues facing society in these four growth areas.
In this regard, we will strive to create products and services
that allow us to deploy DNPʼs true strengths. In other words,
we aim to create “products and services not easily reproduced
by anyone else” and ultimately “products and services forwhich competition does not yet even exist.”
The Sustainable Development Goals (SDGs) adopted by theUnited Nations in 2015 express 17 goals and 169 targets,
underscoring the numerous unresolved issues around us. As
there are still no resolutions to some of these issues, thesolutions we generate will represent long-awaited “new value”
for the people directly affected by these challenges. DNPʼsfour growth areas and the SDGs serve as so-called sources ofvalue, and we intend to build a strong business portfolio by
continuously creating new value.
2P rovide value to the global market

As the trend toward borderless markets and value chains
gains momentum, DNP will also provide products and services
that have the value of leading to solutions across a wide range
in both Japan and overseas.
Although there is no template for creating new value,
Joseph Schumpeter, a renowned political economist who
articulated the concept of innovation, described innovation as
being “new combinations.” I believe we can spur innovation
by taking new perspectives and re-evaluating and combining
our existing products, services and technological strengths
and deploying these in new markets in Japan and overseas.
Therefore, we must ensure optimal designs tailored to eachregion and provide the products and services needed in theselocations, and to do so, we will also focus on strengthening
our global marketing functions.
3Q. W
 hat is your personal involvement

in value generation and what areas
do you wish to focus on?

I ʼ ve been involved in businesses that enhance
the business efficiency of customers andthat provide inspiring experiences for people.
Before joining DNP, I worked for about seven and a half years at
a commercial bank, where I observed numerous companies froman “external perspective” through my involvement in market
analysis and financing. I subsequently entered DNP and havebeen involved in management from an “internal perspective” asa director since 2001 and as a representative director since2009. I believe this experience of observing companies from bothinternal and external perspectives in this manner is extremely
beneficial in the decision-making of current management.
At DNP, I was in charge of the Information Communication
segment for a long period. From around 2000, Business
Process Outsourcing (BPO), the consignment of business
operations to external companies, began to gain traction in thefinancial and a variety of other industries. Around this time,
DNP successfully expanded its BPO business in this new fieldby deploying its advanced information security technologies
cultivated in the smart card business. DNP also possesses

strengths in photo print materials, in which it commands the
top market share. Leveraging this strength, DNP also operates
a service that provides inspirational moments throughphotographs that can be taken only at unique locations suchas baseball stadiums or concert halls.
Traditionally, we have a DNA for cultivating new businessfields utilizing DNPʼs own strengths as a foundation. I would
like to ensure that we can reliably hand down to the next
generation our stance of taking on the challenges of reformfrom diverse perspectives.

We will continue to create a corporate climate
for deepening Taiwa (dialogue) andcooperation and enabling value creation.
Besides the measures I have just explained, the successful
execution of our “Third Corporate Founding” also requires thateach and every employee changes his or her actions andawareness. Up to now, it was advantageous to build structures
for sales, planning, technologies, manufacturing andmanagement for each individual business department. At
present, however, amid the diversification of peopleʼs values
and needs, swiftly undertaking corporate activities flexibly
tailored to meet changing needs is essential. There are also a
growing number of instances in which single businessdepartments alone are insufficient to respond.

Expand corporate value by means of all kindsof structural reforms

The new value we generate can also gradually lose its appeal
with the passing of time or when other companies catch up.
To maintain and strengthen our business competitiveness andmaximize profits, we therefore need to continually ask
ourselves “what is new value?” and re-evaluate ourstrategies, tactics, business partners and markets while
optimizing internal systems and rules.
To the present, we have integrated and reorganizedbusiness departments and Group companies and undertaken
innovation activities in sales, production and business
operations. Going forward, we will continue to implement allkinds of business structural reforms aimed at maximizing ourcorporate value.

DNP Integrated Report 201813

Special Feature

Top Interview

The 40,000 employees making up the DNP Group serve as
valuable assets possessing their own unique strengths as
professionals. I believe there are an unlimited number of patterns
for synergizing these strengths. This is precisely why realizing our“Third Corporate Founding” will be contingent on creating a
climate for deepening Taiwa and promoting collaboration, with all
employees possessing an All-DNP awareness.
Moreover, I would also like to continuously create value by
deepening our Taiwa and cooperation with domestic andoverseas partners and numerous stakeholders.

Q. H
 ow were the business results forthe fiscal year ended March 2018
and what is the plan for the future?

We promoted initiatives in the growth areas
and achieved increases in revenue and profits.
Our initiatives in the four growth areas are beginning to bear
fruit. Let me cite some specific examples. In Lifestyle andMobility, we took advantage of our advanced information
security technologies to develop a digital key platform that
performs locking and unlocking with a smartphone. We will
aim to apply the platform to the various sharing services,
including for cars, homes and parcel delivery lockers. DNP
also succeeded in developing Curved Resin Glass, which islighter than glass and easy to process, for lighter-weightvehicle bodies.
Thanks to these measures, net sales for the DNP Group in

the fiscal year ended March 2018 edged up 0.1% year on
year to 1,412.2 billion yen, operating income jumped 47.6%
to 46.3 billion yen, ordinary income rose 38.7% to 50.9 billion
yen and net income attributable to parent company
shareholders increased 9.0% to 27.5 billion yen.
For the fiscal year ending March 2019, we forecast the DNPGroup will record net sales of 1,420.0 billion yen, up 0.5%
from the previous fiscal year; operating income of 47.0 billion
yen, an increase of 1.4%; ordinary income of 52.0 billion yen,
an increase of 2.0% from the previous year; and net income
attributable to parent company shareholders of 28.0 billion
yen, up 1.8% year on year.

Q. F inally, what is your message to〜 Creation of New Value That Leads to
the Solving of Issues Facing Society〜
DNP will create new value that contributes to solving various social issues bycontinuously advancing its strengths in P&I (Printing & Information) cultivated over the course of
its 142-year history and multiplying these by the strengths of its diverse partners.

stakeholders?

We will strive for sustainable growth byrealizing our “ Third Corporate Founding. ”
DNP is actively promoting environmental, social andgovernance (ESG) initiatives in working to achieve sustainablegrowth. These initiatives have earned high acclaim fromoutside the company, as evidenced by DNPʼs selection formany indices of global socially responsible investments (SRI),
most notably the FTSE4Good Global Index and MSCI ESG
Leaders Indexes. Additionally, in 2017 DNP was selected as aconstituent of all three ESG indices adopted by Japanʼs
Government Pension Investment Fund (GPIF).
Regarding dividends, our basic policy is to pay stabledividends while taking into consideration businessperformance, the dividend payout ratio and other relevant
factors. Concurrently, we support business development
toward future value creation by using retained earnings toenhance our financial constitution and strengthen ourmanagement base. In accordance with this policy, for the
fiscal year ended March 2018 we paid year-end cash
dividends per share of 32 yen.*
In working to realize our “Third Corporate Founding,” we muststrengthen our ESG initiatives and proactively fulfill our
corporate social responsibility to ensure we can create valuethat enables the solving of social issues in the four growthareas. DNP assures transparency and fairness as a listedcompany and carries out close communications with numerous
stakeholders, beginning with shareholders, as it strives toachieve sustainable growth and raise corporate value.
In fiscal 2018, DNP started operations under a new
management structure. Going forward, I ask for your further
support as we work to achieve our objectives.
* On October 1, 2017 DNP changed the number of shares per share unit from
1,000 shares to 100 shares and every two shares were consolidated into one
share. Year-end cash dividends per share converted to a pre-share consolidationbasis were equivalent to 16 yen and together with interim cash dividends per
share of 16 yen, cash dividends per share for the entire year amounted to 32
yen, which is substantially the same amount as after the share consolidation.

14

Todayʼs Innovation is“Tomorrowʼs Basic”

P&I
Innovations
CONTENTS
16

Sustainable Growth of DNP

20

DNP ʼs Value Creation Process

22

Risks and Opportunities

24

Promoting Business Commercializationin Growth Areas

26

Issues Driven Development: Case 1

30

Issues Driven Development: Case 2

34

Issues Driven Development: Case 3

Digital Marketing for Shopping
Creating a Food Value Chain
Next-Generation Automotive Society
DNP Integrated Report 201815

Evolution of DNPʼs Businesses

Sustainable Growth of DNP
1876

1935

● 1868: Meiji Restoration 〜

1973

1987

● 1945: End of war〜Toward a period of rapid economic growth

Civilization and enlightenment● 1876: Founding of Shueisha,
DNP ʼs predecessor

1951● 1973: Surpassed U.S.-based

R.R. Donnelley & Sons Company
to become the worldʼs largest
comprehensive printing company● 1951: Start of five-year reconstruction plan

Comprehensive Printing BusinessRun a Civilized Business

Expansion Printing

Shueisha, DNP ʼs predecessor, was founded
during the Meiji Restoration Period, when Japan
pushed forward with a major transition towardmodernization. Shueisha believed the prosperityof the printing industry depended on anenvironment with an enlightened civilization
where people lived within a peaceful society
with hopes and dreams for the future. Acting on
this belief, Shueisha strived to carry out abusiness that contributed to civilization. This
ambition expressed Shueishaʼs resolve to realize
an even better future and has been passed
down to the present-day DNP in the form of its
unchanging commitment toward realizing“ Today ʼs Innovation is Tomorrow ʼs Basic.”

As times shifted dramatically toward
postwar reconstruction, based on
the thinking that “ our company canno longer prosper by relying only on
business fields to the present,”
the Company strived to expand its
business in anticipation of the waysof life of Japanese people in the
future. Accordingly, the Company
promoted “ expansion printing ”
aimed at diversifying its businesses,
especially by means of utilizing,
applying and advancing such assets
as its printing technologies in
addition to stabilizing
labor-management relations,cultivating customers bystrengthening sales capabilities
and improving production efficiency
and quality. DNP significantly
broadened its business domains byexpanding from publication printing
to commercial and securities
printing as well as printing for
packaging, building materials andelectronics products. DNP believes
that its growth strategy of
expanding business by continuallyhoning such technologies as
information processing,microfabrication, precision coating
and post-processing technologies
to ensure these remain at the
cutting edge will allow DNP torealize its current business vision“ P&I Innovation.”

Second Corporate Founding

Founding

Printing BusinessOne year after its founding, Shueisha
printed and produced a revised
edition of “Self-Help ,” Japanʼs first
domestically produced western-style
book. This book gave courage toyoung people in the Meiji Era andproved to be a major best seller.
1912

Lineup of original
Shueitai font print types
nearly completed

2015● 2008: Collapse of Lehman Brothers● 1991: Bursting of the bubble economy 〜
Toward the “ lost decade”● 1935: Merger of Shueisha and Nisshin Printing to form Dai Nippon Printing

1877 Completed revised edition of Self-Help

2001● 1987: Began transforming toward“ comprehensive information processing ”● 2011 (March): Great East Japan Earthquake● 2001: Announced “ DNP Group Vision for the 21st Century ”

Information Processing Business〜
Information Communication Business

P&I Solutions“ DNP Group Vision for the 21st Century”
On the occasion of its 125th anniversary, DNP announced the DNPGroup Vision for the 21st Century, a vision that expresses our
directions and the goals we intend to achieve. We held anannouncement presentation that gathered approximately 8,000
executives and affirmed our commitment to attaining growth withthe entire Group working as one. This Vision prescribes our businessphilosophy as “ contribute to the development of a society based on
emergent evolution in the 21st century, while designating ʻ P&I
Solution DNP,ʼ which will solve various issues by combining ourstrengths in printing (P) and information (I), as the concept
watchwords for the entire Vision. In addition, we clarified that theinitials “ DNP,” which we had used from the past, will serve as thebrand for the entire Group and that we will raise brand value.

Information Communication
Changes in the times will also spur major
shifts in the ways people communicate.
Since its founding, DNP has contributed
to peopleʼs “ knowledge,” mainly throughpublication printing, and offers products
and services that anticipate trends indigitization and networking, raise value inthe form of information, protect
information with advanced security andenable diverse communications.

1983-85

1983
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

Lifestyle and Industrial Supplies
We are expanding our business in suchdomains as packaging and building (decorative)
materials by broadening our printed items frompaper to films, metals and other items as well
as forming items into cubed shapes and othershapes after printing. DNP is developing
products with outstanding designs and highfunctionality, beginning with packaging forfoods and daily-use items and interior andexterior materials such as floor coverings
and wall coverings, thereby providing valuethat is indispensable in people ʼs lives andin company business processes.

1951

1952

Full-scale entry into paper containerand soft packaging field→ Expansion into packaging business

Began development of decorative
paper for buildings→ Expansion into Living Spaces business
2003
Development of photovoltaic module
components→ Expansion into energy-related businesses
along with the commercialization of pouches
for lithium-ion rechargeable batteries in 1999

Electronics
The Printing business succeeded in securing
new business domains by sophisticating
technologies such as its etching technologies
that form fine patterns on metal surfaces.
Since contributing to the birth of Japanʼs first
domestically produced color TV, DNP has
been developing materials for use in various
types of higher-definition, higher-quality
displays and developing electronics-use
materials perfected to nanometer-level
miniaturization.

1958

1959

Succeeded in the trial productionof shadow masks for color TVs→ Advance into the display
products businessSuccessfully developed
photomasks for semiconductors→ Advance into electronics
devices businessNet sales trends and history(Unit: thousands of yen)

Shueisha

DNP (non-consolidated)(Unit: million yen)
1943

16

1876

1880

1890

1900

1910

Year ended
May 1977

10,000300,000

5,000

150,000

Year ended
May 1976

Net sales (non-consolidated)
268,529 million yen

Consolidated net sales
338,144 million yen

2014
Business and capital tie-up
with PSP, a major player inmedical imaging
management systems→ Expansion toward life
science-related businesses
Year ended
March 2018

Consolidated net sales
1,412,252 million yen

300,000

1,200,000

1,200,000

150,000

600,000

600,000

Shueisha Net sales 2,884 thousand yen

5,000

0

DNP (consolidated)

DNP Net sales 12,763 thousand yen

10,0001934

DNP (non-consolidated)

2004
Successfulformation ofcapillarypatterns

1920

1930

1935

1940

0

1946

1950

1960

1970

1975＊101977 1980(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.

1988＊2 1990

2000

2010

DNP Integrated Report 2018

2018

17

Evolution of DNPʼs Businesses

Sustainable Growth of DNP

2015

2018

● 2015: Formulating DNP Group Vision 2015

● 2018: DNP is accelerating initiatives for realizing its “ Third Corporate Founding ” under a new structure

led by President Yoshinari Kitajima, who assumed the duties of president on June 28, 2018.

P&I Innovation

Following the establishment of its Vision in 2001, DNP newly
established the DNP Group Vision 2015 amid an increasingly severebusiness environment after the Lehman Brothers bankruptcy and
the Great East Japan Earthquake. Under DNP Group Vision 2015,
DNP will leverage its unique and unrivalled strengths in P (printing)and I (information) and promote wide-ranging cooperation with its
external partners to create value that helps solve social issues.

Corporate Philosophy: The DNP Group connects
individuals and society and provides new value.
Business Vision: Use P&I Innovations to expand business,
primarily around four growth areas.
DNP Group Guiding Principles: Taiwa (dialog) and cooperation

Four Growth Areas
Knowledge and Communication

Lifestyle and Mobility

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

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

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

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

Food and Healthcare

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 in birthrates
and aging of society in Japan, DNP will create value that supports safe andhigh-quality lives and helps people maintain their health throughout theirlives. DNP will support the food value chain through its functional andhygienic 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 and services
toward the realization of a sustainable society that achieves compatibility
between economic development and protection of the global environment.
We will combine strengths such as our highly functional films that control
light and heat with our information technologies to provide value thatenables resource and energy savings and helps preserve biodiversity.

Toward our “Third Corporate Founding”

DNP Group Vision 2015

Our “ Third Corporate Founding ” involves multiplying our internal andexternal strengths to create value that helps solve social issues.
DNP has continuously expanded its business, firstby focusing on publication printing from the time ofits founding in the Meiji era, and then on theapplication and development of printing technologies
during its “ Second Corporate Founding.” As we now
strive to realize our “ Third Corporate Founding,”
we will undertake business activities focused onsynergizing our unrivalled and unique strengths in
P&I (printing & information). In doing so, we mustThree Key Measures for Realizing Our “ Third Corporate Founding”
Generate value by
expanding business,
primarily in growth areas

Provide value tothe global market

Increase corporate value
by means of all kinds ofstructural reforms

In working toward the attainment of ourbusiness vision we will combine our strengths
in P&I with the strengths of our partners andwork to generate value in four growth areas.
As reflected by the SDGs, there are still
numerous issues throughout the world thatremain unsolved. We aim to help solve theseissues through the new value we create.

With value chains now extending acrossthe globe, we must set our sights
beyond Japan and address social issues
from a global perspective. As of March
2018, DNP operated 15 sales bases
and 26 production bases overseas andwill now create value in four growthareas in Japan and overseas.

We are progressing with business structurereforms and cost structure reforms that
include integrating and reorganizing
business divisions. We are also maximizing
corporate value with measures that include
the integrated utilization of financial capitalas well as such non-financial capital as
human capital and intellectual capital.

What DNP will never change and what DNP will change
The DNP Spirit that will becarefully handed down
Our “ corporate culture ” for continuously taking on
the challenge of making change● Our “ aspirations ” that began with a “ civilizedbusiness ” and that will lead to the creation of valuethat helps solve social issues● Our business “ pillar ” that combines DNP ʼs uniquestrengths in P&I (Printing & Information)● Our “ corporate stance ” of the fulfillment of ourthree corporate responsibilities consisting of value
creation, integrity of conduct and high transparency(accountability)●

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 planand strives to realize a world where “ No One is Left Behind ” through the implementation of global-wide
initiatives for attaining 17 goals and 169 targets.
The future society drawn up by DNP Group Vision 2015 envisions a sustainable society, or in other words,
a prosperous society that has attained the SDGs. To properly fulfill our responsibilities as a company that isdeeply involved with society, we will utilize the SDGs as a “ yardstick for creating an even better society ”
through all aspects of our business activities.
We will proactively contribute to attaining the SDGs via “ value creation” through products and services andour “ foundation for supporting value creation” within the value chain.
<Reference → P.22-25 、P.55>

18

carry out wide-ranging cooperation with ournumerous partners and leverage our strengths
both within and outside the Company. We believethese efforts will allow DNP to create value that
leads to solutions to various social issues. Our“ Third Founding ” represents a challenge towardmaking changes and by promoting these changes
we can achieve sustainable growth both for theCompany and for society.

What we will resolutely and thoroughly change
Change our perspectives: We will address social issues by broadening
our perspectives to include people beyond our corporate customers, on
which we have focused to the present.
● Change our structures: We will strengthen governance and integrate,
reorganize and optimize such functions as sales, production, technology
development and planning.
● Change our points of contact: We will expand real venues andInternet-based virtual venues for interaction and continuous dialogue
with a diverse range of stakeholders.
● Change our systems: We will introduce frameworks such as systems
for evaluating in-house collaboration that further boost efforts toleverage our strengths.
●

DNP Integrated Report 2018

19

DNPʼsValue Creation Process

Foundation for Value Creation

Financial capital (consolidated)
Net sales

1,412.3 billion yen(up 0.1% YoY)

Net income attributable to parent
company shareholders

27.5 billion yen(up 9.0% YoY)

Structures and Systems for Value Creation

Information Communication■ Publishing Business(Publishing & Media Services, Education and Publications Distribution)■ Information Innovation Business(Marketing, Information Security)■ Imaging Communication Business
Products and services with top shares

DNP will create value that helps solve challenges facing
society through the integrated utilization of our financial
capital and such non-financial capital as human resources
and intellectual property as well as our strong corporate
governance and optimized structures and systems.

Stakeholder Dialogue

Value Created by DNPPartnerships with stakeholders
Suppliers

Employees

Customers

Consumers

Shareholders

Local communities□ Smart cards: Top share overall in Japan and top share in domestic financial markets□ Dye-sublimation thermal transfer printing media for photo prints: World top share

OthersTotal assets

1,810.5 billion yen
Human capital (consolidated)
Total number of employees

38,627(consolidated basis)(33,766 in Japan, 4,861 overseas)

Manufactured capital
Number of production bases

61 in Japan, 15 overseas
Number of sales bases

38 in Japan, 26 overseas
Capital investment

59.6 billion yen
Intellectual capital

Products and services with top shares□ Aseptic filling systems for PET bottles: Top share in Japan for manufacturing

Society

Environment■ Display Components Business(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

Beverages

Hokkaido Coca-Cola Bottling Co., Ltd.

R&D outlays

Corporate Governance(YoY increase of 1.9 billion yen)

DNP recognizes that corporate governance is an important management
issue and therefore builds and operates systems for accurate andintegrated management decision making and fair and quick execution ofbusiness as well as for supervising and auditing these functions.

In May 2018, DNP held a stakeholder dialogue with
CSR Review Forum-Japan*. DNP has continuously
held stakeholder dialogues since 2015 with the aim ofenabling both the Company and its stakeholders toachieve sustainable growth by deepening engagementwith external stakeholders and properly recognizing
the relationship between society and companies.
The theme of the most recent dialogue was“ New value provided by DNP ” and there was a lively
exchange of opinions about this theme with reviewers
from a variety of standpoints.
We intend to reflect these opinions and expectations
in our future business activities and report on these in
our Integrated Report.

Participants
CSR Review Forum-Japan＜ Reviewers ＞
・ Tomohiko Yamaguchi,
Joint Representative, CSR Review Forum-Japan・ Yuka Iwatsuki, President,
NGO Action against Child Exploitation (ACE)・ Li Yanyan, Professor, Komazawa University,
Faculty of Letters, Department of Sociology＜ Guest Reviewer ＞
・ Minoru Matsubara, Chief Manager,
Asset Management Division,
Responsible Investment Group, Resona Bank
DNP・ Managing Director
Satoru Inoue (In charge of R&D and Engineering

Management Div., CSR and Environment Department etc.)
・ Senior Corporate Officer
Ryuji Minemura (In charge of Legal Affairs Department)

Electronics■ Beverages Business33.2 billion yen

Economyvolume of filling systems for PET plastic bottles for beverages□ Building decorative materials: Top share of domestic market for floor
coverings and steel plates□ Pouches for lithium-ion batteries: World top share

Number of Japanese patents held

12,435 (YoY increase of 77)

20

Lifestyle and Industrial Supplies■ Packaging Business■ Living Spaces Business■ Industrial Supplies BusinessWe will continually execute this process fairly andimpartially and strengthen partnerships withstakeholders to provide truly needed value, which
will help enable the realization of a sustainable society
and raise our corporate value.

Together with our stakeholders,we will generate value that contributes tothe creation of an enriched society witha harmonious co-existence among
the economy, society and the environment.
Products and services that support safe and secure lives
Products and services that assure people-friendly ways ofworking and raise production efficiency
Products that reduce waste materials and can be recycled
Products and services with little environmental impact
Products and services adapted to climate change
Responsible procurement that considers the environment,
human rights and labor
Safe and secure working environments
Friendly ways of working tailored to each person
Manufacturing environments, methods and transportation withlow environmental impacts
Proper information management /information security
Thorough compliance etc.

・ Corporate Officer

Hirofumi Hashimoto (In charge of Business Promotion Division)・ Corporate Officer
Kazuhiko Sugita (Corporate Communications Division,
CSR/Environment Department)
・ Corporate Officer
Masafumi Kuroyanagi (In charge of Accounting Division)* CSR Review Forum-Japan is a private non-profit organization
established through an alliance formed by several civicorganizations (NGOs and consumer groups) as well individual
members of those organizations that work to solve social issues
toward the realization of a sustainable society. CSR Review
Forum-Japan provides the CSR Review Forum that performs
third-party reviews of corporate activities based on ISO 26000,
the international standards for social responsibility.

DNP Integrated Report 2018

21

Risks and Opportunities

DNP aims to continue providing new values based on its
corporate philosophy. Therefore, DNP understands the
economic, social and environmental issues and risks,
based on which it promotes initiatives for integrated risk
management as preventive measures and rotates theBusiness Risks Assumed from the Perspective of the SDGs

Key Business-Related Risks
Changes in Japanese and overseas
economies and consumption trends,
currency fluctuations and others● Tightening and easing of legal and other regulations● Acceleration and diversification oftechnological innovations and increasingly
strong development competition● Leakage or infringement of intellectual properties● Reduced performance of or internal
control deficiencies by alliance partners● Failure or disruption of information/social infrastructure● Increase of large-scale cyber attacks● Changes in supply-demand balance interms of raw materials procurement●

EconomyCompliance violations● Large-scale unauthorized use/leakage of data
● Flaws in quality check items for
products and services● Work environment issues● Insufficient workforce caused by loss of
personnel or difficulty acquiring personnel● Social/political turmoil and increase ofcountry risks● Poor reputation caused by insufficient
information disclosure, others

plan-do-check-act (PDCA) cycle. In addition, DNP willtake aggressive measures to expand its business
opportunities and rapidly respond to changes in thebusiness environment.

Countermeasures Taken by DNP
DNP promotes the following measures based on its
understanding of environmental, social and economic risks.

1

DNP promotes activities by considering risks that it recognizes as
the needs of society and opportunities for business expansion.
Specifically, DNP aims to solve society ʼs challenges throughbusiness activities in the following four growth areas.

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

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

Lifestyle and Mobility●

Society

Tightening and easing of legal andother regulations● Response to climate change● Occurrence and expansion in scale ofabnormal weather● Increase of natural disasters● Shift to a circular economy● Worsening marine pollution andecosystem degradation● Loss of biodiversity● Depletion of natural resources● Rapid fluctuations in energy prices
etc.
●

Environment

Reference: SDGs “ wedding cake” illustration presented by Johan Rockström and Pavan Sukhdev

22

Expanding business opportunities thattransform risks into opportunities

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

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

DNP will integrate the entire company ʼs resources tocreate products, services and business models that makethis vision into a reality.

2

Measures for minimizing
the impact of assumed risks

Thoroughly collecting and analyzing information,with a focus on social situations and international affairs● Thoroughly implementing information security management andmeasures for protecting material information● Managing financial risks● Optimizing a business continuity plan (BCP) and operating it thoroughly● Calculating and increasing the cost of (financial and non-financial) capital● Instilling corporate ethics and ensuring compliance● Making decisions promptly in the event of a change beyond expectations● Supply chain management based on the CSR Procurement Guidelines● Promoting human rights due diligence● Improving the work environment● Promoting environmental management● Performing product and safety risk management● Providing employees with training and educational opportunities● Promoting corporate citizenship activities etc.
●

DNP Integrated Report 201823

Issues Driven Development

DNP aims to find solutions to social issues through its
businesses. It has been generally said that compared withexisting businesses to the present, achieving earnings inbusinesses that find solutions to social problems requires
long periods of time. Nonetheless, DNP believes that
establishing such businesses for solving social issues willlead to a healthy and more stable society, which serves as
the foundation for business activities, and will enable thePromoting Business
Commercialization in Growth Areas

Group to create new profit-earning businesses that will
help drive the Company ʼs sustainable growth from along-term perspective. DNP will select targets that it isuniquely capable of solving and then work toward devisingsolutions by multiplying its own strengths in P&I by thestrengths of its external partners. DNP has proactively
drawn up the shape of its envisioned good future for the
SDGs target year of 2030 and beyond.

Four Growth Areas and Business Commercialization Themes
Knowledge and Communication
A future where people worldwide can expand
opportunities for safe and secure communications
and share and inherit knowledge

¥72

12

trillion

Related market and target figures

Omni-channel commercemarket and B2C market* Nomura Research Institute, Ltd.:“ IT Navigator 2018 edition”

DNP Commercialization Themes

Develop content and cultivate creatorsthat provide new experiential value

Approx.

40%

25
18

DNP Commercialization Themes

trillion2¥* Cabinet Office: “ Future Investment Strategy 2018 ”

trillion

1.3¥

trillion

Information platform for safe
and secure communications
Related market and target figures

Forecast of size of Japanʼs
information security market* IDC Japan survey

60.0

¥

billion

Expansion of sharing economy that enables
various items to be used with peace of mind
and without being tied to ownership
Related market and target figures

Japanʼs sharing economy market(fiscal 2020 forecast)* Ministry of Internal Affairs and Communications: Trends
and Forecast of the Size of Japanʼs Sharing Economy

Japanʼs education industry market（ 2015）

Related market and target figures

Size of global market for smart cities (2021)* IDC Japan survey

407¥

trillion

Realize a smart mobility society
with no mobility-impaired people
Related market and target figures

Scale of consumer mobility
service economy in 2050
* Preliminary calculation by Intel of theeconomic effects of the passenger economy

Initiatives for inheriting and utilizing knowledge
Related market and target figures

2025 cultural GDP target amount0* Ministry of Economy, Trade and Industry: “About the Cool Japan Strategy ”(Cultural GDP = added value generated by culture-related industries)

persons
DNP Commercialization Themes+

Extending healthy lifespans, raising QOL andpromoting initiatives for life scienceyears
of ageand older

Healthy lifespans of citizens will be
extended between 2018 〜 2025.

8.6

billion persons

Related market and target figures

A future where people around the world nolonger have anxieties about their own lives andcan lead lifelong safe, secure and high-quality lives

Toward the realization of more-comfortableand functional living spaces

DNP Commercialization Themes* Ministry of Economy, Trade and Industry: Size of Japanʼs
education industry market ¥2.5 trillion, ¥23 trillion combined
national and regional educational expenses* Cabinet Office: “ Future Investment Strategy 2018”

DNP Commercialization Themes

DNP Commercialization Themes

Related market and target figures

Food and Healthcare

24

14Target cashless settlement rate over the
next 10 years (double the current 20% rate)* Cabinet Office Intellectual Property Strategy Headquarters:“ Basic Materials Concerning Intellectual Property Strategies”

Improve education effectiveness/initiatives
for lifelong learning through the spread of ICT¥

Related market and target figures

Japanʼs content market（ 2015）

DNP Commercialization Themes

trillion

DNP Commercialization Themes

Toward a safe and secure cashless society

Related market and target figures

DNP Commercialization Themes¥

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

Digital marketing in future shopping

trillion¥

Lifestyle and Mobility

DNP Commercialization Themes

DNP Commercialization Themes

50%

Reduce food loss through traceability
and high-function solutions

DNP Commercialization Themes

Inclusive design/universal designs
that leave nobody behind26%

reduction

DNP Commercialization Themes

Increase energy sustainability through energy
creation, energy storage and energy savings
Related market and target figures

Domestic greenhouse gas reduction target
by 2030 (compared with 2013)* Agency for Natural Resources and Energy:“ The 5th Strategic Energy Plan”

Related market and target figures

Aiming to realize a society where noone is left behind by 2030 under the
Sustainable Development Goals(SDGs) adopted by the United Nations* 2030 world population of 8.6 billion,
United Nations estimate

US$

4.3
trillion

DNP Commercialization Themes

Expand sustainability by reducing environmental impacts
Related market and target figures

Business value through energy and material economic systems* BETTER BUSINESS BETTER WORLD The report of the Business & Sustainable
Development Commission

Related market and target figures

Food loss reduction target by 2030

reduction (compared with 2000)* Ministry of the Environment: “ Fundamental Planfor Establishing a Sound Material-Cycle Society ”

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

DNP Integrated Report 201825

Issues Driven Development: Case 1

Whereas emerging countries are experiencing rapid
economic advancement alongside population growth,
many industrialized nations are facing challenges such as
sluggish personal consumption and a reduced workforce.
As population dynamics change, exemplified by Japanʼsdwindling birthrate and aging population, digitaltransformation* using artificial intelligence (AI) and theInternet of Things (IoT ) has hit the spotlight as a means torealize an affluent society. The notion is that society canbe changed for the better by leveraging fast-evolving
digital technology, a movement that has now spread to thefield of marketing. This also makes it possible to conduct

Digital Marketingfor Shopping

one-on-one marketing tailored meticulously to theindividual rather than marketing that targets a large
number of people with the same message. At the sametime, consumer awareness is also changing, and anincreasing number of people are actively looking toprovide information if it is thought to enhance a service.
Aware of these changes in society, DNP aims to build aframework enabling the collection, analysis and utilizationof information related to consumption activity andcontribute to the advancement of an economy in which
diverse value is created together with manufacturers,
logistics operators, financial institutions and others.

