DNP Annual Report 2016
CONTENTS

22
Special Feature :2
To Our Shareholders

8
DNP in Brief
10 Synopsis of Performance
14 DNP at a Glance
16 Our Products and Services
18 Evolution of DNP ’s Businesses
20 Investor Information“Today’sInnovation isTomorrow’s
Basic”

Toward medium- and long-term growthfor DNP and society

24 Overview of Business Expansion
Based on “DNP Group Vision 2015”
26 New Value to Be Generated in
Four Growth Areas
28 DNP Businesses that Provide
New Value① Inbound Business② Energy-related Business③ Automotive-related Business

34
Segment
Information
36 Information Communication
36

Business Strategies

38

Financial Results

40

Growth Businesses andStrategic Businesses

42 Lifestyle and Industrial Supplies
42

Business Strategies

44

Financial Results

46

Growth Businesses andStrategic Businesses

48 Electronics
48

Business Strategies

50

Financial Results

52

Growth Businesses andStrategic Businesses

54
How DNP Works
to Achieve
Sustainable
Development
55 CSR: DNP ’s Three Corporate
Responsibilities
56

Compliance with Laws andSocial Ethics

56

Construction of Systems that
Support Business Continuity

57

112

74

Appendix

Financial Section

112

Major Subsidiaries and Affiliates

114

Business Expansion throughApplication and Development ofPrinting Technologies

86 Selected Financial Data (unaudited)

120

Glossary88 Consolidated Financial Statements

123

Sources of Information about DNP

76

110

Management’s Discussion
and Analysis

Independent Auditors’ Report

Contributing to Social Development
・Research and Development
・Creation of Intellectual Property

58

Information Security

59

Environmental Conservation andRealizing a Sustainable Future

60

TOPICS

62

Corporate Governance73

Board of Directors, Statutory
Auditors and Corporate Officers

Editorial
PolicyOur corporate philosophy is “the DNP Group connects individuals and society, and provides
new value.” When we say “new value,” we are not talking only in terms of business
operations, i.e. the development of new products and services. We are also referring tocreating value in the medium and long terms by paying attention to the environment,
society and governance, making quick and accurate decisions, and engaging inwell-coordinated corporate activities. In “Annual Report 2016,” we discuss what kinds ofvalue DNP will create from the resources available to us within and outside of ourcorporate Group, from both financial and non-financial standpoints.

This annual report is aimed at providing information about DNP’s businesses, management vision, and businessresults. Opinions and forecasts contained in the report were based on the best judgment of management at thetime the report was prepared, so we cannot guarantee that all information contained in the report is completely
infallible.
In this annual report, “DNP” refers to the entire DNP Group, and “we” refers to DNP or the DNP management team.
(In the section on Corporate Governance (pp 62-72), “DNP” refers to Dai Nippon Printing Co., Ltd.)To Our Shareholders

Based on “DNP Group Vision 2015,” we will create new value,build DNP’s corporate value and contribute to society.

Yoshitoshi Kitajima
President

2Special Feature
Segment Information
How DNP Works to Achieve
Sustainable Development
Financial Section■ Focusing on initiatives aimed at achieving
sustainable growth
In Japan and abroad, companies are being asked
to take initiatives that support sustainability
from environmental, social, and governance (ESG)
standpoints. Since before people began talking
so much about ESG, DNP has actively addressed
environmental and social challenges and has expanded
its businesses based on the belief that we must
promote dialogue with stakeholders.
DNP has received a great deal of praise for thesetypes of ideas and initiatives, from general society
as well as from investors. For example, DNP has been
included in two major indices of socially responsible
investments: in the Dow Jones Sustainability World
Index for 11 consecutive years, and in the FTSE4Good
Global Index for 15 consecutive years (as of December
31, 2015).
In addition, for two years in a row CDP, a U.K.-based
international nonprofit organization that assesses
corporations’ efforts to fight global warming, has
included DNP in its most lauded “Climate A List.” CDP
evaluates more than 5,000 listed companies worldwide,
including over 500 Japanese companies. Of those, only
115 companies worldwide and only eight from Japan
were selected for the 2015 A list.
Selection is based on information disclosed by thecompanies through various reports and websites,
etc., as well as on CDP’s independent research.
DNP is highly regarded for properly and promptly
disclosing, in a coordinated manner, not only businessperformance and financial information, but also nonfinancial information about matters such as thestrengths and systems that DNP uses to continue
generating value, and initiatives aimed at achieving
sustainable growth.

DNP in Brief
Appendix■ Contributing to society through“P&I innovations”
DNP’s new Business Vision calls for using “P&I (printing
and information) innovations” to expand business,
primarily around four growth areas. The phrase “P&I
innovations” expresses our idea of generating newvalue for society by combining DNP’s strengths inprinting and information, not only technologically but
also in terms of sales, planning and other aspects, inorder to a produce a variety of innovations. The fourareas are Knowledge and Communication, Food and
Healthcare, Lifestyle and Mobility, and Environment
and Energy.
We established these areas by taking a broad viewof social issues in Japan and overseas and asking
ourselves whether we can resolve those issues byapplying DNP’s strengths. By doing our utmost to
provide new value that can resolve social issues, we

aim to succeed simultaneously at contributing tosociety and achieving growth for our own company.

To Our Shareholders■ Creating new value in line with
“DNP Group Vision 2015”
In October 2016, we will celebrate the 140th
anniversary of DNP’s founding.
DNP was founded in 1876, nine years after the Meiji
revolution. Letterpress printing was the cuttingedge technology of that time and remains the coretechnology around which DNP has expanded its
business. Since its founding, DNP has continued tocreate new products and innovative services by taking
advantage of strengths in areas like project planning,development, manufacturing, and sales, in addition to
constantly working on technological development.
Today we are in the midst of major changes.
In October 2015, we responded to these changes
by reviewing our previous corporate vision andformulating “DNP Group Vision 2015” so that we cancontinue to increase DNP’s corporate value in thelong term.
The new corporate philosophy spelled out in our2015 vision is that “the DNP Group connects individuals
and society, and provides new value.” This philosophy
contains our determination to respond to socialchanges by actively appealing to consumers in orderto create our own, more positive changes, which wecall “new value.” DNP is already working on a variety
of innovations aimed at realizing this idea.

DNP Annual Repor t 2 016

3Create new value
through overall corporate activities

Contribute to society and sustainable growthby increasing DNP’s corporate value

DNP creates “tomorrow’s basic.”● Create value that is always close to corporate clients and consumers, so they consider it a basic need.
● Expanding business in our four growth areas will simultaneously increase DNP’s corporate value andsolve social issues in Japan and abroad, which in turn will help realize a sustainable society.

Provide value created by DNP to
consumers and society

Feedback from consumers and society
reflected in our next initiatives

Initiatives aimed at creating new value
Knowledge &Communication

Food & Healthcare

Solve social issues by providing new value
・Invest 100 billion yen in new business development over several years.
・Accelerate development of global businesses that meet local needs.

(Business Vision)

Four growth areas

Promote dialogue with stakeholders
Strengthen corporate governance
Lifestyle & Mobility

Environment & Energy

Improve asset efficiency,
make effective use of management resources
・ FY through March 2016:
Treasury stock acquisition (about 18 mln shares, about 20 bln yen);cancellation of shares (20 mln shares)
・ FY through March 2017:
Treasury stock acquisition (maximum 17 mln shares, 15 bln yen);cancellation of shares (17 mln shares)
・ Improve profitability through structural reform of businesses and costs.

Promote businessactivities based on
DNP Group Vision 2015

Reinforce strengths
in line withDNP Group Vision 2015

DNP Group Vsion 2015

Further improve
results of initiatives

Foundation for creating new value
Strengths in
P&I

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

Business
VisionUse P&I innovations
to expand business,
primarily aroundfour growth areas.

Guiding
Principles
Taiwa (dialogue)
and cooperation● P (Printing) and I (Information)
Leverage strengths in technology,
sales, planning, manufacturing, etc.
● Combine strengths by linking
in-house and outside resources.

Assets● Net assets:
1,063.2 billion yen● Total assets:
1,718.6 billion yen

Human resources
Number of employees:
39,198 (consolidated basis)(34,545 in Japan, 4,653 overseas)

Intellectual property
Number of Japanese patents held:
11,858

Production and sales bases● Number of production bases:
56 in Japan, 14 overseas● Number of sales bases:
40 in Japan, 25 overseas

Research and development
facilities● Research and Development Center● Technology Development Center● Advanced Business Center● Each business unit’s development
department● R&D expenses: 31.8 billion yen(Fiscal year ended March 2016)(As of March 31, 2016)

4

Financial Section
Appendix

DNP Annual Repor t 2 016

How DNP Works to Achieve
Sustainable Development

dramatic demographic changes occurring aroundthe world, including trends in Japan toward a fallingbirthrate and increasing average age. Amid thesechanges, DNP will continue to develop products andservices that support safe, high-quality lifestyles,
including lifelong health maintenance. In addition

services that deliver a high degree of comfort, safety
and peace of mind in all types of living spaces,
including homes and commercial facilities, offices,
medical facilities, automobiles and railway cars.
In a bid to expand our automotive business,in August 2015 the DNP Group acquired TAMURA
PLASTIC MFG. Co., Ltd., which possesses superior
technologies related to dies and resin forming.
By combining TAMURA’s resin forming technologies
with DNP’s hard-coat transfer film, decorative film

Segment Information○ The Food and Healthcare field is affected by the○ In Lifestyle and Mobility, we will continue to provide

Special Feature

support people’s lives through lively communicationand to foster rich and varied culture. In addition to
producing information media and content, we workat creating mechanisms that support safe and securecommunication.
For example, a business partnership that webegan in 2013 with Nihon Unisys, Ltd. has resulted
in the construction of a settlement platform
for international brand prepaid cards and otherelectronic money-related systems. We also offer
a variety of services connected to the 2016 startof the Japanese government’s new “My Number”
system of assigning Individual Numbers for social
insurance and taxation purposes. We provide
related consulting services, security systems, andoutsourced business processes such as collectionof employees’ and customers’ Individual Numbers.
In October 2015, we launched a unique service thatallows people to easily apply for their Individual
Number Card via Ki-Re-i ID photo kiosks. Many
people have already taken advantage of the service,whereby the kiosk takes the required ID photo andsubmits the application online.
Meanwhile, amid increasing worldwide demand for
information security, in March 2016 we establishedCYBER KNOWLEDGE ACADEMY Co., Ltd., which trains
personnel to respond to cyber attacks that target
corporations. As another example of our efforts
focused on developing information security-related
products and services, in July 2015 DNP acquired
HyperTech Co., Ltd., which provides anti-tampering
software for smartphone and computer applications.

DNP in Brief○ In Knowledge and Communication, our aims are toto providing safe and clean packaging products
for foods, beverages and pharmaceuticals thatpeople can use with peace of mind, we will continue
to expand in fields like films for agricultural use,
regenerative medicine, and other life science-related
businesses.
As an example, in March 2015 we acquired acontrolled medical devices retailer license for ourplant in Tanabe, Kyoto Prefecture, which allows
us to sell products like blood sampling kits andclinical electronic thermometers. In combination
with existing strengths, such as operating locations
in Tokyo, Nagoya, and elsewhere that are alreadylicensed for packaging and storing pharmaceuticalproducts and medical devices, etc., we intend todevelop businesses that lighten the operationalloads of pharmaceutical and medical device
manufacturers.
We are also promoting business development in the
agricultural sector. For example, we are developing
and selling “DNP Agri Film (reflective, moisturizingfilm),” which increases crop yields by reflecting
sunlight more efficiently and thus maintaining
optimal moisture for plant growth.
In the life science field, we are participating in a
project aimed at developing “cell sheets” that showpromise for stimulating regeneration when applied
to a damaged cornea, heart muscle, or other bodypart. Among our other projects is the developmentof image analysis technology for investigating
the cause of disease, which we are pursuingthrough a business and capital tie-up with leading
medical imaging management system provider PSP
Corporation.

To Our Shareholders■ Promoting business activities in four growth
areas
Let’s look at some of our specific initiatives in the four
growth fields that we have identified.

5and other technologies, we intend to continue
developing highly competitive new products for the
automotive market.
Furthermore, we will keep leveraging DNP’s original
electron beam (EB) coating technology to increase
our share of the market for interior and exteriormaterials that combine outstanding durability andfunctionality with pleasant designs and aesthetic
appeal. We will also help create comfortable living
environments by expanding into a wide range offields including smart sensing devices, the “Internetof Things,” and big data-based marketing.
○ In the area of Environment and Energy, we areworking to realize a sustainable society thatsimultaneously supports economic development andpreservation of the global environment. We intend
to work harder than ever to develop eco-friendly
products and services that will conserve resourcesand energy and lead to the preservation of biologicaldiversity.
In October 2015, we began selling “DNP Lighting
Film (for laminated glass)” which brightens anentire room by effectively reflecting and diffusing
sunlight that enters from windows onto the ceilingand walls. We have already received a large
number of inquiries, and expect to supply the film
for use in a wide variety of applications including
residential and office buildings, and commercial
and medical facilities. Meanwhile, DNP’s “Highreflective, Light-diffusing Ellio” interior material
helps save energy by delivering even a small
amount of light to a wide area. It has been
adopted for use in bullet train cars on the Tohoku,
Hokkaido and Hokuriku Shinkansen lines, among
other applications.
In our energy business, DNP’s lithium-ion battery
pouches have captured a major share of the global
market. In addition, we are continuing to enhance thefunctionality of our photovoltaic module components
and to reinforce products and services that support
smart houses and smart cities.

■ Turning “new value” into “tomorrow’s basic”
In each of the growth areas described above, DNP will
work both at further expanding existing businesses
and at creating new businesses. Over a period of6several years, we plan to invest some 100 billion yen indeveloping new businesses.
Our hope is that the new value that we create will
become so familiar to people in the future that they
will take its existence for granted.
It is that very strong hope that we aim to express
through our motto, “Today’s Innovation is Tomorrow’s
Basic.” In order to fulfill that hope, we devise mediumand long-term strategies from a holistic standpoint,
make quick decisions, and carry them out by means ofdynamic business activities.

■ Building more global corporate value
We believe it is important that we continue to provide
the new value that DNP creates not only within Japan,
but on a broader, more global basis.
DNP has a long history of overseas expansion; after
opening a Hong Kong office in 1964, we went on toestablish operating locations in Europe, the Asia/
Pacific region, North America and elsewhere. As of
March 31, 2016, about one eighth of the DNP Group’s
roughly 40,000 employees were working outside Japan,
where the Group has 25 sales offices and 14 production
plants in 15 countries and a region.
We know that as we expand overseas, we mustfine-tune our products and services to match thecharacteristics of each region and the needs of thepeople who live there.
In the fiscal year ended March 2016, we took
advantage of our production bases in North America
and Malaysia as well as our worldwide frameworks
for integrated development, manufacturing, andsales to greatly expand our Imaging Communication
unit, which handles businesses related tophotography and other images. Following thebusiness and capital tie-up that we formed in March2014 with Vietnam’s leading smart card maker,
MK Smart Joint Stock Company, in February 2016
we strengthened our competitive position in theSoutheast Asian region by forming a joint venturewith Indonesia’s largest cash card manufacturing
and sales company, PT. Wahyu KartumasindoInternational. We are accelerating DNP’s global
development in a variety of other business fields as
well, for example by expanding our Southeast Asian
packaging business, primarily through our plants inIndonesia and Vietnam.

Segment Information
How DNP Works to Achieve
Sustainable Development
Financial Section

In order to improve capital efficiency, DNP alsoacquires and cancels treasury shares. DNP repurchased
treasury shares for seven consecutive years from2003 until 2009. Following the repurchase of up to 18
million shares for a maximum of 20 billion yen in thefiscal term ended March 2016, we plan to repurchase
up to 17 million shares for a maximum of 15 billion
yen in the fiscal term through March 2017. On May
26, 2016 we retired 17 million treasury shares. In the
future we intend to continue to implement flexible
capital policies in response to changes in the businessenvironment.

Special Feature

In order to earn the trust of all of DNP’s shareholders
and other stakeholders, we will do our best to achievesustainable growth in the medium and long term
through our business activities, and we will continue to
strive to increase DNP’s corporate value.

DNP in Brief■ Returns to shareholders
Our basic policy toward shareholder returns
is to pay stable dividends that are calculatedwith consideration for factors such as businessperformance and dividend payout ratio. At the sametime, we support future business development byusing retained earnings to enhance our financial
constitution and strengthen our managementbase. We allocate retained earnings primarily forinvestment in research and development of newtechnologies and businesses, capital spending,and strategic alliances and M&As. In this way, we
continue to actively create new businesses andexpand existing businesses.

■ Strengthening corporate governanceIn order to increase DNP’s corporate value in themedium and long term and improve financial indicators
like profitability and capital efficiency, we are building
and operating frameworks for making accurate
management decisions, quickly and appropriately
executing those decisions, and supervising anddirecting those processes. In order to further
strengthen those frameworks, in June of 2016 we
instituted a 12-member Board of Directors, including
two outside directors.
In the fiscal term ended March 2016, we explained
DNP’s basic policy of more actively pursuing dialogue
with shareholders and investors based on the principles
set forth in Japan’s new Corporate Governance Code,which took effect in June 2015. We are also working
on enhancing corporate governance by establishing a
new Advisory Committee, which includes our outside
directors among its members. DNP’s Management
Committee will receive advice and recommendations
from the Advisory Committee regarding nominationof director candidates and compensation of directors,
after which it will examine and consider what it hasheard before discussing and making decisions at a
Board of Directors meeting.

To Our Shareholders■ Boosting competitivenessIn order to make DNP’s businesses more competitive,
we are continuously working hard on businessstructure and cost structure reforms.
For example, in April 2015, we transferred our
Imaging Communication business from the Lifestyleand Industrial Supplies segment to the Information
Communication segment. And in April 2016, weconsolidated our business units involved in smart
cards, information security, sales promotion andpromotional tools, and planning and marketing.
These measures will help us as we continue striving
to increase the synergistic benefits that result fromstronger inter-departmental cooperation, to combine
marketing and settlement services, and to expand ourBPO business by leveraging our information security
infrastructure.

Appendix

DNP Annual Repor t 2 016

7

DNP in Brief
CONTENTS

8

10

Synopsis of Performance

14

DNP at a Glance

16

Our Products and Services

18

Evolution of DNP’s Businesses

20

Investor Information

DNP Annual Repor t 2 016

9

Synopsis of Performance

Grand Summary of Financial Results

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries

Years ended March 31

Dollars in thousands
except per share amounts

2016

2014

2016

1,462,118¥ 1,448,550$ 12,884,212-0.4%Statements of Operations (¥ million)

2016/2015($ thousand)¥Net sales

Change2015

1,455,916¥

Operating income

45,472

48,17450,099402,407-5.6%

Ordinary income

52,65153,75953,285465,938-2.1%

Income before income taxes

54,84151,062

48,608

485,319

7.4%

Net income attributable toparent company shareholders

33,58826,92425,642297,239

24.8%

Balance Sheets (¥ million)
Total net assets($ thousand)¥Interest-bearing debt
Total assets

1,063,242¥

1,124,092¥

976,385$-5.4%

189,821

187,946

182,597

1,671,062

1.0%

1,718,636

1,809,462

1,574,754

15,209,168-5.0%

Cash Flow Statements (¥ million)
Cash flow from operating activities

9,409,221($ thousand)¥

72,629¥85,731¥

120,109$642,735-15.3%Cash flow from investing activities(60,883)(50,540)(58,371)(538,788)

20.5%

Cash flow from financing activities(47,166)(23,865)(80,038)(417,399)

97.6%

Free cash flow

11,74635,191

61,738103,947-66.6%*Per Share Data (¥)

($)

0.47

27.0%

1,618.66

1,675.63

1,447.96

14.32

-3.4%

32

32

32

0.28

–

Operating income margin

3.12

3.29

3.46

3.12

-0.17

EBITDA margin

8.42

8.24

8.63

8.42

0.18

Net income to net sales

2.31

1.84

1.77

2.31

0.47

ROE (%)

3.20

2.67

2.81

3.20

0.53

ROA (%)

1.90

1.59

1.63

1.90

0.31

Net income
Net assets
Cash dividend

¥

53.10

¥

41.82

¥

39.82

$

Profit Margins (%)

Financial Ratios

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

19

17

20

19

–

20.79

21.32

18.47

20.79

–

18.84

27.94

24.84

18.84

–

Valuations (against share price on March 31)
PER (times)
PBR (times)

0.62

0.70

0.68

0.62

–

EV/EBITDA (times)

5.23

6.01

4.93

5.23

–

PCFR (times)

6.36

8.00

6.43

6.36

–

Dividend yield (%)

3.20

2.74

3.24

3.20

0.46

Value of shares repurchased (¥ million)

19,998––19,998–Dividend payout ratio (%)

60.30

76.50

80.4

60.30

–

Returns to Shareholders

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

AA–

AA–

AA

AA–

–

22.01

25.54

24.41

22.01

–

U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥113=U.S.$1, the approximate Tokyo foreign exchange market rate as of March 31, 2016.
Free cash flow = net cash from operating activities - net cash from investing activities*

10

To Our Shareholders

We expanded sales of products like smart cards, thermal transfer media for photo printing,lithium-ion rechargeable battery components, etc.

DNP in Brief

The Information Communication segment succeeded in boosting sales and profits,with operating income growing 32.3%.

We implemented strategic M&As, capital spending and other measures aimed atcreating new value.
Special Feature

Operating Income

Net Income (Loss) Attributable toParent Company Shareholders(¥ billion)(¥ billion)(¥ billion)

2,0 0 0

60

40
50.1

1,50 01,507.2

1,446.6

1,448.6

1,462.1

33.6
48.2

1,455.9

40

34.0

30

45.5

14

15

1.6

1.6

14

15

19.2

20

35.8

25.6

26.9

Segment Information

Net Sales

10

1,0 0 0

0

20

–10
0

–20

0

12

13

14

15

12

16

13

14

15

ROE

ROA

(¥)

(%)

(%)

53.10
39.82

40

7

13

16

Financial Section

Net Income (Loss) per Share60(16.4)

12

16

4

6

41.82

3

5

29.84

4
3

20

2.2

2.8

2.7

3.2

How DNP Works to Achieve
Sustainable Development

50 0

2

1.9

1.2

2

1

1

0

–1

–20
(25.39)

–2

–1
–1.8

12

13

14

15

16

–1.0

–2

–3

–40

Appendix

0

0

12

13

14

15

16

12

13

16

DNP Annual Repor t 2 016

11

Income before Income Taxes

EBITDA(¥ billion)(¥ billion)

60

54.8
48.6

50
40

150

51.1

118.8

120.5

122.6

15

16

101.9

10 0

35.2

125.0

30
50

20
10
2.7

0

0

12

13

14

15

Total Net Assets

13

14

Net Assets per Share(¥ billion)(¥)

1,20 01,124.1

1,0 0 0

12

16

914.2

937.1

2,0 0 01,063.2

1,675.6

976.4

1,50 080 01,618.7

1,448.0

1,352.7

1,386.9

12

13

14

1,608.8

1,579.0

1,574.8

12

13

14

1,0 0 0

60 0
400

50 0
20 0
0

0

12

13

14

15

16

Interest-bearing Debt

Total Assets(¥ billion)(¥ billion)

250

229.7

2,0 0 0

227.2

20 0

182.6

187.9

189.8

15

1,809.5

16

1,718.6

1,50 0150
1,0 0 0
10 0
50 0

50

0

0

12

13

14

15

16

15

PER (Price Earnings Ratio)*

PBR (Price Book-value Ratio)(times)(times)

40

1.5

29.70

30

16

27.94

1.0
24.84

20
18.84

0.63

0.64

12

13

0.68

0.70

14

15

0.62

0.5
10

0

0

12
*

12

13

14

15

16

Figure for the fiscal year through March 2012 is
not shown because a net loss was recorded for the year.

16Capital Expenditures *Research and Development Expenditures(¥ billion)(¥ billion)

120
97.3

31.7

88.3

30

30.8

30.8

13

14

31.7

31.8

15

16

To Our Shareholders

10 0

40
98.2

80
63.5
55.0

60

20

40
10
20

DNP in Brief

0

0

12

13

14

15

16

12

Figures include capital expenditures for intangible fixed assets.

*

Depreciation Expense

Free Cash Flow*(¥ billion)(¥ billion)

120

80

10 0

95.8

61.7

80

73.5

67.0

Special Feature

60

80.2

65.3

40

60

35.2
28.5

40

27.9

20

11.7

20
0

0

13

14

15

16

12
*

13

14

15

16

Free cash flow = net cash from operating activities– net cash from investing activities

Net Sales by Segment (Year ended March 31, 2016)

Operating Income by Segment (Year ended March 31, 2016)(¥ billion)(¥ billion)

Information
Communication

Information
Communication

821.6

Lifestyle &Industrial Supplies

382.6

199.4

Electronics

0

12.6

20.5

Electronics

58.1

Beverages

29.4

1.0

Beverages

20 0

400

60 0

80 0

1,0 0 0

0

10

20

30

Employees by Segment (As of March 31, 2016)(persons)

Beverages
1,213

52.5

23.3

Corporate
1,974

Information
Communication
21,370

13.3

Electronics

Lifestyle &Industrial Supplies
10,4185.8

Beverages

0

10

Appendix

Lifestyle &Industrial Supplies

Electronics
4,223

40

Financial Section

Capital Expenditures by Segment (Year ended March 31, 2016)(¥ billion)

Information
Communication

How DNP Works to Achieve
Sustainable Development

Lifestyle &Industrial Supplies

Segment Information

12

20

30

40

50

60

DNP Annual Repor t 2 016

13

DNP at a Glance

ProfileBusiness Portfolio■■

A comprehensive printing company
that creates new value by combining■ strengths in printing and information■■

DNP is one of the largest comprehensive printing companies in
the world. We provide a variety of products and services ina wide range of business fields to consumers and some 30,000
corporate clients in Japan and around the globe. DNP’s mainstrengths are the printing and information technologies thatit has cultivated since its founding in 1876. The Company has
used these technologies to branch out from publishing andcommercial printing into diverse fields including packaging,decorative materials, display components, and electronic
devices, and has developed many products in which it holds theworld’s largest market share. In the future, we will continue tocreate new value by combining our main strengths—printing andinformation technologies—to innovate in the growth areas ofKnowledge and Communication, Food and Healthcare, Lifestyleand Mobility, and Environment and Energy in order to solve theproblems confronting consumers and society.
From early in its development, DNP set about boosting theefficiency of the overall Group’s management throughmeasures including promotion of overall optimization, boosting
profitability, and making effective use of management
resources. We work hard to manage the company efficiently,
for example by concentrating functions like planning, sales,
and research and development in our head office while
positioning manufacturing divisions and specific technology
development divisions within Group companies.
As of March 31, 2016, the DNP Group employed about 39,198
people and had 40 sales bases and 56 production plants inJapan. Overseas, the Group has 25 sales bases in 15 countries
and a region, and 14 production plants in eight countries anda region. Overseas sales contributed 16.1% of the Group’s
overall net sales in the fiscal year ended March 2016.

DNP has two main businesses: Printing, which contributes
about 96% of consolidated net sales, and Beverages, which
generates about 4% of the Group’s sales through Hokkaido
Coca-Cola Bottling Co., Ltd. Armed with this business portfolio,
DNP aims to expand its businesses and increase its corporate
value by providing new value to corporate clients andconsumers.
Printing consists of an assortment of businesses throughwhich DNP applies and develops printing and information
technologies in order to solve problems for consumers, andfor client companies who operate in all types of businessfields and in diverse formats. We divide our Printing business
into three segments:(1) Information Communication, which
includes the book and magazine printing business where
DNP got its start, marketing-related materials with a focus
on commercial printing, smart cards and other products
related to information security, and Imaging Communication,
which focuses on photo printing and related products,(2) Lifestyle and Industrial Supplies, which supplies a wide
range of products including packaging products, decorative
materials, and energy-related components, and (3) Electronics,
which deals in display components, optical films, andelectronic devices, among other products. These threesegments cooperate with each other and form a businessportfolio that is well-balanced from the standpoints ofstability, profitability, growth potential, and risk.
Our Beverages business takes advantage of the Coca-Colabrand strength while also developing original DNP products.
We are working on bolstering our beverages business base,for example by promoting production and procurement incooperation with bottlers in various parts of Japan.

Three Well-Balanced
Strategic Segments(Effective April 2016)

DNP’s business portfolio is balanced
in terms of stability, profitability,■ growth potential, and business risks

Information Communication
Publishing (Publishing & Media Services, Education and Publications Distribution)
Information Innovation (Marketing and Information Security)
Imaging Communication

The Three
Segments of
DNP’s Printing
Business
Lifestyle and Industrial Supplies
Packaging

14

Lifestyle Materials

Industrial Supplies

Electronics
Display Components

Electronic Devices

Information Communication*

Net Salesby Segment (Year ended March 31, 2016)

Net
Sales
Net
Net Sales
Sales

Beverages
4.0%(Net sales)(Net sales)(Net sales)

Electronics
13.6%

Information
Communication
56.2%

billion)Operating Income (¥billion)Operating(¥ billion)
Operating Income
Income (¥(Operating income)(Operating income)(Operating income)

1,0 0 01,0 0 01,0 0 0

80 0
80 0
80 0

821.6
821.6
821.6

789.7
789.7
789.7

60 0
60 0
60 0
400
400
400

Lifestyle andIndustrial Supplies
26.2%

29.4
29.4
29.4

22.2
22.2
22.2

20 0
20 0
20 0
0
0
0

15
15
15

16
16
16

Net
Net Sales
Sales
Net
Sales

Beverages
1.6%(Net sales)(Net sales)(Net sales)

Information
Communication
46.3%

Lifestyle andIndustrial Supplies
19.8%

80 0
80 0
80 0

80
80
80

60
60
60

60 0
60 0
60 0

60
60
60

40
40
40

400
400
400

20
20
20

20 0
20 0
20 0

0
0
0

0
0
0

895.8
895.8
895.8

10 0
10 0
10 0

893.0
893.0
893.0

27.5
27.5
27.5

25.7
25.7
25.7

15
15
15

Beverages

AssetsAssetsAssets(Assets)(Assets)(Assets)

1,0 0 01,0 0 01,0 0 0

80 0
80 0
80 0

80
80
80

80 0
80 0
80 0

60 0
60 0
60 0

60
60
60

60 0
60 0
60 0

40
40
40

400
400
400

20
20
20

20 0
20 0
20 0

0
0
0

0
0
0

388.6
388.6
388.6

382.6
382.6
382.6
13.7
13.7
13.7

0
0
0

40
40
40
20
20
20
0
0
0

16
16
16

12.6
12.6
12.6

15
15
15

16
16
16

billion)Depreciation(¥ billion)
Depreciation (¥(¥ billion)
Depreciation(Depreciation)(Depreciation)(Depreciation)

10 0
10 0
10 0
80
80
80

450.6
450.6
450.6

60
60
60

441.8
441.8
441.8

40
40
40

17.6
17.6
17.6

17.0
17.0
17.0

15
15
15

20
20
20
0
0
0

16
16
16

Electronics

Operating Income (¥ billion)(Net sales)(Operating income)

80

2

58.1
1.1

1.0

40

1

Net Sales
Sales
Net
Net Sales(Net sales)(Net sales)(Net sales)

0

0

16

billion)Operating Income
Income (¥ billion)
Operating(¥ billion)
Operating Income (¥(Operating income)(Operating income)(Operating income)

1,0 0 01,0 0 01,0 0 0AssetsAssetsAssets(Assets)(Assets)(Assets)(¥ billion)
Depreciation (¥Depreciation
billion)Depreciation (¥ billion)(Depreciation)(Depreciation)(Depreciation)

10 0
10 0
10 0

1,0 0 01,0 0 01,0 0 0

80 0
80 0
80 0

80
80
80

80 0
80 0
80 0

80
80
80

60 0
60 0
60 0

60
60
60

60 0
60 0
60 0

60
60
60

40
40
40

400
400
400

20
20
20

20 0
20 0
20 0

0
0
0

0
0
0

400
400
400
20 0
20 0
20 0

20

15

80
80
80

(Operating income)(Operating income)(Operating income)

20 0
20 0
20 0

59.6

1,0 0 01,0 0 01,0 0 0

10 0
10 0
10 0

400
400
400

60

(Depreciation)(Depreciation)(Depreciation)

10 0
10 0
10 0

billion)Operating(¥ billion)
Operating Income
Income (¥(¥ billion)
Operating
Income1,0 0 01,0 0 01,0 0 0Net Sales(Assets)(Assets)(Assets)(¥ billion)
Depreciation
billion)Depreciation(¥ billion)
Depreciation (¥Lifestyle and Industrial Supplies*

Operating Income
by Segment (Year ended March 31, 2016)

Electronics
32.3%

AssetsAssetsAssets

0
0
0

25.9
25.9
25.9

230.3
230.3
230.3

15
15
15

20.5
20.5
20.5

199.4
199.4
199.4

16
16
16

10 0
10 0
10 0

310.3
310.3
310.3

18.4
18.4
18.4

15
15
15

40
40
40

273.4
273.4
273.4

15.0
15.0
15.0

16
16
16

20
20
20
0
0
0

* In April 2015, Imaging Communication business was transferred into the Information Communication segmentfrom the Lifestyle and Industrial Supplies segment. Figures for the term ended March 2015 in the chart above
have been adjusted to reflect the new configuration of the Information Communication segment and Lifestyleand Industrial Supplies segment.
DNP Annual Repor t 2 016

15

Our Products and Services

Information Communication

［1］

［ 2］

［3］
書店

Publishing
Publishing & Media Services [1] Magazines [2] Books[3] Hybrid bookstore network “honto”● Education and Publications Distribution[4] Maruzen & Junkudo Bookstore in Shibuya (Tokyo)
●

本の通販
ストア

Information Innovation
Marketing [5] Flyers and catalogs[6] Household budget-tracking application[7] Energy-efficient digital signage*● BPO[8] DNP’s Kamiya Solutions Center● Information Security [9] Personalized mail[10] Smart cards and magnetic cards[11] SIM card [12] Transparent hologram ribbon

電子書籍
ストア

●

［9］

［ 10 ］

［ 11］

［ 17］

［ 18 ］

Imaging Communication[13] Dye-sublimation thermal transfer printing media[14] Dye-sublimation photo printer [15] Ki-Re-i ID photo kiosk[16] Barcode labels made using thermal mass transfer printing media*BPO: Business Process Outsourcing

Lifestyle and Industrial Supplies
Packaging[17] Packaging [18] Universal design products[19] Barrier film for packages[20] Biomass plastic packaging[21] PET plastic bottles and preform (left in the photo)[22] Aseptic filling systems for PET plastic bottles[23] Medicine packaging for daily behavior monitoring systems● Lifestyle Materials[24] Residential interior materials (floor coverings)[25] Residential interior materials (wall coverings)[26] Exterior materials for buildings[27] Automotive interior materials[28] Interior coverings for railway cars (Hokuriku Shinkansen)● Industrial Supplies[29] Photovoltaic module components[30] Bus line sheet used in photovoltaic cells[31] Pouch for lithium-ion battery●

Electronics［ 24 ］［ 25 ］［ 26 ］［ 32］［ 33 ］［ 34 ］［ 40 ］

［ 41］

［ 42］

Display Components[32] Color filter for liquid crystal display[33] Large-scale photomask [34] Touch panel sensors[35] Optical films used for displays[36] Electrode film for capacitive touch panels[37] Display system for ultra-short focus projector●

Electronic Devices[38] Semiconductor photomask[39] Master template for nanoimprinting[40] Hard disk drive suspension[41] Lead frame for compact semiconductor packages[42] Metal substrate for LED light[43] Camera module[44] Image Enhancement LSI[45] NFC (near field communication) module[46] Electronic paper display system[47] MEMS (micro electro mechanical systems) products●

Note: Numbers in square brackets correspond to photographs on pp. 16-17.