*Digital transformation refers to the idea that the spread of IT will transform all aspects of peopleʼs lives for the better, as proposed by Professor Erik Stolterman of UmeåUniversity in Sweden. The digitization of corporate activities and processes is expected to lead to changes in industry and thus bring about new value.

High volume of information
makes comparison andanalysis easier

ConsumerPossible to gain more valuable
information in a moreconvenient way on the spot

e-mail magazine

3 phases ofmarketing(digitization)

1

Digital signage

etc.

2

Attract
customers

Based on: Customer data
Internet advertising

Business owner

Ensuring information security to protect personal information● Sharing information throughout the value chain under a secure environment● Ensuring borderless standardization of payment device● Implementing measures to counter cyber attacks● Providing suitable information to protect consumers● Ensuring the reliability of information● Catering to a range of different languages● Establishing a system for the business owner● Further spreading the use of digital devicesetc.

QR code settlement

3

Promote
sales

etc.

Digital promotion

Value provided by DNP
as it aims to resolve issues

P28-29etc.

Once again
attract
customers

Payment

Based on: POS dataetc.

Actual customer → Buying customer

Digital payment

etc.

Buying customer → Identify more latent potential customers

Benefits gained from a societythat has resolved these issues
Guarantees workforce
Ensures appropriate working styles● Stimulates personal consumption● Realizes consumption activity that respects people ʼs diversity● Enhances face-to-face communication in-store● Increases inbound consumption● Ensures suitable participation in economy by vulnerable consumers● Ensures suitable and stable supply of products in the supply chain● Protects personal information● Reduces cost of cash management
etc.
●

●

26

Debit card settlement

etc.

Based on: Product data

Potential customer → Actual customer

Examples of issues toward realizing
digital marketing for shopping

Prepaid card settlement

CouponsSNS
smartphone apps

Can make safe and secure
personalized payments bysmartphone

DNP
digital marketing platform®
diip
New value generated through●

DNP
multi-payment service

collaboration with partners

DNP Integrated Report 201827

Issues Driven Development: Case 1

Digital Marketing for Shopping

Examples of Businesses Developed by DNPSupport for One to One Marketing and Medium- and Long-Term Brand Development

Contributing to Creating a Safe, Secure Cashless Society

DNP Digital Marketing Platform diip ®

DNP Multi-Payment Service

The development of digital technologies, including cloudcomputing, big data and IoT, has created demand formore accurate optimized marketing methods. This trend
has also led consumers to selectively use both in-store
and online purchasing channels based on a vast amountof information provided through countless media sourcesin accordance with their individual lifestyles and values.
On the other hand, these changes have been accompaniedby the increasing possibility that the emergence of digital
disruptors will fundamentally undermine the industry ʼsbusiness practices, replacing players.
DNP has developed diip ® digital marketing platform,
which is aimed at optimizing the plan-do-check-act(PDCA) cycle from data acquisition to analysis,
formulation of hypothesis, and implementation andvalidation of communication measures, in a series ofmarketing processes from attracting customers to sales
promotions and settlement. diip ® comprehensively
analyzes and manages a variety of data, including
information on purchases made at real stores and online,
as well as visits to stores, data on reward points, Web
access log, exposure to advertising or direct mail (DM)and information about in-store traffic lines. Therefore, it
enables One to One marketing, which suggests theimpressive experience of “ only now, only here and only
for you.” As a partner in next-generation marketing, we
will contribute to medium- and long-term branddevelopment based on the distinctive indices of eachclient by applying our technologies that we have cultivatedin the fields of printing and information.

Electronic money

Identifying issues/
Formulating hypothesis
Capturing customer
behaviors

Seamless Coordination/
Rapid PDCA

Implementing measures● Development/Improvement of services● Product development

Processing

ID-POS (Stores & EC)
Member data
Data on use of reward points

Brochures/Leaflets

Data on value sets
＋External data and others● Data analysis● Segmentation/ Targeting● Campaign management● Marketing automation

Credit card companies

Reward point cards

Sales promotion service based on
personalized payment history information(Development plan is being discussed.)

In-house
prepaid card

Debit card service providers
Common reward point
service providers

In-house
reward point

Smartphone payment
service providers

Gift card mall
operators

Web advertisement

Event log (App/Beacon)IoT data

Payment history information

Push notification (app)
Web contents (LPO/CMS)

Contact history

28

Digital marketing platformfrom DNP

Electronic money service providers

Brand prepaid card
service providers

Prepaid cards

E-mail delivery/Delivery of DM

Web access log
Data on in-store traffic lines

Credit cards

Debit cards

OutputWith respect to convenience, a system will be required that
permits payment methods used by tourists from overseas tobe accepted at stores and restaurants in Japan. Compatibility
with new payment methods, such as mobile payment andbiometric authentication, will also be demanded.
To solve these issues, DNP has developed the DNPMulti-Payment Service, a cloud-based service, which
complies with PCI DSS and permits centralized
management of data coordination with various payment
methods and payment-related service providers, enabling
the accelerated introduction of multiple payment methods.
DNP will contribute to creating a safe, secure andconvenient cashless society based on its technologies
cultivated from IC cards and other fields through many
years of operation.

DNP
Multi-Payment
Gateway● Communications

Verifying the effect

Input

While payment methods are becoming increasingly diverse
and the shift to a cashless society is progressing
worldwide, the establishment of a payment infrastructure
is being accelerated under a government initiative inJapan toward 2020. As a result, both stronger security
measures and greater convenience for payments aredemanded in the distribution and retail industries.
Regarding security, payment terminals and other devices
need to be introduced to member stores and restaurants
by March 2020 to establish an environment for use of IC
credit cards. Further, compliance with PCI DSS, theinternational security standards in the credit card
industry, or the implementation of measures for not
holding credit card information will be required formember stores and restaurants.

Face-to-facepayment

E-commerce
payment

Print on demand(DM/Brochures/Leaflets)
Contact center
Digital signage

Dedicated
terminal

Internet+ External data and others

DNP Integrated Report 201829

Issues Driven Development: Case 2

The world ʼs population is projected to reach nine billion by
2050, with the stable supply of food through increasedfood production and logistics reforms now a critical issue
at both national and regional levels. A number of logistics
solutions are being put forward to counter these problems,
including development and proliferation of packaging thatcan be transported and stored at room temperature as well
as stored for long periods, plus the establishment of a cold
chain. Another major issue is significant food loss aroundthe world, particularly in industrialized countries such as
Japan. This food loss stems predominantly from uneaten
leftovers and food that is past its expiration date, with mostCreating a Food Value Chain

1
Functionsrequired forvalue chain
creation

Production

Promote crop growth,maintain quality, etc.

2

3

Manufacturing/processing

Protect contents, ensure
convenience of logistics andproduct filling, etc.

Reduce load andtransportation,

Create a value chain for the safe and secure delivery ofInformation
required forvalue chain
creation

Information concerning producer,
producing area and product, etc.

Information on production lot,
production time/date andincoming/outgoing goods, etc.

Information on
outgoing goods,
volume control,

Create an efficient, high-value-added value chain by

Examples of issues toward realizing
a value chain for food
Enhancing processing and packaging technology to maintain food quality,from upstream to downstream● Guaranteeing workforce related to food value chain● Visualizing and sharing information related to food value chain● Establishing a cold chain in regions with inadequate refrigeration
facilities and logistics network● Creating systematic production and manufacturing systems withno overburden or waste● Establishing a logistics network with no overburden or waste● Responding to the effects of climate change● Providing information to consumers to enable appropriate consumption
and disposal● Establishing a social environment that balances food excess and shortage
etc.
●

30

Value provided by DNP
as it aims to resolve issues

DNP transparent
vapor-deposition film,
IB-Film
DNP multifunction
insulation box
New value generated throughLogistics

enhance efficiency inetc.

4of it occurring downstream in the value chain. This has
prompted the creation of an information system to ensurethat only the required food is delivered and only in therequired amount. On top of this, in emerging nations where
refrigeration facilities and logistics networks are
inadequate, a critical challenge is the creation of a cold
chain enabling set temperature control throughout thetransport route. DNP is contributing to the creation of afood value chain in Japan and abroad by utilizing
proprietary materials and technology in conjunction withfood and beverage manufacturers, logistics enterprises,
retailers and other partners.

Sale

Ensure ease of product display,convey product information, etc.

5Consumption/
disposal

Ensure ease of use,
waste sorting and disposal, etc.

food by maintaining food quality and enhancing value.
incoming /business operator andetc.

Information on incoming/
outgoing goods, sales, customers andvolume control, etc.

Information on traceability,
disposal method, etc.

connecting and visualizing food-related information.

P32-33

Benefits gained from a societythat has resolved these issues

Aseptic filling system
for PET plastic bottles●

IC tags (RFID*)*RFID (Radio Frequency Identification): An
automatic identification technology thatuses radio waves for the non-contact
reading and writing of IC data

Reduces food loss
Reduces worker load through appropriate management of information● Eliminates starvation and malnutrition● Ensures the stable supply of food that is not impacted by climate change● Ensures the stable supply of food through appropriate production andmanufacturing● Ensures safe and secure food consumption● Brings stability to food-related prices● Reduces waste emissions● Ensures sustainable consumption and production patterns
etc.
●

collaboration with partners

DNP Integrated Report 201831

Issues Driven Development: Case 2

Creating a Food Value Chain

Examples of Businesses Developed by DNP
Contributing to Reducing Food Loss by Improving Shelf Life of FoodContributing to Building Cold Chains with Limited Environmental Impact at a Low Cost

DNP Transparent Vapor Deposition Film IB-Film

DNP Multifunctional Insulation Box

Canning, aluminum retort pouches and other packaging
methods have been developed for room temperaturetransport and long-term food storage. High-level barrier
properties against water and oxygen are required toprevent food quality degradation. Recently, with socialchanges such as an aging population and growing
single-person households, demand has grown for homemeal replacement, including ready-made food. This has
led to the demand for food packages that can be easily
shaped for a variety of contents and enable a longer shelf
life of food to reduce food loss.
By taking advantage of its deposition technologies andsurface modification technologies as its strengths, DNP
developed IB-Film, a transparent vapor disposition filmfeaturing strong barrier properties against steam andoxygen in 1998, and has commercialized the productmainly for food and medical packaging. Packages made of
IB-Film are transparent, enabling the contents to bechecked visually. In addition, food in the packages can becooked in a microwave oven without being unpacked
because the packages are not metallic. DNP contributes

The DNP multifunctional insulation box features higher
heat insulating properties than conventional insulationmaterials, such as urethane foam, and uses lightweight,
thin vacuum insulation panels. The use of refrigerant in thisbox permits it to maintain an internal temperature as low
as a refrigerator for a long time without using electricity.
This means that the box permits goods that require
refrigeration during transport to be transported as part ofa mixed load on a truck used for shipping at ordinary
temperatures, not limited to a refrigerated car. Therefore,
it improves transport efficiency and enables the reductionof CO 2 emissions and drivers.
Currently, the establishment of a cold chain fortransporting perishable food such as vegetables, fruits
and fresh fish from Japan at a low cost and with limited
environmental impact is speeding up in response to thegrowing demand for Japanese food in countries in Asiaand other regions.
In response, DNP has combined high heat insulating
properties, thermal design technologies and information
technologies featuring the use of IC tags and sensors,and helps realize safe, secure distribution in which cargo
temperature is controlled appropriately, from shipment toarrival. We have repeatedly conducted joint research on
the use of the DNP multifunctional insulation box withclient companies, such as those engaged in ocean/airtransportation from Japan to Asia and ones engaged inland transportation within Asia, in our efforts to build an
efficient cold chain that permits food exported from Japan
to be provided in a fresh state in regions where
refrigerated cars are not prevalent.

about

30
cm

Because the box is foldable,
it can be stored in a space-saving manner
when not in use.

Enabling the Manufacture of Safe, Secure Beverages While Limiting Environmental Impact

Optimizing Movements of People and Goods in a Supply Chain

Aseptic Filling Systems for PET Plastic Bottles

IC tag (RFID)

In the field of beverages, packages such as cans,
cartons and PET plastic bottles have been developed toenhance the supply chain. Among them, PET plastic
bottles began to spread rapidly in the 1980s because they
are lightweight and strong, with high design flexibility,
and screw caps that can be put back on the bottle. In the
1990s, recycling initiatives for PET plastic bottles began
in response to the rising environmental awareness insociety. Those PET plastic bottles were thick and sturdy,
because they were filled with beverages that had beenheated. Therefore, the use of thinner bottles and the
reduction of water used for washing bottles in the overall
manufacturing process had been the targets to achieve.
In 1994, DNP developed the aseptic filling system for
PET plastic bottles by applying its aseptic filling
technology cultivated through the production of milk
portion packs for coffee and bag-in-boxes for businessuse since the 1970s. In this system, PET plastic bottles
are molded and then filled with a sterile beverage at room
temperature in a sterilized space. This has made it
possible to use thinner PET plastic bottles, which are
weak against heat, and fill them with all kinds ofbeverages, including ones containing milk. In this system,32

to diversifying food culture and reducing food loss byproviding packages for cooked food and confectioneries,
including liquid sachets for noodle soup, in response to theneeds of its client companies, including food manufacturers
and distributors. DNP aims to develop films made frommono-materials to replace the current multi-layered films
and provide its films more widely for more recyclable
packages with lower environmental impact.

small PET plastic bottle preforms are transported to thebeverage plant and inflated into bottles immediately
before filling. This has improved transport efficiency bymore than approximately seven times. In addition, we havealso succeeded in reducing the amount of water used towash bottles by 90% through evolving the method withwhich bottles are sterilized
by using hydrogen
peroxide (H 2 O 2 ) gas.
DNP ʼs aseptic fillingsystems for PET plastic
bottles not only boasts the
top market share in Japan,
but has also been introduced
in other countries, including
China, Vietnam, Indonesia,
Thailand and the UnitedStates, thereby contributing
to building safe, secure
beverage supply chainswith limited environmental
impact.

There is approximately 6,460,000 tons per year of foodloss in Japan (estimated amount in 2015) and more thanhalf of it, or approximately 3,570,000 tons, occurs during
manufacturing, delivery and retailing (at food
manufacturers, distributors and retailers) in the supply
chain*. To reduce food loss, it is essential to share
information in the entire supply chain. It is also importantto create a system for delivering only the required amountof food and beverages at the appropriate time withminimal workloads and workforce through collaborations
among manufacturers, distributors and retailers becauseof the serious labor shortage.
In February 2018, DNP, the Ministry of Economy, Tradeand Industry and the New Energy and Industrial Technology
Development Organization (NEDO) jointly conducted ademonstration experiment on a supply chain information
sharing system using electronic tags. DNP has been
operating an IC tag (RFID) business since 1999. In thedemonstration experiment, an initiative for sharing
information about the flow of products was implemented ona trial basis by having a food manufacturer attach IC tags
to product packages and sharing the information between
the wholesale and delivery center and retail stores.

DNP will contribute to innovating food value chains bytaking advantage of its knowledge obtained through many
years of operation in both the information and packaging
businesses, in anticipation of the advancement of digitalmarketing and progress in the shift to a cashless society.
* Loss of the other approximately 2,890,000 tons occurs in households.

Data browsing
Information
sharing system
Manufacturing information

Inventory information

Information about arrival of goods

Sales information

Shipment information

Use-by date information

Loss information

RFID information
Manufacturer

Wholesaler

Distribution center

Each store

DNP Integrated Report 201833

Issues Driven Development: Case 3

The effects of climate change have begun to materialize inthe past few years with increasingly severe damage causedby storms and floods, in particular, as well as an increasein the incidence of heat stroke and infections. Against thisbackdrop, a number of social movements are being
accelerated to reduce greenhouses gases (GHG) such as
the expanded use of renewable energy, promotion ofsmart cities and electrification of automobiles. These
unprecedented changes are occurring with unprecedented

Next-Generation
Automotive Society
Keyword for the
next-generation
automotive society

C

A

S

E

CASE

CONNECTEDAUTONOMOUSSHARED

ELECTRIC

Examples of issues toward realizing
a next-generation automotive society
Enhancing the energy efficiency of electric vehicles
Reducing car weight to save energy and decarbonize● Ensuring information security for safe and secure communications● Providing more advanced sensing in order to understand the relationshipbetween vehicle conditions and surroundings● Expanding mobility services so that they can be enjoyed by more people● Responding to the increase in payment services in addition to ETC● Shifting from a driving space to a more comfortable interior space● Ensuring safety of transportation infrastructure such as roads,
bridges and tunnels● Establishing a social environment for the proliferation of
the sharing economy
etc.
●
●

34

Value provided by DNP
as it aims to resolve issues

P36-37

Pouches forlithium-ion batteries

Security solutions

Curved resin glassfor electric vehicles

Partnership with amobility service company

New value generated throughcollaboration with partners

speed and at the same time on a global scale. In such anera, electrification of automobiles, the move towardautomated driving and the growing use of car sharing
systems are believed to be having a significant impact not
only in terms of reducing GHG emissions but also on
society in general. DNP aims to contribute to the creation
car interiors that are environmental- and people-friendly,
comfortable and safe together with automakers and otherpartners in sharing a future vision of an automotive society.

The acronym “ CASE ” is a key concept that represents the impetus behinda next-generation automotive society that is kind to both people and theearth. Electrified cars will be constantly connected to an information
network and sensors and artificial intelligence (AI) technologies will be
used to accurately ascertain conditions around the vehicle. Suchadvancements will help realize autonomous driving and reduce
environmental impacts. In addition, freeing up people from driving willtransform the car interior into a space for a diverse array of activities.

Benefits gained from a societythat has resolved these issues

Reduces traffic accidents and medical costs, etc.
Reduces GHG emissions and air pollution● Alleviates traffic congestion● Reduces the number of people having less access to transportation
so that more people can enjoy the benefits of a mobility society● Brings stability to industry by eliminating driver shortages● Enhances quality of life through the effective use of traveling time
● Stimulates the local economy by making it easier to move around● Ensures efficient and effective evacuation during a disaster● Develops resilient cities where the swift recovery of lifelines is possible
following a disaster
etc.
●
●

DNP Integrated Report 201835

Issues Driven Development: Case 3

Next-Generation Automotive Society

Examples of Businesses Developed by DNPFor Safer and Lighter Weight Batteries

Realizing a Safe, Secure Mobility Society

Pouches for Lithium-Ion Batteries

Security Solutions

Electric vehicles (EVs) are anticipated to spread as a solution
with the potential to greatly impact the world ʼs energy
issues. Efforts are underway to achieve higher capacity,
lighter weight and other improvements in EV batteries,
aiming for further improvements in driving performance andenergy efficiency for those vehicles. Lithium-ion batteries
are used in EVs, which are also used in many mobile devices.
DNP developed exterior materials (pouches) for lithium-ion
batteries that use films as an alternative to the conventional
metal cases and has applied them to a wide variety of
purposes.
DNP began to work on the technological development ofbattery pouches in the 1990s, immediately after lithium-ion
batteries were put into practical use. We have contributed toachieving lighter weights and thinner dimensions in electronic
devices, such as notebook PCs and tablet computers, bydeveloping thin, lightweight pouches with long-term durability.
Based on these initiatives, functions and qualities
demonstrated with mobile devices, pouches for lithium-ion
batteries from DNP feature vibration resistance, heat
resistance and a long service life, as required for EVs. We arepromoting the expansion of products. Moving forward, we will
apply the pouches to not only EVs but also various types ofusage such as for drones and robots.

A more comfortable traveling experience is enabled byconnecting vehicles to the information network, including
the progress of automated driving technologies, automatic
updates of software for in-car entertainment and exchangeof traffic information between vehicles, which contributes
to alleviating traffic congestion. On the other hand, vehicles
as information terminals are expected to face increasing
threats, such as software tampering and remotemanipulation resulting from cyberattacks. Security
measures will be increasingly important to build a mobility
society where people are safely protected with a sense of
security while being able to enjoy the convenience.
DNP is working on the development and provision of avariety of security solutions based on our understandingthat advanced information security is essential to build avibrant mobility society. In the smart card business, inwhich we have a large market share in Japan, we havemade efforts to cultivate technologies, including thedevelopment of various software, manufacturing andissuance of cards, and authentication via a network. We arealso committed to services including data input, printing
and delivery of personalized mail. With our track record ofhandling a large amount of information with high levels ofimportance and confidentiality, we have also been improving

Changes in Automotive Manufacturing for Energy Conservation and Creation of Comfortable Spaces

Toward a Society Where Anyone Can Use Mobility Services

Curved Resin Glass for EVs

Partnership with a Mobility Service Company

Recently, automakers have been promoting efforts to enable
even lighter weights of vehicle bodies in response to tightened
regulations on CO 2 emissions for automobiles and the global
shift to EVs. In addition, it is believed that automobiles will be
required to function as more convenient and comfortableliving spaces or working spaces, instead of being a mere
means of transport, when automated driving is achieved in
the future. Plastic resin glass, which is lighter than glass andhas superior workability and heat insulating properties, is
expected to help create vehicles with lighter weights andimprove the flexibility of the interior design of vehicles.
DNP has provided plastic resin glass for railway cars andconstruction machinery. In January 2018, we developed
curved resin glass that is optimal for the rear windows ofautomobiles, which are curved. This product will enable theformation of the rear window together with embedded
functional components, such as the roof spoiler and tail lamp
covers. We would like to develop this technology and enable
the entire vehicle body to be formed with curved resin glass,thereby contributing to a significant reduction of metallic andglass parts.
36

technologies such as ones for authentication services,which are used for identifying individuals, and encryption
technologies for safe data exchange.
Taking advantage of its technologies and expertise, DNP
will provide appropriate solutions on a timely basis against avariety of risks that will arise with the development of
information technologies. We will deploy these solutions to
the mobility society that is expected to emerge, thereby
contributing to the safe, secure and enriched lives of people.

Approximately two billion people in the world are noteligible for auto loans because they are unable to pass theinitial screening. This has inhibited the purchase of newvehicles. In particular, in ASEAN countries with remarkableeconomic growth, people continue to use old vehicles that
greatly emit exhaust gas and make noise and other harmful
effects, which has become a social issue.
In June 2018, DNP announced its partnership with Global
Mobility Service, Inc. (GMS), a mobility service provider.
GMS is a venture firm that offers new means of travelingthrough a platform that applies its unique in-vehicle devices
mainly to people who could not previously own cars.
GMS has developed an automotive IoT device that candisable vehicles via remote control. By skipping credit
checks with this device as collateral, the company provides
more people with opportunities to purchase automobiles.
This service is being expanded, mainly in Southeast Asia.
Under a partnership with GMS, DNP will combine thebusiness models and technologies of GMS with its own
strengths, thereby promoting a mobility service businessthat offers a solution to a social issue.
DNP Integrated Report 201837

Business Activity Report
Information Communication

CONTENTS40

DNP ʼs Business Portfolio

42

Information Communication

46

Lifestyle and Industrial Supplies

50

Developing a wide range of businesses that “ deliver the information
people want, when they want it, in optimal media formats ”

・Business Strategies
・Financial Results

Publishing Business●・Business Strategies
・Financial Results●

Information Innovation Business

Publishing & Media Services
Education and Publishing Distribution●●

MarketingInformation Security

Imaging Communication BusinessElectronics

・Business Strategies
・Financial Results

1Lifestyle and Industrial Supplies

Generate value by
expanding business,
primarily ingrowth areas

Taking on challenges to resolve social issues through products andservices closely related to people ʼs lives and products indispensable
in the corporate value chain

Packaging BusinessIndustrial Supplies Business

Three key measures
for realizing our“Third Corporate Founding”

Electronics

Reference → P. 19

Developing high value-added products with outstanding functionality
with a view to next-generation electronics products and enhancing
competitiveness in the growing global market

Value

2
Provide value tothe global market

Living Spaces Business3

Increase corporate
value by means of
all kinds ofstructural reforms

Display Components BusinessElectronic Devices BusinessColor filters for liquid crystal displays
Metal masks for organic light-emitting
diode (OLED) displays● Optical films●●

Beverages
Endeavoring to increase market share, dominate the competition andreduce total Group costs through an ability to be rooted in the community

Beverages Business38

DNP Integrated Report 2018

39

DNPʼsBusiness Portfolio
Publishing Business

DNP has two main businesses: Printing, which contributes
about 96% of consolidated net sales, and Beverages, which
generates about 4% of the Groupʼs sales through Hokkaido
Coca-Cola Bottling Co., Ltd.
DNP aims to continue expanding its businesses andincreasing its corporate value by striving to solve problems
faced by corporate clients, consumers and society.

Lifestyle and Industrial Supplies

27.8 ％ 394.3 billion yen
Electronics

13.3 ％ 188.8 billion yen
Beverages

Net Sales

1,412.3
billion yen(Year ended March 31, 2018)

Beverages

4.0 ％ 56.1 billion yen

Printing
Information Communication

31.0 ％ 21.8 billion yen

Information Communication

Lifestyle and Industrial Supplies

48.6 ％ 34.1 billion yen
Beverages
Beverages

3.1 ％ 2.2 billion yen
40

Using security technologies to enable safe and secure communication

Net Sales

46.4

billion yen(Year ended March 31, 2018)

Operating Income

Assets

100

1,000

80

800

80

60

600

60

40

400

20

200

0

0

1,000
800

821.6

801.2

778.6

600
400

29.4

200

18.9

21.8

17

18

0

16

Packaging Business

Depreciation

893.0

876.0

27.5

904.5

27.7

27.0

100

40
20
0

16

17

18

Wrapping safely, providing easy-to-use packages withminimal stress on the environment■ Net Sales ■ Operating Income■ Assets ■ Depreciation(¥ billion)(¥ billion)

Net Sales

Operating Income

AssetsDepreciation

1,000

100

1,000

100

Living Spaces Business

800

80

800

80

Adding comfort to the various spaces where people spend time

600

60

600

400 382.6

Industrial Supplies Business
Using DNP technologies in pouches for lithium-ion batteries andphotovoltaic cells

200

394.3

388.2

12.6

14.4

12.1

16

17

18

40

400

20

200

0

0

0

60

441.8

439.3

453.7
40

17.0

17.0

16.5

16

17

18

■ Assets ■ Depreciation

Display Components Business(¥ billion)(¥ billion)

Freely shaping displays to suit individuals and society

Net Sales

Operating Income

AssetsDepreciation

1,000

100

1,000

100

800

80

800

80

600

60

600

60

40

400

Electronic Devices Business

400

Creating next-generation electronic devices through ingenuity at
the nano level

200

20.5
199.4

16.5

20

200

0

0

0

(¥ billion)

Refreshing and thirst quenching, fun and always there for you

34.1

169.4 188.8

17■ Net Sales■ Operating Income

Beverages Business

200■ Net Sales ■ Operating Income

Operating Income

Beverages

Electronics

Information Innovation Business:
Information Security(¥ billion)

16

Beverages

17.3 ％ 12.1 billion yen

In order to bring new value to consumers and corporations■ Assets ■ Depreciation(¥ billion)

Adding value to all aspects of imaging, and adding color to peopleʼs lives

Lifestyle and Industrial Supplies

54.9 ％ 778.6 billion yen

Information Innovation Business:
Marketing■ Net Sales ■ Operating Income

Imaging Communication BusinessElectronics

Information Communication

The Three Segments of DNP s Printing Business

Printing

Facilitating access to books and broadening the reading experience18

Net Sales

242.5

15.0

12.1

12.2

16

17

18

20
0

4

56.1

56.6

58.1

2.4

2.2

40
20

40

258.1

Operating Income

80
60

273.4

3
2

1.0

1

0

0

16

17

18

DNP Integrated Report 201841

Information Communication
Main Policies
1

Generate value by expanding business,
primarily in growth areas

Amid the increased risk of cyberattacks accompanying
the advance of digital networks, DNP will acceleratebusiness development leveraging its strengths in
information security cultivated in smart cards.
Furthermore, we will also deploy our combined
paper-digital hybrid products and services to raise thevalue of various types of information media and content.
Generate new value in businesses such as publishing andmedia, publications distribution and educational information
Increase sales via (Strengthen) the “ honto” hybrid
bookstore network that links online sales of e-books andpaper books through the “ honto” website with sales atbricks-and-mortar stores operated by MaruzenJunkudo
Bookstores Co., Ltd. and the Bunkyodo Group.
Expand businesses that are peripheral to publishingsuch as reader services and marketing that use
magazine brands and/or published content.
Provide comprehensive solutions such as for linking
paper and digital book production and for on-demandprinting from small lots and for other items.
Promote community vitalization programs such as providing
electronic library systems and combining bookstores withlibraries to create venues where people can gather.
Develop combined digital-analog educational materials
and learning management services as well as school
management support services.
Promote various businesses that make full use of DNPʼssolid information security technologies andinfrastructure

Business Strategies
As information and communications technology (ICT )evolves and information media and content become
increasingly diverse, peoples ʼ values and lifestyles havealso been undergoing dramatic changes. Rather than justreacting to these changes, DNP is developing a wide
range of businesses that enable us to spur changes on
our own by “ delivering the information that people want,when they want it, in optimal media formats.”
The Information Communication segment is composedof the Publishing business that includes Publishing &Media Services, Education and Publications Distribution;
the Information Innovation business encompassing
Marketing and Information Security; and Imaging
Communication that promotes the creation of things andexperiences such as color printing.
Our Marketing business, for example, set its sights on a
“ digital transformation ” that aims to reshapeorganizations and business leveraging ITC and promoted
the commercialization of digital marketing linking
companies and people through diverse real and virtual
touchpoints and that encourages buying behavior via
measures based on the collection and analyses of various
types of information. We will support the introduction and42

operation of systems that raise the efficiency of digitalmarketing while promoting the planning and production ofvarious types of measures such as for sales promotion
materials and campaigns as we work to solve issues
facing companies and raise convenience for people.
Our Business Processing Outsourcing (BPO) business
optimizes the business processes of companies andcomprehensively handles various types of business
operations. With the establishment of two new operating
locations in June 2017, we now have 13 BPO centersthroughout Japan that will serve as the main venues forfurther expanding this business utilizing artificial intelligenceas well. In addition, we will also focus on providing newvalue by building new platforms for settlement services,
including international brand prepaid cards and cloud
payment services. We will also undertake businesses likeour “ honto” hybrid bookstore network that offers both paperand electronic media and by developing diverse services thatcombine photographic prints with unique content.
In working to expand earnings, we will continue toproactively promote structural reforms that include
constructing a system for unified supervision of
manufacturing throughout Japan.