16

［6 ］

［ 7］
［ 14 ］［ 15 ］［ 16 ］［ 19 ］［ 20 ］

［ 21］

［ 22］

［ 23 ］［ 27］［ 28 ］［ 29 ］［ 30 ］［ 31］［ 35 ］［ 36 ］［ 37］［ 38 ］［ 39 ］［ 43 ］［4 4］［ 45 ］ ［ 46 ］

Special Feature［ 13 ］

DNP in Brief

［4］

［8 ］

To Our Shareholders

［5］

［ 12］

Segment Information
How DNP Works to Achieve
Sustainable Development
Financial Section［ 47］

Appendix

DNP Annual Repor t 2 016

17Evolution of DNP’s Businesses

1876 〈 Founding 〉

1950

1960

Printing▶1876

Founding of Shueisha, DNP’spredecessor; start of letterpress printing

1970

1980

Comprehensive Printing

Information Processing▶1935

Information Communication▶1987

Merger of Shueisha and Nisshin Printing to form Dai Nippon Printing▶1963 Establishment of Hokkaido Coca-Cola Bottling Co., Ltd.
Listed shares on
Tokyo Stock Exchange▶1951 Began promoting “expansion printing”▶1944 Launch of DNP’s Technical Research Laboratory (now called the Research and Development Center)▶1949

Began shifting focus to“comprehensive
information processing”

Publishing▶1877▶1972 Began development of▶1985 Development of world’s first
Produced first Western-style ▶1912 Completion of DNP’s original Shueitai fontbook in Japan, revised edition ofComputer Typesetting System (CTS)
electronic dictionary on CD-ROM▶1925 Received order to print 740,000 copies of the inaugural edition of “King” magazine“Self-Help” by Samuel Smiles▶1975 Began digital processing of image data
▶1956 Printed the inaugural edition of “Shukan Shincho,”▶1882 Began sales of printing types
the first weekly magazine issued by a publishing company

Marketing
▶1885

▶1971

Start of lithographic printing

Developmentof scented printing▶1981

Establishment of
new video printing
system technology▶1989

Constructionof global
network system

Information Security
▶1898

▶1954

▶1973-74 Full-scale production of magnetic plastic cards and magnetic passbooks
Start of carbon-backed ledger printing▶1965 Began mass production of OCR ledgers▶1983 Development of smart cards▶1945 Began printing new Bank of Japan notes
after being designated to do so by Japanese Ministry of FinanceBegan printing of securities

Imaging Communication▶1984-85

Lifestyle and Industrial Supplies

Development of thermal massand dye-sublimation thermaltransfer printing media

Packaging▶1951▶1961 Started production of▶1975 Began producing retort pouches
Full-scale entry into
paper container businessblow-molded bottles▶1976 Development of aseptic filling system▶1962 Began producing paper cups
▶1983 Development of technology for▶1951 Began printing on vinyl
drawing on molded plastic goods
and other non-paper materials▶1969 Began producing laminated tubes▶1984 Began producing PET
plastic beverage bottles

Lifestyle Materials▶1951▶1974 Introduction of Curlfit technology for printing on curved surfaces
Began developing decorative paper for melamine resin plate▶1961 Began printing directly onto steel plate▶1977 Development of stainless decorative sheet

Industrial Supplies(Optical films development)
transferred to Electronics segment

Electronics
Display Components▶1958

Succeeded in prototyping of
shadow masks for color televisions

▶1973

▶1985

Development of color filters

Development of LCD color filter
production technology▶1978 Development of new type of
shadowmasks (flat masks)

Electronic Devices▶1959

Succeeded in prototyping of photomasks▶1964 Began lead frame production

Optical Films
▶1983

18

Started producing
projection screens

1990

2000

P&I Solutions
▶2001

▶2015

Announcement of DNP Group Vision
for the 21st Century(125th anniversary of DNP’s founding)▶1997 Start of online publishing business
Development of Shueitai True Type fontAnnouncement of
DNP Group Vision 2015

P&I Innovations
aimed atcreating new value▶2008-10

Alliances with Maruzen Co., Ltd., Junkudo Co., Ltd. andBunkyodo Group Holdings Co., Ltd., etc.
▶2010 Startup of “honto” e-book sales service

Hybrid publishing solutions
Hybrid bookstore network “honto”

▶1995

▶1993

Promote BPO business▶2001 Began Orikomio! e-flyer service
Began Internet service “Media Galaxy”▶2008 Launch of digital signage project▶1997 Began e-commerce service

Expand total security solutions

self-service printing system▶2015

Inbound tourism andregional revitalization
Settlement-linked marketing
Expand imaging market

Began offering “My Number”
citizen ID card applications
via Ki-Re-i ID photo kiosks

Began selling aseptic PET plastic bottle-filling systems using preforms▶2007 Development of packaging for Japanese-style space food▶2013 Established plant in Vietnam▶2015 Acquired license as controlled▶1998 Development of transparent “innovative barrier film (IB Film)”
medical devices retailer (Kyoto)▶1996

Established research facility“DNP Sumai Mirai Lab” concerned withpleasant future living

Commercialized pouches for lithium-ion rechargeable batteries ▶2015 Began selling DNP Agri Film
▶2015 Began selling DNP Lighting Film
▶2003 Development of photovoltaic module components▶2005 Development of fuel cell components▶2007 Development of printed organic photovoltaic cells

▶2001

▶2016

Announced expanded production
capacity of metal masks used
for organic EL displays▶2011 Development of the world’s
Launched multilayer wiring formation technology
thinnest (0.28mm) printed board▶1999 Entered semiconductor package substrate field▶2001 Began MEMS (micro electro mechanical systems) processing under contract▶2002 Completed production line for “B 2it” high-density build-up boards▶1996▶2014 Development of ultra-low reflection film
Establishment of anti-glare film technology for LCDs
▶2004 Development of “JETBLACK” front projection screens

Expand safe, reliable packaging,a variety of living spacesolutions, and industrial materials
businesses worldwide

Display products:
Shift emphasis to growth areas
and expand new product lineup
Electronic devices:
Develop cutting-edge technologies
and expand overseas business
Optical films:
Use basic technologies to expand
into new markets

Appendix

New Businesses
Life Science (Regenerative Medicine, etc.)▶2004 Successful formation ofcapillary patterns▶2015

Business and capital tie-up with PSP,a major player in medical imaging
management systems▶2008 Development of cell patternculture substrate▶2008 Development of cell sheet culture film

Financial Section

Development of flexible organic EL displays▶2003 Development of full-color organic EL panels▶2006 Mass production of color filters
using inkjet method

Develop new products usingmaterials with more advanced
functionality

How DNP Works to Achieve
Sustainable Development

▶1999

▶1995

▶2014

Began producing sheet with EB coating

Expand eco-friendly products & services

Segment Information▶1997

Special Feature▶2004 Began Card Data Management Service (CDMS)
Production of contactless smart cards▶1999 Launch of IC tag project▶2013 Established DNP Kashiwa Data Center▶2005 Establishment of “SSFC”▶2015 Expanded nationwide BPO
office security consortium
center network to five locations▶2005 Began development of “PrintRush”

DNP in Brief▶1992

2016 〈140th anniversary of DNP’s founding 〉
To Our Shareholders

Information Communication

2010

Promote research and development
aimed at business creation

DNP Annual Repor t 2 016

19

Investor Information(as of March 31, 2016)

Dai Nippon Printing Co., Ltd.

Major Stock Indices in which DNP is a Constituent:Head Office:Nikkei Stock Average

1-1, Ichigaya-Kagacho 1-chome, Shinjuku-ku,

TOPIX Large70

Tokyo 162-8001, Japan

S&P/TOPIX 150
Dow Jones Sustainability Indices

Established: 1876

FTSE4Good Global Index
MSCI Global Sustainability Indexes
CDP Climate Performance Leadership Index

Number of Employees (consolidated): 39,198

ETHIBEL Investment Register
Morningstar Socially Responsible Investment Index

Paid-in Capital: ¥114,464 million

Stock Code: 7912
Number of Common Stocks:
Authorized:
Issued:Administrator of Shareholder Register:

1,490,000,000 shares

Mizuho Trust & Banking Co., Ltd.

680,480,693 shares

2-1, Yaesu 1-chome, Chuo-ku,* With the cancellation of 17 million treasury shares on May 26, 2016,

Tokyo 103-8670, Japanthe total number of outstanding shares stood at 663,480,693.

American Depositary Receipts:

Number of Trading Unit Shareholders (own 1,000 or more shares):

Ratio (ADR:ORD): 1:1

24,228Exchange: OTC (Over-the-Counter)
Symbol: DNPLYCUSIP: 233806306

Stock Exchange Listing: Tokyo Stock Exchange

Depositary:
Major Shareholders:Shares (thousands) Percentage (%)

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

46,972

7.47

Japan Trustee Services Bank, Ltd. (Trust Account)

35,566

5.65

The Dai-ichi Life Insurance Co., Ltd.

30,882

4.91

Mizuho Bank, Ltd.

18,413

2.93

Employees’ Shareholding Association

15,639

2.49

Nippon Life Insurance Company

9,471

1.51

Japan Trustee Services Bank, Ltd. (Trust Account 9)

8,010

1.27

The Bank of New York Mellon SA/NV 10

7,340

1.17

State Street Bank West Client-Treaty 505234

7,306

1.16

State Street Bank And Trust Company 505225

7,198

1.14

Notes: 1. The number of treasury shares (51,375,142) is excluded from the figures above.
2. The ownership stakes are based on the total number of shares outstanding lesstreasury shares (629,105,551).

The Bank of New York Mellon
101 Barclay Street, 22 West,
New York, NY 10286, U.S.A.
Telephone: (201) 680-6825
U.S. toll free: 888-269-2377 (888-BNY-ADRS)URL: http://www.adrbnymellon.com/
Annual Meeting of Shareholders:
The annual meeting of shareholders of DNP is
normally held in June each year in Tokyo, Japan.
Investor Relations:
Dai Nippon Printing Co., Ltd.
Corporate Communication Division
IR Group, Press and Public Relations
1-1, Ichigaya-Kagacho 1-chome, Shinjuku-ku,
Tokyo 162-8001, Japan
Tel: +81-3-6735-0101
Fax: +81-3-5225-8239
Web Site:
http://www.dnp.co.jp/eng/20

To Our Shareholders

Share Price Evolution (Tokyo Stock Exchange)(between April 1, 2013 and March 31, 2016)

DNP Stock Price (yen)Increase (%)*

1,500

70

－DNP
－Nikkei Average

DNP in Brief

80

60－TOPIX50

1,200

Special Feature

40
30
20

900

0

Segment Information

10

–10

15

–20

16

*Index 100 = March 31, 2013

Voting RightsType(as of March 31, 2016)

Number of Stocks (stocks)

Number of Voting Rights (rights)––

Stocks with limited voting rights (treasury stocks, etc.)––

Stocks with limited voting rights (other)––

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

Common stocks
Common stocks

51,375,000
1,085,000––

Stocks with voting rights (other)

Common stocks 626,088,000

626,087

Stocks with less than trading units

Common stocks

Outstanding shares
Total voting rights of stockholders

1,932,693–

680,480,693––

626,087(as of March 31, 2016)

No. of Stocks Held

Percentage of Holding to No. of Outstanding Shares

51,375,000

7.55

Kyoiku Shuppan Co., Ltd.

1,085,000

0.16

Total

52,460,000

7.71

Dai Nippon Printing Co., Ltd.

Appendix

Treasury Stocks
HolderFinancial Section

Stocks with no voting rights

How DNP Works to Achieve
Sustainable Development

14

DNP Annual Repor t 2 016

21

Special Feature

Toward medium- and long-term growthfor DNP and society

22

To Our Shareholders

Our corporate philosophy is “the DNP Group connects individuals andsociety, and provides new value.” In other words, we at DNP aspire toprovide value that never existed before, by more actively engaging with

DNP in Brief

consumers and more proactively grappling with social issues. In order forthe new value that DNP creates to become indispensable to companies’
business processes and to each consumer’s lifestyle, we must develop itin such a way that people come to think of it as a given―as something
basic. “Today’s Innovation is Tomorrow’s Basic” represents DNP’s efforts

Special Feature

to develop new value as universal value for society. In this special
feature section, we will introduce medium- and long-term initiatives
aimed at creating value for the future.

CO NT E NTS

Overview of Business Expansion Based on “DNP Group Vision 2015”

26

New Value to Be Generated in Four Growth Areas

28

DNP Businesses that Provide New Value

Segment Information

24① Inbound Business② Energy-related Business
How DNP Works to Achieve
Sustainable Development③ Automotive-related Business

Financial Section
Appendix

DNP Annual Repor t 2 016

23

Toward medium- and long-term growth for DNP and society

Resolve social issues in four growth areas
Expand business by providing new value
Our business vision is “Use P&I
innovations to expand business,
primarily around four growth areas.”
Among the various social problems
in these four areas, both in Japan andoverseas, we aim to address thosewhich can be resolved through heavy
involvement by DNP, allowing us tosimultaneously expand our business andcontribute to society. We see two
approaches to achieving these kinds ofresults in these growth areas. One is todevelop new businesses. The other is to
add new value within the manybusinesses we already pursue, witha view toward resolving social issues
found in these growth areas.
In order to make both approaches
succeed, DNP is working hard atengaging in taiwa (dialogue) andcooperation with its many
stakeholders. As DNP approaches the140th anniversary of its founding,which falls in October 2016, we have

Corporate
Philosophy

Business
VisionGuiding
Principles

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

Taiwa (dialogue)
and cooperation

innovation
I
&

s

P

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

Printing&
Information(DNP’s strengths)

Society

DNP Group Vision 2015
We reformulated our Corporate
Philosophy, Business Vision, andGuiding Principles to point theway toward medium- andlong-term growth for DNP thatwill result in contributing tosociety.

Main initiatives in the fiscal term ended March 2016

Information
Communication

We expanded our business in Japan and overseas by leveraging DNP’s strengths in areas
like information security and business process outsourcing (BPO).
December 2015 Strengthened BPO business by opening two new BPO centers, giving us a total of five operating locations in Japan
February 2016 Expanded smart card business in Indonesia by establishing PT. Wahyu DNP Bureau

We increased synergistic benefits by rethinking our business segments.
April 2015 Transferred photo printing-related business to Information Communication segment

Lifestyle andIndustrial Supplies

We pursued strategic M&As and other forms of collaboration aimed at generating new value.
August 2015 Strengthened automotive business by adding TAMURA PLASTIC MFG. Co., Ltd. to the DNP Group
February 2016 Strengthened medical image processing business by making PSP Corp. an affiliated company accounted for by the equity method

We focused on products that use cutting-edge technologies and on developing new business models.

Electronics

P&I innovations

April 2015 Started a new, market-creating ultrafine processing business utilizing nanoimprinting technology
October 2015 Announced new film for in-vehicle displays that prevents glare on windshield

We will use abilities and resources from within and outside DNP to continue creating new value.
We increased competitiveness by restructuring operations and implementing cost structure reforms.

24

August 2015 Completion of DNP Ichigaya Kagacho Building, the centerpiece of DNP’s Ichigaya district redevelopment projectcapital and a variety of tangible andintangible assets including the skills andexpertise we have cultivated so far,strengths in sales, planning andmanufacturing, and connections withsociety and communities. However, amid
the large-scale changes that are rapidly
occurring today, it is very importantthat we link our own strengths withthose of the many stakeholders outsideof DNP in ways that will lead togenerating new value.
Any products or services that DNP
creates as new value will bemeaningless unless they arerecognized as valuable by corporateclients and consumers. That’s why

dialogue and cooperation are so
important; they are the vehicles thatwill enable us to resolve issues incompanies’ business processes, makeindividuals’ lives more rich and varied,and bequeath our planetaryenvironment to the next generation
without destroying it.
DNP intends to achieve sustainablegrowth for our company and forsociety by taking a broad view thatencompasses past, present and future,formulating comprehensive strategies
for the short, medium and long term,
making decisions quickly, and actively
developing business activities.

Increasing corporate value
in the medium and long term

Toward growth for
DNP and society

October 2015

Four growth areas

Some of the main areas where
DNP can expect to create “new value”

Areas in which DNP can solve social problems
by making use of its strengths, enhance its
corporate value, and contribute to society

Expanding existing
businesses and creating
new businesses

Solvingsociety’s
problems

BPO

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Inter gs
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Smar act cities
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Reduc vironmentenon theGlobal & local

uc
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Environment and EnergyLifestyle and Mobility

Food and Healthcare

Knowledge and Communication

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Cultivationration・enegthe next nal exchange
atioIntergenerion
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Work-life balance
Diversity

etc.

Contributions
to society

Areas where DNP’s strengths can contribute

Various social problems

DNP Annual Repor t 2 016

25

Increasing corporate value
and contributing to society

Knowledge and Communication

Growth areas

Food and Healthcare

Lifestyle and Mobility

Environment and Energy

P&I innovations

Society26

New Value Generated in Each Growth Area

DNP supports people’s lifestyles through pleasant communication and provides products
and services that foster culture. We provide information that consumers want, when
they want it and in optimal formats, by producing information media and content and byenhancing services protected by information security measures, etc. For example, wewill continue to promote initiatives like DNP’s “honto” hybrid bookstore network whichhandles paper and electronic books, to develop educational information andcommunication technologies including digital textbooks, and to stimulate multilingual
communication in response to the increasing number of people visiting Japan fromoverseas.

Amid changes in worldwide population dynamics, including a falling birthrate andincreasing longevity in Japan, we will support safe, high-quality lifestyles and work toprovide new value that supports lifelong health maintenance. For example, we support
people’s food supply and health by providing safe, hygienic packages for foods andbeverages, household items and pharmaceutical products. In addition, we are actively
developing advanced products and services using printing and information technologies
in new fields like life sciences (including regenerative medicine and medical imaging
control systems) and agricultural films that help boost farm productivity.

We will continue to provide new value that contributes to achieving a high degree ofcomfort, safety and security in a variety of living spaces including homes, commercial
facilities, offices and medical facilities, automobiles and passenger trains. In our daily
lives we pass through a number of living spaces and exchange various types of
information. DNP will continue to develop products with outstanding functionality andaesthetic design in order to make these spaces more pleasant. We will keep our eye on
developments in areas like mobile terminals, wearable devices, and the Internet ofThings (IoT), and promote businesses aimed at realizing a smart society in which living
space infrastructure is appropriately controlled.

We will speed up development of a variety of products and services aimed at realizing asustainable society that combines economic development and environmental
preservation. One example is “DNP Lighting Film,” which efficiently reflects lightentering rooms from windows onto ceilings and other areas, and diffuses it to brighten
up rooms. In the energy field, we intend to further increase our already large global
share of the market for pouches for lithium-ion rechargeable batteries. In addition, we
will focus on the development of eco-friendly products and services that will contributeto energy and resource conservation, and to preserving biological diversity.

Main businesses
Safe and secure information platforms
Reliable settlement solutions● Stimulation of paper andelectronic publications distribution markets● Inbound and outbound tourism● Multilingual communication, etc.
●●

Main businesses
Development of products that can help
increase agricultural productivity
Reducing food loss with the help ofhigh-performance packaging films● “Universal design” that makes products andservices easy for everyone to use● Commercialization of regenerative medicine●●● Advancement of medical imaging control systems, etc.

Main businesses
Actualizing a smart societythat comfortably connects various spaces“Internet of Things,” connecting many things
to the Internet● Creation of information services that can beused safely● Development of electric cars andother next-generation vehicles● Making automated driving systems a reality, etc.
●●

Main businesses
Expanding eco-friendly products and services
Generating, storing and conserving energy● Reuse, reduction, recycling● Advanced products that control light and heat
● Establishing traceability of materials, etc.
●●

Achieve medium- and long-term growth for both DNP and society
by providing new value that makes possible richer and more varied lifestyles

DNP Annual Repor t 2 016

27

DNP Businesses that Provide New Value ①

Inbound Business

Services for inbound travelers to Japan
─ Initiatives aimed at revitalizing every corner of JapanThe number of foreign travelers to Japan in 2015 reached about 19.74 million, and they spent 3.5 trillion yen, a sum on apar with total exports by Japan’s automotive components industry. The government’s new goal for 2020 is to double thenumber of foreign visitors to 40 million and increase their consumption to 8 trillion yen. The main reasons foreigners cometo Japan are sightseeing and shopping. Related inbound business is seen as a significant potential booster for regional
economies and is being hailed as a pillar of the government’s growth strategy aimed at achieving GDP of 600 trillion yen.
Along with the advancement of digitization and networking, DNP has developed its own diverse information and communication
technologies (ICT) such as optimal processing of image, voice and text data and stronger information security. Backed by ourstrengths in printing technologies and ICT, along with our experience in making safe, reliable and pleasant communication a
reality for corporate clients and consumers, today DNP provides comprehensive services that meet the wide range of needsof foreign visitors to Japan. In addition to these services to foreign visitors, DNP also continues to work to increase theappeal of localities throughout Japan, prepare environments in which information is easy for everyone to access, andprovide a variety of services.

DNP’s Initiatives for Serving Inbound Travelers to Japan
Inbound Market (foreign visitors to Japan)
Tourism
Navigation

Shopping

Business

Communication

Pamphlets

Internet
via PC

Shopping

Smartphones

Digital signage

Overseas study
Souvenir-making

Traditionalsignage

Multilingual support
Information transmission

Imaging and video technologies

Marketing

DNP’s core technologies

Cross-media Communications Designthat Makes Use of Printing Technologies
When we travel overseas, very often thefirst obstacle we encounter is the “language
barrier,” i.e. the difficulty of communicatingsmoothly. The same is true for theforeigners who visit Japan from a varietyof countries and regions: when shopping
or trying to find their way to an unfamiliar
destination, it would be very reassuring to
be able to navigate in one’s own native
language.
DNP’s touchscreen multilingual digital
signage based on universal design*
helps first-time visitors to a location or facility
find their way easily.

In response to this problem, DNP has
developed services that will help
everyone who visits Japan to create thebest possible memories. Examples include
touchscreen digital signage that displays
maps and tourist information in multiple
languages and tablet PC apps that
support smooth dialogue with customers
in multiple languages by tapping thescreen to change languages. We will
focus on serving the growing number offoreign visitors to Japan by using themost appropriate expressions anddesigns based on gaining understandingof cultures around the world.

* Universal design makes it easy for anyone to use a product or service.

To Our Shareholders“DNP YORIP” or “DNP Side Trip”
smartphone application
helps popularize little-known
attractions and establish local brands.

Attractive Local Branding Connects Individuals and Society
DNP in Brief

DNP content services

Barrier-free access
DNP is working on barrier-free urban
development that will allow diverse
people from all over the world to enjoy
their time in Japan without worry.
Looking ahead to the 2020 Tokyo
Olympic and Paralympic Games,businesses and shopping malls
throughout the city as well as train
stations, airports and othertransportation facilities have begun
making many types of infrastructurebarrier free. DNP is focusing especiallyon removing barriers from various typesof information communication at shops
and on city streets, for example bydeveloping reading software andproducing braille pamphlets that areeasy for visually impaired people to use.
In ways like these, DNP takes a broad
view of inbound business and uses its
printing technologies and ICT tocontribute to urban development,
enabling all types of people to feel atease in sightseeing and in daily life.
DNP Annual Repor t 2 016

Appendix

an example of the digital archiving business
we are promoting

information is then provided to business
operators within a secure information
environment when the visitor orders
goods or services.

Financial Section

Ryoanji, a World Heritage site from“Historic Monuments of Ancient Kyoto,”

From the autumn of 2016, a vendor
relationship management (VRM) systemdeveloped by DNP will support the“Omotenashi (Hospitality) Platform” tobe provided by Japan’s Ministry of
Economy, Trade and Industry for theconvenience of foreign visitors. The VRM
system will make it easy for foreign
visitors to Japan to receive all types ofservices from the time they begin
preparing for their trip until after they
return home. By simply registering theirpersonal information and credit card
information with the system once, thehelp tourists share memories of their trip.

How DNP Works to Achieve
Sustainable Development

Measures to ensure
safety and security“ShaGoo!” automatedcommemorative photo booths

Segment Information

help the district develop and market local
health and beauty products, including
support for overseas expansion.
Another service that DNP provides fortravelers is its “DNP YORIP” or “DNP SideTrip” smartphone application, which
sends information about the charms ofvarious localities at different points
along a journey. Before departure, thesmartphone app helps travelers plan
their trip and make various reservations.
During the trip it suggests side trips, andafterward it helps the traveler record
notes and memories. The first edition
provides tourists with information about
eight cities and towns in the broader
Hachinohe area of Aomori Prefecture.
DNP plans to actively promote new
businesses related to regional
revitalization. As an example of making
souvenirs, DNP operates a nationwide
network of “ShaGoo!” automated photobooths at tourist attractions and event
venues, where customers can take uniquephotos that commemorate their visit to
the site or participation in an event.

Special Feature

In our inbound business, at the same timethat we bolster multilingual service andprepare environments that welcome
foreign visitors, it is also important totake steps to increase the appeal of
outlying regions. DNP is pursuing
initiatives aimed at discovering eacharea’s best features and publicizing them
to a large number of people.
For example, DNP is promoting a
digital archiving business that uses ultra
high-definition technology to record 4K
video content of the 17 shrines, temples
and castles in Kyoto that are registeredas World Heritage cultural sites. The
content includes high-resolution imagesof treasures that tourists normallycannot see, such as ceiling paintings andpaintings on interior sliding doors.
In addition, DNP has entered into anindustrial development cooperationagreement with the Higashimatsuura
Genkai-cho district of Karatsu, Saga
Prefecture, to promote the “Karatsu
Cosmetic Concept,” under which DNP will

29

DNP Businesses that Provide New Value ②

Energy-r el ated Business

Reducing stress on the environment in many areas
─ Initiatives that make effective use of energy
Due to rapid worldwide economic development and population growth,energy and resource use have increased sharply, and destruction ofnatural habitats and other negative effects on the global environment
have become problematic. DNP positions Environment and Energy as oneof its growth areas. We are promoting a variety of initiatives, including thedevelopment of eco-friendly products and services, in order to realize asustainable society that can coexist with nature.
Through our business activities, DNP aims to simultaneously achieve
economic growth and environmental preservation. Specific examples
include helping to create smart cities that reduce resource and energy
usage and supporting compact cities that concentrate the functions
needed for domestic life; development of products and services that makeeffective use of natural energy; initiatives for generating and storing
power; and development of products that are easy on the environment
throughout their life cycle, i.e. from raw material procurement throughmanufacturing, usage, disposal and recycling.

Room brightness before applying lighting film (left) and after (right)

DNP Lighting Film
improves room brightness by efficiently
reflecting and dispersing sunlight.

“DNP Lighting Film”
applied to windows
to brighten interior space“DNP Lighting Film” is applied towindows at homes, offices, andcommercial, medical or nursing carefacilities, etc., in order to effectively
bring sunlight inside so the interior isbrightened during the daytime,
thereby reducing electricity
consumption. “DNP Lighting Film” (forlaminated glass) was introduced forsale in October 2015. The film, which
directs light coming into the room tojump upward, is sandwiched between
two pieces of glass, thus also making
the glass more difficult to break andpreventing crime. In tests using the
new film in laminated glass windows
on the north side of buildings where
there is not much sunlight, it was
found that after installing the film,brightness in the rooms doubled*1, andelectricity required for lighting was
reduced by 13%*2. In previous attempts
to make this type of product, its
light-drawing function was hinderedwhen the film was bonded to theglass. However, this problem wassolved by tweaking the film’s structure
and materials, for example by placing
the light reflective and dispersal
functions inside the film rather thanon the surface. The product has been
adopted by major housing
manufacturers. DNP has also
developed “DNP Lighting Film” (foron-site installation) which it provides
for application to existing residential
windows, for example during
renovations.
＊1 According to a DNP study: maximum values
measured June 5, 2015, 9 a.m. to 6 p.m.
＊2 According to a DNP study: measured July 2, 2015,
9 a.m. to 6 p.m.

30

Segment Information

Energy-efficient
digital signage with its
own natural power
generation systemtransmits information in timesof emergency as well as at
normal times.

How DNP Works to Achieve
Sustainable Development
Financial Section

proposes household energy conservation
measures.

The energy-efficient digital signage
developed by DNP can transmit
emergency information and confirm
individuals’ safety should a disasteroccur. In addition, it can be fitted witha security camera and serve as both adisaster prevention and crime
prevention system. DNP will push tohave the signs installed in public
facilities and parks, schools anddesignated emergency shelters,commercial facilities where many
people gather, high-traffic roads,
apartment buildings, offices andfactories, etc. in order to achieve safe,
worry-free cities and towns.

Special Feature“e-gokochi” energy conservationassessment system for household use

Many companies and local
governments are working on making
effective use of natural energy as away to prevent global warming.
Since April 2016, DNP has been
selling energy-efficient digital signagethat contains a natural power
generation system combining solar
and wind power and storage batteries.
In the event of a major earthquake, if
power outages and/or disruptions intelecommunications infrastructure
render smartphones and otherinformation terminals unusable, it may
become difficult to obtain emergency
information promptly.

DNP in Brief

DNP actively develops solutions thatmanage overall energy usage. We
began operating a monitoring systemat our own facilities that displays at
a glance, in addition to electric power
and water usage, energy costs and CO2
emissions equivalents. Building on thatexperience, we have answered theneeds of companies and local
governments that wanted to manage
and reduce energy usage based ona smart house or smart cities model.
We intend to continue helping them
manage energy usage and operateenergy management systems.
Citing DNP’s contribution to gas-related
technology and business development,
the Japan Gas Association awarded its
2016 technology prize to DNP for our“e-gokochi” assessment system, which
we developed in 2014 to help reduce
household energy consumption.
The system simulates water and powerusage based on factors like the numberof people in the household, the types ofequipment being used, and the way
equipment is used. It assesses equipment
performance, proposes energy-saving
and CO2 reduction measures, andcalculates the expected effectivenessof those measures. DNP will supply thesystem to a large number of gas
dealers.

Disaster-resistant, crime-preventing digital signage
uses natural energy

To Our Shareholders

Energy usage assessment
system makes energy
consumption visible

Appendix

31

DNP Businesses that Provide New Value ③

Automotive - r el ate d Business

Automotive-related initiatives that
respond to changes in automobile functioning
In the automotive industry, a number of technologies are being developed in order to minimize stress on theenvironment and improve safety and comfort. Rather than simply meeting fuel efficiency standards, vehicle
manufacturers are speeding up initiatives such as developing electric, fuel cell, and other next-generation vehicles
and reducing the weight of auto body components in order to decrease the burden on the environment worldwide.
One of DNP’s designated growth areas is “Lifestyle and Mobility,” where our efforts involve securing people’s
comfort not only in homes, workplaces, schools and commercial facilities, but also in transit spaces such as
automobiles and trains, as well as working to generate information services that are safe to use. Consumers often
view automobiles in particular as their personal space where they seek special functions and new value.
Amid increasing adoption of advanced driving support systems that detect and preempt potential collisions, theautomobile market is anticipating the realization of automated driving systems. The market is also focusing on
products and services that increase comfort, for example by protecting privacy, improving design and texture ofauto interiors and exteriors, or by adoption of head-up displays that project information onto a car’s windshield.
DNP is working to provide new value that will lead to resolving issues like these.

Toward realizing pleasant, safe and reliable transit spaces
More comfortable personal spaces
DNP began developing residential
construction materials in the 1950s. In the
1980s, we developed methods ofdecorating products made of plastic
formed into complex three-dimensional
shapes, including “Thermoject” technologythat enables the application of diverse
designs simultaneous with injection
molding, and our “Curlfit” technology forusing water pressure to transfer design
onto curved surfaces. Automobiles are
considered part of personal space andthere is strong demand for improving
their design. DNP will continue to work
toward advancing formed products
through the use of these technologies,
and to expand the range of possibilities
for interior and exterior design. Meanwhile,
TAMURA PLASTIC MFG. Co., Ltd., which
joined the DNP Group in August 2015,
holds a substantial share of the Japanesemarket for side visors that are attachedabove automobile side windows. We will
focus on developing new products thatcombine Tamura’s strengths with DNP’sdecorative technologies and strength infunctional films.
Using nanoimprinting for self-driven carsNanoimprinting is a method that enables
the transfer of concavo-convex micro32

patterns with line widths of 20nm*1 orless by pressing a template against a
resin-coated substrate. DNP cultivatedhigh-definition pattern-forming
technologies by making semiconductor
photomasks, and we believe we canapply those technologies to self-driven
automobiles. Automatic controls used in
automobiles require an enormous numberof light sensors. By using nanoimprinting
technology, it is possible to develop andmass produce optical elements that improvesensing accuracy and efficiency bycontrolling light within a nano-structure
according to the light’s wavelength.
In 2015, DNP launched a one-stop service
for companies that want to produce
nano-processed goods, whereby wesupport every step from product planningand design to development, die
production, transcription prototyping andmass production.
Increasing in-vehicle information security
People have started talking about“connected cars” that serve as information
terminals since they are always connected
to a network and have many sensors.
Based on our strength in information
security technologies, DNP offers services
that boost the security of in-vehicle
information systems, for example bypreventing the manipulation of
applications loaded onto devices in thecar. Our services use CrackProof, a programthat prevents illicit access to informationfrom in-vehicle systems, and DNP MultiPeer VPN*2, a system embedded in
in-vehicle telecommunications devices
that encodes transmitted data and uses
dedicated servers to manage andauthenticate access between devices.
Going forward, we will continue to develop
services that ensure the security ofcommunication between automobiles andservers and between one automobile andanother.
*1 A nanometer (nm) is one billionth of a meter.
*2 VPN stands for virtual private network.

DNP’s ultra weather-resistant
hard-coat transfer film
improves weather and wear resistance ofresin glass.

Pouch for lithium-ion
batteries
used in an increasing variety
of applications including
electric cars

Segment Information

DNP adhesive films
bond together different materials, suchas aluminum and carbon fiber-reinforced
plastic.

hard-coat layers to the resin glass surface.
Compared to previous technology thatinvolved spraying hard-coat materials
onto a surface, DNP’s new method resultsin higher product yield. DNP began
supplying resin glass with the new transfer
film in the spring of 2016.
In addition, we will accelerate
development of functional film productsthat can help realize reductions in auto
body weight. For example, we areworking on a film that can bonddifferent materials together, such ascarbon fiber-reinforced plastic andmetal.

Special Featureelectric and plug-in hybrid cars.
DNP has also developed a hard-coattransfer film for use on resin glass,which is seen as a promising substitutefor conventional glass in automobiles.
Simply by transferring DNP’s new film tothe surface of the resin glass, it increases
wear resistance and prevents damage
from ultraviolet rays.
Resin glass has already been adopted
for use in some vehicles, including trains
and construction equipment, because inaddition to weighing only about half as
much as regular glass, it is difficult tobreak and offers excellent thermal
insulation and formability. DNP uses
original technology for transferring the

DNP in Brief

As people all over the world work to
make sustainable societies, an important
topic in the automotive industry is how
to make lighter auto bodies that candirectly improve fuel efficiency. As car
bodies and many automotive components
become lighter, DNP provides “pouches”
as the outer covering of lithium-ion
batteries. The pouches are made ofmulti-layer film that seals in electrolytes
and other battery materials. Compared toconventional metal can-type containers,
the pouches afford greater flexibility inbattery dimensions and shape, and have
won high praise as the best solution for
reducing the weight and thickness of carbatteries, which are key components in

To Our Shareholders

Initiatives aimed at linking sustainable society and automobiles

How DNP Works to Achieve
Sustainable Development

A rich variety ofdesigns for automobileinterior materials
thanks to DNP’s technologies
for decorating formed plastics

Financial Section
Appendix

DNP Annual Repor t 2 016

33

Segment
Information
CONTENTS

36

42

48

34

Information Communication
36

Business Strategies

38

Financial Results

40

Growth Businesses and Strategic Businesses

Lifestyle and Industrial Supplies
42

Business Strategies

44

Financial Results

46

Growth Businesses and Strategic Businesses

Electronics
48

Business Strategies

50

Financial Results

52

Growth Businesses and Strategic BusinessesTo Our Shareholders

DNP in Brief

Special Feature

Segment Information

How DNP Works to Achieve
Sustainable Development

Financial Section

Appendix

35

DNP Annual Repor t 2 016

Information
Communication

Top: “honto” hybrid bookstore network membership card and e-book
Bottom (from left): PrintRush self-service photo printing system; DNP Kashiwa Data Center; Printing press in action

Business Strategies
As information becomes increasingly digitized andnetworked, and information media become increasingly
diverse, consumers’ values and lifestyles have been
undergoing major changes. Rather than simply responding
to those changes, DNP is developing a wide range ofbusinesses that “deliver the information that consumers
want, when they want it, in optimal media formats” andenable us to generate changes ourselves.
The Information Communication segment includes
Imaging Communication, a business that addresses all
aspects of imaging, in addition to Books and Magazines,
Commercial Printing, Business Forms, and Education andPublications Distribution.
Our Business Process Outsourcing (BPO) unit opened new
BPO centers in Tokyo and Sendai in December 2015, giving
us a total of five centers nationwide. By using our worldclass information security technologies and expertise atthese BPO centers, we can safely and reliably process
information that belongs to consumers and corporateclients and provide a variety of products and services
including direct mail and other variable notifications. DNP
is one of Japan’s largest smart card providers. In addition
to expanding settlement services for international brandprepaid cards and card-linked offers (purchasing historybased sales promotions) that analyze and propose themost appropriate products based on individuals’ purchasing
histories, we will actively expand a variety of services

36

related to Japan’s new “My Number” citizen numberingsystem. Furthermore, we plan to promote global businessdevelopment, primarily in Southeast Asia. We will continue
to offer diverse services like our “honto” hybrid paper ande-book sales network, and to create new value, forexample by combining photo printing and information
services.
Among the structural reforms that DNP is promoting inorder to increase profits, in April 2016 we consolidated
business units such as marketing (including Commercial
Printing) and information security with units that specialize
in system integration and consulting. By combining
planning and development functions and having themcooperate more closely with sales and manufacturing units,
we aim to increase synergistic benefits. We alreadyintroduced a unified management system for
manufacturing functions nationwide in the fiscal year
ended March 2015, and we intend to continue increasing
revenues by boosting production efficiency and capitalefficiency.

To Our Shareholders

Main Policies■

Expand paper/electronic hybrid sales and■ publishing solutions including “honto” network

Reinforce global manufacturing, sales and service
systems; expand field of business beyond ink ribbons andother printing media to include the entire “imaging
market.”● Develop and provide—to photo imaging markets in Japanand overseas—solutions that offer new value such as
enjoyment or convenience.
● Respond promptly to the digitalization of commercial
photo printing systems that are being used increasingly
around the world.
● Expand the DNP Imaging Mall that promotes distributionof video content from sporting and other events.
●■

Settlement platform businesses that make use of■ DNP’s data centers
Use DNP Kashiwa Data Center to expand safe andreliable general-purpose branded prepaid and debit
processing services.
● Provide unique settlement services that can be offered
to a wide range of corporate clients nationwide,
including financial institutions and distributors.

Financial Section●

How DNP Works to Achieve
Sustainable Development

Expand BPO operations that provide comprehensive
support for corporate clients’ overall business processes.
● Use BPO centers to provide value for clients’ overallbusiness processes through activities like market
research, analysis of operational problems, design,
construction and operation of optimal businessprocesses, customer center operation, and production
and shipment of sales promotion tools.
●■

Imaging Communication:■ everything to do with images

Segment Information

Promote business process outsourcing (BPO)
operations based on solid information■ security systems

Focus on developing communication channels thatconnect companies and consumers by using information
access histories, purchasing histories, and other types ofbig data.
● In addition to responding to the growing number offoreign visitors to Japan and Japanese travelingoverseas, expand various services that enliven outlying
regions.
●

Special Feature■■

Use big data to expand businesses
like inbound and outbound tourism, andregional revitalization based on
consumers’ point of view

DNP in Brief

In order to provide the books that customers want toread, when they want them, in the formats that theywant, we linked our honto.jp website, which offers bothelectronic and paper books, with physical bookstoresoperated by DNP affiliates MaruzenJunkudo BookstoresCo., Ltd. and Bunkyodo Group Holdings Co., Ltd. to form
the “honto” hybrid bookstore network.
● Rather than serving solely as a manufacturer of printed
materials, DNP provides total support for stimulation of
the publications market, for example through marketingand customer service.
● Provide a full range of publishing services including
production of paper and electronic books, and print-ondemand services.
● Promote regional revitalization businesses, for example
by combining bookstore and library functions, or bycreating public gathering places.
●

■■
■

■

Appendix

Apply strength in smart cards to■ settlement-linked marketing, etc.
Expand DNP’s smart card business in the global arena
now that we have already captured the top share of theJapanese market thanks to our overwhelming
technological lead.
● Expand card-linked offers (purchasing history-based
sales promotions) and other types of settlement-linked
marketing methods that generate added value.
●

DNP Annual Repor t 2 016

37

Financial Results

Fiscal Term through March 2016:
Business Environment and Summary of
Financial Results

Financial Highlights(¥ billion, %)2015.32016.3

Net sales			¥

789.7

¥

Operating income			22.2		 29.4

■

821.6

Books and Magazines; Education andPublications Distribution

In the fiscal year ended March 2016, Japanese publishingindustry sales declined by 5.9% from the previous fiscal
year to 1,501.3 billion yen. Specifically, magazine sales
declined 9.6% to 762.4 billion yen and book sales declined
1.7% to 738.8 billion yen. Meanwhile, in calendar 2015 the(¥ billion)
electronic publications
market was brisk, surging by 31.3%
Net Sales Operating Income (¥ billion)
AssetsDepreciation
over the previous
year to 150.2 billion yen.
(Net sales)(Assets)(Operating income)(Depreciation)
1,0 0 01,0 0 0
10 0
10 0 Magazines business, we worked
In DNP’s
Books and
895.8
893.0
821.6
proactively
toincreasesales, and ran special offer
789.7
80 0
80 0
80
80
campaigns that succeeded in boosting book sales above
the previous-year level.
Nevertheless, due to a steep
60 0
60 0
60
60
decline in magazine sales, this unit’s overall sales fell
400
400
40
40
below those ofa yearearlier.
29.4
27.5
25.7
22.2
In
EducationandPublications
Distribution, we enjoyed
20 0
20
0
20
20
higher sales through our honto network, achieving growth0000 well as paper books both throughin sales of e-books as1516
15 physical stores
16 and online mail order. In addition, we didwell in library management support businesses linked togovernmental efforts aimed at regional revitalization. DNP
continues to promote businesses that offer consumers “thebooks they want to read, when they want them, in theformats they want,” primarily through our “honto” hybrid
Net sales
bookstore networkthat links online mail-order sales,
Although the segment
wasaffectedbystagnation
in
the
(¥
billion)(¥ billion)
Net Sales Operating Income
Assets Depreciationelectronic bookstores, and physical bookstores operated bypublishing market and lower demand for flyers, catalogs,(Net sales)(Assets)(Operating income)(Depreciation)
partners including 10
MaruzenCHI Holdings Co., Ltd. andand other commercial
printed matter, Imaging
1,0 0 01,0 0 010 0
0Bunkyodo Group Holdings Co., Ltd. Maruzen CHI focuses on
Communication performed favorably. Some other
80 0
80 0
80
library management80outsourcing services and promotes
businesses also
grew nicely, including businesses
relatedtoregional revitalization measures in cooperation withsmart cards andsettlement services, and information60 0
60 0
60
60
libraries441.8
and local governments. Bunkyodo is pushing toprocessing services such as data entry, printing, and
450.6
388.6
400
0
0
open more stores in4 0its Animega chain, which specializes inmailing of personalized
mail. Net382.6
sales grew4by
4.0%,4 0oranimation-related
merchandise, and is working to draw in
31.89 billion yen compared to a year earlier.
17.6
17.0
20 0
20 0
20
20
13.7
12.6
new customers through such measures as installing astationary section in0 each store.
Operating income
0001516 businesses related
15 Going forward,16
DNP intends to further increase
Growth in Imaging Communication
andcooperation with publishers and work even harder toto the introduction of Japan’s “My Number” citizen
promote all types of publishing-related businesses fromnumbering system helped increase operating income. By
project planning to production, distribution, and sales,
reviewing sales, planning and production systems andincluding secondary content usage and overseas
implementing structural reforms, we compensated fordevelopment, in order to stimulate the publishing market
increases in the cost of printing paper and other materials
as the Japanese publishing industry’s “No.1 partner.”
as well as for the effects of intense competition pushing
Net Sales Operating Income (¥ billion)
Assets Depreciation (¥ billion)
down our own sale prices. As a result, operating income(Net sales)(Assets)(Depreciation)
increased by 32.3% or 7.17 billion yen(Operatingfrom income)the previous
1,0 0 01,0 0 010 0
10 0year. The segment’s operating income margin increased by
80 02.8% a year earlier to 3.6%. 80
80 0
0.8 point, from80
2.8%		

Operating income margin

3.6%

60 0
60 0Information Communication segment from* In April 2015, Imaging
Communication business was transferredto the60
60 the Lifestyle and Industrial Supplies segment.
Figures for the term ended March 2015 in the chart above have been adjusted to reflect the new configuration of the Information Communication segment.

38

400
20 0

40
230.3

25.9

199.4

20.5

20

400
20 0

40

310.3

273.4
18.4

15.0

20

How DNP Works to Achieve
Sustainable Development
Financial Section

Net sales from Imaging Communication increased comparedto the previous year. Commercial photo printing companies
worldwide are increasingly switching from the conventional
silver halide photo development method to dry methods
that do not require developing solution. Buoyed by thistrend, sales of DNP’s dye-sublimation thermal transfer
printing media (color ink ribbons and receiver paper) used
for dry-method photo printing have grown significantly in
the Southeast Asian, North American and European
markets. In the market for thermal mass transfer printing
media, which is used for printing bar codes that help
control production and distribution, we saw growth in salesof high-added value products such as wax-based media
that are exceptionally heat resistant. In addition, we
enjoyed a smooth start for an Individual Number Card
application service that we launched in October 2015. The
service expedites issuance of official Japanese government
ID cards by using our Ki-re-i ID photo system to both takean ID photo and transmit it along with application
information within a highly secure communication
environment.
In the “imaging market,” we plan to take advantage ofbusiness opportunities arising from increasing consumer
demand for services like photo printing and album
production, for example by offering value-added services
that make the most of DNP’s IT expertise. In August 2015,
we launched a new “DNP Imaging Mall” to help companies
that want to make use of their rights to images of popular
musicians, athletes, or other celebrities by selling photo
prints. DNP provides comprehensive service including image
storage and processing, website operation, and highquality print production and delivery.

Segment Information
AppendixThanks to corporations’ increasing need to securely
manage and use employees’ and customers’ personal
information, we have experienced growth in our electronicmoney and other smart card businesses as well as in
information processing services. We are speeding up global
development in our smart card business, starting withstrengthening our position in the Southeast Asian region.
For example, in March 2014 we formed a business andcapital tie-up with MK Smart Joint Stock Company (MKS),
Vietnam’s leading smart card manufacturer, and in
February 2016, we established a joint venture withIndonesia’s largest cash card manufacturer and seller,
Wahyu Kartumasindo International (WKI). In our IPS
business, overall sales increased year on year thanks togrowth in notification mailings connected to the launch ofJapan’s “My Number” citizen numbering system and inoperations outsourced by financial institutions.
DNP is also focusing on expanding sales in its BPO
business, which provides comprehensive support forcorporate clients by analyzing their operational issues andplanning, constructing, and operating optimal businessprocess systems aimed at achieving sustainable growth. In
December 2015, we established BPO centers in Tokyo andSendai, giving us a total of five such centers nationwide.
By doing so, we roughly doubled our overall BPO capacity■ Imaging Communication

Special Feature■ Business Forms

so that we can now process the equivalent of some 20
million units of direct mail per year. In addition to acquiring
internationally recognized Payment Card Industry Data
Security Standards (PCI DSS) certification, we will make useof our earthquake- and fire-resistant DNP Kashiwa Data
Center along with our wealth of expertise to actively
expand businesses that are suitable for full outsourcing by
client companies.

DNP in Brief

According to Japan’s Ministry of Economy, Trade andIndustry, Japanese corporate advertising expenses in thefiscal year ended March 2016 grew by 3.4% from theprevious year as increased Internet-related and otherexpenses more than made up for a decline in direct mailand other printed advertisements. This shift in the market
is reflected in DNP’s Commercial Printing business, which
felt the effects of the market’s switch to Internet-based
distribution of product catalogs and operating manuals.
For some years, DNP has been focusing on building aunified control framework for its nationwide sales, planningand production functions. In the fiscal year ended March
2016, we continued to promote market expansion acrosscorporation and industry lines and focused on proposing
solutions that create new value. We also strove to enlarge
our BPO operations (including operation of sales campaign
headquarters), and worked to achieve nationwide
application of local development projects and successful
endeavors, and to reap synergistic benefits. As a result, weachieved increased sales of pamphlets, in-store
promotional materials for retail stores, and point-ofpurchase and other sales tools, and ended with net sales
similar to those of the previous year.

To Our Shareholders■ Commercial Printing

DNP Annual Repor t 2 016

39

Growth Businesses and Strategic Businesses

Active development of Imaging Communication that addresses every aspect of imaging
In the 1980s, DNP developed two types of printing media—dye-sublimation and thermal resin—by applying thecoating technologies that it had cultivated through its
printing business. Today, we have a comprehensive, global
framework for the development, manufacturing and salesof these products and we are one of the world’s top
suppliers of both dye-sublimation media, used mainly forphoto printing, and thermal resin media, used mainly for
printing barcodes. DNP views as its field of business theoverall “imaging market” that addresses every aspect ofimaging. Based on the idea of “building a future that links
people to the world through imaging,” we offer high-added
value services in addition to developing, manufacturing,and selling printing media.
Nowadays people all over the world enjoy recording
photographs and videos on smartphones or other portabledevices and uploading them to social networking services,making diverse imaging-related needs more widespread.
Mainly in Japan and North America, DNP offers consumers
photo systems that take pictures and print them on the
spot. In August 2015, we launched our “DNP Imaging Mall”
service that provides one-stop image marketing solutions
with a full range of functions including image data storage

and processing, website construction and operation, highquality print production, and order-taking and shipment
functions. The service allows companies that own content
such as photos of popular athletes or other celebrities tomarket prints to consumers without burdening their otherbusiness operations and with little cost for startup or
operation.
In October of the same year, we began offering an
Individual Number Card application service that uses DNP’s
Ki-Re-i ID photo booths to provide consumers with a moreconvenient way to obtain their official government ID card.
Going forward, DNP will continue to provide consumers
and society with new value by operating businesses that
address every aspect of imaging communication, frompicture-taking, data processing and printing, to using
images to stimulate communication.

A Ki-Re-i ID photo booth, where customers
can apply for an official Japanese
government “My Number” card

DNP’s many initiatives to stimulate the Japanese publications market
As “the publishing industry’s No.1 partner,” DNP strives tostimulate the overall publishing market.
We make the most of our strengths in handling both paperand electronic books. As a manufacturer, we perform highquality printing and binding (whether in large or small lots)
and at the same time we plan and produce digital content.
We provide platforms for developing diverse services
including development of e-commerce websites andsmartphone applications.
At the same time, in order to stimulate
distribution and sales, we provide
publications distribution platforms that
effectively market both paper andelectronic books. In order to provide “thebooks that people want to read, when theywant them, in the formats they want” inresponse to consumers’ increasingly
Authors
Publishers
diverse reading styles, we created the“honto” hybrid bookstore network thatlinks our honto.jp book sales website withsales at bricks-and-mortar stores operatedby MaruzenJunkudo Bookstores Co., Ltd.
and Bunkyodo Group Holdings Co., Ltd.
40

As of June 2016, honto had approximately 3.4 million members
who enjoyed services that book-lovers find convenient, suchas loyalty points and store inventory search capabilities.
DNP gains information from its contacts with many readers
and uses that information together with publishers and othercompanies to formulate marketing and sales plans, plan andexecute promotional measures, and take other steps tostimulate the publications market.
Businesses
andOrganizations

Contents etc.

Marketing

DNP
Publishing & Media businessHybridproduction

paper/( electronic)

Flexible
production

Consumers
Consumer
information

Publication

Hybridbookstores

Hybriddistribution

Sales
data
MarketingPublications distribution platform

Memberdata

Analysis

paper/( electronic)

Sales(Purchasing)

Consumers
honto(members)

Consulting
Malfunctions

SolutionsprovisionCyberattacks

Illicit entry
by outsider

Virus
infections

Diagnosis
Segment Information

Loss

Internal
crime

Special Featurebusinesses that involve receiving information from corporateclients. Now we are also making use of it to help companies
bolster their own security measures. For example, now thatbusinesses that handle credit card information are being asked
to comply with international Payment Card Industry Data
Security Standards (PCI DSS), in April 2016 DNP started a
consulting service that helps businesses acquire PCI DSS
certification.
DNP will continue to help companies and all types oforganizations improve their information security in a variety ofways including consulting, employee training, diagnosis ofvulnerabilities in operational systems and processes, and thesale of software that wards off targeted attacks and of various
types of security systems.

DNP in Brief

Cyber attacks that target specific corporations are becoming
increasingly sophisticated. Recent years have seen a
noticeable increase in attacks whose aim is not only to steal
information, but to interrupt corporations’ business operations
by overloading servers, shutting down systems, or by encoding
data so as to lock out the rightful owners.
Since its founding in 1876, DNP has been appropriately andsafely handling large amounts of valuable information
entrusted to it by other businesses. Examples of sensitive
information that we are entrusted with include as-yet
undisclosed information about new products, not yet released
books and magazines, all types of financial institution
statements, personal information including purchasing
histories and membership in e-commerce websites,
semiconductor designs and other technical data. We haveconstructed and implemented strong and appropriate
measures to protect this valuable information from cyberattacks and leaks. In addition to reinforcing physical measures
to secure networks and control entries/exits at factories andoffices, we have revised our company regulations andworkflows and trained employees to reinforce security.
We have always provided our information security expertiseas added value in our business process outsourcing and other

To Our Shareholders

Using DNP’s information security expertise to make businesses more secure

Vulnerabilities

Education

Expanding BPO centers in response to demand for business process optimization

Advertise

NotifyIssue

Deliver

Total support
for all types ofprocesses

Store

Collect

Determine

RegisterAppendix

DNP’s Businesses Process Outsourcing Services

Financial Section

Making the most of our track record, skills and knowledge,
DNP responded to the increasing demand for BPO services by
establishing two new BPO centers in December 2015, one inTokyo’s Toshima Ward and one in Sendai, to supplement our
three existing centers in Tokyo’s Kita Ward, Osaka, andNagoya. From 2016, we will reliably meet the outsourcing
needs of businesses and organizations in areas like adjusting
to Japan’s new “My Number” citizen numbering system andliberalization of gas and electricity sales, and supporting
digital marketing, e-commerce, and healthcare.
By expanding our BPO business, DNP is responding to
dizzying changes in the business environment in ways that
contribute to the development of a sustainable society.

How DNP Works to Achieve
Sustainable Development

Amid today’s dramatic social changes, companies andorganizations are focusing on building new business models
and developing new products and services. At the same time,developments in information communication and othertechnologies have made communication with consumers morediverse and more complicated. Given this situation, businesses
and organizations are taking a fresh look at their conventional
business operations and building new processes. As they work
to optimize efficiency and costs, there is increasing demandfor business process outsourcing (BPO) providers to take onsome or all of their clients’ operations.
DNP’s BPO service provides a comprehensive range offunctions, from study and analysis of operations to process
design, construction, and safe, dependable
execution in a high-security environment.
Businesses
and
DNP has successfully handled a wide rangeorganizationsof assignments, including back-office
operations involving the processing of
Execution
millions of units, formulation of marketing
divisionspolicies, website construction and operation,and operation of customer contact centersand social media-based offices.

Society /Consumers

DNP Annual Repor t 2 016

41

Lifestyle andIndustrial Supplies

Top: Photovoltaic panels Bottom (from left): Interior material (floor covering) for residential use; Culture film for bacterial testing

Business Strategies
The Lifestyle and Industrial Supplies segment is composedof three business divisions: Packaging, Lifestyle Materials,
and Industrial Supplies. The segment plays a vital part inour corporate clients’ manufacturing processes andprovides many products and services that are important in
the daily life of consumers. DNP’s Packaging businesscreates many of the packages that consumers use in daily
life, including packaging for foods and beverages and forpharmaceutical products. Lifestyle Materials handles awide variety of products that form the spaces in which
consumers live, such as floor and wall coverings, residential
exterior products, and automotive interior products.
Products provided by Industrial Supplies include
components used in photovoltaic cells and lithium-ion
rechargeable batteries.
Products and services that are indispensable tocomfortable living must also contribute to people’s safety
and sense of security. They must be designed withconsideration for universal design principles so they will beeasy for most consumers to use. In our development andproduction activities, we must also consider energy
conservation and cleaner energy sources, minimize stresson the environment caused by the use and disposal of our
products, and work to preserve biodiversity. Our strategy
for the Lifestyle and Industrial Supplies segment is toanticipate the diverse needs of businesses and consumers
in Japan and overseas and create new value that enriches
people’s lives while fulfilling all of the above criteria.
42

DNP has identified four growth areas where we see thepotential to develop new value beyond our existing
business unit boundaries: Knowledge and Communication;
Food and Healthcare; Lifestyle and Mobility; andEnvironment and Energy. We will speed up businesscreation by making use of technologies and expertise
cultivated within our segment, engaging in dialogue andcooperative efforts both within and outside of ourcorporate Group, and by actively collaborating withresearch institutes and companies that have relevant
strengths.
* In April 2015, DNP’s Imaging Communication business, which mainly handles
materials used in photo printing, was transferred from Lifestyle andIndustrial Supplies to the Information Communication segment.

To Our Shareholders

Main Policies

Packaging
Develop eco-friendly, advanced products andservices worldwide■

Develop products and services, in Japan and overseas,that make use of DNP’s original converting (materials
processing) technologies; provide new value especially inthree growth areas: Food and Healthcare, Lifestyle andMobility, and Environment and Energy.
● Pouches for lithium-ion batteries: Take advantage of ourstrength as the world’s number one supplier to expand
applications beyond mobile telecommunications devices
to include, for example, electric vehicles and householduse storage batteries.
● Photovoltaic module components: Develop back sheets,
encapsulants and other components that help increase
the conversion efficiency and reliability of photovoltaic
cells.
● Develop products and services like advanced films that
control heat and/or light, for use in fields like
automobiles and agriculture.
●

Provide new value in all kinds of spaces where
people live their lives

Enhance lineup of products that use DNP’s original
electron beam (EB) coating technology.
・ Develop and supply products such as interior andexterior materials with strong scratch and soil
resistance and other outstanding characteristics
including weatherability.
● Develop a variety of businesses that address entire living
space-related supply chains.
・ Examples: measurement and assessment of living
environments, living space design, proposals based on
considerations like Kansei (sensitivity) engineering,and development of easy-to-implement construction
techniques● Develop new products and services needed for therealization of smart cities and smart houses.
・ Metal panels and other materials that save energy byeffectively reflecting and diffusing light● Use DNP’s global business networks to expand ourmarket share in Europe, the Americas and emerging
countries.

Segment Information

Lifestyle Materials

Develop sophisticated products and services
that take advantage of DNP’s strengths
in advanced materials

Special Feature

Reduce the burden that we place on the environment;
actively develop eco-friendly products and services that
also help preserve biodiversity.
● Enhance lineup of advanced products with outstanding
functionality including preservation of package contents.
・ Transparent films that are exceptionally impermeable
to oxygen and water vapor
・ Packaging made from plant-derived materials or otherrecyclable resources, etc.
● Make use of overseas production bases to promote global
packaging business.
● Develop packages that are easy for anyone to use, in
accordance with universal design principles.
● Study and analyze consumers’ awareness and hands-on
interaction with packages that contain everyday items
like foods, beverages, and household items.
●■■

DNP in Brief■

Industrial Supplies●

How DNP Works to Achieve
Sustainable Development
Financial Section
Appendix

DNP Annual Repor t 2 016

43

Financial Results
Net Sales

Operating Income (¥ billion)(Net sales)

1,0 0 080 060 0Assets10 0

1,0 0 080

80 0Financial Highlights 60

60 0(Depreciation)

895.8

893.0

10 0

821.6

789.7

400
20 0

Depreciation (¥ billion)(Assets)(Operating income)

29.4

2015.30

Net sales			¥

400

40

(¥ billion, %)

22.2

20

20 0

0

0

2016.3388.6¥ 382.6
15
16
Operating income			 13.7		 12.6

80

Fiscal Termthrough March 2016:
60
Business Environment and Summary of
40
Financial
Results
27.5
25.7
20

■ Packaging

0

15 The business16 environment in this sector remained harsh in

the fiscal term ended March 2016 as stagnant wages
encouraged consumers to further tighten their purse
strings, resulting in continued sluggishness in individual
consumption.
Despite these conditions, Packaging enjoyed solid salesofpaper cups
used as food packaging as well as plastic(¥ billion)
Net Sales Operating Income (¥ billion)
Assets Depreciation
moldedproducts.
Nevertheless, the downturn in sales of(Net sales)(Assets)(Operating income)(Depreciation)
aseptic PET plastic10bottle
filling systems and paper and film
1,0 0 01,0 0 010 0
0packaging products caused overall packaging sales to
80 0
80 0
80
decline relative to a80year earlier.
Going forward, we60 will reinforce our production bases in
60 0
60 0
60
Indonesia
450.6
441.8and Vietnam and focus on expanding our share in
388.6
382.6
400
400
40
40
Southeast Asian markets.
In Japan we are working tofurtherincrease
Packaging’s
competitive position, for
17.6
17.0
20 0
20 0
20
20
13.7
12.6
example by reorganizing factories that make sake (ricewine) cartons and otherpaper containers for liquids, and
0
0
0
0
15
16
15 by implementing
16
overall optimization in order to boost
production efficiency. In addition, we will strive to expand
our lineup of packaging products that are eco-friendly andeasy for all types of consumers to use, and we will pushahead with development of new products and services forthe medical care, pharmaceutical, and healthcare fields as
Net sales
well as for industrial materials and other fields that are
In addition to pouches for lithium-ion rechargeable
Net Sales Operating Income (¥ billion)
Assets Depreciation (¥ billion)
new to us.
batteries used in smartphones, tablet PCs and automobiles,(Net sales)(Assets)(Operating income)(Depreciation)
photovoltaic1,0module
components
also
sold
well.
On
the
00
1,0 0 010 0
10 0Lifestyle
Materials
other hand, Packaging saw slack sales of paper and film
80 0
80 0
80
80 Land, Infrastructure, Transport andAccording to Japan’s
packaging products
and aseptic PET plastic bottle
filling
Tourism
Ministry,
Japanese
housing starts grew by 4.6%
systems, while a lagging recovery in residential
60 0
60 0
60
60
year on year to about 920,000 units, marking the first
construction demand caused Lifestyle Materials sales toincrease in two years.
fall below the4 0previous
year’s level. Overall 4segment
04sales00
4 0 Nonresidential (office buildings,
0
310.3
273.4 facilities, etc.) and condominium construction
25.9
commercial
dipped 1.5% or 5.91230.3
billionyen compared
to
a
year
earlier.
20.5
199.4
18.4
20 0
20 0
15.0
20
20
were slow, partly
due
to work interruptions arising frombuilding
cost
increases.
Operating income
0000Operating income declined
1.08 billion yen year on
15 7.9% or 16
15 Given this16environment, DNP’s Lifestyle Materials
business focused on selling eco-friendly products madeyear, largely due to decreased sales related to Packaging
with DNP’s original electron beam (EB) coating technology
and Lifestyle Materials. The segment’s operating income
and other high-added value products that offer
margin decreased by 0.2 point, from 3.5% a year earlier tooutstanding design and functionality. Although we worked
3.3%.
hard to increase our market share, sales ended below theprevious-year level amid increased price competition.
Going forward, we will focus on developing and selling* In April 2015, Imaging Communication business was transferred to the
Information Communication segment from the Lifestyle and Industrial
more energy-efficient, eco-friendly products and strive toSupplies segment. Figures for the term ended March 2015 in the chart above
increase our market share especially for products madehave been adjusted to reflect the new configuration of the Lifestyle andIndustrial Supplies segment.
with EB coating. In addition, we will work harder at selling
Operating income margin		

3.5%

3.3%

■

44

Providing high-quality packaging to the ASEAN region
where strong growth is expected

Financial Section

plastics with outstanding oxygen and moisture barrier properties,
and develop local versions of products that are tailored to thecharacteristics and needs of Southeast Asian markets. For example,
in Indonesia, market stalls display products like shampoo andlaundry detergent in “sachets,” or small packets linked together
and suspended from the stall’s ceiling. Sachets provided by
DNP offer the added advantage of strong oxygen, moisture, andlight barrier properties that protect package contents during
prolonged exposure to the outside environment.
DNP aims to be “Asia’s No.1 packaging company.” Toward that
end, we will leverage our outstanding technologies as a leader inthe packaging field, further reinforce our production frameworkin the ASEAN region where strong economic growth is expected,
and continue to provide high-quality products and services.

How DNP Works to Achieve
Sustainable Development

In order to spread “Japan’s excellent packaging culture” to therest of the world, DNP founded PT DNP Indonesia in 1972 and
DNP Vietnam Co., Ltd. in 2013. By handling all of our manufacturing
processes in-house and providing high-quality products and services
that meet a variety of needs, we have built strong relationships oftrust with our corporate clients. In Indonesia we hold the top shareof the market for packaging in many fields including household items
and foods. We have also established an overwhelming competitive
advantage in the ASEAN region by providing high-quality
packaging products through local partnerships with companies
that make cosmetics and sporting goods for the global market.
As an example of how we add value and functionality throughproduct development, we take high-quality packaging materials
developed in Japan, such as materials used in retort pouches orSegment Information

Expansion of
Packaging
operations overseas

Special Feature

Domestic shipments of industrial-use photovoltaic cells in
the fiscal term through March 2016 amounted to 7,136,677
kilowatts, down 23% (in terms of power generation
capacity) from their peak a year earlier according to theJapan Photovoltaic Energy Association. Domestic demandfor photovoltaic cells for both residential andnonresidential use has been on the decline as revisions toJapan’s feed-in tariff scheme (fixed purchase prices for
power generated from renewable sources) have resulted infalling purchase prices. However, demand remained firm forphotovoltaic panels that offer outstanding power
generation efficiency. Also among DNP’s encapsulants,

DNP in Brief■ Industrial Supplies

back sheets and other photovoltaic module components,
there was an increase in sales of high-performance, highly
durable products that improve power generation efficiency.
Meanwhile, DNP’s pouches for lithium-ion rechargeable
batteries, which are lighter in weight and easier to process
than metal alternatives, are among the most popular in theworld. In the first half of the fiscal year ended March 2016,
demand for pouches used in smartphones and tablets
increased sharply, while the second half saw a rise inautomotive demand, which is expected to continue toincrease in the future. Overall, pouch sales exceeded theprevious-year level.
Looking at the future of DNP’s components for bothphotovoltaic cells and lithium-ion rechargeable batteries,
in addition to using our proprietary converting (materials
processing) technologies to boost functionality, we intend
to develop highly reliable new products and actively
expand our business overseas where demand is robust. We
will also continue to work on expanding our businessinvolving advanced materials such as films that control
light and heat, and high-added value barrier films forindustrial applications.

To Our Shareholders

to overseas manufacturers, mainly by offering Arttec
decorative aluminum plate for interior and exterior use,other types of decorative metal paneling, and automotive
interior materials. Furthermore, by increasing cooperation
between industry, government and academia, we plan tocreate new value that will allow us to offer greater comfort
and luxury in a variety of living spaces including homes,
offices, commercial facilities and vehicles.

Appendix

Making rolls of printed film

A market stall in Indonesia

DNP Annual Repor t 2 016

45

Growth Businesses and Strategic Businesses

Packaging

Focus on expanding eco-friendly, advanced products worldwide

DNP engages in a wide variety of packaging operations inJapan and overseas with the aim of becoming the “No.1
partner” of corporate clients and consumers. As part of ourefforts to help meet worldwide demand for affluent andconvenient lifestyles that place minimal burden on theenvironment, we are working on developing new materials anddesigning high-performance, easy-to-use packages.
Domestically, our packaging business aims to respondflexibly to changes in the Japanese market. For example,
because of the falling birth rate, rising average age anddiversifying lifestyles, Japan has growing numbers of singleperson households and seniors eating alone, which translates
to more demand for single-portion foods and ready-to-eat
dishes. We are also seeing increasing demand in medical,
pharmaceutical, and healthcare fields for safe and hygienic
packages that can be used with confidence, and in the
manufacturing field for simple and convenient packaging forindustrial materials, including for shipment between factories.
At DNP, we respond to these needs by viewing themsubjectively from a consumer’s point of view and by working

together with corporate clients to improve packaging
functionality and to develop added value.
Overseas, one of our main policies is to expand our businessin the Asian region. By taking advantage of factories that wealready have in Indonesia and Vietnam, we will continue toprovide high-added value products and services for overseas
clients including Japanese-affiliated companies operating
overseas.
DNP will also seek to expand profits from a standpoint ofoverall optimization. Domestically, we will reorganize our
production bases under a framework that oversees sales andmanufacturing functions on a nationwide basis. We willcontinue to expand our packaging business in Japan andoverseas, armed with the comprehensive strength thatenables us to handle every aspect of the business including
anticipating changes in society and in the needs of consumers
and corporate clients, applying “universal design” principles,
market analysis and project planning, package design andmanufacturing, sales promotion and marketing support, andsupply of aseptic filling systems and other packaging systems.

■ Tanabe Plant acquires controlled medical devices retailer license
In March 2015, DNP’s plant in Tanabe, Kyoto Prefecture, acquired a controlled medical
devices retailer license, allowing it to sell controlled devices such as blood collection kits
and electronic thermometers. The factory already had a general manufacturing (packaging,labeling and storage) license, which is required for packing medical devices together
with their instruction manuals, etc. Now that the plant has both licenses, it can purchase
controlled medical devices from pharmaceutical or medical device manufacturers, package
each device with its instruction manual, and sell them directly to distributors.
Besides the Tanabe Plant, DNP has four other plants nationwide, including one in Tokyoand one in Nagoya, that are licensed for packaging and storing pharmaceuticals and medical
devices. We plan to use these clean environments to continue to expand businesses that
reduce the work loads of pharmaceutical and medical device manufacturers.