Utilize AI to raise quality and expand services in each
BPO business. These services include market researchand problem analysis; design, construction andimplementation of optimal business processes; operationof customer service centers; and the formulation andimplementation of sales promotion plans.
Use DNP ʼs data centers to anticipate diversifying needs
related to settlement methods and information security
and to provide unique settlement services, beginningwith brand prepaid cards and debit settlement services,that can be easily adopted by companies.
Use security technologies cultivated in smart card andother related businesses as a foundation to develop“ Internet of secure things ” (IoST ) platforms that provide
value in the form of safety and security to IoT by
combining secure chips (trusted platform modules),
electronic authentication authorities, key management
and communication security.
Expand DNP ʼs business value from consumersʼ point ofview by taking advantage of big data and helping both
inbound and outbound travelers
Use multilingual translation platforms and focus on
stimulating communication between people andcompanies in various countries and regions.
Expand various services in response to the growing
number of foreign visitors to Japan (inbound travelers)and Japanese going overseas (outbound travelers).
Utilize various types of Cool Japan-related content andimplement a variety of communications measures that linkcompanies with their followers to contribute to community
vitalization and the promotion of creative industries.
Expand Imaging Communication operations, whichmake businesses out of everything to do with imaging
Focus on expanding the business of the DNP Imaging
Mall, which engages in printing and sales of images
recorded at sporting or other events.
Identify new value in Japanese and/or overseas photo
print markets that people experience as fun, happy,
entertaining easy, or convenient and offer this value inthe form of new products and services.
Provide digital marketing services
Use consulting, settlement data and client analysis
based on DNP ʼs original systems in order to solve
corporate clients ʼ marketing issues and propose plansfor optimal sales campaigns, including promotions thatuse smartphones.

2

Provide value to the global market

Develop publishing-related businesses in Japan andoverseas markets by cooperating with publishers;planning, producing, distributing and selling all types ofpublications; making use of content and magazine
brands; and promoting copyright processing, etc.
Boost the competitiveness of the smart card businesses
that we operate in Southeast Asia together with major
Indonesian and Vietnamese card manufacturers withwhom we have business and capital alliances.
In Imaging Communication, further strengthen global
manufacturing, sales and service systems and expand
businesses not only for ink ribbons and other print media
but also for all aspects of imaging. Also, respond rapidly
to the worldwide trend toward digitization of commercial
photo printing systems and strive to maintain and expand
our share of the market for related supplies.

3

Increase corporate value by means of
all kinds of structural reforms

Combine strengths in ICT and BPO to respond to rapidchanges in society while promoting the introduction of
AI and RPA* to improve productivity and quality. Also,link domestic and overseas production bases to improve
operational efficiency and further strengthen market
competitiveness.
Reorganize manufacturing departments andmanagement departments and implement centralized
management of production bases throughout Japan torealize optimal production.
* RPA (Robotic Process Automation): an initiative for the automation of business
operations through the use of robots (software) utilizing AI

DNP Integrated Report 201843

Information Communication

Financial Results

Financial Highlights(¥ billion, %)2016.32017.32018.3

Net sales¥ 821.6¥ 801.2¥ 778.6

Operatingincome

29.3

18.8

21.8

Operatingincome margin

3.6 %

2.4 %

2.8 %

■ Net Sales ■ Operating Income(Net sales)
1,000(¥ billion)(Operating income)
100

821.6

801.2

800

778.6

80

600
400

60
40

29.3
18.8

200

21.8
20

0

0

16

17

18

[Net Sales]
Although Information Security and Marketing continued toperform solidly, sales from Education and Publications
Distribution, Publishing & Media services and Imaging
Communication declined, resulting in a drop of 22.57
billion yen, or 2.8%, in net sales for the segment as awhole compared with the previous fiscal year.
[Operating Income]Operating income increased by 15.2%, or 2.87 billion yen,from the previous fiscal year due to increased sales inInformation Security and Marketing in addition to theimplementation of cost reductions. The segment ʼsoperating income margin increased by 0.4 point to 2.8%,
from 2.4% in the previous fiscal year.

Fiscal Term through March 2018:
Business Environment and Summaryof Financial Results
Publishing Business: Publishing & Media Services,
Education and Publishing Distribution
In the fiscal year ended March 2018, Japanese publishingindustry sales declined by 7.7% from a year earlier to
1,338.9 billion yen, representing a record-breaking decline.
Among sales, magazine sales fell 12.2% to 631.7 billion yen
due to a decrease in the number of copies sold combinedwith an increase in the number of magazines that ceased
publication, while book sales declined by 3.2% to 707.2
44billion yen. On the other hand, the domestic market fore-books expanded significantly in calendar 2017 relative tothe previous year, growing by 16.0% to 221.5 billion yen(Source: Research Institute for Publications, the All Japan
Magazine and Book Publishersʼ and Editorsʼ Association).
Amid an ongoing slump in the publishing industry, DNP
worked to create a system to forecast demand by leveraging
artificial intelligence (AI) to analyze bookstore sales and otherdata and to build a system to increase coordination between
book production, distribution and sales. However, sales ofbooks and magazines both decreased and sales in Publishing& Media Services declined from the previous year.
In Education and Publications Distribution, we focused on
expanding our “ honto” hybrid bookstore network thatcombines physical bookstores, online bookstores ande-books and recorded solid results in online bookstores ande-books. Additionally, our library support business recorded
an increase in the number of outsourcing (client) libraries,
including university and public libraries. Nevertheless,overall sales of both the Education and Publications
Distribution unit as well as overall sales in the Publishingbusiness declined from the previous year because of the
impact of the change of Bunkyodo Group Holdings Co., Ltd.ʼsstatus from a subsidiary to equity-method affiliate in October
2016 due to the transfer of some of that company ʼs shares.
Going forward, DNP aims to revitalize the publishingmarket, further deepen cooperation with publishers andpromote all kinds of publishing-related businesses. These
include project planning, production, distribution and sales ofvarious types of publications, overseas deployment of content
and copyright handling for secondary usage of content.
Information Innovation Business: Marketing
According to the Japanese Ministry of Economy, Tradeand Industry, overall domestic corporate advertisingexpenses in the fiscal year ended March 2018 trended at
virtually the same level as in the previous year.
Advertising insert flyers, direct mail advertising and otherpaper media slumped, but Internet advertising sustained
double-digit growth led by advertising for smartphones
and other mobile devices and for video ads.
In June 2017, DNP established new Business Process
Outsourcing (BPO) centers in Tokyo and Fukuoka city.
These centers provide a broad range of agency services
for companies and respond to customer needs in areas
ranging from market research to customer centers. As aresult, the DNP Group now has a total of 13 BPO operating
locations in Japan as it worked to expand support for
digital marketing operations intended to increase theeffectiveness of sales promotions through timely deliveryof optimal information to people.
Although DNP ʼs catalog and pamphlet sales decreased,sales of advertising flyers were firm. DNP recorded anincrease in point-of-purchase (POP) promotional materials
and other sales tools for the retail industry in addition to
an increase in various solutions for sales campaign offices
and e-commerce sites. Consequently, overall sales inMarketing increased from the previous year.
We will continue to provide total marketing solutions,starting with consulting and other services aimed at
improving clientsʼ business processes and marketing, that
range from planning and implementing sales campaigns to
all types of studies and analyses and production and deliveryof POP tools and leaflets. Also, we intend to accelerate theconstruction of new business models by integrating
marketing and settlement services and by strengthening
in-house and external collaboration in the information andcommunication technology (ICT) and BPO fields.
Information Innovation Business: Information Security
In Japan, major financial institutions and other organizations
are increasingly electing full outsourcing to other companiesof the handling of various notices to customers.
Additionally, the issuance of various types of credit cards,
brand prepaid cards, debit cards and other smart cards is
expected to increase as the establishment of platforms forsafe and secure electronic settlements progresses for therealization of a cashless society being promoted by theJapanese government toward 2020.
DNP recorded favorable results for its Information
Processing Services (IPS), which provide services such asdata input, printing and mailing for smart cards forfinancial institutions and electronic money as well as for
personalized mail. Overall sales in Information Security
increased from the previous year.
In anticipation of the growing use of ICs in credit cards
and cash cards, DNP will establish a card production andissuance structure by increasing and strengthening
production capacity at domestic plants and expanding
production at overseas bases. DNP will also focus onproviding high-added-value services such as a digitalmarketing business that integrates international brandprepaid cards and settlement-linked marketing services
and a BPO business that efficiently executes businessprocesses on behalf of client corporations.
DNP ʼs business processing infrastructure, including
the DNP Kashiwa Data Center and 13 domestic BPO
bases, is protected by advanced information security
measures. We will take full advantage of this environment
and also strengthen collaboration with Nihon Unisys, Ltd.

Imaging Communication Business
DNP is developing businesses that target the overallimaging market, or in other words, everything to do withimages. Besides responding to growing needs for
products like photo prints and photo albums, we are
expanding our services such as our “ DNP Imaging Mall,”which is a cloud-based image sales solution that provides
one-stop service, from data storage to website
construction and image processing, printing and delivery.
Looking at trends in the photo print market, although thenumber of prints per photo print provider has been trending
downward due to the proliferation of smartphones andphoto sharing services, demand is increasing fordye-sublimation thermal transfer printing media forphotographs (color ink ribbons and receiver paper).
In Japan, a growing number of people are using photobooks, which are becoming increasingly popular as gifts,
and the photo book market in the year through March 2019
is forecast to surpass 10 million photo books annuallyaccording to the Japan Photo Imaging Association.
Under these conditions, DNP is working to develop
high-added-value services that allow numerous people toenjoy photo prints. These services include “ ShaGoo! ”
automated commemorative photo booths and DNP Imaging
Mall for photographs taken at unique venues such as
tourist spots, event venues, amusement facilities andstorefronts.
In the fiscal year ended March 2018, sales ofdye-sublimation thermal transfer printing media for photo
printers increased in Southeast Asia and Europe but
declined in Japan and North America, and overall sales inthis business decreased from the previous year.
Sales volume of thermal mass transfer printing media,
mainly used for printing bar codes and expiration dates onfood packages and other items, also fell below the level ofthe previous year, and overall sales in Imaging
Communication declined from the previous year.

TOPICS

Providing Technologies That Achieve Digital Transformation through AI
̶ Capital and Business Alliance with AI inside Inc.
In January 2018, DNP began to collaborate with AI inside Inc.,
which owns AI and optical character recognition (AI-OCR)
technology that converts handwritten characters into digital text
as well as technology that ensures the safe use of personal
information and other information by separating it andconducting confidential distribution processing prior to
information processing. We will introduce OCR technology,
which uses AI for the data input operation in BPO, to improve

DNP ʼs Kamiya Solutions Center

BPO Center

the accuracy of recognition of handwritten characters. In
addition, we will introduce AI to document sorting operations
and screening operations to improve the level of service,including building a system for 24-hour processing and handling
operations with fluctuations between busy times and off-times.
Going forward, we plan to promote joint development for theapplication of AI to contact center operations.

Server room

DNP Integrated Report 201845

Lifestyle and Industrial Supplies
Main Policies
1

Generate value by expanding business,
primarily in growth areas

Combine strengths of the DNP Group and external parties,
including DNP ʼs proprietary coating (precision coating)and converting (material processing) technologies, todevelop advanced products and services that offer
solutions to social issues both in Japan and overseas.
Actively develop environmentally conscious products
and services that minimize stress on the environmentand help conserve biodiversity
Expand the lineup and application of advanced packaging
products such as transparent vapor deposition film (IBfilm), which is highly transparent and has excellent
barrier properties, and our “ Biomatech PET ” series ofplastic films that are partially made from plant-basedmaterials in order to help reduce petroleum usage.
Make use of DNP ʼs proprietary Electron Beam (EB) coating
technology to promote the development of interior andexterior decorative materials and similar products withstrong scratch and soil resistance and other outstanding
characteristics including weatherability.
Promote new businesses in the field of distribution and otherfields by making use of the DNP multifunctional insulation box.
Expand sales of new products with superior functions,
including “ DNP Lighting Film,” which brightens anentire room by effectively reflecting and diffusing light,
thereby conserving electric power.
Focus on developing back sheets, encapsulants and otherphotovoltaic module components that help increase theconversion efficiency and reliability of photovoltaic cells.

Business Strategies
The Lifestyle and Industrial Supplies segment consists ofthree business divisions: Packaging, Living Spaces andIndustrial Supplies. The segment mainly provides manyfamiliar products and services that play important roles inthe daily lives of consumers and a large number of
products that are essential for companies ʼ value chains.
Our Packaging business creates many of the packages that
consumers use in daily life, including packaging for foods,
beverages, household items and pharmaceutical products.
We design and develop a wide variety of packaging
solutions, including ones for the long-term preservation ofcontents, higher durability and reduced environmental
impact. At the same time, we strive to provide diverse
value, including the selection and development of highly
functional materials, a user-friendly structure, attractive
design and information display that is easy for many people
to understand. Living Spaces mainly handles a wide range
of interior and exterior materials that shape various spaces
where people live into comfortable, functional ones. The
division works on both materials for residential use andnon-residential use, including products for automobiles andrailway cars as well as floor and wall coverings. The
division develops products with diverse strengths, including
high design quality with wood grain, stone-like or metallic
textures, resistance to soiling and scratching, and the46

ability to reflect light efficiently. Industrial Supplies focuseson businesses including ones for components used inlithium-ion rechargeable batteries, which are increasingly
in demand as batteries for mobile devices and automobiles,
and ones for photovoltaic cells.
At DNP, we strive to ensure that these products andservices, which are essential for peopleʼs lives, also
contribute to their enhanced comfort, safety and sense of
security. We also develop products with consideration for
universal design, which makes them easy for many people
to use, and for inclusive design, which makes our products
usable for people of all ages, with various individual
characteristics and disabilities, including physicaldisabilities. Further, we strive to conserve biodiversity andminimize stress on the environment caused by the use anddisposal of our products in addition to energy conservationand the adoption of clean energy at our production sites.
Our strategy for the Lifestyle and Industrial Supplies
segment is to create value that leads to the solution ofsocial issues in Japan and overseas in the four growthareas, while fulfilling the above criteria. In addition tocombining the strengths of the DNP Group, we aim toaccelerate value creation by promoting collaboration withcompanies and research institutes that have relevant
strengths.

Develop products and services that are comfortableand easy to use for many different people
In Packaging, we study and analyze consumersʼ awarenessand usage habits related to food products, beverages andall types of household items. In Living Spaces, we grasp
consumersʼ changing values and preferences from DNP ʼsunique viewpoint, analyze latent needs and sensitivities,
and reflect that understanding in a variety of businesses
that seek to increase consumersʼ comfort in everyday life,
including the measurement and assessment of living
environments, suggestion of living space designs including
designs based on Kansei (sensitivity) engineering and thedevelopment of easy-to-implement construction techniques.
Promote inclusive design, which involves diverse people inthe development of products and services, starting from theearly stage, by respecting their diversity in terms of age,disabilities, country or region, language and other attributes.
Develop products with strong aesthetic appeal byapplying technologies, including advanced image
processing technologies and film-making, plate-making
and printing technologies.
Provide new value for the automotive and other markets
Bolster cooperation with partners in addition todeveloping products including decorative films for auto

interiors, “ DNP ultra-weather-resistant hard-coattransfer film ” used on resin glass that helps reduce
auto body weight and “ DNP adhesive films ” that form astrong bond between different materials such as metal
and carbon fiber-reinforced plastic.
Accelerate development of automotive products thatcombine film-related technologies cultivated by DNP
with the molding and resin forming technologies of DNP
Tamura Plastic Co., Ltd., which is a leading provider ofvisors attached to the side windows of automobiles.
Focus efforts on expanding products to non-residential
fields, such as offices, shops and public facilities, by
taking advantage of our technologies and expertise
cultivated in our businesses in handling interior andexterior decorative materials for residences featuring
superior aesthetic appeal and durability.
Expand application of pouches for lithium-ion batteries
to new fields, such as drones, in addition to mobile
equipment and electric vehicles by taking advantage of
DNP ʼs strengths as the world ʼs top supplier of suchproducts.
Make use of the joint venture established in Japan with SIG
Combibloc Group, a world-class, major manufacturerof paper cartons for foods and beverages, to help Japanesecompanies make their products stand out on store shelvesby offering unusual containers rarely found in Japan,such as a carton with a re-sealable spout that can be
filled with solid foods, such as fruits and vegetables.

2

Provide value to the global market

Use our Packaging division ʼs presence in Indonesia andVietnam, where it is already working to enhance
production systems in order to expand the market sharein Southeast Asia, as a base from which to increase
sales in neighboring countries.
In Living Spaces, make full use of our global businessnetwork to increase our market share in Europe, theUnited States and emerging markets. In addition, we
will boost overseas sales of Arttec decorative aluminum
plates for interior and exterior use, as well as
automobile interior materials.
Work steadily to promote global expansion in terms ofsales of pouches for lithium-ion rechargeable batteries,
and back sheets and encapsulants for photovoltaic
cells, in order to expand our shares of these markets.

3

Increase corporate value by means of
all kinds of structural reforms

Review the DNP Groupʼs systems from the standpoint ofoverall optimization to promote improvements in
production efficiency and other aspects.
Further improve profitability and production efficiency,
especially in Packaging, by establishing a system forsupervising domestic sales and manufacturing functions
on a nationwide scale.
Concerning business outside Japan, we will respond
more flexibly to fluctuations in exchange rates and raw
material prices, and use hedging and other risk
management tools to minimize any adverse effects ofsuch fluctuations on our bottom line.
DNP Integrated Report 201847

Lifestyle and Industrial Supplies

Financial Results

Fiscal Term through March 2018:
Business Environment and Summaryof Financial Results

Financial Highlights(¥ billion, %)Packaging Business2016.32017.32018.3

Net sales¥ 382.6¥ 388.2¥ 394.3

Operatingincome

12.6

14.4

12.1

Operatingincome margin

3.3 %

3.7 %

3.1 %

■ Net Sales ■ Operating Income(Net sales)
1,000(¥ billion)(Operating income)
100

800

80

600

60

400
200

394.3

388.2

382.6
12.6

14.4

40
12.1

0

20
0

16

17

18

[Net Sales]
Our Packaging business saw a decline in sales of paper
packages and aseptic systems for filling PET plastic
bottles. However, Living Spaces posted an increase insales of products made with electron beam (EB) coating
technology, aluminum panels for interior and exterior use
and automotive-related products. In addition, Industrial
Supplies recorded strong sales of components forbatteries. As a result, overall segment sales totaled
394.3 billion yen, an increase of 1.6% over the previous
fiscal year.
[Operating Income]Operating income declined 16.0% from a year earlier to12.13 billion yen due to the impact of price increases offilms, resins and other raw materials and a decline inunit prices that resulted from escalating competition.
The operating income margin declined 0.6 percentage
point to 3.1%, from 3.7% in the same period of theprevious fiscal year.

48

Production value of domestic packaging printing in theyear ended March 2018 decreased by 0.6% over theprevious year (according to the Ministry of Economy,
Trade and Industry of Japan). Market conditions were very
tough due to such factors as fluctuations in sales ofseasonal products stemming from unseasonable weather
and escalating price competition. In this environment,
DNP ʼs Packaging business saw an increase in sales offilm packages for Southeast Asia, while sales of theseproducts in Japan declined. The business also enjoyed anincrease in sales of preforms, which are materials for PET
plastic bottles, and other products. However, the business
saw a decline in sales of paper packages and aseptic PET
plastic bottle filling systems. Consequently, overall sales
declined from the previous year.
DNP aims to expand its share of the global packaging
market, particularly in Southeast Asia. We are using ourfactories in Indonesia and Vietnam, along with otheroperating locations in the region, in our effort to provide
high value-added products and services for Japanese andinternational companies expanding their businesses
overseas. In order to boost our competitive position, we
are working to improve production efficiency byimplementing restructuring and overall optimization of ourmanufacturing bases throughout Japan.
In product and service development, we apply universal
design principles, which are aimed at making products
easy for anyone to use, and inclusive design principles,
which involve planning and design based on the diversityof people. We are also promoting the development of
packaging products related to the fields of medical careand healthcare.
Living Spaces Business
Domestic housing starts declined for the first time inthree years in the fiscal term ended March 2018, falling
2.8% compared with the previous year, to approximately
940,000 units. Among them, construction starts ofowner-occupied houses, which greatly influence the salesof DNP ʼs decorative materials, declined 3.3%, while thoseof condominiums declined 3.6% according to the Ministryof Land, Infrastructure, Transport and Tourism of Japan.
In this environment, DNP ʼs Living Spaces businessenjoyed an increase in sales of electron beam (EB) cured
exterior film for the exterior use of buildings, which helps
to express realistic textures of wood, stone and others,
along with an overall feeling of luxury. It is a product from
DNP that was made using our proprietary EB coating
technology. We also recorded an increase in sales ofArttec decorative aluminum plates for interior and exterior
use and decorative films with wood grain, metallic andother textures, which were increasingly in demand as
products for non-residential use, such as automobiles andrailway cars. As a result, overall sales from Living Spaces
increased year on year.
DNP is focusing its efforts on the development andsales of products made with EB coating technology thatfeature greater durability and functionality in its efforts to
expand its market share. We will also step up our efforts
to market automobile and railway car interior and exterior
products with excellent durability and functionality, in
addition to Arttec, to manufacturers outside Japan as wellas those in Japan. Further, we are working to develop
new products for living spaces as a whole including
automobiles, by combining microfabrication andresin-forming technologies, which are related toelectronics, with functional film and other technologies.
Industrial Supplies Business
DNP is one of the world ʼs top suppliers of pouches withmulti-layer films for lithium-ion rechargeable batteries,
which were developed by combining technologies cultivatedby DNP, such as materials technologies, precision coating
technologies and laminating technologies. In the fiscal year

ended March 2018, sales of these products for mobile
information terminals increased, while products forautomobiles were also strong due to the global expansionof the electric vehicle market. As a result, sales of thepouches increased year on year.
Domestic shipments of photovoltaic cells in the fiscal
term through March 2018 (in terms of power generation
capacity) decreased by 17% from a year earlier to 5,246
megawatts according to the Japan Photovoltaic Energy
Association. In this environment, sales of DNP ʼsencapsulants, back sheets and other photovoltaic cellcomponents increased year on year due in part to ourefforts to boost sales in overseas markets with highdemand.
DNP makes more advanced components forphotovoltaic cells and lithium-ion rechargeable batteries,
and combines its proprietary technologies, in its efforts todevelop new, highly reliable products for future businessexpansion.

TOPICS

New Initiative in the Packaging Business:
Providing New Shapes of Beverage and Food Cartons to the Japanese Market
Currently, the majority of beverage cartons in Japan are gable
top cartons, which feature a triangular, roof-like top, and brickcartons, which are entirely rectangular. Therefore, it is rare todifferentiate a product with a unique carton shape. In
response, DNP is making preparations to provide packages
with novel designs to people in Japan.
In April 2018, DNP established DNP - SIG Combibloc Co.,Ltdin Japan, a joint venture with the SIG Combibloc Group (SIG).
SIG is a leading global beverage and food carton manufacturer.
The new company provides the Japanese market with liquid
cartons for beverages and food products developed by SIG
with unusual shapes for Japan, as well as aseptic fillingsystems to be used for the filling and packaging of theircontents. These systems boast the ability to fill cartons withNews conference announcing the establishment of a joint venture(Center: President Yoshinari Kitajima)

small solids, such as fruits, vegetables, cereals and jelly,
together with liquids.
The company is also developing a new carton that can beheated in a microwave oven. Combined with the ability to fillwith solids, the new carton will enable the provision of
products in a new category in which beverages containing
solids can be heated.
DNP has won large market shares with its containers andfilling systems for alcoholic beverages in Japan. In addition,
its aseptic filling systems for PET plastic bottles have also
been adopted by many manufacturers. We will aim to win large
market shares for novel shapes of beverage and foodcontainers from the new company by taking advantage of ourproven track record and sales channels in Japan.

Liquid containers for beverages and food products

DNP Integrated Report 201849

Electronics
Main Policies
1

Generate value by expanding business,
primarily in growth areas

Amid the development in IoT and artificial intelligence (AI),there is growing demand for products, including moreadvanced, easier-to-use information devices and sensors
as well as more eye-friendly displays with higher
resolution. In response, we will collaborate with otherbusiness segments of DNP and refine and synergize ourtechnologies and expertise cultivated in our businesses,
such as color filters for liquid crystal displays (LCD),
metal masks for OLED displays, optical films, as well as
the Electronic Devices business, thereby developing new
products, services and business models to meet theneeds and trends of society.
Strengthen development of products for OLED displays
Panel manufacturers in South Korea, China and Japanare committed to capital expenditures in anticipation of
growing demand for OLED displays. In response, we will
increase our capacity to produce metal masks used for
manufacturing OLED panels. We will also focus ourefforts on the development of products that will fulfill thedemand for higher resolution and flexibility of panels in
our efforts to maintain and expand an overwhelming
share in the global market. We will also promote thedevelopment of retardation film and other optical films
intended for OLED displays.
Pioneer new fields by refining andsynergizing core technologies

Business Strategies
Recently, the market has expanded for organic
light-emitting diode (OLED) panels, which are thin andlightweight, with high contrast capability and superior color
reproducibility. They are widely adopted for displays on
smartphones, TVs, digital signage and other devices.
Among the advantages of these panels, their flexibility
makes them particularly promising in that it makes themdifficult to break. Taking advantage of this property,
manufacturers are developing a wide variety of new
products, such as foldable smartphones, roll-up TVs withlarge-screens and digital signage that can be mounted on
curved surfaces. Another recent trend is the spread of theInternet of Things (IoT), which is a network of various items
embedded with sensors or similar devices that directly
connects to the Internet, permitting the collection andexchange of information. IoT is expected to be applied to avariety of industrial fields, including self-driving cars,
medicine and life sciences.
In this environment, DNP ʼs Electronics segment isdeveloping Display Components and Electronic Devices
businesses, aiming to provide new products, services andsystems by forecasting changes in the needs of companies
and people. Markets for electronics equipment and similar
50

products are spreading globally, with fierce competition intechnology development. Therefore, research anddevelopment and capital expenditures need to be reviewed
constantly to secure stable profits in those markets. At DNP,
we strive to develop high-value-added products withexcellent functionality by focusing on next-generationelectronics products. In this process, we will concurrently
promote the application of DNP ʼs world-leading
microfabrication technology and coating technology as wellas the development of new core technologies. At the sametime, we will commit to collaboration with business partners
and partner companies with strong expertise as part of ourefforts to accelerate commercialization. We will also be
proactive in forming alliances with other companies,
including the licensing of technology, and royalty businesses.
In order to improve profitability, we will continue tominimize costs, improve efficiency and promote otherpositive changes while selecting and concentrating on themost promising products in our lineup. We will also
strengthen our efforts for global development that
effectively uses our production bases in Japan andoverseas. Therefore, we will make DNP-wide efforts tocreate value that leads to solutions for social issues.

We will promote the development of products forautomotive use, such as viewing angle control film thatprevents light emitted from navigation systems or otherin-vehicle displays from being reflected onto the windshield.
We will accelerate the development of next-generation
semiconductor photomasks, provide global support foreach client manufacturer ʼs production systems andendeavor to standardize manufacturing processes. In
addition, we will expand our businesses based on
proposed solutions by taking advantage of DNP ʼs design
technologies as our strength.
Regarding LCD color filters, we will focus on areas
where demand is expected to grow, such as automotive
and medical applications. At the same time, we will
diversify our business models to include the licensing oftechnology and sales of equipment and materials toother companies.
Refine and practically apply nanoimprinting* technologies
We will focus our efforts on manufacturing master
templates used in nanoimprint lithography, a technology
for making products that are expected to greatly
increase in demand, such as 3D NAND flash memories.
We will accelerate the expansion of our nanoimprinting
solutions business, in which we try to solve issues by
providing DNP ʼs nanoimprinting technologies, to diverse

fields that require microfabrication. We will also focus
our efforts on business development related to sensing,a field that is indispensable to furthering IoT and
automation. In addition we will work to develop new
products other than ones for semiconductors, such as
materials used in a variety of batteries, including
photovoltaic cells, light-emitting diodes and OLED
displays, as well as materials related to life sciences.

2

Provide value to the global market

DNP ʼs Electronics segment serves an international
market centered on China that includes East Asia,
Europe and North America. Because the changes inbasic technologies, such as the transition from LCD to
OLED displays, is rapid and wide-ranging, we areproceeding carefully with technological development
and capital spending, while closely observing
developments in Japan and other countries.
In China, many manufacturers are constructing bases
for manufacturing semiconductors and panels for largescreen displays. In response, we will establish sharedproduction bases in the country through joint
cooperation with other companies to meet the growing
demand for a variety of photomasks. We will also
effectively use production bases in Europe in our efforts
to expand our business globally.

3

Increase corporate value by means of
all kinds of structural reforms

We will achieve significant improvement in productivity
and higher production capacity by introducing a coating
device compatible with 2,500 mm-wide films, which is
optimal for manufacturing the optical films for 65-inch
displays used in most large-screen TVs.
Given advances in the miniaturization of semiconductor
products, the ability to draw circuit patterns with line
widths less than 10 nanometers has been essential. In
response, we will effectively use multiple electron-beammask writers to reduce writing time significantly.
Therefore, we will achieve high productivity andenhance our next-generation semiconductor photomask
production systems.
The business environment surrounding the Electronics
segment has been changing rapidly. In response, we willconcentrate our management resources on thedevelopment of products, services and systems that are
expected to continue growing. We will reconsider our
traditional business model, in which we made large-scale
capital investments to supply a large number ofcomponents. We will also deepen collaboration with many
partners, including corporate customers and suppliers,and focus our efforts on the expansion of process solution
services that address overall supply chains, including the
supply of materials, designs and various equipment.
* Nanoimprinting: A microfabrication technology used for reliably transferring
patterns with line widths measured in microns (μm = 1 millionth of a meter) or
nanometers (nm = 1 billionth of a meter) by pressing templates onto resin-coatedsubstrates or other surfaces

DNP Integrated Report 201851

Electronics

Financial Results

Fiscal Term through March 31, 2018:
Business Environment and Summaryof Financial Results

Financial Highlights(¥ billion, %)2016.32017.32018.3

Net sales¥ 199.4¥ 169.4¥ 188.8

Operatingincome

20.5

16.5

34.1

Operatingincome margin10.3 %

9.7 %

18.1 %■ Net Sales ■ Operating Income(Net sales)
1,000(¥ billion)(Operating income)
100

800

80

600

60

400
200

34.1
199.4 20.5

169.4 16.5

188.8

0

40
20
0

16

17

18

[Net Sales]
Sales of the overall Electronics segment increased 11.4%
from the previous year to 188.754 billion yen, thanks tostrong sales of metal masks used in manufacturing OLED
displays, various optical films for flat panel displays andphotomasks for semiconductor products.
[Operating Income]Operating income rose 106.9% year on year to 34.1
billion yen, reflecting an improvement in the gross profit
margin attributed to an increase in sales of mainstay
products in addition to the effect of the increase in salesof the overall segment. The segment ʼs operating income
margin rose 8.4 percentage points, from 9.7% a year
earlier to 18.1%.

Display Components BusinessIn calendar year 2017, the display market saw significant
growth in demand for OLED displays, which are said toenable slimmer dimensions and lighter weight and display
higher-resolution images than liquid crystal displays (LCDs),
which are the current mainstream. Among these displays,
flexible OLED panels for smartphones, which use films as
their substrates, grew significantly. Shipments of thepanels more than tripled from the previous year from 40
million panels in 2016 to 125 million in 2017. Large OLED
displays for TVs also grew significantly, with a 102%
increase in shipments year on year to 1.8 million panels in2017. On the other hand, demand for LCD TVs stagnateddue in part to competing products such as OLED TVs.
Global shipments of LCD TVs decreased 2.6% year on
year to 217 million units in 2017.
In this environment, DNP ʼs metal masks for
manufacturing of OLED displays maintained an
overwhelming share in the global market and enjoyed afurther increase in share and a significant increase insales from the previous year. This mainly reflects a highevaluation of the materials, manufacturing method, thewide range of patents and expertise related to our
products, our excellent technology development capability
and our ability to ensure a stable supply of high-quality,
high-precision products. Optical films also enjoyed
year-on-year growth thanks to the significant growth ofretardation films for OLED TVs and smartphones in
addition to a strong showing of our mainstay
anti-reflection films for LCD TVs, which is attributed tothe increase of TVs and smartphones with larger screens.
Conversely, sales of LCD color filters declined year on
year due to the increasing rate of in-house production bypanel manufacturers worldwide.
At DNP, we will maintain and increase our share in the
OLED display market, where a rise in demand is expected,
by increasing our production capacity for metal masks
and establishing systems for the development and stablesupply of products compatible with higher-resolution
displays. We will also strive to develop a variety of opticalfilms for OLED displays, including retardation films.

13% year on year to 3.7 billion U.S.dollars.
In this environment, sales of DNP ʼs semiconductor
photomasks increased from the previous year thanks to arise in demand for photomasks for flash memories andother products, which offset the impact of the expansionof the in-house production of photomasks mainly atoverseas semiconductor manufacturers.
Moving forward, we will enhance our production
systems for next-generation products by making use ofmulti electron-beam mask writers that greatly reduce
writing time in photomask manufacturing, meeting theneeds of semiconductor manufacturers for miniaturization

and reduced cost. In addition, in 2018 we established ajoint venture in China for manufacturing and sellingphotomasks with Photronics, Inc., a U.S. photomask
manufacturer, to respond to the growing demand forphotomasks in China.
Further, we will strive to increase our market share forQuad Flat No Lead Package (QFN), a small package thatcaters to the need for compact size, slimmer dimensions
and higher density, by following the trends of products for
IoT and automotive use in the semiconductor package
market.

TOPICS

Expansion and Reinforcement of Facilities for Manufacturing Optical Films
in Response to the Rising Demand for Large TVs
DNP will introduce a coating device that is capable of handlingup to 2,500 mm-wide, super-wide film rolls, which is optimalfor manufacturing optical films for large T Vs. Commercial
production of the films will start in October 2019. DNP is thefirst company worldwide to introduce a coating device for
2,500 mm films for the manufacturing of optical functionalfilms (June 2018 study conducted by DNP). With this device,
we will significantly improve the productivity of optical films(1.3 times the current level in terms of area) for large screen
T Vs, including 65-inch T Vs (1436.4 mm × 809.0 mm).
Recently, the spread of larger T Vs has resulted in risingdemand for larger display components, and the improved
productivity of such components has become an important
issue. DNP has captured significant market shares for avariety of its optical films, including a film that prevents lightreflection on a display ʼs surface, one that expands the display ʼsviewing angle and one that controls the transmission andblocking of light. This was enabled by a combination of designand development of various materials and manufacturing
processes, technology for precision coating in a clean
environment, as well as other technologies, in addition to the
proprietary optical design technology of DNP.
Currently, DNP manufactures these films at its Okayama
Plant in Okayama Prefecture and Mihara Plant in Hiroshima
Prefecture. We will introduce a new coating device to theMihara Plant by investing approximately 6.5 billion yen to
improve the productivity of films for 65-inch T Vs. This new

production line is designed with consideration for productivity
with a multi-layer coating, which is important for improving
the functionality of anti-reflection films.
DNP will expand the provision of its optical films throughthese initiatives to manufacturers of panels for LCD and OLED
displays, as well as manufacturers of polarizing plates, thereby
planning to increase annual net sales in the optical film
business to 100 billion yen in fiscal 2020.

Mihara Plant (Hiroshima Prefecture)

Electronic Devices Business
The global semiconductor market in calendar year 2017
grew 21.6% year on year, to 412.2 billion U.S.dollars,
hitting a record high for the second consecutive year. This
growth partly reflects an increase in demand for DRAM
and NAND flash memories. Due to the expanded
applications of semiconductor products, such as IoT, AI,
virtual currency mining and self-driving systems, sales ofsemiconductor manufacturing equipment increased
significantly. In 2017, total sales in monetary terms
increased 37% year on year to a record high of 56.6
billion U.S.dollars. In addition, the semiconductor
photomask market also expanded, driven by
microfabricated products for less than 45 nanometer
node. In 2017, total sales in monetary terms increased
52

Structure of major anti-reflection film
Anti-glare (AG) film
External light
Scattered light

Anti-glare layer
Film substrate

Low-reflection (LR) film
Fineparticles

External light

Unevenness of thesurface of the film
causes light to scatter,making glare lessnoticeable. It has amatte surface.

Light reflectedfrom surface
Light reflectedfrom interface
Low-reflection layer
Film substrate

Glare is reduced
because reflected lightwaves are canceled
due to interference.
The surface is glossy.

DNP Integrated Report 2018

53

ESG Section
DNP believes that its corporate social responsibility (CSR) is tomaintain the trust of all of its stakeholders. To achieve this,
we are working to resolve various environmental and social
challenges in light of the needs and expectations of our
stakeholders based on DNP ʼs Three Corporate Responsibilities.
As a premise to this, we recognize enhancing corporate
governance as a critical management challenge.

CONTENTS55

CSR Management

57

Initiatives in Principal Themes

60

Corporate Governance71

Board of Directors, Statutory
Auditors and Corporate Officers

CSR Management
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 theSustainable Development Goals (SDGs), and comprehensively analyze them. In fiscal 2017,
we reestablished the following eight themes following a review of our principal themes.

New Principal Themes / Medium- to Long-Term Vision

Value creation

1
Value
Creation
DNPʼsIntegrity ofThree
Conduct
Corporate
Responsibilities(Accountability)

Prerequisites for fulfilling our three responsibilities

Corporate
GovernanceMore detailed information regarding our CSR can be found in our CSR Report andEnvironmental Repor t ( PDF format only). We also disclose our policy and data,etc., concerning sustainabilit y on our website. We fulfill our accountabilit y bydisseminating information through a combination of these tools.
CSR Report

54

Environmental Report

http://www.dnp.co.jp/eng/csr/report.html

Foundation to support value creation

2

3

Transparency

Business toContribute to
SDGs
Achievement

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

Fair Operating
PracticesWe help to maintain and develop orderly,
free and competitive markets based on laws
and social ethics and by always remaining
fair and equitable.

Human Rights
and Labor

We respect diversity in the culture, nationality,
creed, race, ethnicity, language, religion, gender,
age and ways of thinking of all persons and fulfill our
responsibility to protect human rights. We also seek
to maintain and improve our working environment toenable everyone to work safely and remain healthy.

Environment

To create a sustainable society with the Earthʼs
limited natural resources, we reduce environmental
impact and conserve biodiversity while ensuring
compliance with environmental laws andregulations and by recognizing our relationshipwith the environment in all business activities.

Responsible
Procurement

For creating excellent value and cultivating strong
compliance awareness at the same time, we work
jointly with our supply chain stakeholders andconduct procurement that gives due consideration
to human rights, the environment and other factors.

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.

Corporate
Citizenship

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.

DNP Integrated Report 201855

Initiatives in Principal Themes
Environment

Principal Themes and Priority Indicators

DNP Group Business and Environmental Activities

DNP has set a medium- to long-term vision for each principal theme under CSR management and the SDGs associated withthese. We have also set priority indicators that are reflected in our ongoing activities toward the realization of the vision.

Principal
themesValue creation

Business tocontribute toSDGs
achievement
Fair
operatingpractices

Human rights
and labor

Environment
Foundation to support value creation

Responsible
procurement(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.)

Targets(1) Achieve sales of 600 billion
yen by FY2020.

FY2017 results(1) 599.3 billion yen(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).
(2) Achieve 100% (covering all
applicable bases).

(1) Once a month(12 times)(2) 100%(105 bases)(1) Number of women in managerial positions(2) Ratio of employees with disabilities(3) Annual paid leave taken(4) Frequency rate of lost workday injuries(1) Double the number of women in
managerial positions by FY2019
compared with the number (96)at the end of FY2015.
(2) Achieve the ratio above 2.0%
in FY2017 and above 2.2%
in FY2018 onwards.
(3) Achieve an increase over theprevious fiscal year.
(4) Keep the rate below 0.2.

(1) 1.65 times thenumber (158)(2) 2.06%(3) 50.8%(48.9% in FY2016)(4) 0.32(1) Achieve average score of 90
points by FY2030.
(2) Achieve 100% (covering all
overseas business locations).
(3) Achieve 100% by FY2030.

Air/Water/Soil
Energy/Water
Raw Materials

Product
safety andquality

Corporate
citizenship* Including cases where a defect in our products jeopardizes
the user ʼs life, causes serious bodily harm or inflicts serious
damage on the user ʼs property (other than the product itself)(2) Percentage of newly developed products
undergoing product safety and risk assessment(1) Achieve zero accidents.
(2) Achieve 100%.

IN

Production
Division
Research
Division

Distribution
Division
Marketing Sales
Promotion Division
UndesiredRe-usematerials

Environmental Activity Targets and Results
Evaluation criteria

Topic
Reduction of GHG
emissions(1) 81.7 points(average of key
suppliers of overseas
business locations)(2) 100%(3) 92.4%

Reduction of
Volatile Organic
Compounds (VOC)
emissions

Reduction ofindustrial waste(1) Zero accidents(2) 100%(184 products)(1) Number of information security complianceassessments conducted(2) Number of inspections and instructions on
departments implementing priority measures for
personal information security performed byexecutive officers in charge(3) Participation rate of information security
education and training(4) Number of security vulnerability tests for publicly
open websites which handle personal information(1) Achieve 100%
(covering all businessdepartments and groupcompanies)(2) Achieve 100%
(covering all applicable bases)(3) Achieve 100%
(covering all applicabledepartments)(4) Achieve 100%
(covering all applicable sites)(1) 100%(82 departments
and companies)(2) 100%(34 bases)(3) 100%(approximately
41,000participants)(4) 100%(83 systems)(1) Number of external participants for DNP ʼs original
future generations development programs(2) Number of local volunteer activities held each year
to support reconstruction of disaster-stricken
regions, including Tohoku and Kumamoto(1) Achieve an accumulated totalof 7,500 persons from
FY2015 to FY2019.
(2) Constantly conduct activities
three times a year until
FY2019.

(1) Accumulated total:
4,033(2) Three times (twice
in Tohoku and oncein Kumamoto)

Reduction of water
usage

Targets through FY2020
To reduce GHG emissions by 10% from the FY2005 levels and 20% by
FY2030 (Includes overseas locations)

To reduce emissions of VOCs (except for methane) by 35% comparedwith FY2010
Overseas, based on local laws and regulations, we plan to reduce
atmospheric emissions of VOCs to the greatest extent possible throughthe introduction of technologies and other measures

Office environment

Offering value to society
Environmentally conscious
products and services

Recycling

Waste

To maintain zero emissions for the entire DNP GroupTo reduce per-unit water use by 25% compared with FY2010(Includes overseas locations)To keep the maximum concentration of air emissions subject to emissions
regulations at 70% of the required standard or lessTo keep the maximum concentration of water emissions subject towastewater regulations at 70% of the required standard or lessTo keep the maximum concentration of odors at our site perimeters at
70% of the required standard or lessTo keep the maximum level of noise at our site perimeters at 70% of therequired standard or lessTo keep the maximum level of vibration at our site perimeters at 70% of
the required standard or lessTo increase the rate of the fractional recovery of waste paper to 70% ofthat for general waste

Evaluation

FY2017 results
Emissions in FY2005: 1.110 million tons
Emissions in FY2017: 0.892 million tons
Per unit in FY2010: 16.1 kl/billion yen
Per unit in FY2017: 14.7 kl/billion yen
Emissions in FY2010: 6,729 tons
Emissions in FY2017: 4,831 tons

19.6% decrease
from FY2005◎

8.7% decrease
from FY2010◯

28.2% decrease
from FY2010◯

Continue operation of VOC recovery equipment at
DNP Indonesiaʼs Karawang Plant

To reduce per-unit waste emissions (waste emissions/production) by 20% Per unit in FY2010: 42.4 tons/billion yen
compared with FY2010. (Includes overseas locations)
Per unit in FY2017: 34.3 tons/billion yen

Development and salesof environmentallyDevelopment and sales of environmentally conscious products andservices totaling 600 billion yen
conscious products
and services

Environmental
conservation

OUT◎：Target exceeded by a wide margin ○：Target achieved or making steady progress toward target△：Making active efforts but target not achieved ×：Efforts insufficient

Reduction of
To reduce per-unit fuel use for transport by 1% per annum and 10%
environmental impact
compared with FY2010
incurred during transport

Reference → P. 57 Environmental Activity Targets and Results(1) Average score of DNP Group CSR Procurement
Guidelines survey on key suppliers(2) Percentage of overseas business locations conducting
DNP Group CSR Procurement Guidelines surveys(3) Percentage of key suppliers conforming to DNPGroup Guidelines for Procurement of Paper for
Printing and Converting

biodiversity based on compliance with laws and regulations.
DNP has established a CSR-Environment Committee chairedby the Managing Director in charge of the CSR-Environment
Department as the structure presiding over the entire Groupʼsenvironmental activities. Environment committees have been
set up in each business and Group company to promote
environmental activities for each business sector.
We are operating our own Environmental Management
System (EMS) that was created in 1993 prior to the issuanceof ISO 14001.

Sustainable Society Resource Circulation Decarbonization Co-existing with Nature(1) Number of serious accidents* caused by our products

Information
security

56

Performance indicators to monitor the progressin achieving the Vision

DNP has always believed in the importance of coexistence with
the natural environment to ensure sustainable business. We
have set “ Environmental conservation and the realization of asustainable society ” as one part of our Code of Conduct andare implementing environmental activities such as the reductionof environmental burden in consideration of the relationshipbetween business activities and the environment throughout
the supply chain. We have set targets and are undertaking
initiatives to achieve them in such areas as curbing global
warming, reducing water consumption and protecting

Landfill waste rate in FY2015: 0.06%
Landfill waste rate in FY2017: 0.04%
Per unit in FY2010: 10.8 m³/million yen
Per unit in FY2017: 7.1 m³/million yen
Sales of 570.8 billion yen in FY2015
Sales of 599.3 billion yen in FY2017◯

19% decrease
from FY2010◯

Maintained zero
emissions◎

34% decrease
from FY2010◎

5.0% increase
from FY2015◯

96% achievement rate of targets for FY2017 (voluntary target)◯

99% achievement rate of targets for FY2017 (voluntary target)◯

100% achievement rate of targets for FY2017 (voluntary target)◯

98% achievement rate of targets for FY2017 (voluntary target)◯

100% achievement rate of targets for FY2017 (voluntary target)◯

80.9% recovery of waste paper in FY2017◎

GHG Emissions Reduction Target of the DNP Group Recognized by the Science Based Targets (SBT) Initiative
DNP recognizes that responding to climate change is the most pressing environmental and social issue. As we virtually achieved our
FY2030 GHG emissions reduction target in FY2017, we defined another target that conforms to an international framework. In July 2018,
our new FY2030 target was recognized by the international Science Based Targets (SBT) initiative as “ science-based ” in helping toachieve the goal of the Paris Agreement, which is to keep global warming below two degrees Celsius. DNP will continue to augment its
GHG emissions reduction activities by saving energy and introducing energy-saving facilities.
FY2030 GHG emissions reduction target of the DNP Group: Reduce GHG emissions by 25% from the FY2015 level

DNP Integrated Report 201857

Fair Operating Practices

Human Rights and Labor

Preventing Bribery

Diversity ~Promoting Women in the Workplace~

DNP Group Anti-Bribery Policy
For the purpose of promoting the anti-bribery framework, DNP Group has
established this DNP-Group Anti-Bribery Policy, in accordance with DNPGroup Code of Conduct.

Rather than simply having each of our employees comply
with laws and regulations when conducting businessactivities, we aim to have high ethical standards that meetsociety ʼs expectations and consistently remain fair andequitable as we help to maintain and develop orderly, freeand competitive markets. For that reason, we are working
to impart a broader and deeper awareness of corporate
ethics throughout the Group based on the key concepts ofcontinuity, autonomy, positivity and efficiency.
As corporate activities expand beyond regional andnational boundaries, regulations concerning bribery arebeing tightened in each country in order to ensure a fairand open competitive market.
DNP ʼs activities will transcend regional and national
borders even more going forward, and against thisbackdrop, we must not seek profit through bribery orother dishonest means in order to remain a company thatis trusted by society.
Based on this philosophy, we formulated the DNP Group
Anti-Bribery Policy in March 2018. Through this, we will
promote further action aimed at preventing bribery.

1. Prohibition of Bribery
DNP Group requires all employees of DNP Group to observe the following
rules:

1 Employees shall not directly or indirectly commit any bribery or perform any
conduct which may lead to suspicion of bribery, in relation to their duties;
2 Employees shall take notice that each country/region has its own specific laws andregulations (such as prohibiting to offer a bribe not only to government officials,
but also to private organizations), and shall comply with any and all applicableanti-bribery laws and regulations when performing their duties;
3 Employees shall not make any facilitation payments to any government officials
and to any other persons/entities to expedite or secure performance ofgovernmental actions, regardless of the amount of such payment, under any
circumstances; and4 Employees shall take notice that bribery committed by agents may be deemed asbribery committed by DNP Group; therefore employees shall not direct agents tocommit bribery or give implicit approval although they are aware of the facts orevidence of bribery committed by agents.

2. Anti-bribery framework in DNP GroupDNP Group shall establish internal anti-bribery regulations and promote thefollowing anti-bribery framework:

1 DNP Group shall, taking into consideration the special characteristic or risk ofeach country/region, establish appropriate anti-bribery management system ineach group company and regularly perform monitoring, inspection and assessmenton whether such anti-bribery management system has been properly operated;
2 DNP Group shall regularly evaluate bribery risk in DNP Group, and revise theanti-bribery management system;
3 DNP Group shall provide training sessions relating to anti-bribery for employees,
and disseminate the anti-bribery management system to employees;
4 DNP Group shall accurately record all of the transactions in its accounting books,
and keep the relevant documentations; and5 DNP Group shall establish the consulting/reporting channels in order to detect any
acts of bribery in a timely manner.
Established on 3/2018

employment environment where women can assume
leadership roles. With the aim of realizing a 100%
increase in the number of female managers (section chief
and above) compared with the end of February 2016,
DNP drafted and implemented educational programs
supporting career development and policies in line withbusiness and workplace environments. DNP also promotesa variety of initiatives such as the planning and executionof training plans to promote women in leadership roles.
At DNP, we will continue to promote diversity in order tocreate a workplace and culture in which diverse
individuals can play active roles.

Training being conducted as part of efforts to promote women in the workplace

Responsible Procurement

Human Rights and Labor/Corporate Citizenship

Overseas Deployment of CSR Procurement

Fairtrade Activities

In addition to generating outstanding products andservices with high added value, as part of our corporate
responsibility DNP must also consider the global
environment and society in our production and material
procurement processes. To achieve this, it is necessary toshare an awareness of issues throughout the supply chain
and work together with stakeholders to resolve them.
DNP established the DNP Group CSR Procurement
Criteria in 2006 and since then has continued topromote initiatives for CSR procurement throughout the
supply chain, including ascertaining the compliance statusof our suppliers every year. At the same time, with
progressive business globalization and increasingly
complex supply chains, it is more incumbent than everupon companies to manage risk in such areas as humanrights and the environment.
To reflect these international trends, we revised thecontent of the criteria in 2017 and changed their nameto the DNP Group CSR Procurement Guidelines.
In November 2017, we expanded our CSR procurement
efforts, which previously focused on domestic sites, to all
overseas sites. We started actual activities upon revising
the content of items in the supplier survey we conduct
every year to reflect recent trends in such areas as humanrights, labor, the environment and prevention of corruption
in line with the new guidelines. First, we provided a
58

The DNP Group Code of Conduct cites respect for humandignity as being of the utmost importance. It stipulates
respect for diversity and requires disciplined action. As
such, we aim to create a corporate culture in which eachindividual can demonstrate his or her diverse individuality
to the fullest and work with vitality.
In particular, women ʼs perspectives and sensitivity are
indispensable in the businesses that create new value
being promoted by DNP, and for this reason, it is
becoming increasingly important for females to takeactive roles in the Company.
From early in this century, DNP began by enhancing
research and systems designed to promote the active
participation by women in order to prevent unnecessary
turnover of female employees in the workplace. Since
2010, DNP has hosted seminars supporting a balance
between work and child care in aiming to create anenvironment conducive to increased participation by
women. Apart from encouraging couples to participate,
DNP is also engaged in the enhancement of training andinternal evaluation systems to support career planning for
employees using the shorter working hour system. Since
2013, DNP has taken a further step forward with existing
activities related to reducing work hours and is promoting
work style reform initiatives that raise value added
through the more efficient use of time resources.
In 2016, DNP promoted such initiatives even further
and drew up an action plan for the creation of anquestionnaire to 130 core suppliers and confirmed thestatus of each company.
The DNP Group will continue to deepen dialogue with
suppliers through such initiatives and strive to ensure
responsible procurement throughout the value chain as acompany that is trusted by society.

DNP Vietnam has started the supplier survey in accordance with the new
procurement guidelines.

DNP has been involved in the internal consumption of
fairtrade-certified products since 2006. Fairtrade refers
to a system of trade that aims to improve the lives ofvulnerable producers and workers and help them become
independent by trading raw materials and products fromdeveloping nations at fair prices. International Fairtrade
Certification encouraging sustainable agriculture andtrade contributes greatly to the achievement of the
Sustainable Development Goals (SDGs).
In agreement with the philosophy behind International
Fairtrade Certification, DNP switched to using
fairtrade-certified coffee in its reception area in 2006 in
consideration of efforts to improve economic activities
rather than provide temporary support to producers andthe producing area and so that DNP employees could
easily take part in the initiative. DNP has continued with
the internal consumption activity for the 12 years since
based on a belief in the importance of continuous actionin order to maximize the effects produced by theInternational Fairtrade Certification framework. As aresult, DNP had served its one-millionth cup of
fairtrade-certified coffee as of March 31, 2018.
In May 2018, DNP received a certificate ofcommendation from the specified non-profit organization
Fairtrade Label Japan (FLJ), which is engaged in productcertification for International Fairtrade Certification labels

in Japan. The award is in recognition of the significant
role DNP has played in spreading fairtrade in Japan on
the back of proactive efforts over a long period. This is
the first time the award has been given to a Japaneseenterprise.
DNP will continue to promote the proliferation of
fairtrade through internal consumption as a means tocontribute to the realization of a sustainable society.

FLJ Chairman Horiki (right) with DNP Senior Corporate Officer Sugita (left)

DNP Integrated Report 201859

Corporate Governance1. Corporate Governance
Healthcare,” “ Lifestyle and Mobility ” and “ Environment
and Energy.” We recognize that to increase our businesscompetitiveness in the future, we must fulfill our corporatesocial responsibilities (CSR) and win the trust of our various
stakeholders, including shareholders, customers, consumers
and employees. To this end, we regard improvement incorporate governance, including internal control systems,
as a top management priority. We establish and operate
systems that enable precise managerial decision-making,prompt and appropriate business execution based on thesedecisions and supervision and auditing of these processes.
We also conduct thorough training and education to improveeach employeeʼs awareness of compliance issues, and we
strive to improve our overall corporate governance.

Fundamental philosophy
DNP seeks to improve earning power and capital efficiency
in order to support sustained growth and increase enterprisevalue over the medium to long term. We established DNPGroup Vision 2015, which states our corporate philosophy
as: “ The DNP Group connects individuals and society, andprovides new value.” We are preparing an environment toallow directors to boldly pursue various business opportunities
based on a healthy entrepreneurial spirit and to effectively
supervise business operations, primarily in the four growthareas of “ Knowledge and Communication,” “ Food and

DNP ’s corporate governance structure
DNP ʼs corporate governance and internal control system has the following structure.
<Structure diagram>
General Meeting of Shareholders
Audit

Audit

Board of Directors
Advisory Committee

Management Committee

President and Directors in Charge
ReportingCorporate Ethics Committee

Information Security Committee

Audit

Quality Assurance & Product Safety Committee

Guidance

Central Disaster Prevention Council
Legal and other main divisions(CSR & Environment Department, Employee Relations
Department, R&D and Engineering Management Division,
Finance & Accounting Division, Strategic Business Planning &Development Division, Intellectual Property Division, Corporate
Communication Division, Legal Affairs Department, etc.)

Audit
Guidance
Reporting
Coordination

60

Audit
ReportingAssistance

Audit Unit

Auditing Department

Guidance
Training(Oversight of internal controls)(Autonomous implementation,
inspection, review, improvement)

Check

CSR & Environmental Committee

Board of Statutory Auditors

Information Disclosure Committee

DivisionsGroup companies

Open Door Room

Reporting

Head Office

Operating Units

Accounting Auditors

Audit

Directors andCorporate Officers
in charge

Management and business execution
structure, audit structure
・ DNP ʼs organization is designed to allow directors withspecialized expertise and experience in a wide range ofbusiness fields to participate in management decisions,to take responsibility and authority as they execute
their work and to supervise the work of other directors.
We are working to enhance our decision-making andsupervisory capabilities from a company-wide perspective
by appointing directors in charge of each management
function. Independent outside directors also participate
in decision-making in order to facilitate prompt andprecise management decisions and smooth executionof those decisions, and to further strengthen proper
supervisory functions. Corporate officers appointed
by the Board of Directors have the responsibility andauthority to execute business decided by the Boardof Directors.
・ In order to nimbly construct optimal management
systems for responding to changes in the businessenvironment, and to further clarify management
responsibility for each fiscal year, we set the term ofoffice for directors and corporate officers at one year.
・ The Board of Directors consists of 11 directors,
including two independent outside directors, and theBoard ensures that meetings are run appropriately
based on the Board of Directors Regulations. The Board
meets once a month, in principle, to discuss and decide
on important business matters. Corporate officers may
also attend meetings as needed to provide reports.
To speed up the Company ʼs activities and make themmore efficient, DNP has also established a Management
Committee consisting of directors at the senior managing
director level and above. The committee meets oncea month, in principle, to review and discuss management
policies, strategies and important business matters.
Decisions about director compensation, designationof director candidates and other such matters are
made in light of the advice and opinions of an Advisory
Committee comprised of independent outside officers inan effort to increase the transparency of thedecision-making process.
・ DNP has in place a Board of Statutory Auditors thatconsists of five auditors, including one auditor withconsiderable knowledge of finance and accounting
and three outside auditors. In accordance with auditors ʼprescribed audit criteria and responsibilities, thestatutory auditors conduct audits of the directors ʼ
management of day-to-day operations and, as
necessary, seek information from the directors andcorporate officers regarding business operations.
・ DNP provides in its Articles of Incorporation for theability to conclude limited liability agreements basedon laws and regulations in order to allow directors(excluding executive directors, etc.) and statutory
auditors to adequately fulfill their expected roles andto ensure useful personnel in the future. DNP and its
directors (excluding executive directors, etc.) andstatutory auditors have concluded agreements that limit
the directors ʼ and auditors ʼ liability for damages within
the parameters set forth in Article 423, Paragraph 1 ofJapan ʼs Companies Act, so long as they perform theirduties in good faith and without serious negligence.

Reasons for choosing this structure
We ensure that the Board of Directors acts appropriately,
agilely and flexibly by adopting the organizational
structure of a company with a Board of Statutory Auditors,
as noted above, by introducing an independent outside
director and corporate officer system, and by establishingand operating discretionary committees. We believe that
adopting this corporate governance structure will allow
the Company to sustain growth and increase enterprisevalue over the medium to long term.