■

The rectangular “Viewbell Cup” responds toJapan’s increasingly common single-person households

In Japan, people are living longer and having fewer children, and more women are working
outside the home. With household size shrinking, single-person households becoming
more common and lifestyles becoming increasingly diverse, we are hearing calls for thedevelopment of new products and points of sale that fit Japan’s changing dining table. In
response to these new market needs, DNP developed its rectangular “Viewbell Cup,” anartistically designed plastic container that can be heated in a microwave oven.
The cup is a composite high-barrier container created by combining a molded product,
made from barrier sheet that blocks the passage of air and moisture, with a barrier in-moldlabel formed from transparent vapor deposition film. Aimed at meeting the needs of people
living alone or working couples who want to save time in the kitchen, the cup is suited toholding a small amount of pre-prepared food. It is also an ideal container for foods intended
for senior citizens or nursing care patients, since the contents can be heated by microwave
without the need to use a flame. DNP will continue to develop containers that have new value
in response to various changes in the social landscape.

46

Operations at the Tanabe Plant

Cross-section
Lid
Product formed frombarrier sheet
Injection molded resin
Barrier label

DNP’s in-mold label container (Viewbell Cup)

Develop global businesses addressing all kinds of spaces
where people live their lives

Special Featuredeveloping products with very attractive designs by using
digital technologies that support high-definition image
processing in order to create wood grain and other patterns.
We are also working hard at expanding overseas. In
response to demand in North America and other parts of theworld, we are reinforcing sales of such products as
residential decorative materials, automotive interiormaterials, and decorative metal panels for large buildings.
In order to create comfortable living spaces for consumers,
we enhance both the functionality of our products (mainly
by applying EB technologies) and the aesthetic appeal, byapplying our image processing technologies and planningand design skills. At the same time, we provide comprehensive
new value addressing every aspect from materials development
to space design, coordination, and development of construction
methods that place less stress on the environment.

DNP in Brief

DNP views its field of business as extending to all the spaces
where humans live their lives, including homes, offices, medical,
nursing care and commercial facilities, automobiles andpassenger cars on trains. We develop and supply products
and services that offer various types of value to enhancethese spaces. As we work to expand this sector, we keep inmind goals like enabling safe, carefree, healthy and comfortable
lifestyles, adapting to aging populations and a smart society,and reducing energy consumption and stress on the environment.
DNP has applied for more than 1,000 patents related toour proprietary electron beam (EB) technology. We receive
much praise from corporate clients and consumers for the very
durable, highly scratch- and soil-resistant interior and exterior
products that we make by taking advantage of EB
technology, and our share of relevant markets has been
growing, especially within Japan. In addition, we are actively

To Our Shareholders

Lifestyle Materials

Segment Information

DNP Annual Repor t 2 016

Appendix

excellent weatherability and fire resistance.
So far Arttec has been adopted as an interior material used inmany passenger train cars, including for Japanese bullet trains andspecial express trains, and England’s high-speed Channel Tunnel Rail
Link. In recent years, Arttec plate has attracted the attention of theconstruction industry as a lightweight yet highly durable material.
It was used on the exterior of the Under Armour Brand House that
opened in Chicago in the spring of 2015; the building was selected
as “Store of the Year” by the Association for Retail Environments
in recognition of its design. Due to Arttec’s high-quality design andfunctionality, it is being used increasingly in building construction
not only in Japan but overseas as well.
Going forward, DNP will continue
to promote new designs andexpanded applications for Arttec,
and will also respond to demand
from building contractors in North
America and other parts of the
globe, in order to promote thebusiness overseas.
Under Armour Brand House (Chicago)

Financial Section

DNP supplies decorative metal plate made by directly printing or
painting a wide variety of designs, including wood grains, stony
textures and artistic patterns, onto steel plate, stainless steel,aluminum or other metal paneling which is then used for a wide
variety of purposes. These products, consisting of fire-resistant metal
decorated with realistic textures and luxurious-looking designs, arestrong yet easy to work with. They are used in a wide variety of
applications including front entrance doors, bathroom wall panels,
elevator and train car interiors, and exterior panels for household
appliances.
Since we began full-fledged sales of Arttec decorative aluminum
plate for interior and exterior use in 2015, we have gotten very positive
feedback from architects and designers who praise this original, highadded value paneling for exuding a sense of custom-made luxury andlending a relaxed ambience and sense of dignity to large-scale publicbuildings including residential facilities. Arttec plate can be made toexpress new textures or the timeless beauty of natural materials likewood, stone or metal. The shape and construction method can also
be chosen according to the style and purpose of the space where
the material will be used. Other advantages are light weight andHow DNP Works to Achieve
Sustainable Development■ Development of decorative metal paneling contributes to a variety of pleasant spaces

47

Electronics

Top: Camera module Bottom (from left): Display system for ultra-short focus projector; Electrode film for use in capacitive touch panels; Nanoimprinting development lab

Business Strategies
Modern life has become richer and more convenient due to
growing use of digital household appliances, high-definition
display products, and mobile information terminals
including smartphones and tablet PCs. Given the massive
amount of information circulating in today’s society,demand for easy-to-use information devices that make useof cutting-edge technologies is becoming increasingly
diverse, and changes are occurring more rapidly than ever.
DNP’s Electronics segment includes Display Components
and Electronic Devices, primarily for the electronicequipment market. The segment refines and combines
existing DNP technologies and works to create new coretechnologies in order to provide products, services, andsystems that anticipate changes in the needs of businesses
and consumers. We are working especially hard on
providing new value in fields including automobiles, smart
houses, medical and health care, and environment andenergy by combining cutting-edge technologies like finepatterning and ultrafine etching.
We endeavor to develop new products with high added
value and exceptional functionality while keeping our eye
on next-generation trends in electronic products. As we doso, we actively seek to collaborate with corporate clients
and/or companies that have specialized strengths, in orderto speed up business development. In addition, we intend
to develop technology licensing arrangements and othertypes of alliances or royalty businesses. DNP’s Electronics

48

segment will continue striving to add new value to, and to
improve the quality and functionality of our existing lineup
of products including liquid crystal color filters, antiglare
films, viewing angle control films and other optical films,
semiconductor photomasks, sensors and other touch panel
components, and vapor deposition masks (metal masks) formaking organic EL panels.
In order to improve profitability, we will continue toselect and concentrate on the most promising products in
our lineup, and to meticulously cut costs and boost
efficiency, for example by optimizing use of our production
bases in Japan and overseas from a global standpoint.

To Our Shareholders

Main Policies■■

Display Components(including liquid crystal (LC) color filters andmetal masks for making organic EL displays)*1 nm (nanometer): one billionth of a meter*2 Nanoimprinting: a semiconductor manufacturing technique that entails
physically transferring a pattern to a resin-coated silicon wafer by pressing
a template bearing a minute pattern against the wafer*3 Extreme ultra-violet (EUV) exposure: a technique for using ultraviolet rays
with extremely short wavelengths to burn minute circuit patterns onto
wafersFinancial Section■ Optical Films

Use overseas production bases to actively take up
worldwide demand and keep a solid grip on one of theworld’s top shares in the market for semiconductor
photomasks, particularly for advanced products with line
widths of 28nm*1 or less, while enhancing development
and supply frameworks for cutting-edge, 14nm products.
● Continue to focus on commercializing next-generation
microfabrication technologies such as nanoimprinting*2
and extreme ultraviolet (EUV) exposure*3.
● Develop solutions-oriented businesses that apply
nanoimprinting technologies in fields other thansemiconductors where microfabrication is required.
● In addition to single electronic devices that use etching
technologies, such as lead frames or hard disk drive
components, expand into solutions-oriented businesses
including packaging.
●

How DNP Works to Achieve
Sustainable Development

Alongside this focus on LC color filters for small- andmedium-size displays, we will also promote productsupply in growing fields like automotive and medical
equipment.
● Promote cost structure reforms including equipment
optimization and the rethinking of development andproduction systems.
● In developing products related to newer fields like touch
panels and organic EL displays, we will make effective
use of our strongest technologies and existing equipment
while reinforcing cooperation with business partners.
●

Generate new business models and strengthen our global
focus.

Segment Information

The growth in smartphones that had been driving this
sector has slowed, while worldwide television shipments
remain flat from year to year. We will focus on meeting
demand for small- and medium-size LC color filters, and forhigher-definition products, as well as on reinforcing ourframework for producing metal masks used in organic EL
displays.

Electronic Devices

Special Feature

Display Components

Expand our new product lineup by promoting cooperation
between our color filter and electronic devices
businesses and blending core technologies.
● Broaden DNP’s product lineup in the market for display
surface materials by adding products geared toward
organic EL and other new types of displays in addition to
the LC market that we already serve.
● Develop viewing angle control film for use in car
navigation systems and other in-vehicle displays, and forpreventing glare on automobile windshields.
● Work harder at getting into clean converting products
other than polarizing plate surface films.
●

DNP in Brief

Amid major changes in the business environment
surrounding electronics in Japan and around the world, we
will concentrate management resources on thedevelopment of products, services, and systems that canbe expected to lead to sustainable growth.
In contrast to the conventional investment recoveryoriented business model whereby we recouped large
investments in production equipment by supplying large
amounts of components, we will increase cooperation withcustomers, suppliers and other partners and develop
process solution services that broaden the scope of ourbusiness to address the entire supply chain including
materials, design and equipment.

Continue developing new products and making proposals
based on a thorough grasp of market needs while further
refining our core technologies.
Appendix●

Anticipate market trends and respond to the market’s
often conflicting demands, such as for higher resolution,a wider color gamut, larger size, lighter weight,
decreasing thickness, greater energy efficiency andhigher performance.

DNP Annual Repor t 2 016

49

0

0

0

15

0

16

15

16

Financial Results
Net Sales

Operating Income (¥ billion)(Net sales)

Assets(Operating income)Depreciation (¥ billion)(Assets)(Depreciation)

1,0 0 010 0

1,0 0 0

10 0

80 0

80

80 0

80

60 0

Financial Highlights 60

60 0

400

388.6

382.6

400

40

(¥ billion, %)
20 0

13.7

2015.3Fiscal Termthrough March 2016:
60
441.8
Business
Environment and Summary of
40
Financial
Results

450.6

12.6

0

Net sales			¥

20

20 0

0

0

2016.3230.3¥ 199.4
15
16
Operating income			 25.9		 20.5

17.6

17.0

20

■ Display Components
0

15 According to
16 one research company’s figures, worldwide

shipments of flat-panel televisions in calendar 2015 totaled
about 240 million units, or roughly even with the previous
year, due largely to depreciated currencies and economic
stagnation in emerging markets. Smartphone shipments
reached about 1.44 billion units, up 10% from a year earlier,but given that
the Chinese market —the world’s largest(¥ billion)
Net Sales Operating Income (¥ billion)
Assets Depreciation
market—hasmatured,further double-digit growth is(Net sales)(Assets)(Operating income)(Depreciation)
considered unlikely.
1,0 0 01,0 0 0
10 0
10 0About 200 million tablet PCs wereshipped, down 10% year on year, while personal computer
80 0
80 0
80
80
shipments amounted
to some 270 million units, also down
10%, apparently due
to smartphones eating into the
60 0
60 0
60
60
markets for both types of products.
400
400
40
40
Given these conditions,
DNP focused LC color filter
310.3
273.4
25.9
230.3
production
onits
8th-generation
manufacturing lines,
20.5
199.4
18.4
20 0
20 0
15.0
20
20
which make large-scale panels used in ultra high-definition
televisions, but sales0 of large filters fell below previous0
0
0
15
16
15 year levels16
along with medium-sized and small products.
We saw growth in sales of some types of optical films,
notably those used for projection screens, but sales of ourmainstay anti-reflection films used for televisions andsmartphones declined relative to a year earlier. Meanwhile,spurred by growing demand for organic EL displays, weNet sales
enjoyed year-on-year growth in sales of metal masks used
DNP enjoyed strong sales of vapor deposition masks (metalin their production, and maintained a large share of themasks) used in the manufacture of organic EL displays,market for these products by making use of DNP’s
which offer tremendous promise as next-generation
proprietary photolithography and etching technologies.
displays. However, sales of color filters used in liquid
Going forward, worldwide smartphone shipments incrystal displays (LCDs) declined for both small- andcalendar 2016 are projected at around 1.5 billion units,
medium-sized products used in smartphones and tablet PCs
representing an increase of 7-8% over 2015 and a
and large products used in televisions. Sales of anti-glare
slowdown from the double-digit growth of the past several
film, the mainstay of our optical film business, also
years. Furthermore, growth in smartphone sales revenues
declined. Sales of photomasks used for making
is expected to be limited even more than growth in thesemiconductors increased overseas, but were sluggish
number of units shipped, due to increasing sales of lowwithin Japan.
priced phones from Chinese manufacturers, particularly inOverall, Electronics segment sales declined by 13.4%, or
the emerging markets that are driving expansion of the
30.96 billion yen, compared to the previous year.
smartphone market.
In light of these projections, DNP is pursuing a plan toOperating income
transfer color filter manufacturing equipment from its
Depreciation and amortization expenses declined year on
Mihara Plant in Hiroshima Prefecture to an LCD glass makeryear by 3.37 billion yen, mainly due to decreased major
in China, probably by the end of March 2017. By continuing
capital spending and sales of surplus equipment. However,to provide technical and other support, we will continue tosmaller net sales and lower unit prices resulting from
benefit from business opportunities presented by growth inincreased competition caused operating income to decline
the Chinese LC market. We will also focus on developingby 20.8%, or 5.40 billion yen from a year earlier. The
new color filters that can support high-brightness, energysegment’s operating income margin decreased by 0.9 point,
efficient LC displays. In addition, we intend to develop
from 11.2% a year earlier to 10.3%.

Operating income margin		50

11.2%		

10.3%Segment Information＊* In April 2014, DNP subsidiary DNP Photomask Technology Taiwan Co., Ltd.
merged with Photronics Semiconductor Mask Corp., which specializes
in photomask production technologies, to form Photronics DNP Mask
Corporation. The new company became an equity-method affiliate of DNP,
with DNP owning 49.99% of its common shares.

Special Feature
How DNP Works to Achieve
Sustainable Development
Financial Section

Year-on-year growth in the world semiconductor market
was basically flat in calendar 2015. While demand is
expected to grow in 2016 in such fields as digital appliances
and automobiles, primarily in the U.S. and Asia, the overall
forecast is quite dim, with the market expected to shrink by
about 2% amid a continued slump in sales of smartphones
and personal computers.
In the fiscal year ended March 2016, DNP’s Electronic
Devices business enjoyed increased sales of photomasks
used for making logic products for sale in China and Taiwan
but was negatively impacted by lower prices forphotomasks used for making flash memories in Japan.
Among other factors that contributed to lowering sales
compared to the previous year was the April 2014deconsolidation* of DNP Photomask Technology Taiwan Co.,
Ltd., our production base in Taiwan.
In the future, we expect to see even more widespreaduse of the Internet of Things (IoT) that links all kinds ofeveryday objects to a network. Concerning mobility, trends
like growing usage of electric and hybrid automobiles andthe transformation of automobiles into information
terminals that receive a variety of services are boosting
prospects for growth in a variety of electronic devices. In
collaboration with a number of companies in Japan andoverseas, DNP is working to expand its sales of cuttingedge products with line widths of less than 20nm andcontinuing to provide photomasks for flash memories andother products. Concerning the use of nanoimprinting
technologies in ultrafine processing, we intend to offer
nanoimprinting innovations that comprehensively support
every aspect of production including planning anddevelopment of applications and products, design andproduction of dies and prototypes, and mass production.
We also plan to develop new products outside of thesemiconductor arena, such as medical materials.

DNP in Brief■ Electronic Devices

DNP is working on improving the profitability of productsthat take advantage of our etching expertise by shifting
our emphasis to higher-added value products. Regarding
lead frames, we have seen increasing demand for metal
substrates used in LED lighting in the Chinese andTaiwanese markets. Going forward, we aim to increase salesof high-added value products with reflectors attached, andto develop lead frames for the smartphone market. We also
aim to increase our share of metal substrates for IC
packages used in power semiconductors. In the year ended
March 2016, sales of hard disk drive (HDD) components for
personal computers were slack as demand for HDDs
declined amid growing use of solid-state drives that offer
greater capacity and faster processing. Demand declined
for substrates with embedded components used in cameras,a mainstay of our electronic modules business, but we arealso focusing on telecom-related modules for the future, as
well as developing substrates with embedded components
for wearable devices.

To Our Shareholders

touch panel films that accommodate increasingly largesized displays, to work at securing orders for components
for high-end smartphones that deliver very sharp images,
and to focus on developing new products that support new
applications including in-vehicle displays. Regardingorganic EL displays, we intend to respond to growing
demand for metal masks and maintain our dominant shareof the market by boosting production capacity.

Appendix

DNP Annual Repor t 2 016

51

Growth Businesses and Strategic Businesses

Innovations born of DNP’s core technologies
For more than half a century, DNP has been developing awide variety of electronic components by applying thephotographic plate-making skills that we cultivatedthrough our printing business, and by refining technologies
for applying uniform coatings and the photolithography

and etching technologies that enable us to make extremely
fine patterns. The various products and systems that DNP
supplies improve the functionality and operability of theelectronic devices that consumers use.

Processing technologies
Clean converting*1
Etching technologies

Wet coating technologies

Photolithography*2

Thin film and multi-layer
technologies

Plating and surface
processing technologies

Exposure
Etching
Developing Stripping

Photo-alignment
technologies

Electroforming techniques

Wiping technologies

Component mounting
technologies

Laminating technologies

Die processing
technologies

Extrusion technologies

UV/EB technologies

Coating*3

Vapor deposition andsputtering technologies
Clean environment
technologies

Molding*4

UV and extrusion molding
technologies
Nanoimprinting
technologies

The Three Core Technologies of
DNP’s Electronics Segment

Circuit design technologies

System module
design technologies

Simulation technologies

Organic and polymer
materials technologies

Optical design technologies

Materials design technologies

Reliability assessment
technologies

Dispersion and composition
technologies

Process design technologies

Machinery and equipment
design technologies

Analytical technologies

Chromatic and sensitive materials
synthesizing technologies

Assessment technologies

Materials development
technologies

Design technologies*1 Clean converting : A combination of optical technologies and other technologies, such as technologies for applying precision thin-film coatings or for
precision molding. Based on our strength in these areas, DNP has developed a wide range of optical films including anti-glare films andother films used on liquid crystal displays (LCDs). Going forward, we intend to actively respond to display market trends such as higher
definition, increasing multi-functionality and greater energy efficiency, and to provide a wide variety of products that only DNP canprovide by virtue of our solid grasp of the properties of light.
*2 Photolithography: A process by which images on a form plate are burned onto a resin or metal plate that has been coated with photosensitive material.
*3 Coating:
Applying and fixing ink or another material, from a printing plate to which it has first been applied, onto paper, film or another material.
*4 Molding:Technologies for forming minute shapes on the surface of film. Stamping with a die that bears minute shapes in order to form minuteshapes on the surface of a polymer material that has been made somewhat fluid by heating or dissolving.

Color filter(magnified view at lower right)

52

Semiconductor photomask

Optical films used for displays

Cover glass (film)
Circularly
polarizing plate
Touch sensor
Luminescentmaterial
Film substrate

How DNP Works to Achieve
Sustainable Development

Sketch of a wearable
terminal using an organic
EL display

Advanced optical films enable the rich expression of information

DNP Annual Repor t 2 016

Appendix

a top share of the world market for anti-reflection films, which
include anti-glare films that work according to a different
principle from the low reflection film described above.
In 2015, we used molding technology to develop a new typeof viewing angle control film, which is most often used for the
displays of in-vehicle navigation systems. This optical film has
minute louvers that control the angle at which light isreflected. In addition to preventing glare on the windshieldfrom the display, the film also improves the brightness andvisibility of the navigation screen. These opticalcharacteristics—the product of DNP’s original design
technologies—are highly regarded in the industry and havebeen adopted by overseas car manufacturers.
DNP will always remain one step ahead of the times as we
address new challenges and provide high-added value opticalfilm products to markets around the world.

Financial Section

In 1990, DNP made use of coating technologies it had cultivatedthrough printing as it began developing low reflection filmthat reduces glare on displays and delivers images enhancedby sharp contrasts. Low reflection film is a transparent filmthat reduces glare when light reflected from the top and thebottom (interface) of the film interferes with each other sothat the reflected light is canceled out. In order to ensure that
this happens, we need to adjust the refractive index and thethickness of the low reflection layer with which we coat thefilm. (See illustration on page 118.) In 2014, we developed
ultra-low reflection film that is both highly soil-resistant andsignificantly reduces glare from indoor light. Thanks to DNP’s
knowledge and skills, in addition to having an ideal reflectanceratio—the factor that determines how easy (or not) it will be
to view images— the product is hard enough that it resists
scratching. In other words, it is difficult for light to bounce offof this film, and difficult for scratches to stick to it. DNP holds

Segment Information

Structure of an organic EL panel

Special Feature

As mobile devices become increasingly high-definition andtheir displays become larger, the RGB organic materials must
be precisely arranged during vapor deposition in order toenable the display of sharp images. This vapor deposition is
one of the more difficult processes in the manufacture of organic
EL panels, and manufacturers demand a high degree of precision
in metal masks. DNP has wide-ranging expertise and holds
patents related to various aspects of metal masks, including
materials and manufacturing methods to use for making them.
We have received much praise for our outstanding capacity fortechnological development and ability to offer stable supplies
of high-quality, high-precision products. Looking ahead, DNP
intends to respond to the rapidly growing market for metal masks
by continuously investing in related equipment. By 2020 we plan
to spend a total of 6 billion yen and triple current production
capacity. By responding to even further increases in highdefinition, we aim to further broaden the advantage that wealready enjoy as the overwhelmingly largest supplier ofmetal masks used for making smartphones. Our goal is some
30 billion yen in net sales of metal masks in 2020.

DNP in Brief

Organic EL displays are attracting attention as goodcandidates to form the next generation of displays since
they are made of fewer components than LCDs. Not only canthey be made thinner than LCDs, but they can also withstandbending and curling. An organic EL display works bysandwiching layers of organic molecules between positive
and negative electrodes, making the organic molecules
self-luminous. Organic EL displays deliver excellent contrast.
In recent years they have become more widely used insmartphones. According to a report issued by U.S. researchfirm IHS Inc., the market for organic EL panels is expected to
grow to about 682 million units in 2020, or almost threetimes the 2015 level.
There are two methods for getting organic EL panels to
express a full range of colors. One is to line up organic
materials on the substrate very precisely, in the three
primary colors of light (red, green and blue or RGB), pixel by
pixel. The other method is to light up the whole surface ofthe panel with white light and use RGB color filters to color
the light. In the case of the former method, a vapor deposition
mask (also called a metal mask, a thin metal plate with
precisely arranged minute holes) is used to apply the coloredorganic materials separately onto the substrate, which isusually made of glass or plastic. The metal masks are used
under vacuum conditions for each of the three primary colors;
the organic material is vaporized and sprayed onto the substrate(vapor deposition). DNP began developing a metal mask in2001 by applying our original photolithography and etching
technologies. Currently we hold a large share of the market
for metal masks used for making smartphone displays.

To Our Shareholders

Contributing to more widespread usage of organic EL displays

53

How DNP Works
to Achieve
Sustainable
Development
Three Corporate
CSR DNP’s
Responsibilities—Remaining a company that is trusted by society—
DNP aims to remain a company that can always be fully trusted by its various stakeholders.
In order to achieve that goal, we will work toward complete fulfillment of our “three corporate
responsibilities:” value creation, integrity of conduct, and transparency (accountability).

CONTENTS

56

Compliance withLaws and Social Ethics

58 Information Security

56

Construction of Systems that
Support Business Continuity

59

57

Contributing toSocial Development

60 TOPICS

Environmental Conservation andRealizing a Sustainable Future

・Research and Development
・Creation of Intellectual Property

Corporate GovernanceIn line with “DNP Group Vision 2015,” we promote Group-wide unified management and work at
enhancing corporate governance so that we can generate value more efficiently and effectively.
In the fiscal term ended March 2016, we explained DNP’s stance toward more active pursuit of
taiwa (dialogue) with shareholders and investors based on the principles set forth in Japan’s
new Corporate Governance Code, which took effect in June 2015.

CONTENTS

62 Corporate Governance54

73

Board of Directors, Statutory
Auditors and Corporate Officers

Value Creation

A company’s first and most fundamental social responsibility
is to provide value for society. We must realize
the connection between offering products and services
necessary to the sustainable development of society andachieving growth for the company. Through our Business
Vision, DNP will continue to provide significant value that
contributes to resolution of social problems.

DNP in Brief

DNP’s Three Corporate Responsibilities

Integrity ofConduct

Respect forhuman dignityand diversity

Environmental
Contributing toconservation and society as a goodrealizing
corporate citizen
a sustainable future

DNP’s Three Corporate Responsibilities

Transparency

Proper disclosure of information(Accountability)

Compliance withlaws and social
ethicsConstruction ofsystems that
support business
continuity

DNP Annual Repor t 2 016

Appendix

Prerequisites for fulfilling
our three responsibilitiesof their daily work, engage in dialogue with stakeholders;
this entails both listening to stakeholders’ opinions andproviding correct information.

Financial Section

The third corporate responsibility is to achieve accountability
and be a highly transparent company. DNP achieves
accountability by having all employees, during the course

How DNP Works to Achieve
Sustainable Development

3

Promoting social
responsibility
throughout the
supply chain

Information
security

Segment Information

The second responsibility is practicing fairness and impartiality
during the value creation process. Regardless of how superior or
useful to society the value produced may be, that value will becompromised if, for example, the environment is damaged or laws
are broken in the process of creating it. DNP seeks to fulfill its
responsibilities by ensuring that all of its employees always act
with integrity in accordance with the DNP Group Code of Conduct.

Creating safe and Ensuring the safety
vibrant
and quality of
workplaces
products and services

Special Feature

2

Contributing to social development● Research and development● Creation of intellectual property, etc.
To Our Shareholders

1

DNP’s Three Corporate Responsibilities

55

Prerequisites for fulfilling our three responsibilities

Compliance with Laws and Social Ethics
Rather than simply having each of our employees comply
with laws and regulations in the execution of DNP’sbusiness activities, we believe that DNP can win society’s
trust by maintaining even higher ethical standards thansociety expects and by consistently remaining fair andequitable as we help to maintain and develop orderly, freeand competitive markets. In order to be able to act in waysthat meet society’s expectations, DNP works to imbue
corporate ethics throughout the DNP Group.

Systems for Promoting Absolute Corporate Ethics
Head Office

Operating UnitsManagement-by-objectives
evaluation system
Compliance assessment system
Corporate ethics training

Corporate
EthicsCommittee

Management-by-objectives
evaluation system

Examination
・Guidance・
Education

Autonomous examination ofrules and laws

Corporate
EthicsCommittee

Regular training sessions according toemployee level● Self-directed corporate ethics training● Training related to individual themes
●

Do

Act

Check

Corporate ethics training

ReportingOpen Door Room

Plan

●

●

Supplier Hotline

Regular training sessions according toemployee level
Self-directed corporate ethics training

Prerequisites for fulfilling our three responsibilities

Construction of Systems that Support Business Continuity
In the event that an emergency situation should
compromise the continuity of DNP’s business operations,
any interruption in our operations would affect not only
DNP but our customers, suppliers, their employees and avariety of stakeholders. DNP has prepared a business
continuity plan in order to build a strong corporate
Central Disaster Prevention Council

Disaster prevention system
during normal times

Basic DNP Group
DisasterPrevention Plan

Human resources subcommittee

Business Unit and Group Affiliate Disaster Prevention Councils
Business Operations
Plan for Disaster
Prevention

Facilities subcommittee
Chairperson

DeputyChairperson

Asset preservation subcommittee

Chairperson

Disaster Prevention
Manager
Fire Prevention
Manager

DeputyChairperson

Secretariat

Community subcommittee

Disasterprevention
systemduringemergency

Central Disaster Response Headquarters

Facilities coordinator

Business activities coordinator
Secretariat

Public relations subcommittee

Ifdisaster occurs,

Human resources coordinator

Asset preservation coordinator

Business activities subcommittee

the Central Disaster
Prevention Council
begins to function as
Disaster Response
Headquarters

56

structure that can continue operating under crisis
conditions and quickly restore operations in the event of aninterruption. In the course of our daily operations, we
maintain a proper awareness of disaster risks andimplement employee training and other measures aimed atenabling us to cope in extreme situations.

Public relations coordinator
Community coordinator

In-house firefighting organization

Regional Disaster Prevention Councils
Chairperson

DeputyChairperson

Secretariat

Business Unit and Group Affiliate
Disaster Response Headquarters
Regional Disaster Response Headquarters

Contributing to Social Development: Research and development
problems and the technologies that are needed to solve
them. Having done so, we then develop our own originaltechnologies while also actively pursuing alliances withother companies that have special strengths in order tospeed up technological development.

DNP in Brief

Given that DNP has expanded its fields of business bydeveloping applications for printing and information
technologies, research and development are extremely
important to us. In today’s rapidly changing world, we needto take consumers’ point of view, look carefully at what ishappening in society, and be quick to discern existing

To Our Shareholders

Our 1st responsibility

Controlled by Head OfficeBusiness Units

Business unit’s development
framework

Publishing & Media Services

Development Headquarters

FieldsDevelopment Headquarters
Development Headquarters

Lifestyle and Industrial Supplies
Electronics

Packaging

Development Headquarters

Lifestyle Materials

Development Headquarters

Fine Optronics

Development Headquarters

New BusinessTechnology
Development
CenterResearchandDevelopment
CenterSpecial Feature

Information Innovation
Imaging Communication

SupervisionCorporate R&D Division

Information Communication

Head office research anddevelopment framework

Advanced Business Center

Long-term
development(3 years or more)

Segment Information

Medium-term
development(less than 3 years)

Short-term development (less than 1 year)

Our 1st responsibility

Contributing to Social Development: Intellectual property
intellectual property greatly affects DNP’s business, wework at generating high-quality patents and making
maximum use of our intellectual property in our business
operations.

Financial Section

Number of patents held (As of March 31, 2016)

How DNP Works to Achieve
Sustainable Development

In our view, intellectual property initiatives provide a basic
underpinning for a wide range of business activities and are
indispensable as we work to differentiate DNP fromcompetitors. Because the competitive standing of our(case)

14,00012,00010,0008,000
6,000

Appendix

4,000
2,000
0

12

13

14

15

16

DNP Annual Repor t 2 016

57

Our 2nd responsibility

Information Security
Information security and the protection of personal
information have become more important than ever.
Because DNP handles a large volume of personal
information and other information assets, proper
management and protection of information assets are

critical tasks that can even be called part of our social
mission. DNP positions information security initiatives
among management’s top-priority concerns as we work tostrengthen our information security-related frameworks
and educate employees about protecting information.

■ The DNP Group’s Basic Policy on Information Security, and Personal Information Protection Policies
It is obvious to us that we have a responsibility to protect
personal information, data entrusted to us by corporate clients,and other information assets. We have established policies

related to information security and personal information
protection. We maintain strict and continuous control bystrengthening related systems and educating employees, etc.

■ Information Security Management Framework
Head office

Operational Divisions and Group Companies

DNP Group Information Security Committee
Chief, Personal information protection manager,
Committee members

Information Security Committee
Chief, Personal information protection manager, Committee members(General manager of division or president of group company)

Person responsible for auditing and inspection
Information Security Promotion Office Manager
Information Security Headquarters

Information Security Manager
Person responsible for education
Person responsible for security area measures
Person responsible for public relations measures
Person responsible for information system measures

TOP

ICS

Globalizing our Information Security Initiatives

In response to the globalization of DNP’s businessactivities, in 2015 we established information security
committees at each of our seven Group companies
outside Japan, in order to reinforce our worldwide
initiatives aimed at making information secure. In
order to enhance employee education overseas, weissued an educational pamphlet, “Introduction to
Information Security VII (2015 edition),”in nine languages.
DNP Group companies
where we establishedinformation security committees:

7

companies
58

Tien Wah Press (Pte.) Ltd.
Singapore
TWP Sdn. Bhd.
Malaysia
DNP Imagingcomm Asia Sdn. Bhd.
Malaysia
DNP Imagingcomm America Corporation
United States
DNP Imagingcomm Europe B.V.
The Netherlands
DNP Photo Imaging Europe SAS
FranceDNP Photomask Europe S.p.A.
Italy

Our educational pamphlet,“Introduction to
Information Security VII(2015 edition),”was published in ninelanguages.

Environmental Conservation and Realizing a Sustainable Future
Code of Conduct is to help realize a sustainable society sothat we can pass on an abundant Earth to future
generations. The entire DNP Group is working to achievethat goal, for example by preventing global warming,
protecting biodiversity, and using resources efficiently.

DNP in Brief

As a manufacturer, DNP always considers how to coexist
with the Earth’s environment. The most urgent problem
facing humanity in the 21st century (sometimes called “theenvironment century”) is how to coexist with nature andpreserve its gifts so that we can pass them on to the next
generation. One of the values set forth in the DNP GroupTo Our Shareholders

Our 2nd responsibility■ Environmental Targets to Achieve by the Fiscal Term through March 2021
Environmental issue

Target for fiscal term through March 2021
Reduce greenhouse gas emissions by 10% worldwide compared to fiscal term ended March 2006
Reduce per-unit fuel usage for transport (amount of transport fuel/net sales) by 1% per year;
reduce by 10% compared to term ended March 2011

Special Feature

Global warming prevention
Reducing negative environmental
impact of transport

Reduce all VOC (except methane) emissions by 35% relative to fiscal term ended March 2011
Volatile organic compounds (VOCs)

Industrial waste reduction

Outside Japan, prepare to reduce VOC emissions by introducing helpful technologies and reducing emissions
as much as possible in addition to complying with local laws
Reduce per-unit waste generation (amount of waste generated/production amount) by 20% worldwide compared tofiscal term ended March 2011

Maintain zero waste generation for DNP Group wtithin Japan

Development and sales of
eco-friendly products and services
Green purchasing
Environmental conservation
Office environment

ICS

Achieve 600 billion yen in sales of eco-friendly products and services

Focus on procuring raw materials; aim for 100% purchasing in line with DNP’s Guidelines for Procurement of Paper for Printing
and Converting
Maintain the maximum concentration of odors at our site perimeters at no more than 70% of the required standard
Wastepaper sorting and recovery rate of at least 70% relative to general waste

Environmental Conservation andRealizing a Sustainable Future%

reduction（Scopes 1 and 2, in fiscal year ended March 2016 as compared to 2006）

DNP Annual Repor t 2 016

Appendix

12

Greenhouse gas
emissions

Financial Section

Because DNP benefits from nature’s bounty in allof our business activities, from procuring raw
materials to manufacturing and disposal, etc., weare always thinking about how to coexist with
the Earth’s environment. The entire DNP Group
works together on initiatives aimed at building asustainable society.

How DNP Works to Achieve
Sustainable Development

TOP

Reduce per-unit water usage (amount of water used/net sales) by 25% worldwide compared to fiscal term ended March 2011

Segment Information

Water conservation

59

TOP

ICS

Respect for
Human Dignity and Diversity

Number of overseas locations
where we conducted humanrights risk assessments:

The DNP Group Code of Conduct cites respect for human dignity
as an important value. Not only among employees, but in every
field where our business activities may exert influence, we havedetermined that absolutely no discriminatory language or
action will be tolerated and we work to ensure that this is thecase throughout the DNP Group.

22
companies(April 2015-March 2016)

Ensuring the Safety and Quality of Products and Services
As a manufacturing enterprise, DNP believes that safety andquality take priority over every other consideration. DNP’s basic
approach to ensuring safety and quality is to envision thesituations in which our products and services will be used, toconsider from consumers’ point of view what qualities are
required, what is safe, and what is easy to use, andto continue making improvements
again and again.
On-site practical* Practical sessions aimed at innovating
manufacturing processes by using industrial
engineering methods

sessions* across businesssector lines (worldwide):

Promoting Social Responsibility
throughout the Supply Chain
DNP works with suppliers to make entire supply chains moresocially compatible. If raw materials procurement or
manufacturing or other processes deviate from social norms,
all of our endeavors will be pointless. DNP uses a variety ofmanagement tools aimed at simultaneously creating
high-quality value and maintaining a strong awareness ofcompliance issues.