Internal control and risk management
systems
The following provides an overview of the various systems
that we have established to ensure appropriate businessconduct at DNP and the corporate group comprising DNP
and DNP subsidiaries (DNP Group), and an overview of theoperation of these systems.
(1) System for ensuring that directors andemployees of DNP and DNP subsidiaries
perform their duties in compliance withlaws and regulations and the Articles ofIncorporationa. We established the DNP Group Code of Conduct
to govern the conduct of all employees (including
directors). We distribute this code to all employeesof the DNP Group and conduct training and take otheraction to promote a full understanding of this code.
〔 Summary of operation〕
We promote a full understanding of the DNP Group
Code of Conduct through various training sessions
and other activities carried out mainly by DNP ʼs
Corporate Ethics Committee.
b. In principle, the Board meets once a month. Basedon the Company ʼs Board of Directors Regulations,the directors ensure that meetings are appropriately
run and supervise each other in day-to-day
operations. We appoint independent outside
directors to ensure that the Board of Directors
DNP Integrated Report 201861

performs its duties in compliance with the law.
Executive directors exercise their authority according
to the Organization Rules, Work Authority Regulations,
Proposal System Regulations and other internal
company rules; and they prevent acts in violation oflaws, regulations and the Articles of Incorporation
by supervising the business execution of the corporate
officers and general managers responsible for DNP ʼsvarious organizational units.
DNP is a company with a Board of Statutory
Auditors. Statutory auditors, including independent
outside statutory auditors audit the performanceof duties by directors according to the audit criteria
and responsibilities prescribed by DNP ʼs Board of
Statutory Auditors.
〔 Summary of operation〕
The Board of Directors met 11 times during the
fiscal year ended March 2018. The Board held
discussions, made decisions and took appropriate
actions on important matters based on the Board of
Directors Regulations. Executive directors exercise
their authority according to various rules andregulations, and they supervise the business executionof the corporate officers and general managers
responsible for DNP ʼs various organizational units.
DNP ʼs two independent outside directors supervise
the business execution of directors.
Statutory auditors audit the performance of duties
by directors according to the audit criteria andresponsibilities prescribed by DNP ʼs Board of
Statutory Auditors.
c. DNP ʼs Corporate Ethics Committee is responsible
for establishing and operating systems and othermechanisms to ensure appropriate business conduct
within the DNP Group, based on the DNP Groupʼs
Basic Compliance Management Regulations.
〔 Summary of operation〕
DNP ʼs Corporate Ethics Committee meets once amonth to oversee the establishment and operationof systems and other mechanisms to ensure
appropriate business conduct within the DNP Group.
d. Under the general oversight of DNP ʼs Corporate
Ethics Committee, the Information Disclosure
Committee, CSR & Environmental Committee,
Information Security Committee, Quality Assurance& Product Safety Committee, Invention Compensation
Committee, Central Disaster Prevention Council andvarious head office organizations responsible for
specific laws and regulations conduct reviews,
provide guidance and offer training in their areasof specialty to other organizational units andGroup companies.
〔 Summary of operation〕
The various special committees, Central Disaster
Prevention Council and various head officeorganizations responsible for specific laws andregulations conduct reviews, provide guidance andoffer training as appropriate through field inspections,group training sessions and other means to otherorganizational units and Group companies.
e. The general managers of DNP ʼs variousorganizational units independently determine,
62

implement, check, evaluate and improve thesystems and procedures required for their own
units, based on the DNP Groupʼs Basic ComplianceManagement Regulations and in light of the specificoperations of their unit.
〔 Summary of operation〕
The head of DNP ʼs various organizational units
independently determine and implement thesystems and procedures required by their unit.
Each organizational unit confirms the operation ofthese systems and procedures. The head of each
unit compiled the results of its independent checks,
evaluations and improvements made through theend of the fiscal year ended March 2018 into a Unit
Confirmation Report, and provided the report to
DNP ʼs Corporate Ethics Committee. The Corporate
Ethics Committee conveyed these results torelevant head office organizations, and these head
office organizations confirmed conditions andprovided guidance to organizational units andtraining as needed.
f. DNP ʼs Auditing Department is independent fromoperating units, and based on the Internal Audit
Regulations, it conducts internal audits and provides
guidance to DNP ʼs various organizational units andGroup companies regarding the establishment andoperation of systems and other mechanisms toensure appropriate business conduct.
〔 Summary of operation〕
DNP ʼs Auditing Department is independent fromoperating units and conducts internal audits andprovides guidance to DNP ʼs various organizational
units and DNP Group companies, in accordancewith an audit plan. The results of the Auditing
Department ʼs internal audits and guidance arereported to DNP ʼs President, statutory auditors
and accounting auditors.
g. DNP ʼs Corporate Ethics Committee established
the Open Door Room as an internal and external
whistleblowing forum for the DNP Group. It alsoestablished the Supplier Hotline as a means toreceive information from material suppliers andcontractors. It uses these to obtain information
about legal violations and other such actions by
employees and to respond to this information(including by not providing unfair treatment towhistleblowers).
〔 Summary of operation〕
We seek to publicize and gain widespreadrecognition of this whistleblower system andto use it appropriately.
h. We establish, operate, evaluate and report oninternal controls for financial reporting based on
the Basic Policy and Basic Plan for Establishing,
Operating and Evaluating Internal Controls for
Financial Reporting, as stipulated by DNP ʼs Board of
Directors. We thereby ensure compliance with laws
and regulations and reliability in financial reporting.
〔 Summary of operation〕
DNP works to ensure compliance with laws andregulations and reliability in financial reporting by
establishing internal controls for DNP and its Group

companies and evaluating their operation basedon the Basic Policy and Basic Plan for Establishing,
Operating and Evaluating Internal Controls for
Financial Reporting.
i. To sever relations with antisocial forces, we
stipulate in the DNP Group Code of Conduct that
the Company shall not engage in any activities
with antisocial forces. In addition to complying
with this stipulation, we work with our various
business partners to create an arrangement
enabling a severing of relations in the event thata business partner is found to be an antisocial
force. The DNP Group will also strengthen ties withoutside organizations, including the police and law
offices, to guard against inappropriate demands
made by antisocial forces.
〔 Summary of operation〕
DNP actively seeks to sever relations with antisocial
forces, and we make ongoing efforts with our various
business partners to create an arrangement enabling
a severing of relations in the event that a business
partner is found to be an antisocial force. We are also
working to strengthen ties with outside organizations,
including the police and law offices, to gather
information about antisocial forces and to guard against
inappropriate demands made by antisocial forces.
(2) Regulations and other systems for
managing the risk of losses at DNP and
DNP subsidiaries
To manage risks that could have a serious impact on
the business of the DNP Group, including those related
to compliance, information security, environment,
disasters, product safety, insider trading and export
control, DNP ʼs Corporate Ethics Committee, various
special committees and other head office organizations
establish regulations and conduct training in an effort
to prevent risks from occurring. When risks do occur,
we respond quickly to avoid or minimize losses tothe DNP Group. Additionally, under the general
oversight of DNP ʼs Corporate Ethics Committee,
we regularly take inventory of risks and designateorganizations and responsible directors to quickly
respond to any new risks that could have a serious
impact on our business.
〔 Summary of operation〕
DNP ʼs Corporate Ethics Committee, various special
committees and other head office organizations
identify risks that could have a serious impact on ourbusiness and designate organizations and responsible
officers to respond to these risks. Special committees
and head office organizations evaluate compliance inrelation to these risk and work to prevent risks fromoccurring. We report the details of these activities to
DNP ʼs Corporate Ethics Committee.
(3) System for ensuring that directors of DNP
and DNP subsidiaries perform their duties
efficiently
a. The Board of Directors meets once a month, inprinciple, and also holds meetings as needed,
providing a basic system for ensuring that directors
perform their duties efficiently. Additionally, tocontribute to fair and efficient decision-making,we established the Advisory Committee comprisedof independent outside officers to provide advice
and opinions on important matters, including
director compensation and designation of director
candidates. The Management Committee comprisedof senior managing and higher directors meets to
examine and discuss important business matters.
〔 Summary of operation〕
In addition to the operation outlined above in (1) b.,
our Advisory Committee held discussions and offeredadvice and opinions about important matters,
including director compensation and designation of
director candidates. Additionally, the Management
Committee met 19 times during the fiscal year
ended March 2018 to examine and discuss
important business matters.
b. We seek to improve the efficiency of businessexecution by allowing executive directors to performtheir duties based on decisions by the Board of
Directors by appropriately delegating authority to thecorporate officers and general managers responsible
for DNP ʼs various organizational units, within thescope provided for in the Organization Rules, Work
Authority Regulations, Proposal System Regulations
and other internal company rules.
〔 Summary of operation〕
DNP seeks to enhance the efficiency of businessexecution by preparing various rules to appropriately
delegate the authority of executive directors to thecorporate officers and general managers responsible
for DNP ʼs various organizational units.
c. To ensure that directors at Group companies
perform their duties efficiently, we seek to enhancethe efficiency of business execution by providing
guidance to enable Group companies, accounting
for their size and other specific attributes, toindependently hold Board of Directors meetings
at their discretion based on the Board of Directors
Regulations, and to appropriately delegate authority
based on the Organization Rules, Work Authority
Regulations, Proposal System Regulations and otherinternal company rules.
〔 Summary of operation〕
Group companies are working to enhance theefficiency of business execution by directors by
establishing appropriate rules in light of theirbusiness portfolio, size and other attributes.
(4) System for storing and managing information
related to the performance of duties by
DNP ʼs directors
We record information related to the performanceof duties by directors in the Board of Directors
meeting minutes, special committee meeting minutes,
proposal documents, other paper documents andelectronic documents. Additionally, in accordancewith the Basic Information Security Rules, Document
Control Standards and Electronic Data Control
Standards, we appropriately and safely store andmanage in an easily searchable format the paperand electronic documents in which this informationis recorded for a period of time stipulated in theserules and standards.

DNP Integrated Report 201863

〔 Summary of operation〕

We record information related to the performanceof duties by directors in paper and electronic
documents, and appropriately store and manage
these documents in the responsible organizationaccording to various regulations.

(5) System for ensuring appropriate businessconduct by the corporate Group comprising
DNP and DNP subsidiaries
a. To ensure appropriate business conduct in the DNPGroup, we undertake training and other activities sothat all DNP Group employees (including directors) gaina full understanding and perform their work according
to the DNP Group Code of Conduct. Concerning theestablishment and operation of systems and othermechanisms to ensure appropriate business conduct,
we established the DNP Groupʼs Basic ComplianceManagement Regulations and the Affiliated Company
Management Regulations, and provide guidance toGroup companies to help them establish their own
rules and regulations based on the above.
〔 Summary of operation〕
In addition to the operation outlined above in (1) a.,
Group companies establish their own rules andregulations under the direction of relevant head
office organizations and based on the DNP Groupʼs
Basic Compliance Management Regulations and theAffiliated Company Management Regulations.

b. We confirm that Group companies, based on thepolicies outlined in the preceding item, independently
establish various rules and regulations, including
Proposal System Regulations, that stipulate mattersrequiring prior consultation or subsequent reportingwith the parent company, accounting for eachcompany ʼs size and other specific attributes; thatthey establish and operate reporting systems toreport to DNP about important business execution
by directors and other employees of Group
companies; and that this business execution
complies with laws, regulations, and the Articles
of Incorporation and is carried out efficiently.
We also provide guidance to help Group companies
make independent decisions about the systems andprocedures they need in light of their businessportfolio, size and other attributes; and to
implement, check, evaluate and improve theirsystems and procedures.
〔 Summary of operation〕
Group companies establish various rules andregulations, including Proposal System Regulations,that stipulate matters requiring prior consultationor subsequent reporting with DNP; and establish
appropriate systems in light of their businessportfolio, size and other attributes. Group companies
confirmed the operation of these rules, regulations
and systems; compiled a Unit Confirmation Reportby the end of the fiscal year ended March 2018;
and reported to DNP ʼs Corporate Ethics Committee.
The Corporate Ethics Committee conveyed theseresults to relevant head office organizations,and these head office organizations confirmed
conditions and provided guidance and training
as needed.
64

c. DNP ʼs Auditing Department, Corporate Ethics
Committee, various special committees and otherhead office organizations conduct audits or checks,
and provide guidance and training in relation to theimplementation of the preceding two items.
〔 Summary of operation〕
DNP ʼs Auditing Department, Corporate Ethics
Committee, various special committees and otherhead office organizations conduct audits or checks,
and provide guidance and training in relation to thesystems and procedures of Group companies.
(6) System for employees who assist DNP ʼsstatutory auditors in the performance of
their duties and matters related to the
independence of these employees fromdirectors
a. DNP ʼs Board of Statutory Auditors established the
Audit Unit and appoints dedicated staff member toassist DNP ʼs statutory auditors in the performance of
their duties. To ensure the effectiveness of the
instructions given by DNP ʼs statutory auditors to theirstaff, we grant their staff the authority to appropriately
conduct checks and gather information.
〔 Summary of operation〕
DNP appoints one dedicated staff member to assist
its statutory auditors. DNP grants this staff member
the authority to appropriately conduct checks andgather information to ensure the effectiveness of hisor her work.

b. Audit Unit staff perform their duties under the
direction of DNP ʼs statutory auditors. Any personnel
evaluation, transfer, reprimand or other such actions
related to this staff requires the consent of DNP ʼs
Board of Statutory Auditors〔 Summary of operation〕
Audit Unit staff are independent from the directionof directors and perform their duties under the
direction of DNP ʼs statutory auditors. Any personnel
evaluation, transfer, reprimand or other such actions
related to this staff are taken with the consent of
DNP ʼs Board of Statutory Auditors.
(7) System for directors and employees of DNP
and DNP subsidiaries to report to DNP ʼsstatutory auditors; policy for expenses
incurred as statutory auditors performtheir duties; system for other reporting tostatutory auditors; and system for ensuring
effective auditing by statutory auditors
a. DNP ʼs statutory auditors at any time deemed necessary
can request that directors and employees of the DNPGroup provide a report on the performance of theirduties; and the directors, employees or persons
receiving reports from these persons will report
promptly when requested by DNP ʼs statutory auditors.
〔 Summary of operation〕
Statutory auditors are independent from thedirection of directors, and have the authority torequest as needed that directors and employees
provide reports on business execution at DNP and
DNP Group companies. DNP Group directors andemployees respond promptly when requested toreport by DNP ʼs statutory auditors.

b. If a DNP director discovers a legal violation orother matter that could significantly damage the
DNP Group, the director will report this matter
immediately to DNP ʼs statutory auditors.
〔 Summary of operation〕
We endeavor to make DNP directors fully awareof their reporting obligations to statutory auditors
as stipulated in the Companies Act.

them an explanation of the audit plan at the start of the
fiscal year, assessing audit operations during the fiscal
year as appropriate and receiving a report of audit results
at the end of the fiscal year.

c. DNP ʼs Auditing Department and Corporate Ethics
Committee provide regular reports to DNP ʼsstatutory auditors about the details of auditing of
the DNP Group and the establishment and operationof systems and other mechanisms to ensure
appropriate business conduct in the DNP Group.
〔 Summary of operation〕
DNP ʼs Auditing Department and Corporate Ethics
Committee held meetings with DNP ʼs statutory
auditors and provided timely reports to thesestatutory auditors.

DNP has two outside directors and three outside statutory
auditors. Outside directors and statutory auditors do nothave any particular personal relationships, capital
relationships, transactional relationships or other interests
with DNP.
The role of outside directors is to supervise inside directors
and contribute to improving the transparency and accountabilityof the Board of Directors by providing management advice
based on their judgment. The role of outside statutory
auditors is to enhance the propriety of accounting andoperational audits and to supervise management.

d. DNP ʼs statutory auditors convene liaison meetingsand exchange opinions with statutory auditors at
Group companies.
〔 Summary of operation〕
The statutory auditors of DNP and DNP Group
companies convene liaison meetings at theirdiscretion and exchange information and opinions.

・ Outside director Tadao Tsukada can participate ine. DNP bears the costs deemed necessary for its
statutory auditors to perform their duties, and DNP ʼs
Board of Statutory Auditors can request these costs
from DNP both before and after the fact.
〔 Summary of operation〕
DNP bears costs related to the work of its statutory
auditors within a scope that it deems necessary.
f. DNP ʼs President conducts regular exchanges of
opinion with DNP ʼs Board of Statutory Auditors.
〔 Summary of operation〕
DNP ʼs President held meetings and exchanged
opinions with DNP ʼs Board of Statutory Auditors.

Internal controls and auditor ʼs auditing
In order to maintain a structure that allows for precise
management decision-making, appropriate and prompt
execution of business, and inspection and monitoring ofthese functions, the Corporate Ethics Committee, as the
body in charge of internal control, inspects and guides
DNP ʼs operating units according to the DNP Groupʼs Basic
Compliance Management Regulations, and regularly
reports to statutory auditors regarding management
conditions. In addition, the Auditing Department(consisting of 14 employees) ensures the propriety ofoperations by conducting accounting and operational
audits based on Internal Audit Regulations and byproviding progress reports to the statutory auditors andthe accounting auditor.
The statutory auditors hold regular meetings of theBoard of Statutory Auditors, work with other statutory
auditors to perform their audit duties and closelycooperate with the accounting auditors by receiving from

DNP ʼs outside directors and outside statutory
auditors

business decision-making from an objective standpointthat is independent from the Company ʼs management
team that executes its business, based on keen insightand broad experience as a distinguished academic.
Mr. Tsukada owns 1,000 shares of DNP stock.
・ Outside director Tsukasa Miyajima can participate
in business decision-making from an objective
standpoint that is independent from the Company ʼsmanagement team that executes its business, based on
keen insight and broad experience as a legal professional.
Mr. Miyajima owns 1,700 shares of DNP stock.
・ Outside statutory auditor Shin-ichi Ikeda is designatedas an independent officer and can help bolster auditing
based on a broad knowledge gained from businessexperience at other companies. Mr. Ikeda owns 1,000
shares of DNP stock.
・ Outside statutory auditor Makoto Matsuura is designatedas an independent officer and can help bolster auditing
based on his legal expertise as an attorney.
・ Outside statutory auditor Kuniaki Nomura can help bolster
auditing based on his legal expertise as an attorney.
DNP established its own Independence Standards for
Independent Officers with reference to stock listing rules
and other material in order to avoid conflicts of interest
with general shareholders when appointing outside
directors and outside statutory auditors. These standards
are presented below, and we designate all of our outside
directors and outside statutory auditors as independent
officers as a result of satisfying these standards.

DNP ʼs independence standards forindependent officers
Independent officers must have a neutral position that is
independent from DNP ʼs management team; none of thefollowing conditions may apply.
(1) An executive of DNP or DNP affiliated company(hereinafter, DNP Group) (person to whom thisapplies during the past 10 years. Persons who have
served as a non-executive director or auditor of the
DNP Group during the past 10 years may include
DNP Integrated Report 2018

65

(2)

(3)

(4)

(5)

those who have served as an executive during the
10-year period prior to their appointment as adirector or auditor)
A major supplier of the DNP Group (supplier group[entity belonging to the consolidated group of thedirect supplier] that provides products or services tothe DNP Group for which the transaction value of the
products or services provided to the DNP Groupaccounts for over 2% of the supplier groupʼs annual
consolidated sales or gross revenues in the mostrecent fiscal year) or an executive thereof
A major customer of the DNP Group (customer groupthat receives products and services from the DNPGroup for which the transaction value of the
products and services provided to the customer
group from the DNP Group accounts for over 2% of
the DNP Groupʼs annual consolidated sales in themost recent fiscal year) or an executive thereof
A major lender to the DNP Group (lender providing
loans accounting for over 2% of the DNP Groupʼstotal consolidated assets in the most recent fiscal
year) or an executive thereof
A consultant, accounting professional or legal
professional (in the case of an organization, a person
belonging to said organization) who receives a large
amount of monetary or other consideration other than

executive compensation from the DNP Group (person
who receives consideration other than executive
compensation in excess of the larger of an annual
amount of ¥10 million or 2% of the personʼs sales
or gross revenues in the most recent fiscal year)(6) A major shareholder of DNP (direct or indirectownership of 10% or more of total voting rights)
or an executive thereof(7) An executive at an entity in which the DNP Group isa major investor (direct or indirect ownership of
10% or more of total voting rights)(8) A person belonging to an auditing company that
performs statutory audits for DNP(9) A person to whom items (2) through (8) haverecently applied (within one year)(10) A relative (within second degree of kinship) of aperson (excluding insignificant persons) to whom anyof items (1) through (5) apply(11) An executive at an entity with mutual appointmentsof outside officers (person to whom this applies
during the past 10 years)(12) An entity that receives donations from DNP (average
donation during the past three fiscal years that is thehigher of an annual amount of ¥10 million or 2% of therecipient ʼs annual gross revenues) or an executive thereof(person to whom this applies during the past 10 years)

Compensation paid to directors and statutory
auditors

Base compensation

Bonus

Number of directors
and statutory
auditors covered

973

776

197

10

58

58

−

2

111

111

−

5

Total compensation

Directors(excluding outside directors)

Statutory auditors(excluding outside auditors)

Outside directors
and auditors(¥ million)

Total compensation by type (¥ million)

Notes: 1. Bonuses are provisions for bonuses for directors and statutory auditors for the fiscal year ended March 2018.
2. There were 10 internal directors, two internal statutory auditors and five outside directors as of the end of the fiscal year ended March 2018.

(2) Company directors and total compensation
Name

Total compensation(director type)(¥ million)

Yoshitoshi Kitajima(Director)

Koichi Takanami(Director)

Masayoshi Yamada(Director)

Accounting auditing
The names of the certified public accountants who
performed the accounting audits, the audit firms they are
employed by and their assistants in the audit work are as
follows:
・ Certified public accountants who performed(1) Total compensation paid by DNP, by category of director/statutory auditor, total compensation bytype and the number of directors and statutory auditors covered
Category of director/
statutory auditor(3) Policies regarding the determination ofcompensation for directors and statutory
auditorsCompensation for directors is calculated within thelimits on directors ʼ compensation approved at a
general meeting of shareholders; is reviewed anddiscussed by the Management Committee in light of
the advice and opinions of the Advisory Committee
comprised of independent outside directors; and isdeliberated and decided on by the Board of
Directors.
Compensation for each director is determinedbased on a broad range of factors, including theoperations they are in charge of, their responsibilities,
achievements and contributions.
Compensation for statutory auditors is calculated
within the limits on statutory auditors ʼ compensation,and the compensation of each statutory auditor
is determined based on discussions with thestatutory auditor.

Company

Total compensation by type (¥ million)
Base compensation

Bonus

325

Dai Nippon Printing Co., Ltd.

268

56

128

Dai Nippon Printing Co., Ltd.

102

25

128

Dai Nippon Printing Co., Ltd.

102

25

the accounting audits
Hirofumi Nikaido, Reiji Yonekura, Yasushi Onuki
・ Audit firm
ARK MEIJI AUDIT & Co.
・ Number of accounting audit assistants
29 certified public accountants, 11 others

Matters for resolution by the general meetingof shareholders that can be resolved by the
Board of Directors(1) Share buybacks
DNP ʼs Articles of Incorporation specify that theCompany may buy back its shares in the open
market, in accordance with Article 165, Paragraph
1 of Japan ʼs Companies Act, upon approval by the
Board of Directors, in accordance with Article 165,
Paragraph 2 of Japan ʼs Companies Act, to allow the
Company to use capital more efficiently andimplement a flexible capital structure policy inresponse to changes in business conditions.

(3) Exemption of statutory auditors fromliability
DNP ʼs Articles of Incorporation specify thatstatutory auditors (including former statutory
auditors) may, by a resolution of the Board of
Directors, in accordance with Article 426,
Paragraph 1 of Japan ʼs Companies Act, be
exempted from liabilities in Article 423, Paragraph
1 of Japan ʼs Companies Act so that the statutory
auditors can sufficiently carry out their expected
responsibilities.
(4) Interim dividend
DNP ʼs Articles of Incorporation specify that theCompany may, by a resolution of the Board of
Directors, pay a monetary dividend stipulated in
Article 454, Paragraph 5 of Japan ʼs Companies
Act to shareholders of record as of September 30
of each year and shareholders with actual stock
certificates, so that profits can be flexibly passed
on to shareholders.

Number of directors
DNP ʼs Articles of Incorporation specify that the numberof regular members on the Board of Directors shall be
no more than 16.

Requirements for shareholder approval of
director nominees
DNP ʼs Articles of Incorporation specify that the approvalof director nominees requires the attendance of at least
one third of shareholders with voting rights and a majorityof the votes of these shareholders, and does not depend
on cumulative votes.

Requirements for shareholder approval of
director nominees
DNP ʼs Articles of Incorporation specify that the approvalof special resolutions stipulated in Article 309, Paragraph
2 of Japan ʼs Companies Act requires the attendance of atleast one third of shareholders with voting rights and at
least two thirds of the votes of these shareholders, so thatthe shareholders ʼ meetings can run smoothly.

(2) Exemption of directors from liability
DNP ʼs Articles of Incorporation specify that
directors (including former directors) may, by aresolution of the Board of Directors, in accordancewith Article 426, Paragraph 1 of Japan ʼs Companies
Act, be exempted from liabilities in Article 423,
Paragraph 1 of Japan ʼs Companies Act so that thedirectors can sufficiently carry out their expected
responsibilities

Notes: 1. Total compensation is shown only for those with compensation of at least 100 million yen.
2. Bonuses of Dai Nippon Printing Co., Ltd. are the amounts expected to be paid as bonuses for the fiscal year ended March 2018.

66

DNP Integrated Report 2018

67

(Fiscal year ended March 2018)

Stockholdings

Stocks held for reasons other than pure investment purposes(1) Stocks held for reasons other than for pure investment purposes
No. of stocks: 331
Total on the balance sheet: 340,091 million yen(2) 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 (Fiscal year ended March 2017)

Stocks held for reasons other than pure investment purposes
Company name

Number of shares

Amount recorded onbalance sheet (¥ million)

Holding purpose

Recruit Holdings Co., Ltd.
The Dai-ichi Life Insurance Co., Ltd.
Ezaki Glico Co., Ltd.
Asahi Group Holdings, Ltd.
Lion Corporation
Taisho Pharmaceutical Holdings Co., Ltd.
NISSIN FOODS HOLDINGS CO., LTD.
Mizuho Financial Group, Inc.
Meiji Holdings Co., Ltd.
YAKULT HONSHA CO., LTD.
YAMATO HOLDINGS CO., LTD.
Aica Kogyo Co., Ltd.
Dexerials Corporation
Daikin Industries, Ltd.
Toyo Suisan Kaisha, Ltd.
FUJIFILM Holdings Corporation
MORINAGA & CO., LTD.
NSK Ltd.
Tosoh Corporation
Sapporo Holdings Limited
Hakuhodo DY Holdings Inc.
Mitsubishi Electric Corporation
ROHM Co., Ltd.
Shiseido Co., Ltd.
Kobayashi Pharmaceutical Co., Ltd.
Mitsubishi UFJ Financial Group, Inc.
Mitsubishi Chemical Holdings Corporation
TAKARA HOLDINGS INC.
Ajinomoto Co., Inc.
Mitsubishi Pencil Co., Ltd.
PILOT CORPORATIONSMK Corporation
KDDI Corporation
Senshukai, INC.
SINFONIA TECHNOLOGY CO., LTD.
Eidai Co., Ltd.
TOTO LTD.
Kikkoman Corporation

23,700,000
6,606,600
1,615,185
1,860,029
3,140,665
692,700
898,711
27,134,319
564,400
701,000
1,660,600
1,293,743
3,125,000
300,000
794,980
685,965
593,000
1,814,000
2,609,000
759,277
1,720,000
1,300,000
270,178
677,619
315,274
2,399,760
1,799,790
1,200,000
630,931
243,350
297,400
3,200,000
426,600
1,511,663
3,664,000
2,237,000
279,000
350,940

134,616
13,190
8,721
7,827
6,287
6,262
5,545
5,535
5,231
4,332
3,873
3,793
3,437
3,355
3,295
2,982
2,929
2,887
2,551
2,285
2,270
2,076
1,999
1,985
1,699
1,679
1,550
1,441
1,385
1,357
1,354
1,267
1,246
1,212
1,190
1,178
1,173
1,166

Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationshipStrengthen business alliance
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationshipStrengthen business alliance
Strengthen business alliance
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationshipStrengthen business alliance
Enhance business relationship
Enhance business relationship
Enhance business relationship

Company name

Number of shares

Amount recorded onbalance sheet (¥ million)

Holding purpose

Recruit Holdings Co., Ltd.
The Dai-ichi Life Insurance Co., Ltd.
Ezaki Glico Co., Ltd.
Taisho Pharmaceutical Holdings Co., Ltd.
Lion Corporation
YAKULT HONSHA CO., LTD.
Asahi Group Holdings, Ltd.
Mizuho Financial Group, Inc.
Aica Kogyo Co., Ltd.
Shiseido Co., Ltd.
Meiji Holdings Co., Ltd.
YAMATO HOLDINGS CO., LTD.
Daikin Industries, Ltd.
Dexerials Corporation
Toyo Suisan Kaisha, Ltd.
FUJIFILM Holdings Corporation
MORINAGA & CO., LTD.
NSK Ltd.
Hakuhodo DY Holdings Inc.
Kobayashi Pharmaceutical Co., Ltd.
Sapporo Holdings Limited
S&B FOODS INC.
Mitsubishi Chemical Holdings Corporation
PILOT CORPORATION
Kotobuki Spirits Co., Ltd.
Mitsubishi UFJ Financial Group, Inc.
TOTO LTD.
Kikkoman Corporation
TAKARA HOLDINGS INC.
SMK Corporation
SINFONIA TECHNOLOGY CO., LTD.
Kurita Water Industries Ltd.
MANDOM CORPORATIONOji Holdings Corporation
Eidai Co., Ltd.
Ajinomoto Co., Inc.
Hulic Co., Ltd.
TOKYO BROADCASTING SYSTEM HOLDINGS, INC.
Mitsubishi Pencil Co., Ltd.
KDDI Corporation

58,100,000
6,606,600
1,615,709
692,700
3,140,665
701,000
960,029
27,134,319
1,293,743
677,619564,400
1,660,600
300,000
3,125,000
794,980
685,965
593,000
1,814,000
1,720,000
316,182759,277
172,200
1,799,790
297,400
300,000
2,399,760
279,000
350,940
1,200,000
3,200,000
3,664,000
387,000
352,000
1,840,800
2,237,000
630,9311,040,000
518,064
487,575
426,600

153,645
12,833
8,999
7,245
6,730
5,516
5,440
5,193
5,097
4,616
4,571
4,431
3,520
3,453
3,279
2,911
2,778
2,586
2,516
2,428
2,353
1,990
1,854
1,763
1,680
1,672
1,565
1,502
1,417
1,414
1,333
1,306
1,291
1,259
1,230
1,214
1,207
1,169
1,169
1,158

Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationshipStrengthen business alliance
Enhance business relationship
Enhance business relationship
Enhance business relationshipStrengthen business alliance
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationshipStrengthen business alliance
Strengthen business alliance
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship
Enhance business relationship

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

Terumo Corporation
TV Asahi Holdings Corporation
Astellas Pharma Inc.
Japan Tobacco Inc.

Number of shares

3,861,000
4,030,000
2,284,000
1,000,000

Amount recorded onbalance sheet (¥ million)

Holding purpose

21,582
9,353
3,686
3,066

Hold voting instruction rights for shares in retirement benefit trust
Hold voting instruction rights for shares in retirement benefit trust
Hold voting instruction rights for shares in retirement benefit trust
Hold voting instruction rights for shares in retirement benefit trust

Note: Specified stocks 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.

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

Number of shares

Amount recorded onbalance sheet (¥ million)

Holding purpose

Terumo Corporation
TV Asahi Holdings Corporation
Japan Tobacco Inc.
Astellas Pharma Inc.

3,861,000
4,030,000
1,000,000
2,284,000

14,922
8,479
3,618
3,348

Hold voting instruction rights for shares in retirement benefit trust
Hold voting instruction rights for shares in retirement benefit trust
Hold voting instruction rights for shares in retirement benefit trust
Hold voting instruction rights for shares in retirement benefit trust(3) Stocks held for pure investment purposes

None

Note: Specified stocks 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.

68

DNP Integrated Report 201869

Board of Directors, Statutory
Auditors and Corporate Officers

2. Compensation Paid to Accounting Auditors
Compensation paid to accounting auditors(As of June 28, 2018)

Fiscal year ended March 2017

Fiscal year ended March 2018

Compensation foraudit certification

Compensation forother services

Compensation for audit
certification

Compensation forother services(¥ million)(¥ million)(¥ million)(¥ million)

The submitting company

96

−

96

−

Consolidated subsidiaries

124

−

122

−

Total

220

−

218

−

Other material compensation details
None

Compensation paid to accounting auditors for services otherthan auditing work provided to the submitting company
None

Determination of compensation for audit services
DNP ʼs compensation for auditing services is determined based on avariety of factors, including the number of expected days for the audit andthe company size.

TetsujiMorinoChairman

Masayoshi
YamadaYoshinari
Kitajima

Yoshitoshi
Kitajima

KoichiTakanami

Masahiko
Wada

Tokuji
Kanda

Senior Managing
DirectorStanding Statutory
AuditorSenior Executive
Corporate Officers

Masahiko Wada

Kazunari Tanaka

Sakae Hikita

Yoshinari Kitajima

Senior Managing
DirectorStanding Statutory
AuditorMasato Koike

Executive Vice President

Tetsuji Morino

Naoki Hoshino

Senior Managing
DirectorStanding Statutory
AuditorTokuji Kanda

Shin-ichi Ikeda*

Ryuji Minemura

Managing Director

Statutory Auditor

Morihiro Muramoto

Satoru Inoue

Makoto Matsuura*Managing Director

Statutory Auditor

Kenji Miya

Mitsuru Iida

Kuniaki Nomura*

Minako Miyama

Yoshitoshi Kitajima
President

Koichi Takanami
Executive Vice President

Masayoshi Yamada

Masato Yamaguchi
Motoharu Kitajima
Takashi Saito

Senior Corporate Officers

Corporate Officers

Toshiki Sugimoto

Kazuhiko Takada

Naohiko Sugimoto

Ryota Chiba

Kiyotaka Nakagawa

Toru Takamatsu

Daiji Suzuki

Satoshi Kubota

Nobuyuki Asaba

Souichiro Nishitani

Mitsuru Tsuchiya

Yoshiki Numano

Hirofumi Hashimoto

Osamu Nakamura

Kazuhiko Sugita

Kazuhisa Kobayashi

Masafumi Kuroyanagi

Toru Miyake

Director

Tadao Tsukada*
Director

Tsukasa Miyajima**Outside directors or auditors

70

DNP Integrated Report 201871

Financial Section

Management ʼs Discussion
and Analysis

Operating Results
Various technologies that
support “P&I innovations”

Business Environment and Overview of Operating
Results for the Fiscal Year Ended March 2018

Net Sales by Segment(Year ended March 31, 2018)

Etching
processing
Precision
engraving
Living spacedesignPackagingdesignPrecision
coating

Photolithography

Microfabrication
Branding

Publishingsolutions

Project
planning
anddesignSales promotion

Bookbinding
processing

Printing

CoatingMedia
conversion
technologies

Molding
Font
technologies

Information
processing

Postprocessing
Laminating
technologies

Polymermaterials
Image
processing andrecognition

Modularization
technologies
Organic-inorganic
hybrids

Materials
development

Information
security
3D imageprocessing

Data analysis
Authenticationand encryption
Big data
analysisAI
Deep learning

Organicsynthesis
technologies

Assessment
and analysis

Databaseanalysis

Pigments andphotosensitive
materials

2018.3
Net sales (¥ million)

Kansei(sensibility)
analysis
Liquid crystalalignment

Computersimulations
Cell culture

Process andmaterial
diagnosis

Process
simulation

Optical design

Biomass plastics
Biocompatible
materials

I oTAssay design
Transfer
processing

Dispersion andcomposition

Text processing

Natural language
processing

Plastic forming

Electron beam(EB) andUV curing

Vacuumdeposition

HologramNanoimprinting

Aseptic filling
processing

Japan ʼs economy continued to gradually recover during the fiscal year ended
March 31, 2018, with employment and income conditions improving as aresult of the economic policies of the Japanese government while capital
expenditures by companies showed signs of picking up. However, theeconomy has still not reached a full-fledged recovery, due partly to a lack ofstrength in consumer spending, overseas economic slowdowns in China andelsewhere, and the impact of higher raw material prices. The printing industry
continued to face a tough business environment, as demand decreased forprinted media due partly to growth in the online advertising market and alongwith this competition also intensified.
In this environment, DNP pursued printing and information (P&I) innovations
that synergize its strengths in printing and information to create new value tosolve social issues both in Japan and overseas, with these efforts primarily
centered around the four growth areas of “ Knowledge and Communication,”“ Food and Healthcare,” “ Lifestyle and Mobility ” and “ Environment andEnergy. DNP also worked to improve earnings by implementing structuralreforms, including the reorganization of business divisions and Group
companies, to bolster business competitiveness.

Brain science¥

1,412,252

2017.3¥

1,410,173¥

72

Information Communication
54.9%

Operating Income by Segment(Year ended March 31, 2018)
Beverages
3.1%

Information Communication
31.0%

Electronics
48.6%

Lifestyle andIndustrial Supplies
17.3%

1,455,916

Gross profit margin (%)

19.9 %

18.9 %

19.4 %

Operating income margin (%)

3.3 %

2.2 %

3.1 %

Ordinary income margin (%)

3.6 %

2.6 %

3.6 %

Net income margin (%)

1.9 %

1.8 %

2.3 %

The DNP Groupʼs total overseas sales for the fiscal year increased ¥24,198
million, or 12.0%, to ¥226,691 million. As a result, overseas sales as apercentage of total sales rose 1.6 percentage points from 14.4% to 16.0%. By
geographic region, sales in the Asian region, including Indonesia and Taiwan,
increased 19.5% to ¥150,794 million, while sales in Other region, which
encompasses the United States and France, declined 0.5% to ¥75,897 million.

Net sales
Operating income
Operating income margin

Beverages
4.0%

Lifestyle andIndustrial Supplies
27.8%

2016.3

Information Communication

CONTENTSElectronics
13.3%¥778,637 million (down 2.8% YoY )¥21,758 million (up 15.2% YoY )2.8% (up 0.4 percentage point)

73

Managementʼs Discussion and Analysis

Information Communication
Publishing Business: Publishing & Media Services

80

Selected Financial Data (unaudited)● Estimated publication sales in Japan ʼs publication industry decreased

82

Consolidated Financial Statements

105

Independent Auditorʼs Reportby 7.7% year on year to ¥1,338.9 billion in the fiscal year through March2018 according to Japan ʼs Research Institute for Publications. Amongthese publications, magazine sales decreased 12.2% to ¥631.7 billion
due to a decline in circulation and an increase in discontinued publications.

DNP ʼs Overseas Sales(¥ billion)
250
216.5

230.2 234.6

226.7
202.5

200
150
100
50
0

14

15

16

17

18

DNP Integrated Report 201873

● DNP worked to create a system to forecast demand by leveraging artificial

intelligence (AI) to analyze bookstore sales and other data and to increase
coordination between book production, distribution and sales. However,sales of books and magazines both decreased and sales in Publishing &Media Services declined from the previous year.

Net sales
Operating income
Operating income margin¥394,308 million (up 1.6% YoY )¥12,127 million (down 16.0% YoY )3.1% (down 0.6 percentage point)

Publishing Business: Education and Publications Distribution

Packaging business● The number of bookstores, which stood at approximately 12,500 as of● Production value in the domestic package printing industry declined 0.6%
year on year in the fiscal year through March 2018 according to Japan ʼs

May 2017, has continued to trend downward at an annual rate of around
3% since 1999 according to statistics from the Japan Authors ʼ Sales
Promotion Center. Meanwhile, the domestic e-book market expandedby16.0% year on year to ¥221.5 billion in calendar year 2017 according
to Japan ʼs Research Institute for Publications.
● DNP ʼs “ honto ” hybrid bookstore network that combines physicalbookstores, online bookstores and e-books posted favorable results. The
library outsourcing business recorded an increase from the previous year
as the number of outsourcing libraries rose by 159 libraries year on year
to 1,365 libraries at the end of January 2018.
However, overall sales decreased year on year due to the impact ofBunkyodo Group Holdings Co., Ltd., which changed from a consolidated
subsidiary to an equity-method affiliate.

Ministry of Economy, Trade and Industry. This decrease reflectedfluctuating sales of seasonal products due to unseasonable weather andintensifying price competition.
● DNP recorded a decrease in sales of film packaging in Japan but posted
increased sales in Southeast Asia. Although sales increased for preform
as a material for use in PET plastic bottles, sales decreased for paper
packaging and PET plastic bottle filling systems and overall sales in the
Packaging business decreased from the previous year.
Living Spaces business● Domestic new housing starts decreased by 2.8% year on year toInformation Innovation Business: Information Security

approximately 940,000 units during the fiscal year through March 2018.
Among these, owner-occupied houses decreased 3.3% while
condominiums declined 3.6%. Apartments and other rental housing
declined 4.0%, reflecting a slowdown in apartment loans, according toJapan ʼs Ministry of Land, Infrastructure, Transport and Tourism.
● DNP expanded sales of environmentally conscious products that use its
proprietary electronic beam (EB) coating technology. Additionally, DNP
focused on providing a wall display system that reduces the burden ofchanging store product displays and a wall refurbishment material
enabling easy remodeling. Sales of Arttec interior and exterior aluminum
panels and of decorative films with the look and feel of wood grains andmetals increased for non-housing applications such as commercial
facilities, offices, automobiles and railway cars. Due to the preceding
factors, overall sales in the Living Spaces business increased from theprevious year.

● Major financial institutions expanded the full outsourcing to otherIndustrial Supplies businessInformation Innovation Business: Marketing● Domestic advertising demand in the fiscal year through March 2018

trended at virtually the same level as in the previous year according toJapan ʼs Ministry of Economy, Trade and Industry. Advertising flyers, direct
mail advertising and other paper media slumped, but Internet advertisingsustained double-digit growth.
● Although catalog and pamphlet sales decreased, DNP recorded an increasein point-of-purchase (POP) promotional materials and other sales tools forthe retail industry in addition to an increase in software and services suchas various solutions for sales campaign offices and e-commerce sites, andas a result, overall sales in this business increased from the previous year.

companies of production and mailing of various types of notifications.
Additionally, the issuance of various types of smart cards increased as
the establishment of electronic payment platforms progressed toward therealization of a cashless society.
● DNP recorded favorable results for smart cards for financial institutions andelectronic money as well as for its IPS (Information Processing Services),and sales in this business increased from the previous fiscal year.
Imaging Communication Business● Although the volume of photo printing is declining worldwide, the market

for dye-sublimation thermal transfer printing media (color ink ribbons andreceiver paper) continued to expand as a result of demand shifting fromsilver halide printing. In particular, there is rising demand for commercial
uses such as printing of certificates and photo printing at events andsightseeing spots in Southeast Asia, the Middle East and China.
● In Japan, there is a growing customer base in the photobook market, and in
the year through March 2019, the market is forecast to surpass 10 million
photobooks annually according to the Japan Photo Imaging Association.
● DNP worked to provide high value-added services to enjoy photo printing
at events, promotions and other activities. These services include“ ShaGoo! ” automated commemorative photo booths and Imaging Mall asa cloud-based image sales solution. Sales of dye-sublimation thermaltransfer printing media for photo printers increased in Southeast Asia andEurope but declined in Japan and North America. Accordingly, overall sales
in the Imaging Communication business decreased from the previous year.
74

Lifestyle and Industrial Supplies● Global demand continues to expand for photovoltaic module components

and pouches for lithium-ion batteries along with the introduction andexpansion of renewable energy and the spread of eco-friendly cars.
● DNP ʼs pouches for lithium-ion batteries have captured a high global market
share leveraging technologies for laminates that combine multiple film
sheets and for precision processing. Sales of these products werefavorable for both mobile and automotive applications. Overseas sales ofphotovoltaic module components also increased and overall sales in the
Industrial Supplies business increased from the previous year.

Electronics
Net sales
Operating income
Operating income margin¥188,755 million (up 11.4% YoY )¥34,100 million (up 106.9% YoY )18.1% (up 8.4 percentage points)

Display Components business● Flexible organic light-emitting diode (OLED) panels for smartphones thatincorporate film substrates recorded sharp growth, with panel shipments
more than tripling from 40 million panels in 2016 to 125 million panels in2017. Additionally, large OLED panels for TVs also posted growth and thenumber of panels shipped in 2017 increased 102% from the previous year
to 1.8 million panels. In contrast, demand for LCD TVs was sluggish due to
DNP Integrated Report 201875

competition with OLEDs, and the number of global unit shipments in 2017
decreased 2.6% from the previous fiscal year to 217 million units.
● DNP recorded increased sales of optical films for use in OLED TVs alongwith the spread of these displays while sales were firm for use in LCD TVs
due to larger screen sizes. Sales of metals masks for manufacturing OLED
displays also increased for mobile device applications. LCD color filter
sales decreased for both small- and medium-sized filters used insmartphones and large filters used in TVs. However, overall sales in the
Display Components business increased from the previous year.

during the fiscal year was limited to just around 30%.
Selling, general and administrative expenses totaled ¥234,218 million in
the fiscal year under review, down 0.6%, or ¥1,380 million, from the previous
year. Selling, general and administrative expenses equated to 16.6% of net
sales, down 0.1 percentage point from the previous year.
As a result, operating income totaled ¥46,372 million in the fiscal year underreview, up 47.6%, or ¥14,961 million, from the previous year. The operating
income margin was 3.3%, up 1.1 percentage points from 2.2% in the previous
year.

Electric Devices business● Supported by robust demand for DRAMs and NAND flash memories, theglobal semiconductor market in calendar 2017 grew by 21.6% over theprevious year to U.S.$412.2 billion, surpassing the record high set in theprevious year. Amid expanding applications for semiconductor products
such as for the Internet of Things (IoT ), AI, virtual currency mining andautonomous driving systems, sales of semiconductor manufacturing
equipment also grew, with the value of total sales in calendar year 2017
increasing 37% from the previous year to a record-high U.S.$56.6 billion.
Additionally, sales of semiconductor photomasks also expanded, led by
micro-products for less than 45nm node, and total sales in calendar year2017 increased 13% from the previous year to U.S.$3.7 billion.
● DNP recorded an increase in semiconductor photomask sales amid
high growth in the overall semiconductor market, supported by anincrease in embedded memory capacity in smartphones and other devices
and by the spread of IoT equipment. As a result, overall Electric Devices
sales increased.

Beverages businessNet sales
Operating income
Operating income margin

Gross Profit Margin
(%)
25
20

18.8

19.1

19.4

18.9

19.9

15
10
5
0

14

15

16

17

(%)
20
15.4

15.8

16.3

16.7

16.6

14

15

16

17

18

15

10

5

76

● The soft drink industry continued to face a tough market environment ascompetition for market share among beverage makers intensified throughsales promotions and price competition. The Beverages business bolsteredsales of new products, including foods for specified health use and foods
with function claims, and worked to expand shares in existing markets andacquire new customers by conducting active sales promotions based onarea marketing in the vending machine business. As a result, sales
increased for the mainstay Coca-Cola brand and for unsweetened tea
drinks that include Ayataka . However, sales of mineral water and sales togroup bottlers outside the Hokkaido region decreased.

18

SGA Expenses to Net Sales

0¥56,061 million (down 1.0% YoY )¥2,244 million (down 7.6% YoY )4.0% (down 0.3 percentage point)

Operating Income Margin
(%)
4

3.5

3.3

3.3

3.1

3

2

2.2

1

Nonoperating Income (Expenses) andExtraordinary Income (Losses)
Nonoperating income totaled ¥13,825 million in the fiscal year under review,up 1.1%, or ¥147 million, from the previous year. Nonoperating expenses
totaled ¥9,226 million, up 10.5%, or ¥877 million. As a result, net
nonoperating income totaled ¥4,599 million, down from ¥5,329 million in theprevious year.
Ordinary income totaled ¥50,971 million, up 38.7%, or ¥14,231 million,
from the previous year.
Extraordinary income totaled ¥59,312 million, up ¥9,681 million from theprevious year, as gain on sale of fixed assets increased to ¥13,022 million
from ¥974 million in the previous year due to the sale of the site of the former
Akabane Plant. Extraordinary losses totaled ¥64,887 million, up ¥18,346
million from the previous year, as repair costs and repair reserve provisions
increased to ¥53,500 million from ¥37,738 million in the previous year. As aresult, net extraordinary loss totaled ¥5,575 million compared with net
extraordinary income of ¥3,090 million in the previous year.
As a result of the above, income before income taxes and non-controllinginterests totaled ¥45,396 million, up 14.0%, or ¥5,565 million, from theprevious year.

0

14

15

2.8

2.7

16

17

18

ROE
(%)
4
3.2

3

Net Income Attributable to Parent Company
Shareholders
Net income attributable to parent company shareholders totaled ¥27,501 million
in the fiscal year under review, up 9.0%, or ¥2,275 million, from the previous
year. Net income per share was ¥90.77, up ¥9.2 from the previous year.
* DNP implemented a share consolidation in which two shares of common stock were consolidated into one shareeffective October 1, 2017. Accordingly, DNP has estimated net income per share and diluted net income per shareassuming this share consolidation was implemented at the start of the previous consolidated fiscal year.

2.6
2.5

2

1

0

14

15

16

17

18

Cost of Sales/Selling, General and
Administrative Expenses/Operating Income
The cost of sales totaled ¥1,131,662 million, down 1.0%, or ¥11,502 million,
from the previous year. The gross profit margin was 19.9%, up 1.0 percentage
point from 18.9% in the previous year.
The Domestic Standard Trading Price for naphtha (crude gasoline), a basic
raw material for synthetic resin, trended upward, reflecting continued highcrude oil prices from the beginning of the period. This was accompanied byincreased prices for films, resins and other petrochemical products while theprice of printing paper also rose due to soaring raw material prices and fuelprices. As a result of these factors, the impact of higher raw material prices
was ¥3.4 billion in the current fiscal year, significantly surpassing ¥500
million in the previous year. Although DNP negotiated with customers to passon the impact of higher raw material prices, the price pass-through ratio
DNP Integrated Report 201877

Balance Sheet

Liquidity and Capital Resources

2018.3
Total assets (¥ million)

Cash Flow2018.3
Cash flow fromoperating activities¥

48,4572017.3¥

71,9452016.3¥72,629Cash flow frominvesting activities¥

23,075¥14,012¥(60,883)

Free cash flow¥

71,532¥

85,957¥

11,746(¥ million)

Interest-bearing Debt toCash Flow Ratio(times)
3.5

3.5
3.0

2.6

2.5

2.2

2.4

2.0
1.5

1.5

1.0
0.5
0

14

15

16

18

17

Capital Expenditures andFree Cash Flow(¥ billion)
Capital expenditures
Free cash flow
97.3

100

86.0
61.7

75

71.5

63.5
57.1

55.0

59.6

50
35.2

25
11.7

0

78

14

15

16

17

Regarding consolidated cash flow, net cash provided by operating activities
totaled ¥48,457 million, versus ¥71,945 million in the previous fiscal year,
due mainly to ¥45,396 million in income before income taxes andnon-controlling interests and ¥61,070 million in depreciation.
Net cash provided by investing activities totaled ¥23,075 million, versus¥14,012 million in the previous year, due mainly to ¥54,617 million inproceeds from sales of investment securities and ¥32,501 million in paymentsfor purchases of property, plant and equipment. Net cash used in financing
activities totaled ¥42,771 million, versus ¥45,223 million in the previous
year, due mainly to ¥19,524 million in dividends paid and ¥15,186 million in
payments for purchases of treasury stock.
As a result of these activities, cash and cash equivalents at the end of
the fiscal year totaled ¥244,937 million, up ¥30,373 million, from theprevious year.
Free cash flow, which is total net cash provided by operating activities andinvesting activities, was ¥71,532 million, down ¥14,425 million from ¥85,957
million in the previous year.

18

Capital Expenditures; Depreciation; Research andDevelopment Expenditures, etc.
Capital expenditures this fiscal year consisted mainly of streamlining
investment and totaled ¥59.6 billion, up 4.3%, or ¥2.5 billion, from theprevious year. By segment, capital expenditures in the Information
Communication segment were ¥27.3 billion, down ¥1.4 billion from theprevious year and accounting for 46% of total capital expenditures. The
Lifestyle and Industrial Supplies segment was ¥15.7 billion, up ¥3.1 billion
and accounting for 26%. The Electronics segment was ¥10.6 billion, up ¥2.9
billion and accounting for 18%. The Beverages segment was ¥2.3 billion,
down ¥1.5 billion and accounting for 4%. Adjustment was ¥3.6 billion, down
¥0.6 billion and accounting for 6%.
Depreciation totaled ¥61.1 billion, down 0.6%, or ¥0.4 billion, from theprevious year. By segment, depreciation in the Information Communication
segment was ¥27.0 billion, down ¥0.7 billion from the previous year andaccounting for 44% of total depreciation. The Lifestyle and Industrial Supplies
segment was ¥16.5 billion, down ¥0.5 billion from the previous year andaccounting for 27%. The Electronics segment was ¥12.2 billion, up ¥0.2
billion and accounting for 20%. The Beverages segment was ¥2.6 billion, up¥0.2 billion and accounting for 4%. Adjustment was ¥2.8 billion, up ¥0.4
billion and accounting for 5%.
Research and development expenditures totaled ¥33.2 billion, surpassing
by 5.8% ¥31.4 billion in the previous year.

¥

2017.3

1,810,499¥

1,741,904

2016.3
¥

182 %

178 %

170 %

Working capital/net sales (%)

26 %

23 %

20 %

Debt-to-equity ratio (%)

16 %

16 %

19 %

¥

3,493.79¥

3,361.10¥

DNP ʼs total assets at the end of this fiscal year amounted to ¥1,810,499
million, up 3.9%, or ¥68,595 million, from the previous year.
Among current assets, cash and cash equivalents and time deposits
totaled ¥247,382 million, up 14.8%, or ¥31,927 million, from the previous
year. Trade receivables totaled ¥354,241 million, up 3.6%, or ¥12,436
million. Inventories of merchandise and finished products, work in process,raw materials and supplies totaled ¥137,548 million, up 0.2%, or ¥235
million. As a result, current assets totaled ¥799,754 million, up 8.5%,
or ¥62,613 million.
Among fixed assets, net property, plant and equipment totaled ¥474,398
million, down 4.6%, or ¥22,769 million, from the previous year. Intangible
fixed assets totaled ¥32,853 million, down 4.6%, or ¥1,583 million.
Investments and other assets totaled ¥503,493 million, up 6.4%, or ¥30,333
million. As a result, fixed assets totaled ¥1,010,745 million, up 0.6%, or¥5,981 million.
Current liabilities totaled ¥438,549 million, up 5.6%, or ¥23,350 million,
from the previous year. Long-term liabilities totaled ¥269,399 million, up
9.8%, or ¥23,980 million. As a result, total liabilities amounted to ¥707,948
million, up 7.2%, or ¥47,330 million.
Additionally, net assets totaled ¥1,102,551 million, up 2.0%, or ¥21,265
million.
As of March 31, 2018, the number of treasury shares totaled 22,676,600
or 6.99% of total shares outstanding of 324,240,346 shares. Total shares
decreased by 339,240,347 shares from the previous year, reflecting a decreaseof 324,240,347 shares due to a share consolidation and a decrease of
15,000,000 shares from the cancellation of treasury shares. The total numberof treasury shares decreased by 25,610,510 shares from the previous year.

Outstanding
sharesTreasurystock

Commonstock
Common
stock

200

178

182

16

17

18

175

175

170

14

15

150

1,618.66

Note: DNP implemented a share consolidation in which two shares of common stock were consolidated into one shareeffective October 1, 2017. Accordingly, DNP has estimated net income per share and diluted net income pershare assuming this share consolidation was implemented at the start of the previous consolidated fiscal year.

Stock type(%)

1,718,636

Current ratio (%)

Net assets per share (¥)

Current Ratio

Number ofshares at the
beginning of
the year ended
March 2018

Increase in
number ofshares during
the year ended
March 2018

Decrease in
number ofshares during
the year ended
March 2018

Number ofshares at theend of theyear ended
March 2018

663,480,693―

339,240,347

324,240,346

48,287,110

12,062,315

37,672,825

22,676,600

100

50

0

Equity Ratio
(%)
80

60

59.2

59.6

59.2

59.4

58.2

14

15

16

17

18

40

20

0

(Shares)
Notes:
1.The number of treasury shares of common stock increased by 12,062,315 shares, with the following breakdown.
(Before the share consolidation)
・Increase from repurchase of odd-lot shares: 20,759 shares・Increase from acquisition of treasury shares by resolution of the Board of Directors: 12,037,000 shares(At the end of and after the share acquisition)
・Increase from repurchase of fractional shares resulting from the share consolidation: 1,492 shares・Increase from repurchase of odd-lot shares: 3,064 shares
2. The number of treasury shares of common stock decreased by 37,672,825 shares, with the following breakdown.
(Before the share consolidation)
・Decrease due to sale of odd-lot shares: 305 shares・Decrease due to the cancellation of treasury shares by resolution of the Board of Directors: 15,000,000 shares(At the time of and after the share consolidation)
・Decrease due to a share consolidation: 22,672,282 shares・Decrease due to sale of odd-lot shares: 238 shares

DNP Integrated Report 201879

Selected Financial Data (unaudited)
Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

Statements of Operations Data (¥ million)
Net sales¥

1,412,252¥

1,410,173¥

1,455,916¥

1,462,118¥

1,448,550¥

1,446,607¥

1,507,228¥

1,589,373¥

1,583,383¥

1,584,844

Cost of sales

1,131,662

1,143,164

1,173,203

1,182,954

1,176,077

1,186,558

1,246,878

1,287,581

1,286,682

1,324,522

Gross profit

280,590

267,009282,713279,164

272,473

260,049

260,350

301,792

296,701

260,322

Selling, general and administrative expenses

234,218

235,598

237,241

230,990

222,374

224,269

226,335

233,973

230,187

214,145

Operating income

46,372

31,41145,472

48,17450,09935,78034,01567,81966,514

46,177

Ordinary income

50,971

36,74052,65153,75953,28540,31836,84362,786

68,84147,390

Income (loss) before income taxes and non-controlling interests

45,396

39,831

54,84151,062

48,60835,152

2,673

52,69649,496(27,842)

Net income (loss) attributable to parent company shareholders

27,501

25,22633,58826,92425,642

19,218(16,356)

25,03323,278(20,933)

Balance Sheet Data (¥ million)
Total assets¥

1,810,499¥

1,741,904¥

1,718,636¥

1,809,462¥

1,574,754¥

1,578,976¥

1,608,806¥

1,649,784¥

1,618,854¥

1,536,557

Property, plant and equipment ̶ net

474,398

497,167

513,157

512,791

528,538

538,455

579,567

614,827

616,848

604,904

Long-term liabilities

269,399

245,419

232,080

249,965

179,946

184,136

251,414249,575

190,045

126,671

Total liabilities

707,948660,618

655,394

685,370

598,369

641,921694,593

697,343

661,990

596,471

Stockholdersʼ equity

877,797884,829894,752

902,217892,110887,194

888,650

925,702921,775

917,348

1,102,551

1,081,286

1,063,242

1,124,092

976,385

937,055914,213

952,441

956,864

940,086

Total net assets
Other Selected Data (¥ million)
Capital expenditures¥

59,558¥57,085¥97,265¥55,024¥63,465¥88,315¥98,189¥102,173¥

119,063¥

96,156

Depreciation expenses

61,071

61,461

65,31067,03473,45980,20095,82997,977

91,695

106,883

R&D expenditures

33,21031,376

31,82731,74930,82030,82031,69033,14733,85034,112

Common Share Data (¥, shares)
Earnings (loss) per share ̶ primary

¥

90.77

¥

81.57

¥

53.10

¥

41.82

¥

39.82

¥

29.84

¥

(25.39)

¥

38.86

¥

36.13

¥

(32.35)

Earnings (loss) per share ̶ fully diluted

90.71

81.55

53.07

41.44

39.65

29.79

̶

̶

̶

̶

Dividends paid per share

48.00

32.00

32.00

32.00

32.00

32.00

32.00

32.00

32.00

32.00

3,493.79

3,361.10

1,618.66

1,675.63

1,447.96

1,386.86

1,352.71

1,410.44

1,422.34

1,393.91

301,563,746

307,596,791

628,561,116

643,833,079

643,893,863

643,990,364

644,062,928

644,142,530

644,238,930

644,357,076

Book value per share
No. of common shares outstanding (exc. treasury shares)
Financial Ratios (%)
As a percentage of net sales:
Gross profit

19.87 %

18.93 %

19.42 %

19.09 %

18.81 %

17.98 %

17.27 %

18.99 %

18.74 %

16.43 %

Selling, general and administrative expenses

16.58

16.71

16.29

15.80

15.35

15.50

15.02

14.72

14.54

13.51

Operating income

3.28

2.23

3.12

3.29

3.46

2.47

2.26

4.27

4.20

2.91

Income (loss) before income taxes and non-controlling interests

3.21

2.82

3.77

3.49

3.36

2.43

0.18

3.32

3.13

−1.76

Net income (loss) attributable to parent company shareholders

1.95

1.79

2.31

1.84

1.77

1.33

−1.09

1.57

1.47

−1.32

Return on equity

2.63

2.46

3.20

2.67

2.81

2.18

−1.84

2.74

2.57

−2.20

Current ratio

182

178

170

175

175

164

177

177

157

144

D/E ratio

16

16

19

17

20

25

26

25

18

14

Note:
*1. DNP implemented a share consolidation in which two shares of common stock were consolidated into one share effective October 1, 2017. Accordingly, DNP has estimated net income per shareand diluted net income per share assuming this share consolidation was implemented at the start of the previous consolidated fiscal year.