46
times

(April 2015-March 2016)

Number of companies thathave assessed compliance with
CSR Procurement Criteria:

1,200
About

companies(April 2015-March 2016)

60

Proper disclosure of information
We believe that if DNP is to continue growing sustainably along with society, it is essential that webuild trusting relationships with stakeholders. In order to gain the understanding and sympathy ofour various stakeholders, DNP remains accountable by disclosing information in a timely andappropriate manner, and by engaging in dialogue.

in a row(As of December 31, 2015)years
in a row

How DNP Works to Achieve
Sustainable Development

CDP rates listed companies worldwide in terms of their efforts to reducegreenhouse gas emissions and otherwise fight climate change, as well as
related information disclosure. In addition to assigning a grade of A-E toexpress the degree to which companies have adapted their businesspractices to alleviate climate change, CDP rates them for information
disclosure using a scale of 0-100. Worldwide, 115 companies made CDP’s“The Climate A List 2015,” and DNP was one of the eight Japanese companies
selected. DNP was also ranked a very high 97 for information disclosure.
DNP constructed its own original environmental management system in
1993. We established targets in areas like greenhouse gas emission
reduction and effective use of resources and we have worked actively andcontinuously toward achieving those goals. Regarding greenhouse gas
emissions, in addition to setting goals for our own production processes(including long-term goals), we formulated targets for our entire supply
chain, in Japan and overseas (Scope 3), and we continue to work at
reducing emissions.

Segment Information

In recognition of its initiatives for preventing climate change,
DNP was selected by the Carbon Disclosure Project (CDP),
for inclusion in its top-rated “A list” for two consecutive years.

Special Feature

years

Number of years included in
the FTSE4Good Global Index asa globally socially responsible
investment:

DNP in Brief

11 15
Number of years included in
the Dow Jones Sustainability
Indices as a globally socially
responsible investment:

To Our Shareholders

Our 3rd responsibility

Financial Section
Appendix

DNP Annual Repor t 2 016

61

Corporate Governance“DNP” refers to Dai Nippon Printing Co., Ltd. in this section.
(As of June 29, 2016)

1“Lifestyle and Mobility,” and “Environment and Energy.” Werecognize that to increase our business competitiveness inthe future, we must fulfill our corporate social
responsibilities (CSR) and win the trust of our various
stakeholders, including shareholders, customers,
consumers, and employees. To this end, we regard
improvement in corporate 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 these decisions, andsupervision and auditing of these processes. We also
conduct thorough training and education to improve each
employee’s awareness of compliance issues and we strive
to improve our overall corporate governance.

Corporate Governance■ Fundamental philosophy

DNP seeks to improve earnings power and capital efficiency
in order to support sustained growth and increase
enterprise value over the medium to long term. We
established the DNP Group Vision 2015, which states our
corporate philosophy as: “The DNP Group connects
individuals and society, and provides new value.” We arepreparing an environment to allow directors to boldly
pursue various business opportunities based on a healthy
entrepreneurial spirit and to effectively supervise business
operations, primarily in the four growth areas of“Knowledge and Communication,” “Food and Healthcare,”■ DNP’s corporate governance structure

DNP’s corporate governance and internal control system will have the following structure from June 29, 2016.
<Structure diagram>
General Meeting of Shareholders
Audit

Audit

Board of Directors
Advisory Committee

Management Committee

President and Directors in Charge

Corporate Ethics Committee
Open Door RoomGroup companies

CSR & Environmental Committee
Information Security Committee
Invention Compensation Committee
Central Disaster Prevention Council

Audit
Guidance

Legal and other main divisions
Audit
Guidance
Training(Autonomous implementation,
inspection, review, improvement)

Audit
Guidance
Reporting

Coordination

62

Audit
ReportingAssistance

Audit Unit

(CSR & Environment & Product Liability
Department, Employee Relations
Department, Technical & Engineering
Division, Finance & Accounting Division,
Corporate Planning &Control Department, Intellectual
Property Division,
Corporate Communication Division,
Legal Affairs Department, etc.)

Auditing Department

Head Office

Operating Units

Accounting Auditors

Divisions

Information Disclosure Committee

Board of Statutory Auditors

Directors andcorporate officers
in charge(Oversight of internal controls)

Reporting

Audit

ReportingManagement and business execution structure, audit
structure

Reasons for choosing this structure

DNP in Brief

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 enterprise value
over the medium to long term.

To Our Shareholders

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.

Financial Section
Appendix

DNP Annual Repor t 2 016

How DNP Works to Achieve
Sustainable Developmentb. In principle, the Board meets once a month. Based on
the Company’s Board of Directors Regulations, thedirectors ensure that meetings are appropriately run
and supervise each other in day-to-day operations. We
appoint independent outside directors to ensure thatthe Board of Directors performs its duties in compliancewith the law. Executive directors exercise their authority
according to the Organization Rules, Work Authority
Regulations, Proposal System Regulations, and otherinternal company rules; and they prevent acts inviolation of laws, regulations, and the Articles ofIncorporation by supervising the business execution of
the corporate officers and general managers responsible
for DNP’s various organizational units.
DNP is a company with a Board of Statutory
Auditors. Statutory auditors, including independent
outside statutory auditors, audit the performance of
duties by directors according to the audit criteria andresponsibilities prescribed by DNP’s Board of
Statutory Auditors.

Segment Information(1) System for ensuring that directors and employees of DNP
and DNP subsidiaries perform their duties in compliancewith laws and regulations and the Articles ofIncorporationa. We established the DNP Group Code of Conduct togovern the conduct of all employees (including
directors). We distribute this code to all employees of
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 Codeof Conduct through various training sessions and otheractivities carried out mainly by DNP’s Corporate Ethics
Committee.

Special Feature

DNP’s organization is designed to allow directors withspecialized expertise and experience in a wide range ofbusiness fields to participate in management decisions, totake responsibility and authority as they execute their work,and to supervise the work of other directors. We are working
to enhance our decision making and supervisory capabilities
from a company-wide perspective by appointing directors incharge of each management function. Independent outside
directors also participate in decision-making in order tofacilitate prompt and precise management decisions andsmooth execution of those decisions, and to further
strengthen proper supervisory functions. Corporate officers
appointed by the Board of Directors have the responsibility
and authority to execute business decided by the Board of
Directors.
● In order to nimbly construct optimal management systems
for responding to changes in the business environment, andto further clarify management responsibility for each fiscal
year, we set the term of office for directors and corporate
officers at one year.
● The Board of Directors consists of 12 directors, including two
independent outside directors, and the Board ensures thatmeetings are run appropriately based on the Board of
Directors Regulations. The Board meets once a month, inprinciple, to discuss and decide on important businessmatters. Corporate officers may also attend meetings asneeded to provide reports. To speed up the Company’s
activities and make them more efficient, DNP has alsoestablished a Management Committee consisting of directors
at the senior managing director level and above. The
committee meets once a month, in principle, to review anddiscuss management policies, strategies, and importantbusiness matters. Decisions about director compensation,
designation of director candidates, and other such matters
are made in light of the advice and opinions of an Advisory
Committee comprised of independent outside directors in aneffort to increase the transparency of the decision making
process.
● DNP has in place a Board of Statutory Auditors that consistsof five auditors, including one auditor with considerable
knowledge of finance and accounting and three outside
auditors. In accordance with auditors’ prescribed audit
criteria and responsibilities, the statutory auditors conduct
audits of the directors’ management of day-to-day
operations and, as necessary, seek information from thedirectors and corporate officers regarding business
operations.
● DNP provides in its Articles of Incorporation for the ability toconclude limited liability agreements based on laws andregulations in order to allow directors (excluding executive
directors, etc.) and statutory auditors to adequately fulfill
their expected roles and to ensure useful personnel in the
future. DNP and its directors (excluding executive directors,etc.) and statutory auditors have concluded agreementsthat limit the directors’ and auditors’ liability for damages●

within the parameters set forth in Article 423, Paragraph 1of Japan’s Companies Act, so long as they perform theirduties in good faith and without serious negligence.

63

〔Summary of operation〕
The Board of Directors met nine times during the fiscal
year ended March 2016. The Board held discussions,
made decisions, and took appropriate actions onimportant matters based on the Board of Directors
Regulations. Executive directors exercise their authority
according to various rules and regulations, and theysupervise the business execution of the corporate
officers and general managers responsible for DNP’svarious organizational units. DNP also appoints two
independent outside directors. Statutory auditors audit
the performance of duties by directors according to theaudit criteria and responsibilities prescribed by DNP’s
Board of Statutory Auditors.
c. DNP’s Corporate Ethics Committee is responsible forestablishing and operating systems and othermechanisms to ensure appropriate business conduct
within the DNP Group, based on the DNP Group’s Basic
Compliance Management Regulations.
〔Summary of operation〕
DNP’s Corporate Ethics Committee meets once a month,in principle, 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’s Corporate Ethics
Committee, the Information Disclosure Committee, CSR& Environmental Committee, Information Security
Committee, Invention Compensation Committee, Central
Disaster Prevention Council, and various head officeorganizations responsible for specific laws andregulations conduct reviews, provide guidance, andoffer training in their areas of specialty to otherorganizational units and group 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’s various organizational
units independently determine, implement, check,evaluate, and improve the systems and procedures
required for their own units, based on the DNP Group’s
Basic Compliance Management Regulations and in lightof the specific operations of their unit.
〔Summary of operation〕
DNP’s various organizational units independently
determine and implement the systems and procedures
required by their unit. Each organizational unit confirms
the operation of these systems and procedures. Each
unit compiled the results of its independent checks,
evaluations, and improvements made through the endof the fiscal year ended March 2016 into a Unit
64

Confirmation Report, and provided the report to DNP’s
Corporate Ethics Committee.
f. DNP’s Auditing Department is independent fromoperating units, and based on the Internal Audit
Regulations, it conducts internal audits and provides
guidance to DNP’s various organizational units andgroup companies regarding the establishment andoperation of systems and other mechanisms to ensure
appropriate business conduct.
〔Summary of operation〕
We established the Auditing Department as anorganization that is independent from operating units
to conduct internal audits and provide guidance to DNP
and DNP Group companies. The results of the Auditing
Department’s internal audits and guidance are reported
to DNP’s President, statutory auditors, and accounting
auditors.
g. DNP’s Corporate Ethics Committee established the Open
Door Room as an internal and external whistleblowing
forum for the DNP Group. It also established theSupplier Hotline as a means to receive information frommaterial suppliers and contractors. It uses these to
obtain information about legal violations and othersuch actions by employees and to respond to thisinformation (including by not providing unfair treatment
to whistleblowers).
〔Summary of operation〕
We seek to publicize and gain widespread recognition ofthis whistleblower system and to use it appropriately.
h. We establish, operate, evaluate, and report on internal
controls for financial reporting based on the Basic
Policy and Basic Plan for Establishing, Operating, andEvaluating Internal Controls for Financial Reporting, as
stipulated by DNP’s Board of Directors. We thereby
ensure compliance with laws and regulations andreliability in financial reporting.
〔Summary of operation〕
DNP works to ensure compliance with laws andregulations and reliability in financial reporting by
establishing internal controls and evaluating theiroperation based on 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, should a business
partner be revealed as an antisocial force, we will pursue
an arrangement among our various business partners thatenables a severing of this relationship. The DNP Group will
also strengthen ties with outside organizations, including
the police and law offices, to guard against inappropriate
demands made by antisocial forces.

Financial Section
Appendix

DNP Annual Repor t 2 016

How DNP Works to Achieve
Sustainable Development(4) System for storing and managing information related tothe performance of duties by DNP’s directors
We record information related to the performance of
duties by directors in the Board of Directors meeting
minutes, special committee meeting minutes, proposal
documents, other paper documents, and electronic
documents. Additionally, in accordance with the Basic
Information Security Rules, Document Control
Standards, and Electronic Data Control Standards, weappropriately and safely store and manage in an easily
searchable format the paper and electronic documents
in which this information is recorded for a period of time
stipulated in these rules and standards.
〔Summary of operation〕
We record information related to the performance of
duties by directors in paper and electronic documents,
and appropriately store and manage these documentsin the responsible organization according to various
regulations.

Segment Informationc. To ensure that directors at Group companies performtheir duties efficiently, we seek to enhance theefficiency of business execution by providing guidance
to enable Group companies, accounting for their sizeand other specific attributes, to independently 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 other internal company rules.
〔Summary of operation〕
Group companies are working to enhance the efficiencyof business execution by directors by establishingappropriate rules in light of their business portfolio,size, and other attributes.

Special Feature(3) System for ensuring that directors of DNP and DNP
subsidiaries perform their duties efficiently
a. The Board of Directors meets once a month, in principle,
and also holds meetings as needed, providing a basic
system for ensuring that directors perform their duties
efficiently. Additionally, to contribute to fair andefficient decision making, we established the Advisory
Committee comprised of independent outside directors
to provide advice and opinions on important matters,
including director compensation and designation of
director candidates. The Management Committee
comprised of senior managing and higher directors
meets once a month, in principle, to examine anddiscuss important business matters.
〔Summary of operation〕
In addition to the operation outlined above in (1) b., weestablished the Advisory Committee in November 2015
to discuss and offer advice and opinions about
important matters, including director compensation anddesignation of director candidates. Additionally, theManagement Committee met 10 times during the fiscalb. We seek to improve the efficiency of business execution
by allowing executive directors to perform their duties
based on decisions by the Board of Directors byappropriately delegating authority to the corporate
officers and general managers responsible for DNP’svarious organizational units, within the scope provided
for in the Organization Rules, Work Authority
Regulations, Proposal System Regulations, and otherinternal company rules.
〔Summary of operation〕
DNP’s Board of Directors reviewed the Board’s
processes and other matters on March 17, 2016. In linewith this review, we amended various related
regulations in an effort to enhance the efficiency ofbusiness execution by appropriately delegating theauthority of executive directors to the corporate
officers and general managers responsible for DNP’svarious organizational units.

DNP in Brief(2) Regulations and other systems for managing the risk oflosses at DNP and DNP subsidiaries
To manage risks that could have a serious impact on thebusiness of the DNP Group, including those related tocompliance, information security, environment,
disasters, product safety, insider trading, and export
control, DNP’s 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 to the DNPGroup. Additionally, under the general oversight of
DNP’s Corporate Ethics Committee, we regularly takeinventory of risks and designate organizations andresponsible directors to quickly respond to any new
risks that could have a serious impact on our business.
〔Summary of operation〕
DNP’s 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
directors to respond to these risks. Special committees
and head office organizations evaluate compliance inrelation to these risk and work to prevent risks fromoccurring.

year ended March 2016 to examine and discuss
important business matters.
To Our Shareholders〔Summary of operation〕
In an effort to sever relations with antisocial forces, if
DNP finds that a business partner is an antisocial force,
we will actively pursue an arrangement among ourvarious business partners that enables a severing of
this relationship. We are also working to strengthen ties
with outside organizations, including the police and law
offices, to guard against inappropriate demands madeby antisocial forces.

65

(5) System for ensuring appropriate business conduct 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 Group’s 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 based on the DNP Group’s Basic ComplianceManagement Regulations and the Affiliated Company
Management Regulations.
b. We confirm that group companies, based on the policies
outlined in the preceding item, independently establish
various rules and regulations, including Proposal
System Regulations, that stipulate matters requiring
prior consultation or subsequent reporting with theparent company, accounting for each company’s sizeand other specific attributes; that they establish andoperate reporting systems to report to DNP about
important business execution by directors and other
employees of group companies; and that this businessexecution 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 business portfolio,size, and other attributes; and to implement, check,evaluate, and improve their systems and procedures.
〔Summary of operation〕
Group companies establish various rules andregulations, including Proposal System Regulations,that stipulate matters requiring prior consultation orsubsequent reporting with DNP; and establish
appropriate systems in light of their business portfolio,size, and other attributes. Group companies confirmed
the operation of these rules, regulations, and systems;
compiled a Unit Confirmation Report by the end of the
fiscal year ended March 2016; and reported to DNP’s
Corporate Ethics Committee.
c. DNP’s Auditing Department, Corporate Ethics
Committee, various special committees, and other head
office organizations conduct audits and checks andprovide guidance and training in relation to theimplementation of the preceding two items.

66〔Summary of operation〕
DNP’s Auditing Department, Corporate Ethics
Committee, various special committees, and other head
office organizations conduct audits and checks andprovide guidance and training in relation to the systemsof Group companies.
(6) System for employees who assist DNP’s statutory
auditors in the performance of their duties and mattersrelated to the independence of these employees fromdirectors
a. DNP’s Board of Statutory Auditors established the Audit
Unit and appoints dedicated staff to assist DNP’s
statutory auditors in the performance of their duties. To
ensure the effectiveness of the instructions given by
DNP’s statutory auditors to their staff, we grant theirstaff the authority to appropriately conduct checks andgather information.
〔Summary of operation〕
DNP appoints one dedicated staff member to assist its
statutory auditors. We grant this staff the authority toappropriately conduct checks and gather information toensure the effectiveness of their work.
b. Audit Unit staff perform their duties under the directionof DNP’s statutory auditors. Any personnel evaluation,transfer, reprimand, or other such actions related tothis staff requires the consent of DNP’s Board of
Statutory Auditors.
〔Summary of operation〕
Audit Unit staff are independent from the direction of
directors and perform their duties under the direction of
DNP’s statutory auditors. Any personnel evaluation,transfer, reprimand, or other such actions related tothis staff requires the consent of DNP’s Board of
Statutory Auditors.
(7) System for directors and employees of DNP and DNP
subsidiaries to report to DNP’s statutory auditors; policy
for expenses incurred as statutory auditors performtheir duties; system for other reporting to statutory
auditors; and system for ensuring effective auditing bystatutory auditors
a. DNP’s 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’s statutory auditors.
〔Summary of operation〕
Statutory auditors are independent from the directionof directors, and have the authority to request as
needed that directors and employees provide reports
on business execution at DNP and DNP Group
companies. DNP Group directors and employees
respond promptly when requested to report by DNP’s
statutory auditors.

DNP established its own Independence Standards for
Independent Officers with reference to stock listing rules andother material in order to avoid conflicts of interest withgeneral shareholders when appointing outside directors andoutside statutory auditors. These standards are presented
below, and we designate all of our outside directors andoutside statutory auditors as independent officers as a resultof satisfying these standards.

DNP Annual Repor t 2 016

Appendix

In order to maintain a structure that allows for precise
management decision-making, appropriate and prompt
execution of business, and inspection and monitoring of thesefunctions, the Corporate Ethics Committee, as the body incharge of internal control, inspects and guides DNP’soperating units according to the DNP Group’s Basic
Compliance Management Regulations, and regularly reports
to statutory auditors regarding management conditions. In
addition, the Auditing Department (consisting of 11
employees) ensures the propriety of operations by

Financial Section■ Internal controls and auditor’s auditing

How DNP Works to Achieve
Sustainable Development

f. DNP’s President conducts regular exchanges of opinion
with DNP’s Board of Statutory Auditors.
〔Summary of operation〕
During the fiscal year ended March 2016, DNP’s
President held meetings and exchanged opinions with
DNP’s Board of Statutory Auditors.

DNP has two outside directors and three outside statutory
auditors. Outside directors and statutory auditors do not haveany 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 andaccountability of the Board of Directors by providing
management advice based on their judgment. The role ofoutside statutory auditors is to enhance the propriety ofaccounting and operational audits and to supervise
management.
● Outside director Tadao Tsukada can participate in businessdecision making from an objective standpoint that is
independent from the Company’s management team that
executes its business, based on keen insight and broad
experience as a distinguished academic. Mr. Tsukada owns
2,000 shares of DNP stock.
● Outside director Tsukasa Miyajima can participate inbusiness decision making from an objective standpoint thatis independent from the Company’s management team that
executes its business, based on keen insight and broad
experience as a legal professional. Mr. Miyajima owns 1,000
shares of DNP stock.
● Outside statutory auditor Shin-ichi Ikeda is designated as
an independent officer and can help bolster auditing basedon a broad knowledge gained from business experience atother companies. Mr. Ikeda owns 2,000 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.

Segment Information

e. DNP bears the costs deemed necessary for its statutory
auditors to perform their duties, and DNP’s 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.

DNP’s outside directors and outside statutory
auditors

Special Feature

d. DNP’s statutory auditors convene liaison meetings andexchange opinions with statutory auditors at groupcompanies.
〔Summary of operation〕
The statutory auditors of DNP and DNP Group
companies convene liaison meetings at their discretionand exchange information and opinions.

■

DNP in Brief

c. DNP’s Auditing Department and Corporate Ethics
Committee provide regular reports to DNP’s statutory
auditors about the details of auditing of the DNP Groupand the establishment and operation of systems andother mechanisms to ensure appropriate businessconduct in the DNP Group.
〔Summary of operation〕
During the fiscal year ended March 2016, DNP’s Auditing
Department and Corporate Ethics Committee held
meetings with DNP’s statutory auditors and provided
timely reports to these statutory auditors.

conducting accounting and operational audits based on
Internal Audit Regulations and by providing progress reports
to the statutory auditors and the accounting auditor.
The statutory auditors hold regular meetings of the Boardof Statutory Auditors, work with other statutory auditors to
perform their audit duties, and closely cooperate with theaccounting auditors by receiving from them an explanation of
the audit plan at the start of the fiscal year, assessing audit
operations during the fiscal year as appropriate, and receivinga report of audit results at the end of the fiscal year.

To Our Shareholders

b. If a DNP director discovers a legal violation or othermatter that could significantly damage the DNP Group,
the director will report this matter immediately to
DNP’s statutory auditors.
〔Summary of operation〕
We endeavor to make DNP directors fully aware of theirreporting obligations to statutory auditors as stipulated
in the Companies Act.

67

DNP’s independence standards
for independent officers
Independent officers must have a neutral position that is
independent from DNP’s management team; none of thefollowing conditions may apply.
( 1 ) An executive of DNP or DNP affiliated company(hereinafter, DNP Group) (person to whom this applies
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 those who have served as
an executive during the 10-year period prior to their
appointment as a director or auditor)( 2 ) A major supplier of the DNP Group (supplier group [entity
belonging to the consolidated group of the direct
supplier] that provides products or services to the DNPGroup for which the transaction value of the products orservices provided to the DNP Group accounts for over 2%of the supplier group’s annual consolidated sales or grossrevenues in the most recent fiscal year) or an executive
thereof( 3 ) A major customer of the DNP Group (customer group thatreceives products and services from the DNP Group forwhich the transaction value of the products and services
provided to the customer group from the DNP Groupaccounts for over 2% of the DNP Group’s annual
consolidated sales in the most recent fiscal year) or an
executive thereof( 4 ) A major lender to the DNP Group (lender providing loans
accounting for over 2% of the DNP Group’s total
consolidated assets in the most recent fiscal year) or an
executive thereof( 5 ) 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 compensationin excess of the larger of an annual amount of ¥10 million
or 2% of the person’s sales or gross revenues in the mostrecent fiscal year)( 6 ) A major shareholder of DNP (direct or indirect ownershipof 10% or more of total voting rights) or an executive
thereof( 7) An executive at an entity in which the DNP Group is amajor investor (direct or indirect ownership of 10% ormore 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) have recently
applied (within one year)(10) A relative (within second degree of kinship) of a person(excluding insignificant persons) to whom any of items (1)through (5) apply(11) An executive at an entity with mutual appointments ofoutside officers (person to whom this applies during thepast 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’s annual gross revenues) or an executive thereof(person to whom this applies during the past 10 years)■ Compensation paid to directors and statutory auditors(1) Total compensation paid by DNP, by category of director/statutory auditor, total compensation by type,
and the number of directors and statutory auditors covered
Total compensation by type (¥ million)

Category of director/
statutory auditor

Total compensation(¥ million)

Base compensation

Bonus

Number of directors
and statutory
auditors covered

Directors

1,244

1,103

141

16

Statutory auditors

64

64

—

4

Outside directors
and auditors

105

105

—

5

(excluding outside directors)(excluding outside auditors)

Notes: 1. Bonuses are provisions for bonuses for directors and statutory auditors for the fiscal year ended March 2016.
2. There were 16 internal directors, two internal statutory auditors and five outside directors as of the end of the fiscal year ended March 2016.

68

(2) Company directors and total compensation

Yoshitoshi Kitajima(Director)

Koichi Takanami(Director)

Masayoshi Yamada(Director)

Total
compensation

Company328

Total compensation by type (¥ million)
Base compensation

Bonus

Dai Nippon Printing Co., Ltd.

306

22

129

Dai Nippon Printing Co., Ltd.

116

12

129

Dai Nippon Printing Co., Ltd.

116

12

(¥ million)

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:●

Audit firm
ARK MEIJI AUDIT & Co.
Number of accounting audit assistants
17 certified public accountants, 3 others■■

Matters for resolution by the general meeting ofshareholders that can be resolved by■ the Board of Directors

DNP’s Articles of Incorporation specify that the number ofregular members on the Board of Directors shall be no morethan 16.

■

Requirements for shareholder approval of
director nominees■

Requirements for shareholder approval of special
resolutions

DNP’s Articles of Incorporation specify that the approval of
director nominees requires the attendance of at least one
third of shareholders with voting rights and a majority of thevotes of these shareholders, and does not depend on
cumulative votes.

Appendix(1) Share buybacks
DNP’s Articles of Incorporation specify that the Company
may buy back its shares in the open market, in
accordance with Article 165, Paragraph 1 of Japan’sCompanies Act, upon approval by the Board of Directors,in accordance with Article 165, Paragraph 2 of Japan’sCompanies Act, to allow the Company to use capital more
efficiently and implement a flexible capital structure
policy in response to changes in business conditions.

■ Number of directors

Financial Section●

Certified public accountants who performed theaccounting audits
Atsushi Sasayama, Hirofumi Nikaido,
Tsugihiro Tsukakoshi, Yurika Kimura

How DNP Works to Achieve
Sustainable Development●

Segment Information■ Accounting auditing(2) Exemption of directors from liability
DNP’s Articles of Incorporation specify that directors(including former directors) may, by a resolution of theBoard of Directors, in accordance with Article 426,
Paragraph 1 of Japan’s Companies Act, be exempted fromliabilities in Article 423, Paragraph 1 of Japan’s Companies
Act so that the directors can sufficiently carry out their
expected responsibilities.
(3) Exemption of statutory auditors from liability
DNP’s Articles of Incorporation specify that statutory
auditors (including former statutory auditors) may, by aresolution of the Board of Directors, in accordance with
Article 426, Paragraph 1 of Japan’s Companies Act, be
exempted from liabilities in Article 423, Paragraph 1 ofJapan’s Companies Act so that the statutory auditors cansufficiently carry out their expected responsibilities.
(4) Interim dividend
DNP’s Articles of Incorporation specify that the Company
may, by a resolution of the Board of Directors, pay amonetary dividend stipulated in Article 454, Paragraph 5of Japan’s 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.

Special Feature(3) Policies regarding the determination ofcompensation for directors and statutory auditors
Compensation for directors is calculated within the limits
on directors’ compensation approved at a general meetingof shareholders; is reviewed and discussed by theManagement Committee in light of the advice andopinions of the Advisory Committee comprised ofindependent outside directors; and is deliberated anddecided on by the Board of Directors.
Compensation for each director is determined based ona broad range of factors, including the operations they
are in charge of, their responsibilities, achievements, andcontributions.
Compensation for statutory auditors is calculated within
the limits on statutory auditors’ compensation, and thecompensation of each statutory auditor is determinedbased on discussions with the statutory auditor.

DNP in Brief

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 2016.

To Our Shareholders

Name(director type)

DNP’s Articles of Incorporation specify that the approval of
special resolutions stipulated in Article 309, Paragraph 2 ofJapan’s Companies Act requires the attendance of at least
one third of shareholders with voting rights and at least two
thirds of the votes of these shareholders, so that theshareholders’ meetings can run smoothly.
DNP Annual Repor t 2 016

69

■ Stockholdings(1) Stocks held for reasons other than for pure investment purposes
No. of stocks: 370
Total on the balance sheet: 301,988 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 2015)
Stocks held for reasons other than pure investment purposes

70

Company name

Number ofsharesAmount recordedon balance sheet

Holding purpose(¥ million)

Recruit Holdings Co., Ltd.

37,700,000

141,375

Enhance business relationship

The Dai-ichi Life Insurance Co., Ltd.

6,606,600

11,531

Enhance business relationship

Ezaki Glico Co., Ltd.

1,614,101

7,844

Enhance business relationshipAsahi Group Holdings, Ltd.

1,860,029

7,093

Enhance business relationship

Terumo Corporation

2,202,000

6,980

Enhance business relationship

Taisho Pharmaceutical Holdings Co., Ltd.

692,700

6,192

Enhance business relationship

YAKULT HONSHA CO., LTD.

701,000

5,867

Enhance business relationshipMizuho Financial Group, Inc.

27,134,319

5,728

Enhance business relationship

CALBEE, Inc.

1,032,800

5,391

Enhance business relationship

NISSIN FOODS HOLDINGS CO., LTD.

898,711

5,311

Enhance business relationship

YAMATO HOLDINGS CO., LTD.

1,660,600

4,603

Enhance business relationship

Meiji Holdings Co., Ltd.

282,200

4,134

Enhance business relationship

Aica Kogyo Co., Ltd.

1,293,743

3,622

Enhance business relationshipToyo Suisan Kaisha, Ltd.

794,980

3,362

Enhance business relationship

NSK Ltd.

1,814,000

3,189

Strengthen business alliance

FUJIFILM Holdings Corporation

685,965

2,933

Enhance business relationshipStrengthen business alliance

NuFlare Technology, Inc.

500,000

2,670

Mitsubishi Chemical Holdings Corporation

3,598,790

2,514

Strengthen business alliance

Daikin Industries, Ltd.

300,000

2,413

Enhance business relationship
Enhance business relationshipLion Corporation

3,140,665

2,298

TOSHIBA CORPORATION

4,547,000

2,292

Strengthen business alliance

ROHM Co., Ltd.

268,893

2,212

Enhance business relationship

Hakuhodo DY Holdings Inc.

1,720,000

2,199

Enhance business relationship

Mitsubishi Electric Corporation

1,300,000

1,857

Enhance business relationship

Sapporo Holdings Limited

3,796,388

1,807

Enhance business relationship

Mitsubishi UFJ Financial Group, Inc.

2,399,760

1,784

Enhance business relationship

SMK Corporation

3,200,000

1,667

Enhance business relationship

Ajinomoto Co., Inc.

630,931

1,662

Enhance business relationshipTosoh Corporation

2,609,000

1,581

Strengthen business allianceIsetan Mitsukoshi Holdings Ltd.

783,600

1,557

Enhance business relationship

KUBOTA Corporation

774,000

1,472

Enhance business relationshipShiseido Co., Ltd.

677,619

1,445

Enhance business relationship

Hulic Co., Ltd.

1,040,000

1,405

Enhance business relationship

Kobayashi Pharmaceutical Co., Ltd.

156,445

1,345

Enhance business relationship

Kikkoman Corporation

350,940

1,338

Enhance business relationship

Senshukai Co., Ltd.

1,511,663

1,315

Enhance business relationship

MORINAGA & CO., LTD.

2,965,000

1,251

Enhance business relationship

NIPPON STEEL & SUMITOMO METAL CORPORATION

3,905,768

1,181

Strengthen business allianceKDDI Corporation

142,200

1,160

Enhance business relationship

Stocks held in trust or other legal entity while retaining voting rights or voting instruction rights
Number ofsharesAmount recordedon balance sheet

Holding purpose(¥ million)

Terumo Corporation

3,861,000

12,239Hold voting instruction rights for shares in retirement benefit trust

Astellas Pharma Inc.

4,568,850

8,989

Hold voting instruction rights for shares in retirement benefit trust

TV Asahi Holdings Corporation

4,030,000

8,080

Hold voting instruction rights for shares in retirement benefit trust

Japan Tobacco Inc.

1,000,000

3,800

Hold voting instruction rights for shares in retirement benefit trust

To Our Shareholders

Company nameNote: 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.

DNP in Brief(Fiscal year ended March 2016)
Stocks held for reasons other than pure investment purposes
Amount recordedon balance sheet

Holding purpose

Recruit Holdings Co., Ltd.

35,700,000

122,629

Enhance business relationship

Ezaki Glico Co., Ltd.

1,614,656

9,316

Enhance business relationship

The Dai-ichi Life Insurance Co., Ltd.

6,606,600

9,001

Enhance business relationship

Terumo Corporation

2,202,000

8,885

Enhance business relationshipAsahi Group Holdings, Ltd.

1,860,029

6,523

Enhance business relationship

Taisho Pharmaceutical Holdings Co., Ltd.

692,700

6,178

Enhance business relationship

Meiji Holdings Co., Ltd.

564,400

5,107

Enhance business relationship

NISSIN FOODS HOLDINGS CO., LTD.

898,711

4,754

Enhance business relationshipMizuho Financial Group, Inc.

27,134,319

4,561

Enhance business relationshipLion Corporation

3,140,665

3,985

Enhance business relationship

YAMATO HOLDINGS CO., LTD.

1,660,600

3,731

Enhance business relationship

YAKULT HONSHA CO., LTD.

701,000

3,494

Enhance business relationship

Dexerials Corporation

3,125,000

3,475

Strengthen business allianceToyo Suisan Kaisha, Ltd.

794,980

3,211

Enhance business relationship(¥ million)

1,293,743

3,058

Enhance business relationship

685,965

3,053

Enhance business relationship

Daikin Industries, Ltd.

300,000

2,523

Enhance business relationship

Hakuhodo DY Holdings Inc.

1,720,000

2,193

Enhance business relationship

Sapporo Holdings Limited

3,796,388

2,125

Enhance business relationship

NSK Ltd.

1,814,000

1,868Strengthen business alliance

SMK Corporation

3,200,000

1,849

Enhance business relationship

677,619

1,702

Enhance business relationship

2,965,000

1,698

Enhance business relationship

Ajinomoto Co., Inc.

630,931

1,602

Enhance business relationship

Kobayashi Pharmaceutical Co., Ltd.

157,054

1,551

Enhance business relationship

Mitsubishi Electric Corporation

1,300,000

1,533

Enhance business relationship

Kikkoman Corporation

350,940

1,298

Enhance business relationshipKDDI Corporation

426,600

1,282

Enhance business relationship

ROHM Co., Ltd.

269,474

1,277

Enhance business relationship

PILOT CORPORATION

297,400

1,275

Enhance business relationship

Mitsubishi UFJ Financial Group, Inc.

2,399,760

1,251

Enhance business relationship

NuFlare Technology, Inc.

250,000

1,246

Strengthen business allianceTosoh Corporation

2,609,000

1,234Strengthen business alliance

Financial Section

Shiseido Co., Ltd.
MORINAGA & CO., LTD.

How DNP Works to Achieve
Sustainable Development

Aica Kogyo Co., Ltd.
FUJIFILM Holdings Corporation

Segment Information

Number ofsharesSpecial Feature

Company name

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

Number ofsharesAmount recordedon balance sheet

Holding purpose

Terumo Corporation

3,861,000

15,579Hold voting instruction rights for shares in retirement benefit trust

TV Asahi Holdings Corporation

4,030,000

8,136

Hold voting instruction rights for shares in retirement benefit trust

Japan Tobacco Inc.

1,000,000

4,690

Hold voting instruction rights for shares in retirement benefit trust

Astellas Pharma Inc.

2,284,000

3,418

Hold voting instruction rights for shares in retirement benefit trust

Appendix(¥ million)

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.