80*2. Cash dividends per share of ¥48.00 for the fiscal year through March 2018 is the combined total of interim cash dividends per share of ¥16.00 and year-end cash dividends per share of¥32.00. Because DNP implemented a share consolidation in which two shares of common stock were consolidated into one share effective October 1, 2017, interim cash dividends per share of¥16.00 is the amount prior to the share consolidation and year-end cash dividends per share of ¥32.00 is the amount after the share consolidation.

DNP Integrated Report 201881

Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETS
Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
March 31, 2018 and 2017
Thousands of
U.S. dollars (Note 3)

Millions of yen

2018

Assets2018

2017

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

Thousands of
U.S. dollars (Note 3)

Millions of yen

2018

Liabilities and Net Assets

2018

2017

Current liabilities:¥

244,937¥

214,564$

2,310,726

2,445

891

23,066

Trade receivables (Notes 10 and 16)354,241

341,805

3,341,896

Allowance for doubtful receivables(1,691)(1,628)(15,953)

Inventories (Note 6)

137,548

137,313

1,297,623

Prepaid expenses and other current assets (Notes 5, 10 and 13)

62,27444,195

587,491

799,754

737,140

7,544,849

Time deposits (Note 16)

Total current assets

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

44,795¥43,036$

422,594

6,583

7,800

62,104

Trade payables (Notes 10 and 16)

248,993

247,562

2,348,991

Accrued expenses (Note 10)

39,71340,713374,651

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

Income taxes payable (Note 13)

10,042

7,153

94,736

Reserve for repair

29,58018,680279,057

Other current liabilities (Notes 7, 10 and 13)
Total current liabilities

58,84350,255555,122438,549

415,199

4,137,255

118,727

118,299

1,120,066

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

58,91654,217555,811

Investment securities (Notes 5 and 16)

344,956

326,950

3,254,302

Other (Note 10 and 16)
Total investments and advances

486

4,670

4,585

404,358

385,837

3,814,698

Long-term liabilities:
Long-term debt (Notes 7 and 16)
Net defined benefit liability (Note 8)

35,21735,149332,236

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

115,455

91,971

1,089,198

269,399

245,419

2,541,500

Total long-term liabilities
Property, plant and equipment, at cost (Note 7):Land

151,521155,115

1,429,444

Buildings and structures

566,446

567,662

5,343,830

Machinery and equipment

849,993873,636

8,018,802

Leased assets

26,96824,324

254,415

Stockholdersʼ equity
Common stock -Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment

7,160

18,32667,547

1,602,088

1,639,063

15,114,038(1,127,690)(1,141,896)(10,638,585)

474,398

497,167

4,475,453

Other assets
Net defined benefit asset (Note 8)

67,83957,089639,991

Other (Notes 7 and 13)

64,15064,671

605,188

Total other assets

131,989

121,760

1,245,179

1,741,904$ 17,080,179

Total assets¥

1,810,499¥

Contingent liabilities (Note 18)
Net assets

Authorized: 745,000,000 shares;
114,464

114,464

1,079,849

Capital surplus (Note 9)

144,264

144,280

1,360,981

Retained earnings (Note 9)

681,977695,721

6,433,745

Treasury stock, at cost 22,676,600 shares in 2018 and24,143,555 shares in 2017 (Note 9)(62,908)(69,636)(593,471)

877,797884,829

8,281,104

168,156

149,575

1,586,377

Issued: 324,240,346 shares;

Total stockholdersʼ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Net deferred gains (losses) on hedges

(4)

(3)

(38)

Foreign currency translation adjustments

1,410(2,220)13,302Remeasurements of defined benefit plans (Note 8)

6,242

1,683

58,887

Total accumulated other comprehensive income

175,804

149,035

1,658,528

48,95047,422

461,792

1,102,551

1,081,286

10,401,424

1,741,904$ 17,080,179

Non-controlling interests
Total net assets
Total liabilities and net assets¥

1,810,499¥(Notes) The Company consolidated its common shares at a ratio of two shares to one share on the effective date of October 1, 2017.
Accordingly, the Treasury stock is calculated on the assumption that the consolidation of shares is conducted at the beginning of the preceding fiscal year.
The accompanying notes are an integral part of these consolidated financial statements.

82

DNP Integrated Report 2018

83

CONSOLIDATED STATEMENTS OF INCOMECONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2018 and 2017

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2018 and 2017
Thousands of
U.S. dollars (Note 3)

Millions of yen

2018
Net sales (Note 19)¥

1,412,252

¥

2018

2018

2017
1,410,173$ 13,323,132

Net income

1,131,662

1,143,164

10,676,057

Gross profit

280,590

267,0092,647,075

Valuation difference on available-for-sale securities

Operating income

18,291

26,073

172,556

3

(1)

28

31,411

437,472

Foreign currency translation adjustments

1,912(3,874)

18,038Remeasurements of defined benefit plans

4,115

6,892

38,821

Share of other comprehensive income in associates accounted forusing the equity method

2,613(3,019)24,651

26,93426,071254,094

56,40453,335532,113Interest expenses(2,212)(2,202)(20,868)

Equity in earnings of affiliates

3,007

3,015

28,368Foreign exchange transaction gain (loss)(1,416)(585)(13,359)

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

9,353(4,906)

88,236

Net gain on sales of investment securities

45,687

46,205431,009

(758)

(162)

(7,151)(5,952)(896)(56,151)

0(5,793)0

Repair reserve provisions(53,500)(31,945)(504,717)

Other(1,026)584(9,679)

(976)

8,420

(9,208)45,396

39,831

428,264

Total other comprehensive income
Comprehensive income
Attributable to :Parent company shareholders

Current

15,73913,541

148,481Deferred

187

(974)

1,764

15,926

12,567150,245

29,470¥27,264$

278,019

Net income attributable to non-controlling shareholders

1,969

2,038

18,576

Net income attributable to parent company shareholders

27,501

25,226259,443¥

54,269¥2,135

Non-controlling shareholders

51,596

511,972
20,141

U.S. dollars (Note 3)

2018
Net assets per common share

$

1,739

Yen

2018

2017

¥

3,493.79¥

3,361.10

$

32.96

¥

90.77

¥

81.57

$

0.86

¥

90.71

¥

81.55

$

0.86

Net income per common shareprimary

Income taxes (Note 13):¥

278,019

46,372

55,104

Net income$

2,209,603

5,105

Income before income taxes and non-controlling interests

27,264

235,598

5,841

Repair costs¥

234,218

Interest and dividends income

Impairment loss on fixed assets (Note 14)

29,470Net deferred gains (losses) on hedges

Other income (expenses) (Note 12):

Loss on devaluation of investment securities

¥

2018

2017

Other comprehensive income

Cost of sales (Notes 19)
Selling, general and administrative expenses (Notes 11 and 19)

Thousands of
U.S. dollars (Note 3)

Millions of yen

Net income per common share
fully diluted(Notes) The Company consolidated its common shares at a ratio of two shares to one share on the effective date of October 1, 2017.
Accordingly, the Book value per share, the Earnings per share - primary and the Earnings per share - fully diluted are calculatedon the assumption that the consolidation of shares is conducted at the beginning of the preceding fiscal year.
The accompanying notes are an integral part of these consolidated financial statements.

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

84

DNP Integrated Report 201885

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2018 and 2017

Millions of yen

Stockholders' equity
Number ofshares issued(in thousands)

Balance at April 1,2016
Cumulative effects of changes in accouting policies
Adjusted balance at April 1,2016
Changes of items during the perio
Net income attributable to parent company shareholders
Cash dividends paid
Change of scope of consolidation
Purchases of treasury stock
Disposal of treasury stock
Retirement 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 share acquisition rights
Changes in non-controlling interests
Other
Total changes of items during the period
Balance at March 31, 2017
Changes of items during the period
Net income attributable to parent company shareholders
Cash dividends paid
Change of scope of consolidation
Purchases of treasury stock
Disposal of treasury stock
Retirement 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 share acquisition rights
Changes in non-controlling interests
Decrease due to a share consolidation
Other
Total changes of items during the period
Balance at March 31,2018

680,480

Commonstock¥

Accumulated other comprehensive income

Capitalsurplus¥Treasurystock,
at costRetainedearnings

680,480

114,464

144,283

717,03027
717,057(17,000)---(17,000)
663,480

114,464(3)(3)
144,280¥

114,464¥

144,283¥¥

Valuationdifference on
available-for-salesecurities¥¥

123,478(7)

Remeasurementsof defined
benefit plans

Stock acquisitionrights¥¥¥123,478

(7)

3,051

(3,850)16

25,226(19,919)(78)(26,565)-(15,174)
26,565-26,097
-

-

-

-

-

-

4
-

(5,271)
-

5,533

-

(21,336)
695,721(2)
11,389(69,636)

26,097
149,575

4(3)(5,271)(2,220)

5,533
1,683

(16)
(16)
-

¥

¥

3,051

¥

(3,850)¥16

Non-controllinginterests(81,025)¥¥

Foreign currencytranslation
adjustments

45,802
1
45,803¥(81,025)

Net deferredgains (losses)on hedges

¥

¥

1,619
1,619
47,422(15,000)---

27,501(19,511)30(0)(21,764)-(15,037)
1
21,764-

18,581
-

-

-

-

-

-

(1)
-

3,630
-

4,559

-

(324,240)(339,240)
324,240

-

(16)

-

-

-

-

-

-

-

1,528

114,464(16)
144,264(13,744)
681,977

6,728(62,908)

18,581
168,156

(1)
(4)

3,630
1,410

4,559
6,242

-

1,528
48,950

¥

¥

¥

¥

¥

¥

¥

¥

¥

¥

Thousands of U.S. dollars (Note 3)

Stockholders' equity
Number ofshares issued(in thousands)

Balance at March 31,2017
Changes of items during the period
Net income attributable to parent company shareholders
Cash dividends paid
Change of scope of consolidation
Purchases of treasury stock
Disposal of treasury stock
Retirement 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 share acquisition rights
Changes in non-controlling interests
Decrease due to a share consolidation
Other
Total changes of items during the period
Balance at March 31,2018
86

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

663,480(15,000)(324,240)(339,240)
324,240

Commonstock$$

Accumulated other comprehensive income

Capitalsurplus1,079,849$

Treasurystock,
at costRetainedearnings

1,361,132$

6,563,406$(656,943)

Valuationdifference on
available-for-salesecurities$

1,411,085

Net deferredgains (losses)on hedges$(28)

Foreign currencytranslation
adjustments

Remeasurementsof defined
benefit plans

Stock acquisitionrights$$$(20,943)

15,877-

Non-controllinginterests$

447,377-(151)

259,443(184,066)283(0)(205,321)-(141,858)9205,321-

175,292-(10)-

34,245-43,010----14,415

1,079,849(151)
1,360,981(129,661)
6,433,745

63,472(593,471)

175,292
1,586,377

(10)
(38)

34,245
13,30243,01058,887-

14,415
461,792

$

$

$

$

$

$

$

$

$

DNP Integrated Report 201887

CONSOLIDATED STATEMENTS OF CASH FLOWS
Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2018 and 2017
Thousands of
U.S. dollars (Note 3)

Millions of yen

2018

2018

2017

2018

Cash flows from operating activities:

Thousands of
U.S. dollars (Note 3)

Millions of yen

2018

2017

Cash flows from financing activities:
Net increase (decrease) in short-term bank loans

2,258(6,961)

21,302Adjustments to reconcile income before income taxes

Proceeds from long-term debt

2,690

6,680

25,377and non-controlling interests to net cash provided by operating

Repayments of long-term debt

(4,077)(6,983)(38,462)

activities:

Proceeds from issuance of debentures

1,225

3,933

11,557

(240)

(555)

(2,264)

Income before income taxes and non-controlling interests¥

45,396

Depreciation

61,070

Impairment loss on fixed assets
Allowance for doubtful receivables (net)¥39,831$

428,264

61,461

576,132

Payments for redemption of debentures

5,952

896

56,151

Interest paid

(2,213)(2,209)(20,877)(302)(1,560)(2,849)Dividends paid

(19,524)(19,919)(184,189)

Net defined benefit asset (net)(5,781)(1,537)(54,538)

Dividends paid to non-controlling shareholders

Net defined benefit liability (net)

2,005

1,242

18,915

Payments for purchases of treasury stocks

Equity in earnings of affiliates(3,007)(3,015)(28,368)

Amortization of goodwill

2,306

2,317

21,755Interest and dividends income(5,841)(5,105)(55,104)

Interest expenses

2,212

2,202

20,868(45,687)(46,205)(431,009)

758

162

7,151

(9,302)

4,970(87,755)

Net loss (gain) on sales of investment securities
Loss on devaluation of investment securities
Net loss (gain) on sale or disposal of property, plant and equipment
Repair costs
Repair reserve provisions

-

5,793

-

53,50031,945504,717

Changes in assets and liabilities(17,606)

4,444(166,094)

Inventories

(875)

3,257

(8,255)Trade payables

5,899

(99)

55,651

Trade receivables

6,050

6,909

57,07596,747

107,908

912,707

Payments for repair costs(35,056)(23,149)(330,716)

Extra retirement payments

(49)

(104)

(462)

Payments of income taxes(13,185)(12,710)(124,387)

48,457

71,945457,142

Other assets and liabilities
Sub-total

Net cash provided by operating activities

(393)

(338)

(3,708)(15,168)(15,182)(143,094)

Payments for purchase of stock in subsidiaries not resulting
in a change in the scope of consolidation

(226)

-

(2,133)

Other financing(7,103)(3,689)(67,009)(42,771)(45,223)(403,500)

Effect of exchange rate changes on cash and cash equivalents

Net cash used in financing activities

1,428(1,702)

13,472

Net increase (decrease) in cash and cash equivalents

30,18939,032284,802

Cash and cash equivalents at beginning of year

214,564

175,5132,024,189

-

19

-

184

-

1,735

Increase in cash and cash equivalents resulting fromchange of scope of consolidation
Increase in cash and cash equivalents
resulting from merger with unconsolidated subsidiaries
Cash and cash equivalents at end of year¥

244,937¥

214,564$

2,310,726

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

Cash flows from investing activities:
Net decrease (increase) in time deposits(1,547)

241(14,594)

Payments for purchases of property, plant and equipment(32,501)(50,031)(306,613)

Proceeds from sales of property, plant and equipment

19,644

4,991

185,321

Payments for purchases of investment securities(1,234)(692)(11,642)

Proceeds from sales of investment securities

54,61760,878515,255

Payments for purchases of intangible assets(10,483)(11,213)(98,896)

Payments for sales of subsidiaries' shares, resulting in consolidation scope change

(855)

-

(8,066)

Proceeds from sales of subsidiaries' shares, resulting in consolidation scope change

-

1,289

-

Interest and dividends received
Other investing
Net cash provided by investing activities

88

8,256

7,953

77,887(12,822)596(120,964)

23,07514,012

217,688

DNP Integrated Report 201889

Notes To Consolidated
Financial Statements
Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries March 31, 2018 and 2017

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 andprepare their financial statements in conformity with accounting principles and practices generally accepted in Japan ( “Japanese GA AP ” ), andits foreign subsidiaries in conformity with the Company ʼs group accounting policies based on International Financial Reporting Standards( “ IFRS ” ) or accounting principles generally accepted in the United States of America ( “ US GA AP ” ).
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 2017 financial statements to conform with current classifications. In addition, the notes
to the consolidated financial statements include additional information which is not required for disclosure under accounting principles andpractices generally accepted in Japan.
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 105 consolidated subsidiaries. Some subsidiaries areconsolidated with their fiscal year ends that differ from that of the Company. Significant transactions that took place between their fiscal year
ends and the Company ʼs 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 isjudged to be other than 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
and are amortized over a period mainly for 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 (or 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 in effect at the balance sheet date, except for common
stock and capital surplus, which are translated at historical rates. Revenue and expense accounts are translated at the average exchange rates
during the year. The resulting translation adjustments are presented as “ foreign currency translation adjustments ” and “ non-controllinginterests ” as reported in a separate component of accumulated other comprehensive income 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 insignificant risk of changes in value because of changes ininterest rates.
Inventories
Inventories are stated at cost which 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-salesecurities, net of applicable taxes, are reported in a separate component of accumulated other comprehensive income in the consolidatedbalance sheets.
Non-marketable securities are stated at cost determined by the average method. For other than temporary declines in fair value, investment
securities are 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 tobuildings and structures acquired on or after April 1, 2016 are computed by the straight-line method.
Assets with an acquisition cost of ¥100,000 ($943) or more but less than ¥200,000 ($1,887) 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 equipment90

3 to 50 years
2 to 13 years

Leased assets
Lease assets with transfer of ownership are depreciated using the same depreciation method applied to owned fixed assets.
Finance leases which do not transfer ownership are capitalized. Depreciation for leased assets is computed on a straight-line basis over thelease period with a residual value of zero.
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 are amortized by the straight-line method over five years.
Impairment of fixed assets
The Company and its subsidiaries review fixed assets for impairment whenever events or changes in circumstance indicate the carrying
amount of an asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or asset
group exceeds 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, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling priceat disposition.
Employeesʼ retirement benefits
The Company and domestic significant consolidated subsidiaries applied the accounting standard for employees ʼ retirement benefits. Under
the accounting standard, accrued pension and liability for employees ʼ retirement benefits has been provided based on the estimated amounts
of projected pension and severance obligation and fair value of plan assets at the end of the fiscal year. Benefit formula basis is applied forthe 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 6 years) of the eligible employees. Actuarial gains and losses havebeen amortized from the following fiscal year by the declining-balance method over the periods within the average remaining service periods(primarily 9 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,
interest rate swaps and currency swaps to manage the risk arising from fluctuation in foreign currency exchange rate and interest 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 are used for hedging
purposes.
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 or currency swap contracts meet certain hedging criteria, the hedged items are stated by
the contracted rates ( “ alternative method ” ). In addition, if interest rate swap contracts meet certain hedging criteria, the net amount to be
paid or received under the interest rate swap contracts is added to or deducted from interest on the assets or liabilities for which the interest
rate swap contracts were executed ("exceptional accrual method").
Net assets and income per common share
Net assets per common share were computed based on the number of shares outstanding after deducting treasury stock at March 31, 2018and 2017, respectively.
Net income per share was computed based on the average number of shares of common stock outstanding after deducting treasury stocks
during each year. Necessary adjustments were made on the net income or the number of shares for diluted net income per share in order toreflect dilutive effects.
Reserve for repair(Basis for recording significant allowances)
The reserve for repair is based on a rational estimate of the amount of repair costs that will be required in the future to repair defects for someproducts.
(Changes in accounting estimates)
The Company previously recorded reserve for repair to cover the expected required repair costs for defects in some products; however
because it was able to obtain new and more accurate information about the products subject to repair, it has changed its estimate in the fiscal
year ended March 31, 2018.
As a result, income before income taxes and non-controlling interests decreased by ¥53,500 million ($504,717 thousand) in the fiscal year
ended March 31, 2018.

DNP Integrated Report 201891

3. Basis of Translating Financial Statements
The consolidated financial statements are expressed in Japanese yen in accordance with accounting principles generally accepted in Japan.
The Japanese yen amounts have been translated into U.S. dollar amounts, solely for the convenience of the readers, at the rate of ¥106=U.S.
$1, the approximate exchange rate on the Tokyo Foreign Exchange Market at March 31, 2018. 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.

The proceeds from sales of available-for-sale securities for the years ended March 31, 2018 and 2017 were ¥53,180 million ($501,698
thousand) and ¥59,966 million, respectively. The gross realized gains on these sales for the years ended March 31, 2018 and 2017 were¥44,964 million ($424,189 thousand) and ¥44,915 million, respectively, and the gross realized losses on these sales for the years ended
March 31, 2018 and 2017 were ¥68 million ($642 thousand) and ¥979 million, respectively.
The redemption schedules for securities with maturities at March 31, 2018 and 2017 were as follows:
Millions of yen

4. Cash and Cash Equivalents

Thousands of
U.S. dollars (Note 3)

Millions of yen

2018
Cash and deposits (excluding time deposits with a maturity over three months)¥

Due in one
year or lessMarch 31, 2018

Cash and cash equivalents as of March 31, 2018 and 2017 were comprised of the following:

2018

2017

244,937¥

214,564$

Corporate bonds¥

Over five years

¥

¥

200

10,000

Others¥2,310,726-

Due after one year
through five years

10,000

80

¥

200

¥

80

Thousands of U.S.dollars (Note 3)

5. Marketable Securities and Investment Securities
Corporate bonds

Carrying amount

Others¥200

Fair value¥$$

Difference

200

¥

-

Due after one year
through five years

Over five years

$

$

1,887

94,340

OthersMillions of yen

March 31, 2018

Due in one
year or lessMarch 31, 2018

The carrying amount and aggregate fair value of marketable and investment securities classified as held-to-maturity debt securities as ofMarch 31, 2018 and 2017 were as follows:

94,340

755

$

1,887

$

755

0
Millions of yen

March 31, 2018

Carrying amount

Others$

1,887

Fair value$

Difference

1,887

Due in one
year or lessMarch 31, 2017

Thousands of U.S. dollars (Note 3)$0

Corporate bonds¥-

Due after one year
through five years

Over five years

¥

¥

201

80

Millions of yen

March 31, 2017

Carrying amount

Others¥201

Fair value¥

Difference

201

¥

(0)

6. Inventories
Inventories at March 31, 2018 and 2017 consisted of the following:

March 31, 2018

Acquisition cost

Unrealized gains

Unrealized losses

Stocks¥¥¥

10,157

OthersTotal

105,321¥

115,478

241,999

2,736

15
¥

242,014

Fair value
¥

¥

2018
Merchandise and finished products

Millions of yen

2,736

344,584
10,172¥Thousands of
U.S. dollars (Note 3)

Millions of yen

The acquisition cost and aggregate fair value of marketable and investment securities classified as available-for-sale securities including
those with no fair value as of March 31, 2018 and 2017 were as follows:¥

82,698

2018

2017
¥

84,286Work in process

31,672

29,130Raw materials and supplies

23,17823,897¥

137,548¥

137,313$780,170
298,793
218,660$

1,297,623

354,756

Thousands of U.S. dollars (Note 3)

March 31, 2018

Acquisition cost

Unrealized gains

Unrealized losses

Stocks$$$95,821OthersTotal

993,594$

1,089,415

2,283,009
142$

2,283,151

25,811

Fair value$

3,250,792$

3,346,755$

25,811

95,963

Millions of yen

March 31, 2017

Acquisition cost

Unrealized gains

Unrealized losses

Stocks

¥

¥

¥

Total

92

114,279
168

Others¥114,447

214,887
14¥

214,901

2,599

Fair value¥

326,567¥

326,749

¥

2,599

182

DNP Integrated Report 201893

7. Short-term Bank Loans and Long-term Debt

8. Retirement Benefits

Short-term bank loans at March 31, 2018 and 2017 were represented by bank loans and bank overdrafts, etc., bearing interest at an averagerate of 0.46% per annum for 2018 and 0.35% per annum for 2017.
Long-term debt at March 31, 2018 and 2017 consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

2018

2018

2017

The Company and its subsidiaries have several retirement plans covering all of their employees, i.e., defined benefit corporate pension plan, agovernmental welfare contributory pension plan, lump-sum retirement plan and defined contribution pension plan. Upon retirement or
termination of employment for reasons other than the cause of dismissal, employees are entitled to lump-sum payments based on the current
rate of pay, length of services and accumulated number of points determined based on the employment services.
Under the Defined Benefit Pension Plan Law, the Company has established new defined benefit pension plans on March 1, 2005 underwhich most of the retirement benefit liability of the Company and its subsidiaries is covered by the employees ʼ pension fund.
The reconciliation of beginning and ending balance of the projected benefit obligation at March 31, 2018 and 2017 were as follows:

Unsecured debentures
0.160~0.180% due 2023

¥

1,050

$

9,906
2018

2018

0.100~0.376% due 2022

3,570

3,520

33,679Change in projected benefit obligation:

0.150~1.358% due 2021

52,49052,440495,189

Balance at the beginning of year

0.100~1.705% due 2020

51,49051,440485,755

Service cost

13,665

14,1960.150~0.460% due 2019

2,290

2,240

21,603

Interest cost

1,259

1,092

11,8770.150~0.340% due 2018

-

240

-

Actuarial gain/loss

5,996(1,858)56,566

Benefits paid

(8,453)(8,066)(79,745)

Mortgage loans, maturing 2019~2023

3,268

3,491

30,830Prior service cost

-

146

-

Unsecured loans, maturing 2019~2023

11,152

12,728105,208

Change of scope of consolidation(1,241)(649)(11,708)

125,310126,099

1,182,170(6,583)(7,800)(62,104)

Current portion of long-term debt¥

118,727¥¥

118,299$

1,120,066

Finance lease obligations at March 31, 2018 and 2017 which are included in other long-term liabilities consisted of the following:

2018
Finance lease obligations¥

15,337(5,937)

Current portion of lease obligations
¥

9,400

16,226$

11,199144,689(56,010)(5,027)¥$88,679The assets pledged as collateral for the Company and its consolidated subsidiaries ʼ indebtedness, such as property, plant and equipment
and other assets, were ¥7,542 million ($71,151 thousand) and ¥7,531 million at March 31, 2018 and 2017, respectively.
Interest rates on mortgage loans ranged from 0.15% to 1.98% per annum for 2018 and from 0.20% to 2.56% per annum for 2017, whileinterest rates on unsecured loans ranged from 0.36% to 1.15% per annum for 2018 and from 0.40% to 2.00% per annum for 2017.
The aggregate annual maturities of long-term debt after March 31, 2018 were as follows:
Years ending March 31

2019

Thousands of
U.S. dollars (Note 3)

Millions of yen

¥

6,583

$

2020

53,922508,698

58,627553,085

2022

4,807

45,349

2023

1,371

12,934--2024 and thereafter

125,310$

1,182,170

The aggregate annual maturities of finance lease obligations after March 31, 2018 were as follows:
Millions of yen

¥

5,937

Thousands of
U.S. dollars (Note 3)$

56,009

2020

4,991

47,085

2021

1,639

15,462

2022

825

7,783

2023

579

5,463

1,366

12,8872024 and thereafter¥

15,337$¥

248,945$2,394,170
128,915

-

-

-

(86)

(24)

(811)

264,922¥

253,782$2,499,264

Thousands of
U.S. dollars (Note 3)

Millions of yen

2018

Change in plan assets:
Balance at the beginning of year

¥

2018

2017

275,722¥260,622$2,601,151

Expected return on plan assets

7,050

6,564

66,509Actuarial gain/loss

12,3896,152

116,877

Contributions by the employer

9,442

9,057

89,075

Benefits paid

(7,068)(6,702)(66,678)

9

Other
Balance at the end of year¥

297,54485

29¥275,722$2,807,019

The reconciliation of projected benefit obligation and plan assets to net defined benefit liability and asset recognized in the consolidatedbalance sheets as of March 31, 2018 and 2017 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2018
Funded projected benefit obligation¥

Plan assets
Unfunded projected benefit obligation
Net amount of liabilities and assets recognized in consolidated balance sheets

¥

¥

2018

2017
¥

219,605$

2,173,123(297,544)(275,722)(2,807,019)(67,193)(56,117)(633,896)

34,571

34,177(32,622)¥(32,622)(21,940)

326,141$(639,991)(57,089)¥(21,940)(307,755)
332,236

35,149(67,839)

Net defined benefit asset
Net amount of liabilities and assets recognized in consolidated balance sheets

230,351

35,217

Net defined benefit liability

Years ending March 31

2019

¥

62,1042021¥

Increase due to change from simplified method to principle method
Other
Balance at the end of year2017

253,782

The reconciliation of beginning and ending balance of the plan assets at March 31, 2018 and 2017 were as follows:

2018

2017
¥

¥

Thousands of
U.S. dollars (Note 3)

Millions of yen

94

Thousands of
U.S. dollars (Note 3)

Millions of yen$(307,755)

144,689

DNP Integrated Report 2018

95

The components of net periodic benefit costs for the years ended March 31, 2018 and 2017 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2018
Service cost

¥

2018

2017

13,645¥

14,178$

128,726

Interest cost

1,259

1,092

11,877

Expected return on plan assets(7,050)(6,564)(66,509)

Actuarial gain/loss(1,344)807(12,679)

580

656

5,472

-

-

-

Amortization of prior sevice cost
Amortization due to change from simplified method to principle method
Net periodic benefit costs of the defined benefit plan

¥

7,090

¥

10,169$66,887(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 Boardof Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the stockholders which isdetermined by specific formula.
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
stock acquisition rights are presented as a separate component of net assets or deducted directly from stock acquisition rights. At present,
the Company has not issued such stock acquisition rights.
Upon approval by the resolution of the Board of Directors, the Company purchased 12,037 thousand shares of common stocks at an
aggregate cost of ¥14,999 million ($141,500 thousand) during the year ended March 31, 2018. Furthermore, the Company retired 15,000
thousand shares of common stocks at an aggregate cost of ¥21,764 million ($205,321 thousand) during the year ended March 31, 2018.
10. Accounts with Non-consolidated Subsidiaries and Associated Companies
Account balances with non-consolidated subsidiaries and associated companies as of March 31, 2018 and 2017 were summarized as follows:Remeasurements of defined benefit plans, before income-tax effect, recorded under accumulated other comprehensive income at March 31,2018 and 2017 consisted of:Thousands of
U.S. dollars (Note 3)

Millions of yen

2018
Unrecognized actuarial gain/loss¥¥(1,385)

Unrecognized prior service cost
Total

9,398

¥

8,013

2018

2017
4,147

$

(1,966)
¥

2,181

$

2018
Trade receivables¥

51,302
2,123

Investment securities

56,45853,374

532,623(13,066)

Long-term loan receivables

150

180

1,415

75,594

Other investments

2,308

663

21,774

Trade payables
2017
19%

Stocks40%

46%

Alternative

33%

26%

Other

7%

9%

Total

100%

100%

5,310

4,180

50,094

Accurued expenses

254

391

2,396

Other current liabilities

1,046

991

9,868

Other long-term liabilities

10

-

94

11. Selling, General and Administrative Expenses
Selling, general and administrative expenses for the years ended March 31, 2018 and 2017 consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

2018

$

88,660Assumptions used for the years ended March 31, 2018 and 2017 were set forth as follows:
2017

0.7%

0.8%

mainly 2.5%

mainly 2.5%

9. Net Assets
Japanese companies are subject to the Companies Act of Japan (the “ Companies Act ” ). The significant provisions in the Companies Act that
affect financial 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 stockholders meeting. For companies that meet certain criteria such as; (1) having the Board of Directors, (2) having
independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of service of the directors is prescribed as one year
rather than two years of normal term by its articles of incorporation, 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 of incorporation 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
and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of
the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase oftreasury 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 ($0.3) per share, aggregating ¥9,659 million ($91,123 thousand), were approved at the general stockholders ʼ
meeting held in June 28,2018 with respect to the year ended March 31, 2018.
(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 ofsuch dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock. Under
the Companies 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 transferredamong the accounts under certain conditions upon resolution of the stockholders.