(3) Stocks held for pure investment purposes
None
DNP Annual Repor t 2 016712Compensation Paid to Accounting Auditors■ Compensation paid to accounting auditors
Fiscal year ended March 2015
Compensation foraudit certification (¥ million)

Compensation forother services (¥ million)

Dai Nippon Printing Co., Ltd.

96

Consolidated subsidiaries

127

Total

223

Fiscal year ended March 2016
Compensation foraudit certification (¥ million)

Compensation forother services (¥ million)

—

96

—

—

125

—

—

221

—

■ Other material compensation details
None■ Compensation paid to accounting auditors for services other than auditing work provided to DNP
None■ Determination of compensation for audit services

DNP’s compensation for auditing services is determined based on a variety of factors, including the number of expecteddays for the audit and the company size.

72

Board of Directors, Statutory Auditors and Corporate Officers(As of June 29, 2016)

Managing Directors

Yoshitoshi Kitajima

Motoharu Kitajima

Senior Executive Corporate
Officers

Sakae Hikita

Takashi Saito
Executive Vice Presidents

Kouichi Hashimoto

Satoru Inoue

Koichi Takanami

Corporate Officers

Kiyotaka Nakagawa
Kazuhiko Takada
Ryota Chiba
Nobuyuki Asaba

Senior Corporate Officers

Masayoshi Yamada

Directors

Yoshinari Kitajima

Tadao Tsukada

Shigemi Furuya*

Ryuji Minemura

Tsukasa Miyajima*
Senior Managing Directors

Masahiko Wada

Standing Statutory Auditors

Tetsuji Morino

Kazunari Tanaka

Tokuji Kanda

Naoki Hoshino
Shin-ichi Ikeda*

Masato Yamaguchi
Morihiro Muramoto
Kenji Miya
Toshiki Sugimoto
Naohiko Sugimoto

Hirofumi Hashimoto
Kazuhiko Sugita
Masafumi Kuroyanagi
Daiji Suzuki
Toru Takamatsu
Satoshi Kubota
Souichiro Nishitani*

Outside directors or auditors

Kuniaki Nomura*Special Feature

Statutory Auditors

Makoto Matsuura*

DNP in Brief

Masato Koike

Mitsuru Tsuchiya

To Our Shareholders

President

Segment Information
How DNP Works to Achieve
Sustainable Development
Financial Section
Appendix

Tetsuji Morino

Yoshinari Kitajima

Koichi Takanami

Yoshitoshi Kitajima

Masayoshi Yamada

Masahiko Wada

Tokuji Kanda

DNP Annual Repor t 2 016

73

Financial
Section
CONTENTS

74

76

Management ’ s Discussion and Analysis

86

Selected Financial Data (unaudited)

88

Consolidated Financial Statements

110

Independent Auditors ’ ReportTo Our Shareholders

DNP in Brief

Special Feature

Segment Information

How DNP Works to Achieve
Sustainable Development

Financial Section

Appendix75

DNP Annual Repor t 2 016

Management’s Discussion and Analysis

Operating Results■ Business Environment

Japan’s economy gradually recovered during the current fiscal year (April
2015–March 2016), as reflected by improvement in corporate earnings andemployment conditions, supported by the economic policies of theJapanese government and monetary easing policies of the Bank of Japan.
However, the economy has still not reached a full-fledged recovery,
due partly to sluggish consumer spending, overseas economic slowdowns,
including in China, and volatility in forex and equity markets since thestart of 2016.
The printing industry continued to face a tough business environment asa result of lower demand for printed media, including published printed
materials, and lower order prices due to stiffer competition. A discussionof the business environment affecting each of DNP’s business segments inthe current fiscal year is provided below.

Information Communication
Demand continued to decline in the Books and Magazines business andthe Education and Publications Distribution business. Publication sales
fell a sharp 5.9% year on year to ¥1,501.3 billion, and were down morethan ¥1 trillion from the peak of ¥2,656.3 billion in 1996. Book sales fell
1.7% year on year to ¥738.8 billion, and magazine sales fell 9.6% to¥762.4 billion on a further decline in circulation and increase ine-magazines.
Meanwhile, the domestic e-book market grew a sharp 31% year on
year to ¥150.2 billion in 2015. Japan’s Research Institute for Publications
forecasts the e-book market to expand to ¥289.0 billion in the fiscal
year through March 2020, up 92% from the fiscal year through March
2016.
● In the Commercial Printing business, although spending on direct mailand other printed material decreased, an increase in internet
advertising contributed to corporate advertising expenditures rising
3.4% year on year in the fiscal year through March 2016 (according to
the Ministry of Economy, Trade and Industry). This business was also
affected by a decline in printed media amid a shift to internet
distribution of product catalogs and instruction manuals.
● In the Business Forms business, ensuring high-level information security
is becoming more important as companies face a greater need to safely
manage and appropriately use the personal information of employees
and customers. Japan’s “My Number” citizen ID numbering systemcommenced full operation in January 2016 and smart cards are now
being issued to applicants. Demand also increased for e-money cards
such as international brand prepaid cards. The Business Process
Outsourcing (BPO) market has expanded as major financial institutions
revise their business processes and outsource the production andmailing of various notifications.
● In the Imaging Communication business, the global market for photo
printing is gradually contracting, but developed markets are leading ashift toward commercial photo printing systems based on a dry methodthat uses dye-sublimation thermal transfer printing media, moving awayfrom conventional silver halide printing systems (wet method).
●76

To Our Shareholders

Lifestyle and Industrial Supplies
In the Packaging business, demand for packaging materials was slow torecover as domestic consumer spending remained sluggish, affected byeconomic slowdowns in emerging markets and turmoil in global financial
markets.
● In the Lifestyle Materials business, domestic housing starts increased by
4.6% year on year during the fiscal year through March 2016, but arecovery in demand still lacked momentum, and this business was also
affected by work interruptions resulting in part from higher construction
costs for non-residential properties (especially commercial facilities)
and condominiums.
● In the Industrial Supplies business, the domestic photovoltaic cellmarket stagnated for both residential and non-residential applications,affected by price reductions in the feed-in tariff system.
●

DNP in Brief
Special Feature

Electronics
Chinese manufacturers continue to invest heavily while the Chinese
government pursues a policy of expanding the home-country production
ratio for LCD panels. As a result, LCD panels are in oversupply and prices
have been falling since 2015. Sales are weak for high-priced
smartphones and TVs, whereas low-priced smartphones have expanded
in India and other emerging markets.
● Annual sales in the global semiconductor market edged down 0.2% year
on year to $335.2 billion in 2015, holding generally flat from a record
high of $335.8 billion in 2014, according to research by the U.S.-based
Semiconductor Industry Association.
●

Segment Information

Beverages●

How DNP Works to Achieve
Sustainable Development

The soft drink industry continued to face a tough market environment
as a result of price and market share competition between
manufacturers.

Financial Section
Appendix

DNP Annual Repor t 2 016

77

■ Overview

DNP reviewed the DNP Group Vision for the 21st Century, which itprepared in 2001 as a basic management policy, and established the DNPGroup Vision 2015 in October 2015. DNP states its corporate philosophy as:“The DNP Group connects individuals and society, and provides newvalue.” It also defines its business vision as: “Use P&I innovations to
expand business, primarily around four growth areas.”
DNP sought to increase the value of existing business by leveraging its
strengths both inside and outside the company, mainly in the growthareas of “Knowledge and Communication,” “Food and Healthcare,”“Lifestyle and Mobility,” and “Environment and Energy.” It also focused on
new business development and worked to expand its business by creating
new value. As a result of these activities, consolidated net sales fell 0.4%
year on year to ¥1,455,916 million in the fiscal year through March 2016.
Consolidated operating income in the Information Communication
segment grew a sharp 32.3% year on year, driven by photo printing
business and growth in smart card (mainly My Number cards) and BPO
services. However, the Electronics segment fell 20.8% due to a global
slump in LCD TV sales and slower growth in the smartphone market.
DNP also made aggressive upfront investment in the current fiscal year,
including for M&A, new business development, business unit integration,and redevelopment to establish an operating base in the Ichigaya districtof Tokyo. As a result, overall consolidated operating income fell 5.6% year
on year to ¥45,472 million. The consolidated operating income margin fell
by 0.2 percentage points to 3.1%.
The operating income margin increased by 0.8 percentage points to 3.6%in the Information Communication segment, decreased by 0.2 percentage
points to 3.3% in the Lifestyle and Industrial Supplies segment, decreased
by 0.9 percentage points to 10.3% in the Electronics segment, anddecreased by 0.1 percentage points to 1.7% in the Beverages segment.
		2016.3		2015.3		2014.3
Net sales (¥ million)

Net Sales by Segment¥

1,455,916¥

1,462,118¥ 1,448,550

Gross profit margin (%) 		

19.4%		

19.1%		 18.8%

Operating income margin (%) 		

3.1%		

3.3%		

3.5%

Ordinary income margin (%)		

3.6%		

3.7%		

3.7%

Net income margin (%)		 2.3%		

1.8%		

1.8%

(Year ended March 31, 2016)

Beverages
4.0%Electronics
13.6%

Net income per share (¥)
Information
Communication
56.2%

¥

53.10

¥

41.82

¥

39.82

■ Net Sales

Net sales totaled ¥1,455,916 million in the current fiscal year, down 0.4%,
or ¥6,202 million, from the previous year.
Lifestyle andIndustrial Supplies
26.2%

78

Information Communication
In the Books and Magazines business, book sales increased but wereunable to offset a decline in magazines, affected by market conditions,and overall sales decreased. In the Education and Publications Distribution

To Our Shareholders
DNP in Briefbusiness, sales increased as the company worked to expand the “honto”
hybrid bookstore network. In the Commercial Printing business, sales
decreased for flyers, catalogs, and other products, but overall sales wereon par with the previous year thanks to emerging benefits from building aunified control framework for nationwide sales, planning, andmanufacturing functions; and to growth in BPO services (including
promotional campaign offices) and sales promotion tools (e.g., point-ofpurchase campaign materials). In the Business Forms business, sales
increased on strong sales of smart cards, growth in Information Processing
Services (including in relation to the My Number system), and expansionof business center outsourcing orders from financial institutions. As aresult, overall segment sales grew 4.0%.

Lifestyle and Industrial Supplies
Special Feature

In the Packaging business, sales were strong for paper cups, mainly forfood applications, and increased for molded plastic goods. However,overall sales decreased, affected by weak sales of aseptic PET plastic
bottle filling systems. In the Lifestyle Materials business, among DNP’s
eco-friendly products that use its Electron Beam (EB) coating technology,
the scratch resistance of its EB floor coverings is well regarded, anddespite strong sales and top share of the domestic flooring materials
market, overall sales in this business decreased. In the Industrial Supplies
business, sales increased on contributions from increasing domestic
market share for photovoltaic cell back sheets and expanding productlineups for overseas manufacturers, and growth for lithium-ion battery
pouches used in mobile devices and automotive applications. As a result,overall segment sales fell 1.5%.

Segment Information

Electronics

Sales increased for coffee drinks that use a new extraction technology
and for tea drinks including the mainstay Ayataka brand, but decreased to
Coca-Cola Group bottlers and for the Coca-Cola brand and sports drinks.
As a result, overall segment sales fell 2.6%.

(¥ billion)

250
216.5

20 0

192.2

195.6

12

13

230.2

234.6

15

16

150

Financial Section

Beverages

DNP’s Overseas Sales

How DNP Works to Achieve
Sustainable Development

In the Display Products business, sales increased for high-value-added
products such as vapor deposition masks (metal masks) used in the
production of organic EL panels. However, LCD color filter sales decreased
for both large filters and small- and medium-sized filters. For semiconductor
photomasks, DNP worked to acquire overseas demand, but sales decreased
as a result of weak sales in Japan and removal of a Taiwanese subsidiaryfrom the scope of consolidation in April 2014. Sales were also weak anddecreased for optical films and lead frames. As a result, overall segment
sales fell 13.4%.

10 0

50

0

14

Appendix

Overseas sales totaled ¥234,586 million in the current fiscal year, up 1.9%,
or ¥4,381 million, from the previous year. As a result, the ratio to overallsales was 16.1%, up 0.4 percentage points from 15.7%. By region, sales in
Asia (including Indonesia and Taiwan) were down 8.6% year on year at¥146,925 million, and other regions (including the U.S. and France) were up
26.1% at ¥87,661 million.

DNP Annual Repor t 2 016

79

■ Cost of Sales
Gross Profit Margin
(%)

25

20

17.3

18.0

18.8

19.1

19.4

14

15

16

15

10

5

0

12

13

SGA Expenses to Net Sales
(%)

20

16

15.0

15.5

15.4

15.8

16.3

■ Selling, General and Administrative Expenses

12

Selling, general and administrative expenses totaled ¥237,241 million in
the current fiscal year, up 2.7%, or ¥6,251 million, from the previous year.
Selling, general and administrative expenses equated to 16.3% of net
sales, up 0.5 percentage points from the previous year.

8

4

0

12

13

14

15

16

■ Operating Income

Operating income totaled ¥45,472 million in the current fiscal year, down
5.6%, or ¥2,702 million, from the previous year. The operating income
margin was 3.1%, down 0.2 percentage points from 3.3% in the previous
year.

Operating Income Margin(%)

Information Communication

10

8

6
3.5

4
2.3

2.5

12

13

3.3

3.1

15

16

2

0

80

The cost of sales totaled ¥1,173,203 million in the current fiscal year, down
0.8%, or ¥9,751 million, from the previous year. The gross margin was
19.4%, up 0.3 percentage points from 19.1%.
Although demand for printing paper stagnated during the current fiscal
year, prices increased for general paper in April 2015 and for communication
paper in June 2015 as a result of higher costs for wood chips and otherraw materials and fuels. However, petrochemical product prices continued
to decline, due partly to a global slowdown in crude oil demand. As aresult of these factors, the impact of higher raw material prices was ¥3.3
billion in the current fiscal year, down from ¥5.2 billion in the previous
year. DNP worked to pass costs through to product prices by negotiatingwith customers, resulting in nearly all of the impact of higher prices being
passed through to product prices.
DNP also endeavored to cut costs, reducing personnel costs mainly by
shortening overtime work hours. It sought to reduce equipment and repair
costs through the sale and disposal of equipment while consolidating
manufacturing facilities. It worked to increase production efficiency by
optimizing production locations across Japan, mainly in the Information
Communication segment and the Packaging business. It strived to reduce
variable manufacturing costs by improving yields and lowering material
losses. As a result, DNP cut costs by ¥28.5 billion during the current fiscal
year.

14

Higher costs for printing paper and other raw materials and a decrease inunit prices due to stiffer competition were offset by profit growth fromhigher sales for My Number-related services, for BPO business fromfinancial institutions and other customers, and for the Imaging
Communication business. As a result, segment operating income totaled¥29,364 million, up 32.3%, or ¥7,171 million, from the previous year. The
operating income margin was 3.6%, up 0.8 percentage points, from 2.8% in
the previous year.

Lifestyle and Industrial Supplies
Segment operating income totaled ¥12,597 million, down 7.9%, or ¥1,079
million, from the previous year, due to lower sales in the Packaging
business and the Lifestyle Materials business and to a decline inprofitability, especially in the Lifestyle Materials business. The operating
income margin was 3.3%, down 0.2 percentage points from 3.5% in theprevious year.

To Our Shareholders

Electronics
Segment operating income totaled ¥20,509 million, down 20.8%, or ¥5,396
million, from the previous year, due to sharply lower sales for LCD color
filters and optical films as mainstay products. The operating income
margin was 10.3%, down 0.9 percentage point from 11.2% in the previous
year.

DNP in Brief

Beverages
Segment operating income totaled ¥991 million, down 8.0%, or ¥86 million,
from the previous year. The operating income margin was 1.7%, down 0.1
percentage point from 1.8% in the previous year.

■

Nonoperating Income (Expenses) andExtraordinary Income (Losses)

ROE
(%)

7
6
5
4
3

2.2

2.8

2.7

14

15

3.2

2
1
0
–1
–2

How DNP Works to Achieve
Sustainable Development

–1.8

–3

12

13

16

Financial Section

Net income attributable to parent company shareholders totaled ¥33,588
million in the current fiscal year, up 24.8%, or ¥6,664 million, from theprevious year. Net income per share was ¥53.10, up ¥11.28 from theprevious year.

Segment Information■ Net Income Attributable to Parent Company Shareholders

Special Feature

Nonoperating income totaled ¥14,751 million in the current fiscal year, up
17.7%, or ¥2,215 million, from the previous year; and nonoperating
expenses totaled ¥7,571 million, up 8.9%, or ¥621 million. As a result, net
nonoperating income totaled ¥7,180 million, up from ¥5,586 million in theprevious year.
Ordinary income totaled ¥52,651 million, down 2.1%, or ¥1,108 million,
from the previous year.
Extraordinary income totaled ¥16,491 million, up ¥11,646 million fromthe previous year, as gains on the sale of investment securities increasedto ¥15,135 million from ¥4,442 million in the previous year. Extraordinary
losses totaled ¥14,301 million, up ¥6,758 million from the previous year.
DNP did not record business integration losses as in the previous year,
but extraordinary losses still increased as a result of ¥2,264 million in
production restructuring costs and ¥7,672 million in repair costs. As aresult, net extraordinary income totaled ¥2,190 million, up from losses of¥2,698 million in the previous year.
As a result of the above, income before income taxes and noncontrolling interests totaled ¥54,841 million, up 7.4%, or ¥3,779 million,
from the previous year.

Appendix

DNP Annual Repor t 2 016

81

Liquidity and Capital Resources■ Cash Flow
		2016.3		2015.3		2014.3
Cash flow from operating activities¥ 72,629 		

¥ 85,731		

Cash flow from investing activities（60,883）（50,540）
		

（58,371）

11,746			

35,191		

61,738

Free cash flow

¥ 120,109(¥ million)

Interest-bearing Debt to Cash Flow Ratio(times)Net cash provided by operating activities totaled ¥72,629 million, down
15.3%, or ¥13,102 million, from the previous year.
Net cash used in investing activities totaled ¥60,883 million, up 20.5%, or¥10,343 million, from ¥50,540 million in the previous year.
Net cash used in financing activities totaled ¥47,166 million, up ¥23,301
million, from ¥23,865 million in the previous year.
As a result of these activities, cash and cash equivalents at the end of
the fiscal year totaled ¥175,513 million, down 17.5%, or ¥37,249 million,
from the previous year.
Free cash flow—i.e., net cash provided by operating activities minus net
cash used in investing activities—was ¥11,746 million, down ¥23,445 million
from ¥35,191 million in the previous year.

3.0
2.6

2.5

2.3

2.2

2.1

2.0
1.5

1.5
1.0
0.5
0

12

13

14

15

16

■
Capital Expenditures and Free Cash Flow(¥ billion)

200

150

100

98.2

97.3

88.3
63.5 61.7

50

28.5

55.0
35.2

27.9

11.7

0

12

13

Capital expenditures82

14
Free cash flow

15

16

Capital Expenditures; Depreciation; Research and Development
Expenditures, etc.

Capital expenditures this fiscal year consisted mainly of streamlining
investment, but also included business structure reforms to create new
business and increase value in existing business and DNP’s redevelopmentof the Ichigaya district in Tokyo as part of cost structure reforms. As aresult, capital expenditures totaled ¥97.3 billion, up 76.8%, or ¥42.2 billion,
from the previous year. By segment, capital expenditures in the
Information Communication segment were ¥52.5 billion, up ¥29.2 billion
from the previous year and accounting for 54% of total capital
expenditures. The Lifestyle and Industrial Supplies segment was ¥23.3
billion, up ¥10.7 billion and accounting for 24%. The Electronics segment
was ¥13.3 billion, up ¥1.1 billion and accounting for 14%. The Beverages
segment was ¥5.8 billion, up ¥2.2 billion and accounting for 6%.
Adjustment was ¥2.4 billion, up ¥1.3 billion and accounting for 2%.
Depreciation totaled ¥65.3 billion, down 2.6%, or ¥1.7 billion, from theprevious year. By segment, depreciation in the Information Communication
segment was ¥27.5 billion, up ¥1.8 billion from the previous year andaccounting for 42% of total depreciation. The Lifestyle and Industrial
Supplies segment was ¥17.0 billion, down ¥0.6 billion and accounting for26%. The Electronics segment was ¥15.0 billion, down ¥3.4 billion andaccounting for 23%. The Beverages segment was ¥3.9 billion, up ¥0.1
billion and accounting for 6%. Adjustment was ¥1.8 billion, up ¥0.3 billion
and accounting for 3%.
Research and development expenditures totaled ¥31.8 billion, roughly
the same as ¥31.7 billion in the previous year.

To Our Shareholders■ The Balance Sheet		2016.3		2015.3		2014.3
Total assets (¥ million)¥ 1,718,636¥ 1,809,462		

¥ 1,574,754

170%

175%		

175%

Working capital/net sales (%)

20%

22%		

22%

Debt-to-equity ratio (%)

19%

17%

20%

Net assets per share (¥)¥

1,618.66			

¥

1,675.63			

DNP in Brief

Current ratio (%)¥		 1,447.96

Current Ratio
(%)

200

177
164

175

175

170

14

15

16

59.2

59.6

59.2

14

15

16

150

Special Feature

100

50

0

12

13

(%)

80

60

54.2

56.6

12

13

How DNP Works to Achieve
Sustainable Development

Equity Ratio

Segment Information

40

Financial Section

DNP’s total assets at the end of this fiscal year amounted to ¥1,718,636
million, down 5.0%, or ¥90,826 million, from the previous year.
Among current assets, cash and cash equivalents and time deposits
totaled ¥176,694 million, down 18.6%, or ¥37,285 million, from the previous
year. Trade receivables totaled ¥348,585 million, down 4.8%, or ¥17,483
million. Inventories of merchandise and finished products, work in process,raw materials and supplies totaled ¥155,947 million, up 5.4%, or ¥8,041
million. As a result, current assets totaled ¥721,725 million, down 5.4%, or¥41,397 million.
Among long-term assets, property, plant and equipment totaled¥513,157 million, up 0.1%, or ¥366 million, from the previous year.
Intangible assets totaled ¥35,802 million, up 17.1%, or ¥5,219 million.
Investments and other assets totaled ¥447,952 million, down 10.9%, or¥55,014 million. As a result, long-term assets totaled ¥996,911 million,
down 4.7%, or ¥49,429 million.
Current liabilities totaled ¥423,314 million, down 2.8%, or ¥12,091 million,
from the previous year. Long-term liabilities totaled ¥232,080 million,
down 7.2%, or ¥17,885 million. As a result, total liabilities amounted to¥655,394 million, down 4.4%, or ¥29,976 million.
Additionally, net assets totaled ¥1,063,242 million, down 5.4%, or¥60,850 million.
As of March 31, 2016, the number of treasury shares totaled 51,919,577,
or 7.63% of total shares outstanding of 680,480,693 shares. Treasury
shares decreased by 4,728,037 shares, reflecting the acquisition of
15,221,000 shares, acquisition of 54,962 odd-lot shares, cancellation of
20 million treasury shares, sale of 1,200 odd-lot shares, and decrease of
2,799 shares from changes in equity ownership ratios in equity-method
affiliates.

20

0

Appendix

DNP Annual Repor t 2 016

83

Business risks
The performance and the results of DNP could be significantly affected by a variety of factors and circumstances that mightarise in the future. Because DNP is aware of these risk factors, its policy is to strive to minimize their potential effects.
The following are the major factors that the DNP management views as risks, as of the publication date of this annual report.

■

The Japanese and overseas economies andconsumption trends

DNP engages in a wide range of businesses with an extremely
large number of corporate customers, and steadily conducts
its business so as not to overly depend on specific customers.
DNP does most of its business in the Japanese market, but
if consumer spending and other components of domestic
demand slump, owing to domestic economic weakness in
sympathy with global economic trends, declines in ordervolume and unit prices may affect its corporate performance.
Additionally, DNP could be directly or indirectly affectedby market trends in various industries in Japan or overseas.
In particular, electronics-related industries are susceptible
to global declines in unit prices caused by an expansion of
production in emerging countries and changes in demand,and DNP’s performance could be affected by major changes
in market trends.

■ Overseas business activities

DNP conducts overseas business activities in the Americas,
Europe, Southeast Asia, and elsewhere, and these activities
face risks including social and political turmoil caused not
only by economic factors such as unexpected changes inlaws and regulations, stricter environmental-related laws
and regulations, fragility of industrial infrastructure, anddifficulty of hiring and securing personnel, but also byterrorism, war, and other factors. DNP’s performance could
be affected if its overseas business activities are
obstructed as a result of these risks materializing.

■ Development of new products and services

DNP uses its printing and information technologies todevelop products and services that deliver new value tocompanies, consumers, and society. These development
efforts face an accelerating pace of technologicalinnovation and diversification of needs. Going forward,
amid expectations for development competition to intensify
in Japan and overseas, it is possible that DNP’sperformance could fluctuate significantly due to a greaterthan-expected shortening of product life cycles andchanges in market trends.

84■

Strategic business and capital alliances andcorporate acquisitions

DNP engages in strategic business and capital alliances andcorporate acquisitions, and its performance could be
affected if it is unable to achieve initially expected results
and synergies as a result of deterioration in the businessenvironment affecting the companies and businesses
involved in these alliances and acquisitions.

■ Fluctuations in raw material procurement

DNP works hard to secure stable supplies and maintain
optimal pricing by procuring raw materials such as printing
paper and film from multiple suppliers in Japan andoverseas. However, there is some potential for temporary
imbalances between supply and demand due to sharp
fluctuations in petroleum prices, sudden surges in demand
from emerging markets, the impact of major disasters, thedepletion of natural resources, and climate change.
DNP will respond during such times by negotiating withclient companies and business partners, but its performance
could be affected if raw materials procurement becomes
extremely difficult, if purchasing prices rise sharply, or if
other such events occur.

■ Currency fluctuations

Amid growth in business with overseas customers,
DNP expects the impact of foreign exchange to steadily
increase. We use such means as foreign exchange forward
contracts to hedge the risks of currency fluctuations.
Nevertheless, it is possible that radical swings in currency
values could have a more serious effect on DNP’s performance.

Information security andpersonal information protection

DNP seeks to establish corporate ethics throughout thegroup, and works to earn the trust of society by each andevery employee complying with laws and regulations in
conducting business activities, maintaining higher ethicalstandards than required by society, and contributing tomaintaining and advancing orderly and freely competitivemarkets with a consistently fair attitude. Nevertheless,
DNP’s performance could be affected in the event of being
subject to lawsuits and resulting fines in Japan or overseas.

Special Feature■

DNP is affected by legal regulations in Japan and othercountries related to energy conservation, climate change
prevention (e.g., reduction of greenhouse gas emissions),
reduction of the use of harmful substances, air pollution
prevention, water quality protection, waste treatment, andproduct recycling. These regulations could conceivably bestrengthened or changed in the future. In addition, DNP’sbusiness could be substantially affected if faced with asituation in which soil is contaminated by harmful
substances and it is held responsible for assessment andcleanup.

■ Lawsuits and fines

DNP in Brief

Environmental protection andstricter environmental regulations

To Our Shareholders■

Segment Information

Global computer networks and information systems havebecome essential tools for conducting business, and there
are now greater risks of software and hardware defects,
computer virus infections, and personal data leaks.
DNP regards the protection of data and personal
information as a top priority. It is doing all it can to protect
and maintain systems and data by strengthening its
organization and training employees, but if problems arisein these areas, then its business activity could be affected.

■ Response to changes in legal regulations

How DNP Works to Achieve
Sustainable Development

DNP conducts its business based on strict compliance withlaws and social ethics. We are subject to a variety of legal
regulations in Japan and overseas, including productliability laws, antimonopoly laws, personal data protection
laws, patent laws, tax regulations, and import and export
rules. We believe these regulations could be strengthenedin the future. On the other hand, market and industry
trends may change substantially as a result of
deregulation. If that should occur, it is possible that DNP’sbusiness performance could be affected by limitations on
its business activities, the burden of responding toregulatory changes, or increased costs.

Financial Section■ Disasters

Appendix

DNP takes steps to protect production equipment and othermajor facilities from fires and earthquakes, seeks todisperse production facilities, and works to minimize
production shutdowns and product supply disruptions
caused by disasters. We also use various types of insurance
to transfer risk. Nevertheless, DNP’s performance could besubstantially affected in the event of major earthquakes,
natural disasters such as heavy rainfall or flooding causedby climate change, disease outbreaks, or other unexpected
events that cause production shutdowns or significantly
damage or impair social infrastructure.

DNP Annual Repor t 2 016

85

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

2016

2015

2014

2013

Statements of Operations Data (¥ million)
Net sales¥

1,455,916¥

1,462,118¥

1,448,550¥

1,446,607

Cost of sales

1,173,203

		1,182,954

		1,176,077

		1,186,558

Gross profit

282,713

		 279,164

		 272,473

		 260,049

Selling, general and administrative expenses

237,241

		 230,990

		 222,374

		 224,269

Operating income

45,472

		

48,174

		

50,099		

35,780Ordinary income

52,651

		

53,759		

53,285

		

40,318

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

54,841

		

51,062

		

48,608

		

35,152

Net income (loss) attributable to parent company shareholders

33,588

		

26,924

		

25,642

		

19,218

1,718,636¥

1,809,462¥

1,574,754¥

Balance Sheet Data (¥ million)
Total assets¥

1,578,976

Property, plant and equipment—net

513,157

		 512,791

		 528,538

		 538,455

Long-term liabilities

232,080

		 249,965

		 179,946

		 184,136

Total liabilities

655,394

		 685,370

		 598,369

		 641,921

Stockholders’ equity

894,752

		 902,217

		 892,110

		 887,194

1,063,242

		1,124,092

		 976,385

		 937,055

Total net assets
Other Selected Data (¥ million)

97,265¥55,024¥63,465¥88,315

Depreciation expenses

65,310		

67,034

		

73,459		

80,200R&D expenditures

31,826

		

31,748

		

30,820		

30,820

53.10

¥

41.82

¥

39.82

¥

29.84

Earnings (loss) per share—fully diluted

53.07

		

41.44

		

39.65

		

29.79

Dividends paid per share

32.00

		

32.00

		

32.00

		

32.00

Capital expenditures¥

Common Share Data (¥, shares)
Earnings (loss) per share—primaryBook value per share
No. of common shares outstanding (exc. treasury shares)¥

1,618.66

		 1,675.63

		 1,447.96

		 1,386.86

628,561,116

		643,833,079

		643,893,863

		643,990,364

		

		

		

Financial Ratios (%, times)
As a percent of net sales:		Gross profit

19.42%

		 19.09%

		 18.81%

		 17.98%

		Selling, general and administrative expenses

16.29

		 15.80

		 15.35

		 15.50

		Operating income

3.12

		 3.29

		 3.46

		 2.47

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

3.77

		 3.49

		 3.36		 2.43

		Net income (loss) attributable to parent company shareholders

2.31

		 1.84		 1.77		 1.33

Return on equity

3.20

		 2.67		 2.81		 2.18

Current ratio

170

		

175

		

175

		

164

D/E ratio

19

		

17

		

20

		

25

		
86

		

¥

2011

1,507,228¥

2010

1,589,373¥

2009

1,583,383¥

2008

1,584,844¥

2007

1,616,053¥

1,557,802

		1,324,522

		1,327,872

		1,268,072

		 260,350

		

301,792

		 296,701

		 260,322

		 288,181

		 289,730

		 226,335

		

233,973

		 230,187

		 214,145

		 201,077

		 193,585

		34,015

		

67,819		

66,514

		

46,177

		87,104				

36,843

		62,786

		68,841

		

47,390		

86,502

		 101,348

		

2,673

		

52,696

		

49,496

		 (27,842)

		88,469		

98,950		 (16,356)

		25,033

		23,278		 (20,933)

		

45,172

		

54,842

1,608,806¥

1,649,784¥

1,601,193¥

		 579,567

		614,827

		 616,848

		 604,904

		 639,343

		 635,784

		 251,414

		249,575

		 190,045

		 126,671

		 106,691

		 118,437

		 694,593

		697,343

		 661,990

		 596,471

		 561,058

		 600,811

		 888,650

			925,702

		 921,775

		 917,348

		 990,122

		1,027,475

		 914,213

		

952,441

		 956,864

		 940,086

		1,040,135

		1,099,439¥

1,618,854¥

1,536,557¥

102,173¥

119,063¥

116,139¥

162,886

		

95,829		

97,977

		

91,695

		 106,883

		 109,902

		 100,161

		

31,690		

33,147

		

33,850		

34,112

		

35,556

		30,113¥(25.39)

¥

38.86

¥

36.13

¥

(32.35)

¥

67.08

¥

78.10

		

–

		

–

		

32.00

		

		 1,352.71

		

		

–

		

–

		

–

32.00

32.00

		

32.00

		

36.00

		

32.00

1,410.44

1,422.34

		 1,393.91

		 1,516.35

		 1,544.02

644,142,530

		644,238,930

		644,357,076

		661,366,377

		694,226,171

		

		

		

		

		

18.99%

		 18.74%

		 16.43%

		 17.83%

		 18.60%

		 15.02

14.72

		 14.54

		 13.51

		 12.44

		 12.43

		 2.26

4.27

		

4.20

		 2.91		 5.39

		 6.17

		 0.18

3.32

		

3.13

		 -1.76

		 5.47

		 6.35

		 -1.09

1.57

		

1.47

		 -1.32

		 2.80

		 3.52

		 -1.84

2.74

		

2.57

		 -2.20

		 4.35

		 5.14

		

177

177

		

157

		

144

		

157

		

166

		

26

25

		

18

		

14

		

8

		

6

Appendix		 17.27%

Financial Section–

How DNP Works to Achieve
Sustainable Development

98,189		644,062,928

96,1561,700,250

¥

		

¥

¥

96,145

Segment Information

		1,286,682

Special Feature		 1,287,581

DNP in Brief

		1,246,878

To Our Shareholders

2012

		
DNP Annual Repor t 2 016

87

Consolidated Financial Statements

Consolidated Balance Sheets
Thousands of
U.S. dollars (Note 3)

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
March 31, 2016 and 2015

2016

2016

2015

AssetsCurrent assets:
Cash and cash equivalents (Notes 4 and 15)
Time deposits (Note 15)
Trade receivables (Notes 10 and 15)
Allowance for doubtful receivables
Inventories (Note 6)
Prepaid expenses and other current assets (Notes 5, 10 and 13)
Total current assets¥

Investments and advances:Non-consolidated subsidiaries and associated companies(Notes 10 and 15)
Investment securities (Notes 5 and 15)
Other (Note 10 and 15)
Total investments and advances

Property, plant and equipment, at cost (Note 7):Land
Buildings and structures
Machinery and equipment
Leased assets
Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment
Other assets
Net defined benefit asset (Note 8)
Other (Notes 7 and 13)
Total other assets

Total assets

88¥

175,513
1,181
348,585(1,349)155,947
41,848
721,725¥

212,7621,217
366,068(822)
147,906
35,991
763,122$

1,553,212
10,452
3,084,823(11,938)
1,380,062
370,336
6,386,947

57,246306,190
6,555
369,991

51,835
346,053
8,072
405,960

506,6022,709,646
58,0093,274,257

155,532
584,014888,329
24,644
14,946
1,667,465(1,154,308)
513,157

154,094537,358
883,201
29,37841,458
1,645,489(1,132,698)
512,791

1,376,389
5,168,265
7,861,319
218,088
132,266
14,756,327(10,215,115)
4,541,212

45,844
67,919113,763

65,931
61,658
127,589405,699
601,053
1,006,752

1,718,636¥

1,809,462$

15,209,168

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
March 31, 2016 and 2015

2016

2016

2015

Liabilities and Net Assets¥¥

53,371
11,291
258,887
40,221
8,075
63,560435,405$

489,522
77,4782,261,823
404,735
53,221
459,3633,746,142

125,750
34,167
72,163232,080

124,336
32,34893,281
249,965

1,112,832
302,363638,610
2,053,805

114,464
144,283
717,030

114,464
144,898
737,241

1,012,956
1,276,841
6,345,398(81,025)
894,752(94,386)
902,217(717,035)
7,918,160

123,478(7)
3,051(3,850)122,672
16
45,802
1,063,242

147,914(0)
7,247
21,450176,61116
45,248
1,124,092

1,092,726(62)
27,000(34,071)
1,085,593
142
405,326
9,409,221

Special Feature

Long-term liabilities:
Long-term debt (Notes 7 and 15)
Net defined benefit liability (Note 8)
Other long-term liabilities (Notes 7 and 13)
Total long-term liabilities

55,316
8,755
255,586
45,735
6,014
51,908423,314

DNP in Brief

Current liabilities:
Short-term bank loans (Notes 7 and 15)
Current portion of long-term debt (Notes 7 and 15)
Trade payables (Notes 10 and 15)
Accrued expenses (Note 10)
Income taxes payable (Note 13)
Other current liabilities (Notes 7, 10 and 13)
Total current liabilities

To Our Shareholders

Thousands of
U.S. dollars (Note 3)

Millions of yen

Contingent liabilities (Note 17)

1,718,636¥

1,809,462$

15,209,168

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

Financial Section¥

How DNP Works to Achieve
Sustainable Development

Total liabilities and net assets

Segment Information

Net assets
Stockholders’ equity
Common stock Authorized : 1,490,000,000 shares;
Issued : 680,480,693 shares;
Capital surplus (Note 9)
Retained earnings (Note 9)
Treasury stock, at cost
51,919,577 shares in 2016 and 56,647,614 shares in 2015 (Note 9)
Total stockholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Net deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans (Note 8)
Total accumulated other comprehensive income
Stock acquisition rights
Non-controlling interests
Total net assets

Appendix

DNP Annual Repor t 2 016

89Consolidated Statements of Income
Thousands of
U.S. dollars (Note 3)

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2016 and 2015

Net sales (Note 18)
Cost of sales (Note 18)
Gross profit
Selling, general and administrative expenses (Notes 11 and 18)
Operating income

2016¥

Other income (expenses) (Note 12):Interest and dividends income
Interest expenses
Equity in earnings of affiliates
Foreign exchange transaction gain (loss)
Net loss on sale or disposal of property, plant and equipment
Net gain on sales of investment securities
Loss on devaluation of investment securities
Loss on business integration
Production restructuring costs
Repair costs
Other

Income before income taxes and non-controlling interests
Income taxes (Note 13):
Current
Deferred
Net income
Net income attributable to non-controlling shareholders
Net income attributable to parent company shareholders¥

1,455,916
1,173,203
282,713237,241
45,472¥

1,462,118
1,182,954
279,164
230,990
48,174$

12,884,212
10,382,327
2,501,885
2,099,478
402,4075,227(2,439)3,696(497)(1,609)15,111(924)–(2,265)(7,672)
741
9,369

4,138
(2,453)
2,171
1,754(1,941)
4,456(67)(4,342)
–
–
(828)
2,888

46,257(21,584)
32,708(4,398)(14,239)
133,726(8,177)–(20,044)(67,894)
6,557
82,912

54,84151,062

485,319

13,3496,788
20,137
34,704
1,116
33,58814,097
8,475
22,57228,4901,566
26,924

118,133
60,071
178,204
307,1159,876
297,239

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

90

2016

2015

¥

$

Consolidated Statements of Comprehensive Income
Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2016 and 2015

2016
¥

¥

2016

2015

34,704¥28,490$307,115(24,502)22(5,236)(26,118)

113,164(31)
6,991
15,200(216,832)
195(46,336)(231,133)

1,325(54,509)(19,805)

1,869
137,193
165,683

11,726(482,380)(175,265)(20,351)546¥

163,316
2,367(180,097)
4,832

U.S. dollars (Note 3)

2016

Special Feature

Yen$

DNP in Brief

Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Net deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income in associates
accounted for using the equity method
Total other comprehensive income
Comprehensive income
Attributable to:Parent company shareholders
Non-controlling shareholders

To Our Shareholders

Thousands of
U.S. dollars (Note 3)

Millions of yen

2016

2015

¥

1,618.66¥

1,675.63$

14.32

Net income per common shareprimary

¥

53.10

¥

41.82

$

0.47

Net income per common share
fully diluted

¥

53.07

¥

41.44

$

0.47

Segment Information

Net assets per common share

The accompanying notes are an integral part of these consolidated financial statements.
How DNP Works to Achieve
Sustainable Development
Financial Section
Appendix

DNP Annual Repor t 2 016

91

Consolidated Statements of Changes in Net Assets
Millions of yen

Dai Nippon Printing Co., Ltd. andConsolidated Subsidiaries
Years ended March 31, 2016 and 2015

Balance at March 31, 2014
Cumulative effects of changes
in accounting policies
Adjusted balance at March 31, 2014
Changes of items during the period
Net income attributableto parent company shareholders
Cash dividends paid
Changes resulting from changeof scope of consolidation
Changes resulting from changeof scope of equity method
Purchases of treasury stock
Disposal of treasury stock
Changes in valuation difference
on available-for-sale securities
Changes in deferred gains (losses) on hedges
Changes in foreign currencytranslation adjustments
Changes in remeasurementsof defined benefit plans
Changes in non-controlling interests
Other
Total changes of items during the period
Balance at March 31, 2015
Changes of items during the period
Net income attributableto parent company shareholders
Cash dividends paid
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 currencytranslation adjustments
Changes in remeasurementsof defined benefit plans
Changes in non-controlling interests
Other
Total changes of items during the period
Balance at March 31, 2016

Stockholders’ equity

Number ofsharesCommonissuedstock(in thousands)

Capitalsurplus

Accumulated other comprehensive income
Valuation
Foreign
RemeasureNet deferreddifference on
currency ments of defined
available-for-sale gains (losses) translation
benefitonhedgessecurities
adjustments
plans

Treasurystock,
at costRetainedearnings

Stockacquisitionrights

Noncontrollinginterests

700,480

114,464

144,898

727,070(94,322)

34,598

3

145

5,473

16

44,040–700,480–
114,464–
144,898

4,001
731,071–(94,322)–
34,598

–
3

–
145

–
5,473

–
16

(506)
43,534

–
–

–
–

–
–

26,924(20,622)

–
–

–
–

–
–

–
–

–
–

–
–

–
–

–

–

–

(141)

–

–

–

–

–

–

–

–
–
–

–
–
–

–
–
–

10
–
(1)

–
(67)
3

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–

–
–

–
–

–
–

–
–

113,316
–

–
(3)

–
–

–
–

–
–

–
–

–

–

–

–

–

–

–

7,102

–

–

–

–
–
–
–
700,480––––
114,464––00144,898

–
–
–
6,170
737,241––0(64)(94,386)–––
113,316
147,914

–
–
–
(3)
(0)

–
–
–
7,102
7,247

15,977––
15,97721,450

–
–
–
–
16

–
1,714
–
1,714
45,248––––(20,000)

–
–
–
–
–

–
–
–
–
–

33,588(20,376)–(1)(33,422)––(20,067)2
33,422

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–

–
–

–
–

–
–

–
–

(24,436)
–

–
(7)

–
–

–
–

–
–

–
–

–

–

–

–

–

–

–

(4,196)

–

–

–

–
–
–
(20,000)
680,480––––
114,464

–
(615)
–
(615)
144,283–––(20,211)717,030––
4
13,361(81,025)–––(24,436)
123,478

–
–
–
(7)
(7)

–
–
–
(4,196)
3,051(25,300)––(25,300)(3,850)

–
–
–
–
16

–
554
–
554
45,802Stockacquisitionrights

Noncontrollinginterests

Thousands of U.S. dollars (Note 3)
Stockholders’ equity

Number ofsharesCommonissuedstock(in thousands)

Balance at March 31, 2015
Changes of items during the period
Net income attributableto parent company shareholders
Cash dividends paid
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 currencytranslation adjustments
Changes in remeasurementsof defined benefit plans
Changes in non-controlling interests
Other
Total changes of items during the period
Balance at March 31, 2016

Retainedearnings

Treasurystock,
at cost6,524,257(835,274)

1,308,973(0)64,133

189,823

142

400,425–
297,239–(180,319)– (177,584)
18(9)(295,770) 295,770

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

700,480

1,012,956

1,282,283––––(20,000)

–
–
–
–
–

–
–
–
–
–

–
–

–
–

–
–

–
–

–
–

(216,247)
–

–
(62)

–
–

–
–

–
–

–
–

–

–

–

–

–

–

–

(37,133)

–

–

–

–
–
–
(20,000)
680,480––––
1,012,956––––(5,442)–35––(5,442) (178,859) 118,239
1,276,841 6,345,398 (717,035)–––(216,247)
1,092,726

–
–
–
(62)
(62)

– (223,894)––––(37,133) (223,894)
27,000(34,071)

–
–
–
–
142

–
4,901
–
4,901
405,326

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

92

Accumulated other comprehensive income
Valuation
Foreign
RemeasureNet deferreddifference on
currency ments of defined
available-for-sale gains (losses) translation
benefiton hedges
securities
adjustments
plans

CapitalsurplusConsolidated Statements of Cash Flows
Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2016 and 2015¥

54,841¥51,062$

485,319(12,507)(5,711)
4,767
14,872
101,372(153)(15,488)
85,731

158,239(93,204)(41,823)
1,575
792,425(8,770)(140,920)
642,735

38(64,416)
2,792(5,664)
19,950(8,702)

2,161(52,627)
3,961(2,330)7,846(8,989)336(570,053)
24,708(50,124)
176,549(77,009)(8,981)
6,179(2,079)(60,883)

(675)
4,990
(4,877)(50,540)(79,478)
54,681(18,398)(538,788)

2,131
5,803
(10,553)
4,718(1,050)(2,436)(20,381)(453)(20,068)

4,029
11,153(10,232)
2,947(1,850)(2,443)(20,613)
(365)
(68)

18,85851,354(93,389)
41,752(9,292)(21,558)(180,363)(4,009)(177,593)(152)(4,725)(47,166)(1,829)(37,249)
212,762–(6,423)(23,865)
2,790
14,116
199,813(1,345)(41,814)(417,399)(16,186)(329,638)
1,882,850

–

64

–

–

(1,274)––
175,513¥43
212,762$

Appendix

17,881(10,532)(4,726)
178
89,544(991)(15,924)
72,629Financial Section

577,965973(12,327)(135,504)(71)(32,708)
19,478(46,257)
21,584(133,726)
8,177
14,735

How DNP Works to Achieve
Sustainable Development

67,03479
700(14,799)
151(2,171)
1,989(4,138)2,453(4,456)67
1,980

Segment Information

65,310110(1,393)(15,312)(8)(3,696)2,201(5,227)2,439(15,111)924
1,665

Special Feature

¥

2016

2015

DNP in Brief

Cash ﬂows from operating activities:
Income before income taxes and non-controlling interests
Adjustments to reconcile income before income taxes
and non-controlling interests to net cash provided by operating activities:
Depreciation
Impairment loss on fixed assets
Provision for doubtful receivables (net)
Net defined benefit asset (net)
Net defined benefit liability (net)
Equity in earnings of affiliates
Amortization of consolidation goodwill (net)
Interest and dividends income
Interest expenses
Net gain on sales of investment securities
Loss on devaluation of investment securities
Net loss on sale or disposal of property, plant and equipment
Changes in assets and liabilities
Trade receivables
Inventories
Trade payables
Other assets and liabilities
Sub-total
Extra retirement payments
Payments of income taxes
Net cash provided by operating activities
Cash ﬂows from investing activities:
Net decrease in time deposits
Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for purchases of investment securities
Proceeds from sales of investment securities
Payments for purchases of intangible assets
Payments for acquisition of subsidiaries’ shares,
resulting in consolidation scope changeInterest and dividends received
Other investing
Net cash used in investing activities
Cash ﬂows from ﬁnancing activities:
Net increase in short-term bank loans
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from issuance of debentures
Payments for redemption of debentures
Interest paid
Dividends paid
Dividends paid to non-controlling shareholders
Payments for purchases of treasury stocks
Payments for purchase of stock in subsidiaries not resulting
in a change in the scope of consolidation
Other financing
Net cash used in ﬁnancing activities
Eﬀect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents
resulting from change of scope of consolidation
Decrease in cash and cash equivalents
resulting from merger of consolidated subsidiaries
Increase in cash and cash equivalents
resulting from merger with unconsolidated subsidiaries
Cash and cash equivalents at end of year

2016

To Our Shareholders

Thousands of
U.S. dollars (Note 3)

Millions of yen–
1,553,212

The accompanying notes are an integral part of these consolidated financial statements.
DNP Annual Repor t 2 016

93

Notes to Consolidated Financial Statements

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries March 31, 2016 and 2015

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 GAAP”),
and its foreign subsidiaries in conformity with the Company’s group accounting policies based on International Financial ReportingStandards (“IFRS”) or accounting principles generally accepted in the United States of America (“US GAAP”).
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 ofaccounts and modifications have been made in the accompanying consolidated financial statements to facilitate understanding by readers
outside Japan. Certain reclassifications have also been made in the 2015 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 underaccounting principles and practices 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 114 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’s 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 otherassets 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 theexchange 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 forconsolidation 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” 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 ofchanges in interest rates.
Inventories
Inventories are stated at cost which is determined substantially by the average method being written-down to reflect the decline ofprofitability.
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
Property, plant and equipment are carried at cost. Major renewals and additions are capitalized, while minor renewals maintenance and repairs
are charged to income when incurred. Interest expenses on capital expenditures during the construction stage are not capitalized.
Depreciation of property, plant and equipment is principally computed by the declining-balance method at rates based on estimateduseful lives. However, depreciation of buildings acquired on or after April 1, 1998 is computed by the straight-line method.
The estimated useful lives for depreciation purposes range as follows:
Buildings and structures
Machinery and equipment

94

3 to 50 years
2 to 13 years

Assets with an acquisition cost of ¥100,000 ($885) or more per unit and less than ¥200,000 ($1,770) per unit are depreciated over three
years on a straight-line basis, whereby one-third of such acquisition cost may be taken as depreciation expense each year.

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.

Special Feature

Employees’ retirement benefits
The Company and domestic significant consolidated subsidiaries applied the accounting standard for employees’ retirement benefits. Under
the accounting standard, accrued pension and liability for employees’ retirement benefits has been provided based on the estimatedamounts of projected pension and severance obligation and fair value of plan assets at the end of the fiscal year. Benefit formula basis isapplied for the method of attributing expected retirement benefits to periods. Prior service cost is being amortized as incurred by thestraight-line method over the period within the average remaining service periods (primarily 6 years) of the eligible employees. Actuarial
gains and losses have been amortized from the following fiscal year by the declining-balance method over the periods within the averageremaining service periods (primarily 9 years) of the eligible employees.

DNP in Brief

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 price at disposition.

To Our Shareholders

Leased 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.

Research and development expenses
Research and development expenses are charged to income as incurred.

DNP Annual Repor t 2 016

Appendix

Change in accounting policies
Application of “Accounting Standard for Business Combinations”
The Company adopted the “Accounting Standard for Business Combinations” (ASBJ Statement No.21, September 13, 2013), the “AccountingStandard for Consolidated Financial Statements” (ASBJ Statement No.22, September 13, 2013), the “Accounting Standard for Business
Divestitures” (ASBJ Statement No.7, September 13, 2013), and other accounting standards. As a result, the Company now records any

Financial Section

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, 2016
and 2015, 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.

How DNP Works to Achieve
Sustainable Development

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 andinterest 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 forhedging 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 statedby the contracted rates (“alternative method”). In addition, if interest rate swap contracts meet certain hedging criteria, the net amount tobe paid or received under the interest rate swap contracts is added to or deducted from interest on the assets or liabilities for which theinterest rate swap contracts were executed (“exceptional accrual method”).

Segment Information

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.
The Act for Partial Amendment of the Income Tax Act, etc., (Act No.15 of 2016) and The Act for Partial Amendment, etc. of the Local Tax Act,etc., (Act No.13 0f 2016) were enacted on March 29, 2016.
Consequently, the statutory tax rate used to calculate deferred tax assets and liabilities changed from 32.3% to 30.9% for temporary
differences expected to be realized during the fiscal year beginning on or after April 1, 2016 until March 31, 2018. The rate will be changed
to 30.6% for temporary differences expected to be realized during the fiscal years beginning on or after April 1, 2018.
As a result of these changes in the corporate tax rate, deferred tax liabilities (net of deferred tax assets) decreased by ¥1,870 million($16,549 thousand), and income taxes-deferred increased by ¥959 million ($8,487 thousand). In addition, the valuation difference on
available-for-sale securities increased by ¥2,899 million ($25,655 thousand), net deferred gains (losses) on hedges increased by ¥-0 million($-0 thousand), and remeasurements of defined benefit plans increased by ¥-70 million ($-619 thousand).

95

differences resulting from changes in its ownership interests in subsidiaries subject to ongoing control under capital surplus, and records
acquisition-related costs as expenses in the fiscal year in which they are incurred.
Furthermore, for business combinations carried out on or after the beginning of the current fiscal year, the Company now reflects the
updated acquisition cost allocation based on finalization of the provisional accounting treatment in the consolidated financial statements
for the fiscal year in which the business combination occurs.
In addition, the company has made changes in the presentation of net income and other items and has changed from presenting minority
interests to presenting non-controlling interests. To reflect these changes in presentation, the Company has reclassified the consolidated
financial statements for the previous fiscal year.
The Company adopted the Accounting Standard for Business Combinations and other accounting standards in line with transitional
measures stipulated in Paragraph 58-2(4) of the Accounting Standard for Business Combinations, Paragraph 44-5(4) of the AccountingStandard for Consolidated Financial Statements, and Paragraph 57-4(4) of Accounting Standard for Business Divestitures, and thisapplication is effective from the beginning of the current fiscal year and into the future.
In the consolidated statements of cash flows for the current fiscal year, the Company lists cash flows related to the purchase or sale ofstock in subsidiaries not resulting in a change in the scope of consolidation in the category of cash flows from financing activities, and cash
flows related to acquisition-related costs for stock in subsidiaries resulting in a change in the scope of consolidation or expenses arising in
relation to the purchase or sale of stock in subsidiaries not resulting in a change in the scope of consolidation in the category of cash flows
from operating activities.
Additionally, the Company is not reclassifying comparable information in the consolidated statements of cash flows for the current fiscal
year, in line with transitional measures stipulated in Paragraph 26-4 of the Practical guidelines on Accounting Standards for Preparing
Consolidated Statements of Cash Flows.
These changes have an immaterial impact on the financial statements for the current fiscal year.
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 ¥113=U.S.
$1, the approximate exchange rate on the Tokyo Foreign Exchange Market at March 31, 2016. 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.
4. Cash and Cash Equivalents
Cash and cash equivalents as of March 31, 2016 and 2015 were comprised of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

2016
Cash and deposits(excluding time deposits with a maturity over three months)

¥

2016

2015

175,513¥$

212,762

1,553,212

5. Marketable Securities and Investment Securities
The carrying amount and aggregate fair value of marketable and investment securities classified as held-to-maturity debt securities as ofMarch 31, 2016 and 2015 were as follows:
Millions of yen

March 31, 2016
OthersCarrying amount¥201

Fair value¥

201

Difference¥(0)

Thousands of U.S. dollars (Note 3)

March 31, 2016
OthersCarrying amount
$

1,779

Fair value
$

1,779

Difference$(0)Millions of yen

March 31, 2015
Others96

Carrying amount¥202

Fair value¥

202

Difference¥0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, 2016 and 2015 were as follows:

March 31, 2016
StocksOthers
Total

Acquisition cost

Unrealized gains

Unrealized losses

¥

¥

¥

¥

130,399249
130,648

179,660
14
179,674

¥

4,324
0
4,324

¥

Fair value¥

305,735263
305,998¥

March 31, 2016
StocksOthers
Total

Acquisition cost

Unrealized gains

Unrealized losses

$

$

$

$

1,153,973
2,204
1,156,177

1,589,912
123
1,590,035$

38,265038,265$

Fair value$

2,705,620
2,327
2,707,947$

DNP in Brief

Thousands of U.S. dollars (Note 3)

To Our Shareholders

Millions of yen

Millions of yen

Acquisition cost

Unrealized gains

Unrealized losses

¥

¥

¥

¥

130,487
2,214
132,701

216,152
19
216,171

¥

1,112
–
1,112

¥

Fair value¥

345,5272,233
347,760¥

The redemption schedules for securities with maturities at March 31, 2016 and 2015 were as follows:
Millions of yen

March 31, 2016
Corporate bonds

Due after one year
through five years

Due in one
year or less

¥

48

¥

201

Over five years¥

80

Corporate bonds

Due after one year
through five years

Due in one
year or less

$

425

$

1,779

Over five years$

708

Due in one
year or lessMarch 31, 2015
Corporate bonds
Trust beneficiary right on sales credit

Due after one year
through five years

–
1,900

¥

201
–

¥

Over five years
180
–

¥

Financial Section

Millions of yen

How DNP Works to Achieve
Sustainable Development

Thousands of U.S. dollars (Note 3)

March 31, 2016

Segment Information

The proceeds from sales of available-for-sale securities for the years ended March 31, 2016 and 2015 were ¥19,632 million ($173,735
thousand) and ¥5,726 million, respectively. The gross realized gains on these sales for the years ended March 31, 2016 and 2015 were ¥15,136
million ($133,947 thousand) and ¥4,443 million, respectively, and the gross realized losses on these sales for the years ended March 31, 2016
and 2015 were ¥1 million ($9 thousand) and ¥1 million, respectively.

Special Feature

March 31, 2015
StocksOthersTotal

6. Inventories
Inventories at March 31, 2016 and 2015 consisted of the following:

2016
Merchandise and finished products
Work in process
Raw materials and supplies¥¥

101,240
29,68625,021
155,947

2016

2015
¥

¥

97,232
28,27822,396
147,906

AppendixThousands of
U.S. dollars (Note 3)

Millions of yen$$

895,929
262,708
221,425
1,380,062
DNP Annual Repor t 2 016

97

7. Short-term Bank Loans and Long-term Debt
Short-term bank loans at March 31, 2016 and 2015 were represented by bank loans and bank overdrafts, etc., bearing interest at an averagerate of 0.62% per annum for 2016 and 0.66% per annum for 2015.
Long-term debt at March 31, 2016 and 2015 consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

2016
Unsecured debentures
0.320~1.358% due 2021
0.100~1.705% due 2020
0.320~0.54% due 20190.320~0.54% due 2018
0.320~0.79% due 20170.350~0.79% due 2016¥

Mortgage loans, maturing 2016~2030
Unsecured loans, maturing 2016~2025
Current portion of long-term debt
¥

2016

2015

52,48051,680
2,650
750
990
–
11,131
14,824
134,505(8,755)
125,750¥

50,00050,200
2,370
470
710
1,050
13,474
17,353
135,627(11,291)
124,336¥$$

464,426
457,345
23,451
6,637
8,761
–
98,504
131,186
1,190,310(77,478)
1,112,832

Finance lease obligations at March 31, 2016 and 2015 which are included in other long-term liabilities consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

2016
Finance lease obligations
Current portion of lease obligations¥¥

14,343(3,972)
10,371

2016

2015
¥

16,810(4,738)12,072¥$$

126,929(35,150)
91,779The assets pledged as collateral for the company and its consolidated subsidiaries’ indebtedness, such as property, plant and equipment
and other assets, were ¥9,879 million ($87,425 thousand) and ¥10,852 million at March 31, 2016 and 2015, respectively.
Interest rates on mortgage loans ranged from 0.47% to 2.86% per annum for 2016 and from 0.47% to 2.86% per annum for 2015, whileinterest rates on unsecured loans ranged from 0.47% to 2.00% per annum for 2016 and from 0.52% to 2.00% per annum for 2015.
The aggregate annual maturities of long-term debt after March 31, 2016 were as follows:
Years ending March 31
2017
2018
2019
2020
2021
2022 and thereafter

Millions of yen

8,755
10,458
7,681
54,14753,144
320
134,505¥¥

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

77,47892,54967,973479,177
470,301
2,832
1,190,310

The aggregate annual maturities of finance lease obligations after March 31, 2016 were as follows:
Years ending March 31
2017
2018
2019
2020
2021
2022 and thereafter

Millions of yen

¥

¥

3,972
3,248
2,685
1,831
617
1,990
14,343Thousands of
U.S. dollars (Note 3)$$

35,15028,74323,761
16,204
5,460
17,611
126,929

8. Retirement Benefits
The Company and its subsidiaries have several retirement plans covering all of their employees, i.e. defined benefit corporate pension plan,a governmental 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 the98The reconciliation of beginning and ending balances of the projected benefit obligation at March 31, 2016 and 2015 were as
follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2016
¥

¥

¥

$

219,322(6,798)
212,524
11,9191,861
6,616(7,933)
(130)
17
–
279
225,153$

1,992,504–
1,992,504
112,195
14,752
134,779(73,973)
22,5041,265
1,850(2,823)2,203,053

The reconciliation of beginning and ending balances of the plan assets at March 31, 2016 and 2015 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2016

¥

2016

2015

258,736
6,494(13,401)
14,945(6,261)
109
260,622¥

209,006
5,177
30,973
19,936(6,523)
167
258,736¥¥2,289,699
57,469(118,593)
132,257(55,408)965
2,306,389$$

Thousands of
U.S. dollars (Note 3)

Millions of yen

2016
Funded projected benefit obligation
Plan assets

Net defined benefit liability
Net defined benefit asset
Net amount of liabilities and assets recognized in consolidatedbalance sheets¥

215,598(260,622)(45,024)
33,347¥

194,476(258,736)(64,260)
30,677$

1,907,947(2,306,389)(398,442)
295,106¥(11,677)¥(33,583)$(103,336)

34,167(45,844)¥(11,677)

302,363(405,699)

32,348(65,931)¥(33,583)$

Financial Section

Unfunded projected benefit obligation
Net amount of liabilities and assets recognized in consolidatedbalance sheets

2016

2015

How DNP Works to Achieve
Sustainable Development

The reconciliation of projected benefit obligation and plan assets to net defined benefit liability and asset recognized in the
consolidated balance sheets as of March 31, 2016 and 2015 were as follows:

Segment Information

Change in plan assets:
Balance at the beginning of year
Expected return on plan assets
Actuarial gain/loss
Contributions by the employer
Benefits paid
Other
Balance at the end of year

Special Feature

¥

2016

2015

225,153–
225,153
12,678
1,667
15,230(8,359)
2,543
143
209
(319)
248,945

DNP in Brief

Change in projected benefit obligation:
Balance at the beginning of year
Cumulative effects of changes in accounting policies
Adjusted balance at the beginning of year
Service cost
Interest cost
Actuarial gain/loss
Benefits paid
Prior service cost
Change of scope of consolidation
Increase due to change from simplified method to principle method
Other
Balance at the end of year

To Our Shareholders

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 under whichmost of the retirement benefit liability of the Company and its subsidiaries is covered by the employees’ pension fund.

(103,336)

Appendix

DNP Annual Repor t 2 016

99

The components of net periodic benefit costs for the years ended March 31, 2016 and 2015 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2016
Service cost
Interest cost
Expected return on plan assets
Actuarial gain/loss
Amortization of prior sevice cost
Amortization due to change from simplified method to principle method
Net periodic benefit costs of the defined benefit plan

¥

¥

2016

2015

12,626
1,667(6,494)(7,038)
880
208
1,849

¥

¥

11,8501,861(5,177)(2,157)
321
–
6,698

$

$

111,735
14,752(57,469)(62,283)
7,788
1,841
16,364Remeasurements of defined benefit plans, before income-tax effect, at March 31, 2016 and 2015 consisted of:Thousands of
U.S. dollars (Note 3)

Millions of yen

2016
Unrecognized actuarial gain/loss
Unrecognized prior service cost
Total

¥
¥

(4,687)(2,443)(7,130)

2016

2015
¥
¥

30,860(782)
30,078$$(41,478)(21,619)(63,097)

The major categories of plan assets as of March 31, 2016 and 2015 were as follows:

Bonds
StocksAlternative
Other
Total

2016

2015

22%
45%
22%
11%
100%

20%
52%
16%
12%
100%

2016

2015

0.6%
2.5%

1.3%
2.5%

Assumptions used for the years ended March 31, 2016 and 2015 were set forth as follows:

Discount rateLong-term expected rate of return on plan assets

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 ¥16.00 ($0.1) per share, aggregating ¥10,066 million ($89,080 thousand) were approved at the general stockholders’meeting held in June 29, 2016 with respect to the year ended March 31, 2016.
(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 paymentof such 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 transferred among the accounts under certain conditions upon resolution of the stockholders.

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

Millions of yen

2016
¥

2016

2015

5,133
230
56,464
180
602
4,420
579
973

¥

6,374
460
51,063
170
602
4,631
321
1,079

$

45,425
2,035
499,6821,593
5,327
39,115
5,124
8,611

Thousands of
U.S. dollars (Note 3)

Millions of yen

2016
¥

¥

2016

2015

68,621
6,048(616)
15,88031,827
115,481
237,241¥¥

67,867
6,110
1,458
13,70931,749110,097
230,990$$

607,265
53,522(5,451)
140,531281,655
1,021,956
2,099,478

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

Interest and dividends income
Rent income on facilities
Rent expense

¥

76
148
(114)

2016

2015
¥

31
133
(23)

$

673
1,310
(1,009)DNP Annual Repor t 2 016

Appendix

13. Income Taxes
The Company and its domestic consolidated subsidiaries are subject to a number of different taxes based on income, which, in theaggregate, resulted in a normal effective statutory tax rate of approximately 33.1% and 35.6% for the years ended March 31, 2016 and2015, respectively.
In addition, the statutory tax rate will change approximately from 32.3% to 30.9% effective for the fiscal years beginning on or after April
1, 2016 until March 31, 2018 and to 30.6% afterwards. These changes were caused by the revision of the Income Tax Act, etc., in 2016. (Refer
to 2. Significant Accounting Policies: Income Taxes)

Financial Section

2016

How DNP Works to Achieve
Sustainable Development

Salaries and allowances
Accrued bonuses
Provision for retirement benefits
Depreciation
Research and development expenses
Other

Segment Information

11. Selling, General and Administrative Expenses
Selling, general and administrative expenses for the years ended March 31, 2016 and 2015 consisted of the following:Special Feature

Trade receivables
Other current assets
Investment securities
Long-term loan receivables
Other investments
Trade payables
Accrued expenses
Other current liabilities

DNP in Brief

10. Accounts with Non-consolidated Subsidiaries and Associated Companies
Account balances with non-consolidated subsidiaries and associated companies as of March 31, 2016 and 2015 were summarized as follows:

To Our Shareholders(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 theBoard of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the stockholders
which is determined by a 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 resolution of the Board of Directors, the Company purchased 15,221 thousand shares of common stocks at an
aggregate cost of ¥19,999 million ($176,982 thousand) during the year ended March 31, 2016. Furthermore, the Company retired 20,000
thousand shares of common stocks at an aggregate cost of ¥33,422 million ($295,770 thousand) during the year ended March 31, 2016.

101

The actual effective tax rate reflected in the accompanying consolidated statements of operations differs from the normal effective
statutory tax rate primarily due to the effect of permanently non-deductible expenses, current operating losses and different tax rates
applicable to foreign subsidiaries, etc.
The following is a reconciliation of the difference between the normal effective statutory tax rate and the actual effective tax rate forthe years ended March 31, 2016 and 2015, respectively.

Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Amortization of consolidation goodwill
Change in valuation allowance
Equity in earnings of affiliates
Loss on business integration
The effective income tax rate change
Other
Actual effective tax rate

2016

2015

33.1%
3.4
0.9
(0.3)
(2.2)
–
1.8
0.0
36.7%

35.6%
0.9
0.9
0.3
(1.5)
3.0
4.2
0.8
44.2%

Net deferred tax assets (liabilities) at March 31, 2016 and 2015, 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

2016
Prepaid expenses and other current assets
Other assets
Other current liabilities
Other long-term liabilities
Net deferred tax assets (liabilities)

¥
¥
¥

2016

2015

10,744
6,732(20)(48,884)(31,428)

¥
¥
¥

8,540
6,601
(29)
(65,861)(50,749)$$$

95,08059,575(177)(432,602)(278,124)

Significant components of deferred tax assets and liabilities at March 31, 2016 and 2015 were as follows :Thousands of
U.S. dollars (Note 3)

Millions of yen

2016
Deferred tax assets:
Net defined benefit liability
Loss on devaluation of investment securities
Excess provision for doubtful receivables
Accrued bonuses
Loss on write-down of inventories
Operating loss carryforwards
Impairment loss on fixed assets
Other
Total deferred tax assets
Less: valuation allowance
Total
Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Reserve for special depreciation
Undistributed earnings of subsidiaries
Net defined benefit asset
Other
Total
Net deferred tax assets (liabilities):

13,184
3,406
2,220
5,735
1,058
40,09011,46016,767
93,920(53,044)
40,876$$¥(67,468)(11)(960)(21,295)(1,891)(91,625)$(463,796)(796)(7,133)(124,142)(17,549)(613,416)¥(50,749)$(278,124)

14,281
2,967
2,044
5,323
1,068
35,062
10,356
18,64589,746(51,858)
37,888¥¥¥(52,409)(90)(806)(14,028)(1,983)(69,316)¥(31,428)

¥

¥

¥

2016

2015

¥

$

126,381
26,25718,08847,106
9,451
310,283
91,646
165,000
794,212(458,920)
335,292

14. Leases
Operating Leases
The amounts of outstanding future payments under non-cancelable operating leases as of March 31, 2016 and 2015 were also summarized
as follows:102Thousands of
U.S. dollars (Note 3)

Millions of yen

Future lease payments:
One year or lessMore than one year

¥
¥

2016

2015

5,107
16,08821,195¥¥

4,771
18,312
23,083$$45,195
142,371
187,566

Millions of yen

March 31, 2016

¥

¥

700
(17)
683

176,694
348,585
319,048
6,772

Differences¥––
13,4596,772
851,099
255,586
55,316140,170451,072

1,059
14,518
–
–
5,665
5,665

700
(17)
683

–
–
–

Thousands of U.S. dollars (Note 3)(1) Cash and deposits(2) Trade receivables(3) Short-term and long-term investment securities(4) Long-term loan receivables
Allowance for doubtful receivables*1

1,563,664
3,084,823
2,704,328
60,116(9,558)50,558
7,403,373
2,261,823
489,522
1,190,310
3,941,655
6,194
(150)
6,044

$

1,563,664
3,084,823
2,823,434
59,929Differences$––
119,106

59,9297,531,850
2,261,823
489,5221,240,443
3,991,788

9,371
128,477––
50,13350,133

6,194
(150)
6,044

–
–
–

DNP Annual Repor t 2 016

Appendix

Assets(1) Trade payables(2) Short-term bank loans(3) Long-term debts
Liabilities
Derivatives*2[1] Hedge accounting is not applied[2] Hedge accounting is applied
Total

$

Fair value

Financial Section

March 31, 2016

Carrying amounts
reported in the
consolidatedbalance sheet

How DNP Works to Achieve
Sustainable Development

Assets(1) Trade payables(2) Short-term bank loans(3) Long-term debts
Liabilities
Derivatives*2[1] Hedge accounting is not applied[2] Hedge accounting is applied
Total

176,694
348,585
305,589
6,793(1,080)5,713
836,581
255,586
55,316
134,505
445,407

Fair value

Segment Information(1) Cash and deposits(2) Trade receivables(3) Short-term and long-term investment securities(4) Long-term loan receivables
Allowance for doubtful receivables*1

Carrying amounts
reported in the
consolidatedbalance sheet

Special Feature

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, 2016 and 2015
were as follows:

DNP in Brief

15. Financial Instruments
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 therisk 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.