96

4,319
154

20%

Long-term expected rate of return on plan assets

¥

225

Bonds

Discount rate

2018

2017

5,438

Other current assets

The major categories of plan assets as of March 31, 2018 and 2017 were as follows:
2018

Thousands of
U.S. dollars (Note 3)

Millions of yen

2018
Salaries and allowances

¥

2018

2017

66,627¥

68,346$

628,556

Accrued bonuses

6,078

6,141

57,340

Provision for retirement benefits

1,441

2,390

13,594

Depreciation

15,452

16,062

145,774

Research and development expenses

33,21031,376313,302

Other

111,410111,283

1,051,038¥

234,218¥

235,598$

2,209,604

12. Other Income (Expenses)
The following types of income (expenses) from non-consolidated subsidiaries and associated companies were included in other income.
Thousands of
U.S. dollars (Note 3)

Millions of yen

2018Interest and dividends income

¥

2018

2017
16

¥

45

$

151

Rent income on facilities

125

137

1,179

Rent expense

(28)

(28)

(264)

13. Income Taxes
The Company and its domestic consolidated subsidiaries are subject to a number of different taxes based on income, which, in the aggregate,
resulted in a normal effective statutory tax rate of approximately 30.9% and 30.9% for the years ended March 31, 2018 and 2017,
respectively.
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 toforeign subsidiaries, etc.

DNP Integrated Report 2018

97

The following is a reconciliation of the difference between the normal effective statutory tax rate and the actual effective tax rate for theyear ended March 31, 2018, although no reconciliation for 2017 was shown because the difference was not more than five percent of thestatutory tax rate.
2018

2017

30.9%

Normal effective statutory tax rate-

Expenses not deductible for income tax purposes

0.8-

Amortization of consolidation goodwill

1.4-

Change in valuation allowance

0.8-

Equity in earnings of affiliates

(2.0)

-

14. Impairment Loss on Fixed Assets
The Company and its consolidated subsidiaries reviewed the fixed assets for impairment for the year ended March 31, 2018. Fixed assets
were, in principle, grouped at the business unit for impairment testing purposes. Idle assets and assets for rent were grouped in each asset.
Loss on impairment of fixed assets for the year ended March 31, 2018 was recognized in the amount of ¥5,952 million ($56,151 thousand).
The impairment loss breaks down into buildings and structures at ¥3,580 million, land at ¥1,870 million and others at ¥502 million.
15. Leases
Operating Leases
The amounts of outstanding future payments under non-cancelable operating leases as of March 31, 2018 and 2017 were also summarized as follows:

Per capita inhabitantsʼ taxes

1.3-

Future lease payments:

Tax credit

(0.8)

-

One year or lessTax rate differences in consolidated subsidiaries

1.3-

More than one year

Other

1.4

-

35.1%

-

Actual effective tax rate

Net deferred tax assets (liabilities) at March 31, 2018 and 2017, resulting from temporary differences between the carrying amounts andthe tax bases of assets and liabilities were reflected on the accompanying consolidated balance sheets under the following captions:Thousands of
U.S. dollars (Note 3)

Millions of yen

2018
Prepaid expenses and other current assets¥

Other assets¥

15,315¥

185,9817,286

65,425-(16)-(80,718)

Other long-term liabilities

$

6,935

Other current liabilities
Net deferred tax assets (liabilities)

2018

2017

19,714(54,069)(761,491)(66,147)¥(43,562)

$

2018

2017

¥

$

1. Management policy
The Company and its consolidated subsidiaries manage fund surpluses 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 and interest 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 accordancewith internal customer credit management rules.
Long-term investments are mainly equity securities. Listed stocks are stated at fair value based on market prices quarterly.
2. Fair value of financial instruments
Fair value and difference compared to the carrying amounts reported in the consolidated balance sheets as of March 31, 2018 and 2017 were as follows:
Millions of yen¥

993,722¥

126,660(1) Trade payables¥

248,993¥248,993

¥

5,200

5,247

49,057

1,221

1,201

11,519Operating loss carryforwards

26,417

31,240249,217

Impairment loss on fixed assets

10,653

9,735

100,500

44,795(2) Short-term bank loans
Liabilities[1] Hedge accounting is not applied
Total

11,360

5,772

107,170

16,416

158,897

88,58088,827

835,661(47,568)(49,169)(448,755)

March 31, 2018

386,906(1) Cash and deposits¥

421,751

¥

2,653

¥

501

¥

501

¥

-

¥

-

(20)
¥

$

2,348,991$(20,759)(17,469)(195,840)(3) Long-term debts(1,586)(1,690)(14,962)

Liabilities(43,562)$(510,085)

297,047$

Net defined benefit asset¥

3,699,047

2,348,991
422,594(2) Short-term bank loans

422,594

1,182,170

297,047-

1,207,198

25,028$3,953,755$

3,978,783$

25,028

$

4,726

$

4,726

$

-

Derivatives* 1[1] Hedge accounting is not applied(189)[2] Hedge accounting is applied
Total

98

3,402,000

-

$

Other

(54,069)$

3,341,896(1) Trade payables(7,500)¥2,333,793

$

(800)

Net deferred tax assets (liabilities):$

3,341,896

Differences

9,374,736(795)(896,991)

2,333,793

Fair value$

Undistributed earnings of subsidiaries$-

9,077,689(481)(83,220)

481

$

(68)

¥

¥

Assets(51)(95,081)481

Carrying amounts
reported in the consolidatedbalance sheet(3) Short-term and long-term investment securities

¥

(20)

Thousands of U.S.dollars (Note 3)

Reserve for special depreciation

Total

2,653

419,098(2) Trade receivables(678,208)

127,963¥[2] Hedge accounting is applied

16,843$-

Derivatives* 1

Repair reserve provisions

Deferred tax liabilities:

31,48744,795

125,310(3) Long-term debts

Other(63,193)-¥

Loss on write-down of inventories¥¥

962,235

Accrued bonuses(71,890)

247,382¥

11,160¥¥Differences

Assets

21,481

Unrealized gain on available-for-sale securities

247,382

Fair value

2018

1,331

$

Carrying amounts
reported in the consolidatedbalance sheet

-

2,802

39,658168,133

31,487

1,183

¥

$

392,099

2,277

41,012

21,192360,612

Excess provision for doubtful receivables¥¥(3) Short-term and long-term investment securities

Loss on devaluation of investment securities

Total

17,82253,425
114,708

15,924354,241¥15,083

Less: valuation allowance$

354,241

13,426

Total deferred tax assets

5,268(2) Trade receivables

Deferred tax assets:
Net defined benefit liability¥

16. Financial Instruments(1) Cash and deposits
Thousands of
U.S. dollars (Note 3)

2018

2017

5,663
12,159¥March 31, 2018

Millions of yen

2018¥(510,085)

Significant components of deferred tax assets and liabilities at March 31, 2018 and 2017 were as follows :Thousands of
U.S. dollars (Note 3)

Millions of yen

$

4,537

(189)
$

4,537

$

-

DNP Integrated Report 201899

17. Derivative Financial Instruments

Millions of yen

March 31, 2017

(1) Cash and deposits

Carrying amounts
reported in the consolidatedbalance sheet¥(2) Trade receivables

215,455

Fair value¥

341,805(3) Short-term and long-term investment securities

215,455

Differences¥-

341,805

330,263-

347,403

17,140Assets¥887,523¥

904,663¥(1) Trade payables¥

247,562¥

247,562¥

17,140-(2) Short-term bank loans

43,03643,036-(3) Long-term debts

126,099

130,261

4,162

Liabilities¥

416,697¥

420,859

¥

4,162

¥

[2] Hedge accounting is applied
Total

Fair value of derivatives:
The contracted amount and fair value of derivatives at March 31, 2018 and 2017 were as follows:
Derivative transactions to which the Company and its subsidiaries did not apply hedge accounting

Derivatives* 1[1] Hedge accounting is not applied

Nature of derivative financial instruments:
The Company and certain consolidated subsidiaries enter into derivatives for foreign currency forward contracts and interest rate swaps tomanage the risk arising from fluctuation in foreign currency exchange rates and interest rates. Derivatives related to currency are utilized tohedge foreign exchange risks associated with certain accounts receivable, accounts payable and other debts, including forecasted
transactions, denominated in foreign currencies. Interest rate swaps are utilized to hedge interest rate risks on interest-bearing debts. 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 and executes derivatives based on the internal policies of the Company.

(107)

¥

(14)
¥

(121)

(107)

¥

-

(14)
¥

(121)

Millions of yen¥-

March 31, 2018

Contracted amount

Fair value*1. Derivative assets and liabilities are on a net basis.

Receivables:
U.S. dollars¥

15,258

¥

¥

40

462
40

Payables:Assets(1) Cash and deposits and (2) Trade receivables
The carrying amounts approximate fair value because of the short maturities of these instruments.

26

U.S. dollars¥(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.
Liabilities(1) Trade payables and (2) Short-term bank loans
The carrying amounts approximate fair value because of the short maturities of these instruments.

(1)

17,414

¥

(1)

501

¥

501

Thousands of U.S. dollars (Note 3)

March 31, 2018

Contracted amount

Fair value

Unrealized gain (loss)

Foreign currency forward contracts
Receivables:
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 for similar debt.

$

143,943$

20,094

Euro

4,358

$

377

4,358
377

Payables:246

U.S. dollars$

164,283(9)$

Derivatives
Information about the fair value for derivatives is included in Note 17.

4,726

(9)
$

4,726

Millions of yen

Note B: Financial instruments whose fair value is extremely difficult to measure

March 31, 2017
Millions of yen

Thousands of
U.S. dollars (Note 3)

March 31, 2018

Carrying amounts

Carrying amounts

Unlisted equity securities¥$

50,697105

478,274
991
Millions of yen

March 31, 2017

Carrying amounts

Unlisted equity securities

¥

Other

462

2,130

Euro

Note A: Fair value of financial instruments, marketable securities and derivatives

Others

Unrealized gain (loss)

Foreign currency forward contracts

49,944Contracted amount

Fair value

Unrealized gain (loss)

Foreign currency forward contracts
Receivables:
U.S. dollars

¥

Euro

17,345

¥

1,859

(108)

¥

1

(108)
1

Payables:U.S. dollars

24¥

19,228

(0)
¥

(107)

(0)
¥

(107)

117

The above are not included in “ (3) Marketable and investment securities ” because there is no market value and it is extremely difficult tomeasure the fair value.

100

DNP Integrated Report 2018101

Derivative transactions to which the Company and its subsidiaries applied hedge accounting

18. Contingent Liabilities
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, 2018 and 2017, the Company and its consolidated subsidiaries
were contingently liable on trade notes discounted in the amount of ¥665 million ($6,274 thousand) and ¥626 million, respectively.

Millions of yen

March 31, 2018

Hedged items

Contracted amount

Fair value

Foreign currency forward contracts

19. Segment Information

Receivables:
U.S. dollars

Trade receivables

¥

39

¥

-

Payables:U.S. dollars

Trade payables

1,345

(24)

Sterling pound

Trade payables

110

2

Euro

Trade payables

111
¥

1,605

2
¥

(20)

Outline of reportable segments:
The Company and its consolidated subsidiaries ʼ 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, for which
discrete financial information is available. The Group ʼs reportable segments consist of Information Communication, Lifestyle and Industrial
Supplies, Electronics and Beverages based on a classification by commonality in manufacturing and marketing method of products.
Information on sales and profit, identifiable assets and other items by reportable segment
Millions of yen

Interest rate swaps
Receive floating and pay fixed

Reportable segment

Long-term loan payables

¥

20

¥

For 2018:

Thousands of U.S. dollars (Note 3)

March 31, 2018

Hedged items

Contracted amount

$

368

$

-

Payables:U.S. dollars

Trade payables

12,689(227)

Sterling pound

Trade payables

1,038

19

Euro

Trade payables

1,047
$

15,142

19
$

(189)

Interest rate swaps
Receive floating and pay fixedLong-term loan payables

$

189

$

Beverages

Total

Adjustment

Consolidated

Net sales

Receivables:
Trade receivables

Electronics

Net sales and operating income

Fair value

Foreign currency forward contracts
U.S. dollars

Information
Communication

Lifestyle andIndustrial
Supplies-

Outside customers
Intersegment¥

774,998 ¥392,459 ¥

3,639

1,849

9

11

5,508

(5,508)-778,637

394,308

188,755

56,0601,417,760(5,508)1,412,252

21,75812,127

34,1002,244

70,229(23,857)

46,372¥

904,487 ¥453,742 ¥242,462 ¥48,550 ¥ 1,649,241 ¥

¥

Total
Segment income
Segment assets

188,746 ¥56,049 ¥ 1,412,252 ¥- ¥ 1,412,252

161,258 ¥ 1,810,499

Others26,968 ¥16,509 ¥12,234 ¥2,608 ¥

58,319 ¥2,752 ¥

61,071

Amortization of goodwill

1,093

1,213

-

-

2,306

-

2,306

Impairment loss

1,979

-

-

21

2,000

3,952

5,952

Increase in property, plant andequipment and intangible assets

27,286

15,725

10,6002,327

55,9383,620

59,558Depreciation and amortization

Millions of yen

March 31, 2017

Hedged items

Contracted amount

Fair value

Thousands of U.S. dollars (Note 3)

Foreign currency forward contracts

Reportable segment

Receivables:
U.S. dollars

Trade receivables

Euro

Trade receivables

¥

192

¥

8

(0)
0

Payables:U.S. dollars

Trade payables

1,481

(13)

Sterling pound

Trade payables

2

(0)

Euro

Trade payables

164

(1)

Japanese yen

Trade payables

67

0

¥

1,914

¥

(14)

¥

70

¥

-

Interest rate swaps
Receive floating and pay fixedLong-term loan payables

The fair values of foreign currency forward contracts subject to the alternative method are included in trade receivables, trade payables andlong-term loan payables as hedged items. The fair values of interest rate swap contracts subject to the exceptional accrual method areincluded in long-term loan payables as hedged items.
Fair value of derivatives is based on forward exchange rates or information provided by financial institutions at the end of the fiscal year.

102

For 2018:

Information
Communication

Lifestyle andIndustrial
Supplies

Electronics

Beverages

Total

Adjustment

Consolidated

Net sales and operating income
Net sales
Outside customers
Intersegment$ 7,311,302 $ 3,702,443 $ 1,780,623 $Total
Segment income
Segment assets

528,764 $ 13,323,132$- $ 13,323,132

34,33017,44385

104

51,962(51,962)-

7,345,632

3,719,886

1,780,708

528,868

13,375,094(51,962)

13,323,132

205,264

114,406

321,698

21,170662,538(225,066)

437,472$ 8,532,896 $ 4,280,585 $ 2,287,377 $

458,019 $ 15,558,877 $ 1,521,302 $ 17,080,179$

Others254,415 $

155,745 $

24,604 $

550,179 $

25,963 $576,142

Amortization of goodwill

10,311

11,444--21,755-21,755

Impairment loss

18,679--198

18,87737,28356,160

Increase in property, plant andequipment and intangible assets

257,415

148,349

100,000

21,953

527,717

34,151561,868

Depreciation and amortization

115,415 $DNP Integrated Report 2018103

Independent Auditorʼs Report
To the Board of Directors of Dai Nippon Printing Co., Ltd.:

Millions of yen

Reportable segment
For 2017:

Information
Communication

Lifestyle andIndustrial
Supplies

Electronics

Report on the Consolidated Financial Statements
Beverages

Total

Adjustment

Consolidated

We have audited the accompanying consolidated balance sheet of Dai Nippon Printing Co., Ltd. and consolidated subsidiaries as of March 31,2018 and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended, anda summary of significant accounting policies and other explanatory information (all expressed in Japanese yen).

Net sales and operating income
Net sales
Outside customers
Intersegment¥

797,047 ¥387,143 ¥

4,157

1,052

6

39

5,254

801,204

388,195

169,408

56,62018,884

14,434

16,4842,430¥

875,999 ¥439,303 ¥258,120 ¥47,526 ¥ 1,620,948 ¥

¥

Total
Segment income
Segment assets

169,402 ¥56,581 ¥ 1,410,173 ¥- ¥ 1,410,173(5,254)-

1,415,427(5,254)

1,410,173

52,232(20,821)

31,411

120,956 ¥ 1,741,904

Others27,661 ¥17,028 ¥12,083 ¥2,367 ¥

59,139 ¥2,322 ¥

61,461

Amortization of goodwill

1,104

1,213

-

-

2,317

-

2,317

Impairment loss

834

-

61

1

896

-

896

28,735

12,619

7,729

3,805

52,888

4,197

57,085

Depreciation and amortization

Increase in property, plant andequipment and intangible assets[Related information]
Information by geographic areaJapan

For 2018:

Auditor ʼs Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in conformity
with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.
The procedures selected depend on the auditor ʼs judgment, including the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to theentity ʼs preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity ʼs internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.

Opinion¥

1,185,561

Asia¥

Other region

150,794¥

75,897

Total¥

1,412,252

For 2018:

Japan

Net sales$ 11,184,538

Asia$

Other region

1,422,585$

716,009

Total$ 13,323,132

Japan
¥

1,207,680

Asia¥

126,210

Other region¥

As discussed in Note 2. “ Reserve for repair (Changes in accounting estimates) ”, the Company has changed estimate for reserve for repair tocover the expected required repair costs for defects in some products in the fiscal year ended March 31, 2018.
Our opinion is not modified in respect of this matter.
Convenience Translation

Millions of yen

For 2017:

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial positionof Dai Nippon Printing Co., Ltd. and consolidated subsidiaries as of March 31, 2018, and the consolidated results of their operations and their
cash flows for the year then ended in conformity with accounting principles generally accepted in Japan.
Emphasis of Matter

Thousands of U.S. dollars (Note 3)

Net sales

Management is responsible for the preparation and fair presentation of these consolidated financial statements in conformity with accounting
principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Millions of yen

Net sales

Management ʼs Responsibility for the Consolidated Financial Statements

76,283

Total¥

1,410,173

Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been
made in conformity with the basis stated in Note 3 to the consolidated financial statements. Such U.S. dollar amounts are presented solely forthe convenience of readers outside Japan.

ARK MEIJI AUDIT & CO.
Tokyo, Japan
June 28, 2018104

DNP Integrated Report 2018105

Major Subsidiaries and Affiliates(As of March 31, 2018)

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

Ownership ratio ofvoting rights (%)

350
350
350
400
50

100.0
100.0
100.0
100.0
97.0

Investment in operating companies
3,000
Sale of books, creation of data, library operation support and consulting
266
Education and academic businesses; retail stores; publishing; commercial facility/store interiors, etc.
100
Publishing
50
Sale of books, magazines and stationery
50
Used bookstore operation; development and operation of new/used goods businesses; management guidance for affiliated stores
3,652
Sale of books, magazines, CD, DVD, stationery, game and hobby goods
2,035
Production, agency and sale of digitized books, magazines and other published materials
500
Development, sale and maintenance of computer software
50
Offset printing and bookbinding
200
Film making
180Electronic publishing and distribution platform services; e-book distribution service
100
Editing and sale of textbooks and educational materials
60
Research and policy planning aimed at activating Japanʼs publications distribution markets
50
Printing and bookbinding
49
Film making, printing and bookbinding(S$1,000)
4,600

53.0
53.0
53.0
53.0
53.0
15.6
23.7
80.5
86.8
100.0
100.0
63.4
48.2
50.0
100.0
100.0

Development and maintenance of software
843
Planning, production and sale of artistic images and videos
300
Printing and bookbinding
100
Planning, production, film making and plate making
100
Production and sale of business forms and plastic cards
100
Planning, design, maintenance and operation of information systems
100
Planning and production of promotional materials
80
Film making, printing and bookbinding
100
Mailing of printed matter, etc.
20
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

50.6
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
95.0
36.3

Production and processing of thermal mass transfer media and dye-sublimation media
100
Sale of photo-related products; operation of ID photo booths and automated commemorative photo booths
100
Sale of equipment and media for making driver licences
60
Production, processing and sale of thermal mass transfer media and(RM 1,000)
dye-sublimation media; sale of photo-related products
190,000
Production, processing and sale of thermal mass transfer media and(US$1,000)
dye-sublimation media; sale of photo-related products
71,980Development, production and operation of automated commemorative photo booths(US$1,000)
10
Sale of photo-related products(Euro 1,000)
2,408
Processing and sale of thermal mass transfer media and dye-sublimation media(Euro 1,000)
1,000

100.0
100.0
100.0
100.0

Display Components
DNP Precision Devices Himeji Co., Ltd.
DNP Denmark A/SInformation Innovation

PT. Wahyu DNP Bureau

45.0

Imaging Communication
DNP Imaging Comm Co., Ltd.
DNP Photo Imaging Japan Co., Ltd.
DNP ID System Co., Ltd.
DNP Imagingcomm Asia Sdn. Bhd.
DNP Imagingcomm America Corporation
Foto Fantasy, Inc.
DNP Photo Imaging Europe SAS
DNP Imagingcomm Europe B.V.

PT DNP Indonesia

Research, compilation and provision of various kinds of information about purchasing and consumption of foods and beverages
430
Production, printing and processing of packaging materials
300
Production of plastic tubes
200
Manufacturing and sale of aseptic filling systems, and related consulting
100
Filling and processing of packages
80
Marketing research and consulting
50
Sale of packaging materials(THB 1,000)
200,000
Production and sale of packaging materials(US$1,000)
31,500
Production and sale of packaging materials(US$1,000)
26,000

84.0
100.0
90.0
100.0
100.0
100.0
100.0

Sale of decorative products
Printing and processing of steel, aluminum and other metals
Production, printing and processing of decorative products
Manufacturing and sale of automotive accessories

300
300
200
60

100.0
50.0
100.0
100.0

Production of lithium-ion battery components

200

100.0

100.0
(20.0)
51.0

106

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

DNP Photomask Europe S.p.A.

Production and sale of semiconductor photomasks

490
300
100
(NT1,000)
2,198,185(Euro 1,000)
47,200(0.7)(15.1)

80.5

Other
Nihon Unisys, Ltd.
DNP Fine Chemicals Co., Ltd.
DNP Fine Chemicals Utsunomiya Co., Ltd.
All About Inc.
DNP Logistics Co., Ltd.
DIC Graphics Corporation
PSP Corporation
DNP Engineering Co., Ltd.
DNP Trading Co., Ltd.
CYBER KNOWLEDGE ACADEMY Co., Ltd.
DNP HyperTech Co., Ltd.
CP Design Consulting Co., Ltd.*CAFI Corporation*
At Table Co., Ltd.*DNP Dexerials Consulting Co., Ltd.
DNP Corporation USA
DNP Holding USA Corporation
DNP Business Consulting（Shanghai) 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 pharmaceutical products
100
Operation of comprehensive information website based on “expert guides”; Internet advertising
1,199
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
Production and sale of computers and peripheral devices; development, production and sale of software
40
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$1,000)
420
Coordination of DNP business operations in the Southeast Asia/Oceania region(S$1,000)
19,03420.6
100.0
100.0 (100.0)
22.5
100.0
33.4
31.0
100.0
94.3
100.0
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
Management of golf courses
Accounting agency and consulting services
Studies related to patents; preparation of contracts

350
100
100
90
33
30
20

100.0
100.0
100.0
100.0
88.8
100.0
100.0

(Krw 1,000)
800,000(NT 1,000)
10,000(US$1,000)
5,400(US$1,000)
100(S$1,000)
350(Euro 1,000)
92(A$1,000)
70

100.0

100.0

Personal Welfare, Facility Service and Others
DNP Facility Services Co., Ltd.
DNP Information Systems Co., Ltd.
Metro Systems Co., Ltd.
DNP Human Services Co., Ltd.
Uzumine Country Club Co., Ltd.*DNP Accounting Services Co., Ltd.
DNP Techno Research Co., Ltd.*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 and photo-related products, 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

Dai Nippon Printing Co. (Australia) Pty. Ltd.*Sale of printed matter(90.0）

100.0
100.0
100.0
(100.0)
100.0
100.0
100.0

Beverages
Beverages
Hokkaido Coca-Cola Bottling Co., Ltd.

Industrial Supplies
DNP High-performance Materials Co., Ltd.

(53.0)(53.0)(53.0)(53.0)
(9.4)

100.0

Living Spaces
DNP Lifestyle Materials Marketing Co., Ltd.
DNP Ellio Co., Ltd.
DNP Living Space Co., Ltd.
DNP Tamura Plastic Co., Ltd.

100.0
100.0

Overseas Sales

Packaging

DNP Vietnam Co., Ltd.

400
(Dkr1,000)
135,000

100.0(100.0)100.0(100.0)100.0

Lifestyle and Industrial Supplies
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.
Dai Nippon Printing (Thailand) Co.,Ltd.*

Production of display-related components
Production and sale of precision electronic components

Electronic Devices

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 Tech Co., Ltd.
DNP Multi Print Co., Ltd
NBC Co., Ltd.*DNP Social Links Co., Ltd.
DNP Media Support Co., Ltd.
MK Smart Joint Stock Company

Ownership ratio ofvoting rights (%)

Electronics

Information Communication
Maruzen CHI Holdings Co., Ltd.
TRC Library Service Inc.
MARUZEN-YUSHODO Company, Limited
MARUZEN PUBLISHING CO., LTD.
MaruzenJunkudo Bookstores Co., Ltd.
BOOKOFF CORPORATION
Bunkyodo Group Holdings Co., Ltd.
2Dfacto, Inc.
VISUALJAPAN Inc.*DNP Book Factory Co., Ltd.
DNP Media Art Co., Ltd.
MobileBook.jp Inc.
Kyoiku Shuppan Co., Ltd.
Publishing Marketing Innovation Japan Co., Ltd.
Oguchi Book Binding & Printing Co., Ltd.
Tien Wah Press (Pte.) Ltd.

Capital(¥ million)

Production and sale of soft drinks

2,935

59.9

(6.4)

Notes: 1. Voting rights ownership ratios (in brackets) 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 2018107

Investor Information(As of March 31, 2018)

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 103-8670, Japan

Established: 1876
Number of Employees (consolidated): 38,627
Paid-in Capital: ¥114,464 million
Number of Common Stocks:
Authorized: 745,000,000 shares
Issued: 324,240,346 shares*DNP implemented a share consolidation in which two shares of common stock wereconsolidated into one share effective October 1, 2017. Accordingly, the number ofauthorized shares totaled 745,000,000, reflecting a decrease of 745,000,000 shares.
Also, the number of issued shares totaled 324,240,346, reflecting a decrease of
324,240,347 shares

Number of Trading Unit Shareholders (own 100 or more shares):29,870* On October 1, 2017 DNP changed the number of shares per share unit from 1,000
shares to 100 shares

Major Shareholders:

26,06615,993
10,345
9,206
7,769
5,133
5,001
4,931
4,735
3,973

Nikkei Average

DNP Stock Price (yen)TOPIX

Increase (%)*
30

3,000

American Depositary Receipts:
Ratio (ADR:ORD): 2:1
Exchange: OTC (Over-the-Counter)
Symbol: DNPLYCUSIP: 233806306
Depositary:
The Bank of New York Mellon
240 Greenwich Street, 22 West,
New York, NY 10286, U.S.A.
Telephone: (201) 680-6825
U.S. toll free: 888-269-2377 (888-BNY-ADRS)

20

10
2,500
0

-10
2,000

Annual Meeting of Shareholders:
The annual meeting of shareholders of DNP is
normally held in June each year in Tokyo, Japan.
Shares(thousands)

DNP(between April 1, 2015 and March 31, 2018)

URL: http://www.adrbnymellon.com/

Stock Exchange Listing: Tokyo Stock Exchange

The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
The Dai-ichi Life Insurance Co., Ltd.
Mizuho Bank, Ltd.
Employeesʼ Shareholding Association
Japan Trustee Services Bank, Ltd. (Trust Account 9)
Japan Trustee Services Bank, Ltd. (Trust Account 5)
State Street Bank West Client-Treaty 505234
Nippon Life Insurance Company
JP Morgan Chase Bank 385151

Share Price Evolution (Tokyo Stock Exchange)

Percentage
(%)

8.64
5.30
3.43
3.05
2.57
1.70
1.66
1.63
1.57
1.32

Investor Relations:
Dai Nippon Printing Co., Ltd.
Corporate Communication 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
Web Site:
http://www.dnp.co.jp/eng/

-20

-30

16

17

* Index 100 = March 31, 2015
* On October 1, 2017 DNP changed the number of shares per share unit from 1,000 shares to 100 shares and every two shares were consolidated into one share.
The stock prices above are based on after the share consolidation.

Voting Rights (as of March 31, 2018)

Number of Stocks(stocks)

Type

Stocks with no voting rights
Stocks with limited voting rights (treasury stocks, etc.)
Stocks with limited voting rights (other)Notes:
1. The number of treasury shares (22,403,726) is excluded from the figures above.
2. The ownership stakes are based on the total number of shares outstanding lesstreasury shares (301,836,620).

18

Number of Voting Rights(rights)

―

―

―

―

―

―

Stocks with voting rights (Treasury held stocks)(treasury stocks, etc.) (Mutually held stocks)

Common stocks
Common stocks

22,403,700
542,500――

Stocks with voting rights (other)
Stocks with less than trading units
Outstanding shares
Total voting rights of stockholders

Common stocks
Common stocks

301,013,000
281,146
324,240,346

3,010,125―

3,010,125――

Inclusion in SRI Indexes (As of March 31, 2018)
DNP has been selected for the following indices of global socially responsible investments (SRI). Additionally, DNP is also selected as a constituent of three ESG
indices adopted by Japan ʼs Government Pension Investment Fund (GPIF ), F TSE Blossom Japan Index, MSCI Japan ESG Select Leaders Index and MSCI Japan
Empowering Women ( WIN) Select Index.

FTSE4Good
Global Index

108

MSCI ESG
Leaders indexes

MSCI SRI
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 INDEX NAMES AND
LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

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 INDEX NAMES AND
LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

ETHIBEL
Investment Register

Morningstar Socially
Responsible Investment Index

Treasury Stocks (as of March 31, 2018)
HolderDai Nippon Printing Co., Ltd.
Kyoiku Shuppan Co., Ltd.
Total

No. of Stocks Held

22,403,700
542,500
22,946,200

Percentage of Holding to
No. of Outstanding Shares

6.91
0.17
7.08

DNP Integrated Report 2018109

1-1, Ichigaya Kagacho 1-chome, Shinjuku-ku, Tokyo 162-8001, Japan
Tel: +81-3-3266-2111
URL: http://www.dnp.co.jp/eng/©2018.DNP
PRINTED IN JAPAN