To Our Shareholders

2016

103

Millions of yen

March 31, 2015
(1) Cash and deposits(2) Trade receivables(3) Short-term and long-term investment securities(4) Long-term loan receivables
Allowance for doubtful receivables*1
Assets(1) Trade payables(2) Short-term bank loans(3) Long-term debts
Liabilities
Derivatives*2[1] Hedge accounting is not applied[2] Hedge accounting is applied
Total

Carrying amounts
reported in the
consolidatedbalance sheet¥

213,979
366,068
343,326
8,958(1,614)
7,344
930,717
258,887
53,371
135,627
447,885

Fair value
¥

(166)
(36)
(202)

213,979
366,068
353,336
9,012

Differences¥––
10,0109,012
942,395
258,887
53,371
141,943454,201

1,668
11,678
–
–
6,316
6,316

(166)
(36)
(202)

–
–
–

*1. Allowance for doubtful receivables associated with long-term loan receivables is deducted.
*2. Derivative assets and liabilities are on a net basis.
Note A: Fair value of financial instruments, marketable securities and derivatives
Assets(1) Cash and deposits and (2) Trade receivables
The carrying amounts approximate fair value because of the short maturities of these instruments.
(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
are measured at the quoted price provided by financial institutions.
(4) Long-term loan receivables
The fair values of long-term loans are mainly determined based on the present value of the future cash flows discounted by government
bonds rates plus certain credit risk premiums by categories according to the internal ratings.
Liabilities(1) Trade payables and (2) Short-term bank loans
The carrying amounts approximate fair value because of the short maturities of these instruments.
(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 ofbonds 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.
Derivatives
Information about the fair value for derivatives is included in Note 16.
Note B: Financial instruments whose fair value is extremely difficult to measure

March 31, 2016
Unlisted equity securities
Other

Millions of yen

Thousands of
U.S. dollars (Note 3)

Carrying amounts

Carrying amounts¥$

56,934140

503,841
1,239

Millions of yen

March 31, 2015
Unlisted equity securities
Other

104

Carrying amounts¥

55,444255

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.

DNP in Brief

Fair value of derivatives:
The contracted amount and fair value of derivatives at March 31, 2016 and 2015 were as follows:

To Our Shareholders

16. Derivative Financial Instruments
Nature of Derivative Financial Instruments:
The Company and certain consolidated subsidiaries enter into derivatives for foreign currency forward contracts, currency swap contracts,
and interest rate swaps to manage the risk arising from fluctuation in foreign currency exchange rates and interest rates. Derivatives
related to currency are utilized to hedge foreign exchange risks associated with certain accounts receivable, accounts payable and otherdebts, including forecasted transactions, denominated in foreign currencies. Interest rate swaps are utilized to hedge interest rate risks oninterest-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.

Derivative transactions to which the Company and its subsidiaries did not apply hedge accounting
Millions of yen

March 31, 2016

Contracted amount¥

Payables:U.S. dollars¥

19,805
1,605

Fair value¥

182
21,592¥

Unrealized gain (loss)

¥

690
10

0
700

¥

690
10

0
700

March 31, 2016
Foreign currency forward contracts
Receivables:
U.S. dollars
Euro

$

$

1,611
191,080

$

$

6,106
88

0
6,194

Unrealized gain (loss)

$

$

6,106
88

0
6,194

Millions of yen

March 31, 2015

Contracted amount¥

Payables:U.S. dollars

Currency swap contracts
Receive U.S. dollars, and pay Japanese yen:

20,764
1,911

Fair value

¥

(374)
86

Unrealized gain (loss)

¥

(374)
86

¥

1
22,676

¥

0
(288)

¥

0
(288)

¥

300

¥

122

¥

122

Financial Section

Foreign currency forward contracts
Receivables:
U.S. dollars
Euro

How DNP Works to Achieve
Sustainable Development

Payables:U.S. dollars

175,265
14,204

Fair value

Segment Information

Thousands of U.S. dollars (Note 3)

Contracted amountSpecial Feature

Foreign currency forward contracts
Receivables:
U.S. dollars
Euro

Appendix

DNP Annual Repor t 2 016

105

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

March 31, 2016
Foreign currency forward contracts
Receivables:
U.S. dollars
Payables:U.S. dollars
Sterling pound
Euro

Interest rate swaps
Receive floating and pay fixed

Hedged items

Contracted amount

Trade receivables

¥

–

¥

2,220
92
331
2,774

¥

(13)
(3)
(1)
(17)

¥

5,202

¥

–

¥

131

Trade payables
Trade payables
Trade payables

Long-term loan payables

Fair value

Thousands of U.S. dollars (Note 3)

March 31, 2016
Foreign currency forward contracts
Receivables:
U.S. dollars
Payables:U.S. dollars
Sterling pound
Euro

Interest rate swaps
Receive floating and pay fixed

Hedged items

Trade receivables

Contracted amount

$

–

$

19,646814
2,930
24,549

$

(115)
(27)
(8)
(150)

$

46,035

$

–

$

1,159

Trade payables
Trade payables
Trade payables

Long-term loan payables

Fair value

Millions of yen

March 31, 2015
Foreign currency forward contracts
Receivables:
U.S. dollars
Euro
Payables:U.S. dollars
Sterling poundEuro

Hedged items

Trade receivables
Trade receivables

Contracted amount

¥

634
21

Fair value

¥

(2)
–

¥

2,123
202
318
3,298

¥

(2)
(6)
(26)
(36)

Trade payables
Trade payables
Trade payables

Currency swap contracts
Receive U.S. dollars, and pay Japanese yen:

Long-term loan payables

¥

117

¥

–

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

¥

6,798

¥

–

The fair values of foreign currency forward contracts and currency swap contracts subject to alternative method are included in tradereceivables, trade payables and long-term loan payables as hedged items. The fair values of interest rate swap contracts subject to
exceptional accrual method are included 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.

106

Special Feature

Changes in reportable business segments, etc.
The Company changed its reportable business segments effective from the first quarter of the current fiscal year.
The Company shifted the Imaging Communication business including photo printing, etc. from the Lifestyle and Industrial Supplies
segment to the Information Communication segment in April 2015.
Segment information for the previous fiscal year has been prepared based on the new reportable business segments.

DNP in Brief

18. Business Segment Information
Outline of reportable segments:
The Company and its consolidated subsidiaries’ reportable segments are components of the Group whose operating results are regularly
reviewed by the Board of Directors to make decisions about resources to be allocated to the segments and assess their performance,
for which discrete financial information is available. The Group’s reportable segments consist of Information Communication, Lifestyleand Industrial Supplies, Electronics, and Beverages, based on a classification by commonality in manufacturing and marketing method of
products.

To Our Shareholders

17. Contingent Liabilities
The Company and its consolidated subsidiaries were guarantors of bank loans of other companies, amounting to approximately ¥7 million($62 thousand) and ¥22 million at March 31, 2016 and 2015, respectively. 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 atbanks. At March 31, 2016 and 2015, the Company and its consolidated subsidiaries were contingently liable on trade notes discounted in theamount of ¥628 million ($5,558 thousand) and ¥625 million, respectively. One of the consolidated domestic subsidiaries securitized deposits
for its leased property and sold them to third parties for ¥758 million ($6,708 thousand) and ¥1,119 million at March 31, 2016 and 2015,
respectively.

Segment Information
How DNP Works to Achieve
Sustainable Development
Financial Section
Appendix

DNP Annual Repor t 2 016

107

Information on sales and profit, identifiable assets and other items by business segment
Millions ofof yenyen
Millions
SegmentreportreportSegment

For 2016:
2016:
For
Net sales
sales andand operating
operating income
incomeNet
Net sales
sales
Net
Outside customers
customers
OutsideIntersegment
Intersegment
Total
Total
Segment income
incomeSegment
Segment assets
assetsSegment

Information
Information
Communication
Communication¥¥

LifestyleandandLifestyle
Industrial
Industrial
Supplies
Supplies

Electronics
Electronics

Beverages
Beverages

Total
Total

¥¥

816,875 ¥¥
816,875
4,747
4,747
821,622821,622
29,36429,364
892,969 ¥¥892,969

381,648 ¥¥381,648
999
999
382,647
382,647
12,597
12,597441,761 ¥¥441,761

199,330 ¥¥
199,33020
20
199,350
199,350
20,50920,509273,403 ¥¥273,403

58,063 ¥¥ 1,455,916
1,455,916 ¥¥58,063
32
5,798
32
5,798
58,095
1,461,714
58,095
1,461,714
991
63,461
991
63,46145,800 ¥¥ 1,653,933
1,653,933 ¥¥
45,800

OthersOthersDepreciation andand amortizationamortization
Depreciation¥¥
Amortization ofof goodwill
goodwill
Amortization
Impairment loss
loss
Impairment
Tangible/intangiblefixed
fixedassets
assetsincreased
increased
Tangible/intangible

27,514 ¥¥27,514
1,593
1,593
102
102
52,53752,537

17,026 ¥¥17,026607
607-23,277
23,277

15,008 ¥¥15,008––––13,277
13,277

3,941 ¥¥
3,941
11
88
5,781
5,781

63,489 ¥¥63,489
2,201
2,201
110
110
94,872
94,872Adjustment
Adjustment

Consolidated
Consolidated

1,455,916–– ¥¥ 1,455,916(5,798)(5,798)––(5,798)1,455,916(5,798)1,455,916(17,989)
45,472(17,989)
45,47264,703 ¥¥ 1,718,636
1,718,636
64,703

1,821 ¥¥
1,821
––
––
2,393
2,393

65,31065,310
2,201
2,201
110
110
97,26597,265

Thousands ofof U.S.
U.S. dollars
dollars (Note(Note 3)
3)
Thousands
SegmentreportreportSegment

For 2016:
2016:
For
Net sales
sales andand operating
operating income
incomeNet
Net sales
sales
Net
Outside customers
customers
OutsideIntersegment
Intersegment
Total
Total
Segment income
incomeSegment
Segment assets
assetsSegment

Information
Information
Communication
Communication

LifestyleandandLifestyle
Industrial
Industrial
Supplies
Supplies

Electronics
Electronics

7,228,982 $$ 3,377,416
3,377,416 $$ 1,763,982
1,763,982 $$$$ 7,228,982
42,0098,841
177
42,0098,841
177
7,270,991
3,386,257
1,764,159
7,270,991
3,386,257
1,764,159
259,858
111,478
181,496259,858
111,478
181,496
7,902,380 $$ 3,909,389
3,909,389 $$ 2,419,496
2,419,496 $$$$ 7,902,380

OthersOthersDepreciation andand amortizationamortization
Depreciation$$
Amortization ofof goodwill
goodwill
Amortization
Impairment loss
loss
Impairment
Tangible/intangiblefixed
fixedassets
assetsincreased
increased
Tangible/intangible

243,487 $$
243,487
14,097
14,097902
902
464,929464,929

150,673 $$
150,673
5,372
5,372
––
205,991
205,991

132,814 $$
132,814––––
117,496
117,496

Beverages
Beverages

Total
Total

Adjustment
Adjustment

Consolidated
Consolidated

513,832 $$12,884,212
12,884,212 $$
12,884,212
513,832–– $$ 12,884,212
283
51,310(51,310)283
51,310(51,310)––514,115
12,935,522(51,310) 12,884,212
12,884,212
514,115
12,935,522(51,310)8,770
561,602(159,195)
402,4078,770
561,602(159,195)
402,407405,310 $$14,636,575
14,636,575 $$ 572,593
572,593 $$ 15,209,168
15,209,168
405,31034,876 $$34,87699
71
71
51,15951,159561,850 $$
561,850
19,47819,478973
973
839,575
839,575

16,115 $$16,115––––
21,177
21,177

577,965
577,965
19,47819,478973
973
860,752
860,752

Millions ofof yenyen
Millions
SegmentreportreportSegment

For 2015:
2015:
For
Net sales
sales andand operating
operating income
incomeNet
Net sales
sales
Net
Outside customers
customers
OutsideIntersegment
Intersegment
Total
Total
Segment income
incomeSegment
Segment assets
assetsSegment

108

Information
Information
Communication
Communication¥¥

LifestyleandandLifestyle
Industrial
Industrial
Supplies
Supplies

Electronics
Electronics

Beverages
Beverages

Total
Total

¥¥

784,671 ¥¥784,6715,064
5,064
789,735
789,735
22,19322,193895,813 ¥¥895,813387,518 ¥¥
387,518
1,039
1,039
388,557
388,557
13,676
13,676450,646 ¥¥
450,646

230,298 ¥¥
230,298
88
230,306
230,306
25,90525,905
310,315 ¥¥
310,315

59,631 ¥¥ 1,462,118
1,462,118 ¥¥
59,631
10
6,121
10
6,121
59,641
1,468,239
59,641
1,468,239
1,077
62,851
1,077
62,851
46,359 ¥¥ 1,703,133
1,703,133 ¥¥
46,359OthersOthersDepreciation andand amortizationamortization
Depreciation¥¥
Amortization ofof goodwill
goodwill
Amortization
Impairment loss
loss
Impairment
Tangible/intangiblefixed
fixedassets
assetsincreased
increased
Tangible/intangible

25,669 ¥¥25,669
1,992
1,992
61
61
23,343
23,343

17,601 ¥¥17,601
66––
12,60012,60018,378 ¥¥
18,37818
18––
14,395
14,395

3,841 ¥¥
3,841
00
18
18
3,554
3,554

65,489 ¥¥65,489
2,016
2,016
79
79
53,89253,892Adjustment
Adjustment

Consolidated
Consolidated

1,462,118–– ¥¥ 1,462,118(6,121)(6,121)––(6,121)
1,462,118(6,121)
1,462,118(14,677)
48,174(14,677)
48,174
106,329 ¥¥ 1,809,462
1,809,462
106,329

1,545 ¥¥
1,545
––
––
1,132
1,132

67,034
67,034
2,016
2,016
79
79
55,02455,024

[Relative information]

Millions of yen

Japan

For 2016 :Net sales¥

1,221,330

Asia¥

Other region

146,925¥

87,661Total¥

1,455,916

To Our Shareholders

Information regarding regions

Thousands of U.S. dollars (Note 3)

Japan

Net sales$

10,808,230

Asia$

Other region

1,300,221$

775,761

Total$

12,884,212

Millions of yen

Japan

For 2015 :Net sales¥

1,231,913

Asia¥

160,681

Other region¥

69,524

DNP in Brief

For 2016 :

Total
¥

1,462,118

Special Feature
Segment Information
How DNP Works to Achieve
Sustainable Development
Financial Section
Appendix

DNP Annual Repor t 2 016

109

Independent Auditors’ Report

To the Board of Directors of Dai Nippon Printing Co., Ltd.:
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Dai Nippon Printing Co., Ltd. and consolidated subsidiaries asof March 31, 2016 and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows
for the year then ended, and a summary of significant accounting policies and other explanatory information (all expressed inJapanese yen).
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in conformity withaccounting 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.
Auditor’s 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 toobtain 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’s judgment, including the assessment of the risks ofmaterial misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Dai Nippon Printing Co., Ltd. and consolidated subsidiaries as of March 31, 2016, and the consolidated resultsof their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted inJapan.
Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation 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 for the convenience of readers outside Japan.
Report on Internal Control
We have audited management’s report on internal control over financial reporting of the consolidated financial statements of Dai
Nippon Printing Co., Ltd. as of March 31, 2016.
Management’s Responsibility for Report on Internal Control
Management is responsible for designing and operating effective internal control over financial reporting and for the preparationand fair presentation of its report on internal control in conformity with assessment standards for internal control over financial
reporting generally accepted in Japan. There is a possibility that misstatements may not be completely prevented or detected byinternal control over financial reporting.

110

Auditor’s Responsibility

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

DNP in Brief

An internal control audit involves performing procedures to obtain audit evidence about the results of the assessment of internal
control over financial reporting in management’s report on internal control. The procedures selected depend on the auditor’s
judgment, including the significance of effects on reliability of financial reporting. An internal control audit includes examining
representations on the scope, procedures and results of the assessment of internal control over financial reporting made bymanagement, as well as evaluating the overall presentation of management’s report on internal control.

To Our Shareholders

Our responsibility is to express an opinion on management’s report on internal control based on our audit. We conducted ourinternal control audit in conformity with auditing standards for internal control over financial reporting generally accepted inJapan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether management’s
report on internal control is free from material misstatement.

OpinionIn our opinion, management’s report on internal control referred to above, which represents that the internal control over financial
reporting of the consolidated financial statements of Dai Nippon Printing Co., Ltd. as of March 31, 2016 is effectively maintained,
presents fairly, in all material respects, the results of the assessment of internal control over financial reporting in conformity
with assessment standards for internal control over financial reporting generally accepted in Japan.
Special Feature

Tokyo, Japan
June 29, 2016

ARK MEIJI AUDIT & Co.

Segment Information
How DNP Works to Achieve
Sustainable Development
Financial Section
Appendix

DNP Annual Repor t 2 016

111

Major Subsidiaries and Affiliates(As of March 31, 2016)

Printing

Capital(¥ million)

DNP Hokkaido Co., Ltd.
General affairs, accounting work and other business services
350		
DNP Tohoku Co., Ltd.
General affairs, accounting work and other business services350		
DNP Chubu Co., Ltd.
General affairs, accounting work and other business services350		
DNP Nishi Nippon Co., Ltd.
General affairs, accounting work and other business services
400		
DNP Shikoku Co., Ltd.
Film making, printing, bookbinding; production and sale of packaging
50		
Information Communication
Books and Magazines
DNP Book Factory Co., Ltd.
Film making, printing and bookbinding200		
DNP Media Art Co., Ltd.
Film making
180		
OGUCHI BOOK BINDING & PRINTING CO., LTD.
Binding and post-processing
49		
Tien Wah Press (Pte.) Ltd.
Film making, printing and bookbinding(S$1,000)		
4,600
Commercial Printing
DNP Graphica Co., Ltd.
Printing and bookbinding100		
DNP Media Create Co., Ltd.
Planning, production, film making and plate making
100		
Business Forms
INTELLIGENT WAVE INC.
Development and maintenance of software
843
DNP Data Techno Co., Ltd.
Production and sale of business forms and plastic cards
100		
*
NBC Co., Ltd.
Mailing of printed matter, etc.
20		
DNP Media Support Co., Ltd.
Printing, production and sale of magnetic cards
10		
MK Smart Joint Stock Company
Production and sale of plastic cards and business forms(VND 1,000,000)
		100,000C&I
DNP Art Communications Co., Ltd.
Planning, production and sale of artistic images and videos
300		
DNP AV Center Co., Ltd.
Imaging software planning and production100		
DNP Digitalcom Co., Ltd.
Website planning, production and delivery
100		
DNP Social Links Co., Ltd.
Planning, development and operation of online advertising and computer systems, etc.
10		
DNP information and Services (Shanghai) Co., Ltd.
Planning and production of electronic media(CNY 1,000)
		
1,000		Imaging Communication
DNP Imaging Comm Co., Ltd.
Thermal ribbons for thermal transfer, dye-sublimation type transfer printing
100		
DNP Photo Imaging Japan Co., Ltd.
ID photo business and sale of photographic supplies and components; production and sale of original books
100		
DNP ID System Co., Ltd.
Sale of equipment for making driver licenses and ID photos
60		
DNP Imagingcomm Asia Sdn. Bhd.
Processing and sale of thermal transfer ribbons(RM 1,000)
		
190,000
DNP Imagingcomm America Corporation
Processing and sale of thermal transfer ribbons(US$1,000)
		
71,980		
Foto Fantasy, Inc.
Development, production and operation of automated systems that take and print photos(US$1,000)
		
10		
DNP Photo Imaging Europe SAS
Sale of photo-related products(Euro 1,000)
		
2,408		DNP Imagingcomm Europe B.V.
Processing and sale of thermal transfer ribbons(Euro 1,000)		
1,000
Lifestyle and Industrial Supplies
Packaging
LIFESCAPE MARKETING CORPORATION
Research, compilation and provision of various kinds of information about purchasing and consumption of foods and beverages
430		
DNP Technopack Co., Ltd.
Production, printing and processing of packaging materials
300		
Sagami Yoki Co., Ltd.
Production of laminated tubes
200		
Aseptic Systems Co., Ltd.
Production and sale of packaging equipment and aseptic filling equipment
100		
DNP Hoso Co., Ltd.
Filling and processing of packages
80		
DNP Field Eyes Co., Ltd.
Marketing research and consulting50		
DNP Vietnam Co., Ltd.
Production and sale of packaging materials(US$1,000)
		
31,500PT DNP Indonesia
Production and sale of packaging materials(US$1,000)
		
26,000Lifestyle Materials
DNP Lifestyle Materials Marketing Co., Ltd.
Sale of decorative products
300		
DNP Ellio Co., Ltd.
Printing and processing of steel, aluminum and other metals
300		
DNP Lifestyle Materials Co., Ltd.
Film making, plate making, printing and processing of decorative materials
200		
Industrial Supplies
DNP High-performance Materials Co., Ltd.
Production of fillers for photovoltaic cells
200		
Electronics
Display Components
DNP Color Techno Kameyama Co., Ltd.
Production and sale of color filters for LCDs
2,500		DNP Precision Devices Himeji Co., Ltd.
Production of display-related components
400
DNP Denmark A/S
Production and sale of precision electronic components(Dkr 1,000)
		
135,000
Electronic Devices
DT Fine Electronics Co., Ltd.
Production and sale of semiconductor components
490		
DNP Fine Optronics Co., Ltd
Production of precision electronic components
300		
DNP LSI Design Co., Ltd.
Design and production of drawings used in semiconductor production100		
Photronics DNP Mask Corporation
Production and sale of photomasks(NT 1,000)
		
2,259,276		
DNP Photomask Europe S.p.A.
Production and sale of photomasks(Euro 1,000)
		
47,200112

Ownership ratioof voting rights (%)
100.0
100.0
100.0
100.0
97.0

100.0
100.0
100.0
100.0

100.0
100.0
50.6
100.0
100.0
95.0
36.3

100.0
100.0
100.0
100.0
100.0
(100.0)
100.0
100.0
100.0
100.0
100.0
(100.0)100.0(100.0)
100.0
100.0

84.0
100.0
90.0
100.0
100.0
100.0
100.0
(20.0)
51.0

100.0
50.0
100.0
100.0

100.0
100.0
100.0

65.0
100.0
100.0
49.9
80.5

(15.1)

100.0

100.0
100.0
100.0
88.7
100.0
100.0

(Krw 1,000)
500,000(US$1,000)
62,164(NT 1,000)
10,000(US$1,000)
5,400(THB 1,000)
200,000(S$1,000)350(£1,000)
120(US$1,000)
100(US$1,000)
100(Euro 1,000)
92(A$1,000)
70

100.0
100.0
(7.1)
100.0
100.0
100.0

100.0
100.0
(100.0)100.0(100.0)
100.0
100.0

Appendix

Production and sale of soft drinks

2,935		

Financial Section

100.0

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

How DNP Works to Achieve
Sustainable Development

350		
100		
90		
33		
30		
20		

Segment Information

19.4
53.0
53.0		 (53.0)
53.0		 (53.0)
53.0		 (53.0)
53.0		 (53.0)
53.0		 (53.0)
15.6		 (9.4)
51.8		 (16.0)
100.0
100.0 		(100.0)
31.8
100.0
80.5		 (0.7)
33.4
86.7
20.1		
51.1
50.0
99.6
100.0
94.3
63.4
100.0
100.0 		(90.0)
100.0
100.0
48.2
100.0
99.8
100.0
92.5
95.0
66.6
50.0
100.0

Special Feature

5,483		3,000		
266		
100		
50		
50		
50		
3,652		2,035		2,000		1001,199		
626		
500		
500		
435		
379		
32		
50		
100		
100		
100		
100		
100		
100
80		
70		
60		
60		
50		
40		
40		
30		
30		
10		
(S$1,000)
2,000(US$1,000)
420

DNP in Brief

Ownership ratioof voting rights (%)
To Our Shareholders

Other
Nihon Unisys, Ltd.
Development and sale of software; computer system support services
Maruzen CHI Holdings Co., Ltd.
Investment in operating companies
Toshokan Ryutsu Center Co., Ltd.
Sale of books, creation of data, library operation support, and consulting
MARUZEN-YUSHODO Company, Limited
Sale of books, magazines and stationery; importation and sale of rare Western books and academic books
MARUZEN PUBLISHING CO., LTD.
Publishing
MaruzenJunkudo Bookstores Co., Ltd.
Sale of books, magazines, and stationery
honto Book Service Co., Ltd.
Agency and sale of electronic books
BOOKOFF CORPORATION LIMITED
Used bookstore operation; development and operation of new used goods businesses; management guidance for affiliated stores
BUNKYODO GROUP HOLDINGS CO., LTD.
Investment in operating companies
DNP Fine Chemicals Co., Ltd.
Production and sale of chemical products
DNP Fine Chemicals Utsunomiya Co., Ltd.
Production, purchasing and sale of photographic materials and pharmaceuticals
All About, Inc.
Online shopping business, specialist referral business
DNP Logistics Co., Ltd.
Freight transport, warehousing, packing and shipping operations
2Dfacto, Inc.
Operation of hybrid bookstore network
DIC Graphics Corporation
Production and sale of printing ink*
VISUAL JAPAN INC.
Development, sale, and maintenance of computer software
PSP Corporation.
Planning, research, development, sales and maintenance of internal systems for hospitals and clinics*
CAFI Corporation.
Remote diagnostic imaging service
Publishing Marketing Innovation Japan Co., Ltd.
Research and policy planning aimed at activating Japan’s publications distribution markets
SHUFUNOTOMO Co., Ltd.
Editing and sale of books and magazines
D.N.K. Co., Ltd.
Production, sale and repair of printing equipment and machine tools
DNP Trading Co., Ltd.
Trading of paper, materials and all types of merchandise
MobileBook.jp, Inc.
Electronic publishing and distribution platform services and e-book distribution service
DNP Multi Print Co., Ltd.
Film making, printing and bookbinding
Metro Systems Co., Ltd.
Planning, design, development, maintenance and support operations for information systems
DNP SP Tech Co., Ltd.
Planning and production of promotional materials
CYBER KNOWLEDGE ACADEMY Co., Ltd.
Operation of academy for training and developing personnel to defend against targeted cyber attacks
Kyoiku Shuppan Co., Ltd.
Editing and sale of textbooks and educational materials
DNP Tamura Plastic Co., Ltd.
Production and sale of automotive goods and various types of plastic products*
My Earth Projects LLC
Planning, production and sale of trading cards
DNP HyperTech Co., Ltd.
Production and sale of computers and peripheral devices; development, production and sale of software*
CP Design Consulting Co., Ltd.
Personal information protection and risk management consulting*
M’s Communicate Co., Ltd.
Consulting and related to customer membership program services*
At Table Co., Ltd.
Research, consulting and planning related to production and sales promotions for supermarkets and other retailers
DNP Dexerials Consulting Co., Ltd.
Business planning and proposals
DNP Asia Pacific Pte. Ltd.
Coordination of DNP businesses in the Southeast Asia/Oceania region		
DNP Business Consulting (Shanghai) Co., Ltd.*
Study of Chinese market and business feasibility
		Personal Welfare, Facility Service and Others
DNP Facility Services Co., Ltd.
Building facilities maintenance and management; sports and welfare facility operation; security
DNP Information Systems Co., Ltd.
Design, development and maintenance of information systems; production and sale of software
DNP Human Services Co., Ltd.
Planning and management related to personnel plans
Uzumine Country Club Co., Ltd.*Management of golf courses
DNP Accounting Services Co., Ltd.
Accounting agency and consulting services
DNP Techno Research Co., Ltd.*
Studies related to patents and the preparation of contracts
Overseas Sales
DNP Korea Co., Ltd.*Sale of precision electronic components		
DNP Corporation USA
Investment in operating companies
		
DNP Taiwan Co., Ltd.
Sale of precision electronic components		
DNP International Trading (Shanghai) Co., Ltd.*Sale of printed matter, etc.
		
Dai Nippon Printing (Thailand) Co., Ltd.*Sale of packaging supplies and precision electronic components		
DNP Singapore Pte. Ltd.*Sale of precision electronic components and decorative materials
		
DNP UK Co., Ltd.*Sale of decorative materials
		
DNP America, LLC
Sale of printed materiais, precision electronic components, and decorative materials
		
DNP Holding USA Corporation
Investment in operating companies
		*
DNP Europa GmbH
Sale of printed materials and decorative materials
		*
Dai Nippon Printing Co. (Australia) Pty. Ltd.
Sale of printed materials		Capital(¥ million)

59.9 		 (6.4)

Notes: 1. Voting rights ownership ratios (in brackets) indicate the percentage of shares owned through DNP’s subsidiaries or affiliates.
2. Companies with an asterisk are neither consolidated nor accounted for by the equity method.

DNP Annual Repor t 2 016

113

Business Expansion through Application andDevelopment of Printing Technologies
In order to meet the needs of businesses, consumers and society and provide new value, DNP has evolved its printing technologies.
We take knowledge and expertise accumulated through performing each step of the printing process and expand it in multiple
directions to develop new technologies.

Basic printing processes ※Example of publication printing (offset printing)
Planning

Manuscript/Information processing

Create layout data consisting of integrated text
and image data.

Film making

Plate making

Color separate the data into four colors (CMYK*) and output printing
data for each color onto film (film making). Transfer the informationfrom each film to a metal plate to form a master (plate making).
*C for cyan, M for magenta, Y for yellow, K for “key plate” (black)

Information
Processing

Microfabrication
Form minute patterns on metal surfaces

Process information appropriately
while controlling its security

Exposure
Light

Corrosion
Laser

Applied to electronics, life science,and other fields

Applied to digital media, information security,and other fields

Font technologies
Image processing andrecognition technologies

Media conversion
technologies
Data analysis
technologies

Information security
technologies

Digital fontE-bookふ け い

Molding technologies
Nanoimprinting

Photolithography

Optical design technologies

Circuit mounting technologies

etc.

Color filter (magnified view)

Photomask

100nm

Color management LSI

114

Smart card

Touch panel sensor

etc.

150nm

Cell cultivation plate (magnified view)Printing

Productdelivery

Binding and post-processing

To Our Shareholders

Feedback

Effectivenessassessment
DNP in Brief

Collate and bind together the printed pages toform books.

Precision
Coating

Postprocessing

Special Feature

Wrap plate around roll, supply ink, andperform high-speed, high precision printing.

Form into easy-to-use shapes

Combine material design with technologies likefilm thickness control, multi-layering, and surface
processing in order to provide functionality.

Stabilize development quality of aseptic filling systems
and other packaging products; improve productivity

Segment Information

Apply a thin, uniform layer of ink

Coating technologies

Synthesizing
technologies

Aseptic filling
technologies

EB and UV hardening
technologies

Machinery and equipment
design technologies

Vapor deposition technologies

etc.

Assessment and analysis
technologies
Inspection and measuring
technologies

Environmental protection
technologies

How DNP Works to Achieve
Sustainable Development

Dyestuffs and sensitive
materials

etc.
Financial Section

Dye-sublimation thermal transfer printing media Anti-reflection film

Aseptic filling system for PET plastic bottles

Pouch for lithium-ion
rechargeable battery

Printing inspection equipment for
printed materials

Appendix

Biomass plastic packaging materials

Barrier film for packaging

Residential interior materials

DNP Annual Repor t 2 016

115

Information
Processing

With the digitization of printing, DNP has been developing a wide range of original
information processing technologies including image processing, language processing,information security and networking technologies. We are also pursuing research anddevelopment in fields like computer vision, regenerative medicine, and artificial
intelligence.

Image Processing and Recognition Technologies
TECHNOLOGIESImage processing and recognition technologies apply appropriate information processing techniques to still or moving images in order toextract useful information. They enable information media to perform sophisticated information processing tasks that only humans were able
to accomplish in the past. Sometimes these technologies even make it possible to see information that humans cannot recognize without
help. Since DNP began digitizing the text and image data that we handle in our printing businesses, we began research and development infields such as color reproduction, in which we have continued to develop related technologies. We are now developing applications in a wide
range of fields including security, energy conservation, education, medical care, and entertainment. We are working at a variety of levels fromdeveloping our own algorithms to developing architecture.
PRODUCTS&SERVICES

Real-time image analysis system
We developed a system for perceiving the danger of a potential accident
or disaster by analyzing images from surveillance cameras in real timeand quickly discovering anomalies. As an example, the system can help
prevent people from being accidentally trapped in automated parking
lots by detecting the presence of someone still inside at closing time.
To supplement the use of motion detectors, DNP has developed a newtechnology that we call “stationary object detection,” for perceiving
a person who has fallen. In order to capture the movement of people
and objects, DNP’s original algorithm makes distinctions according tochanges in lighting, shadows and reflections, and initiates follow-up
processing based on information about colors and shapes. Parameters
for this processing can be set according to the requirements of eachenvironment. One important feature of this system is the ability toconfigure it very specifically in order to derive the most useful analysis.

◉ Motion Detection◉ Stationary object detection

Information Security Technologies
TECHNOLOGIESDNP has three core types of technologies related to this area: smart card OS and application development technologies; smart card issuing
technologies; and network server system development and operation technologies. In addition to manufacturing and issuing smart cards, we candevelop a variety of products and services such as IC software and peripheral smart card-based systems by refining these three types of technologies.
PRODUCTS&SERVICES

Smart cards
A smart card contains a microchip with non-volatile memory
capable of storing a large amount of data, and a CPU. Smart cards
may be contact-type cards, contactless, or dual interface cards
that combine contact-type and contactless functions.
DNP maintains one of the leading shares of the Japanese smart
card market, supplying every type of card—from credit cards, cash
cards and transportation cards to electronic money cards—used bya variety of business types and business formats.

116

Microfabrication

In the process of making masters (plate making) for printing, DNP has cultivated highly
precise processing technologies. By applying those technologies to electronics, we havecreated a large number of micro-processed products including semiconductor
photomasks and color filters for liquid crystal displays. We continue to explore the limitsof the microscopic world through our cutting-edge technologies.

TECHNOLOGIES

Photolithography is a technology for forming patterns by shining light on the surface of a substrate coated with photosensitive material.
The pattern forms because some areas are exposed and some are not. DNP has honed its photolithography technologies through the
production of masters used for printing. We apply these technologies to the manufacture of products like photomasks and color filters.
PRODUCTS&To Our Shareholders

Photolithography

SERVICES
DNP in Brief

Photomasks

Special Feature

A photomask is a master used for forming semiconductor
circuits. In order to make cutting-edge semiconductors, weneed to use various special techniques in order to makephotomasks that can produce circuits whose lines havethe necessary resolution of 14 to 28nm*. DNP contributes
to the miniaturization of semiconductor product line
widths by providing photomasks that control not only theintensity but also the phase and polarity of the light thatpasses through them.
* nm (nanometer): one billionth of a meter

Color filters◉ Color filters

Segment Information

We have developed high quality color filters—an importantcomponent of liquid crystal displays—by developing newcoloring materials and using pigment miniaturizationand dispersion techniques along with photolithography
technologies for patterning of colored layers. In responseto the trend toward multi-colored layers, we havealso developed multicolor filters with expanded color
reproduction ranges of four or five colors.
Close-up photographof a color filter

TECHNOLOGIES

Nanoimprinting is a method that enables the transfer of patterns with line width of 20nm or less by pressing a template against a resincoated substrate. The development of nanoimprinting makes use of knowledge and skills from a wide range of fields, including clarification of
the mechanisms by which polymers react when exposed to light or to an electron beam, a good grasp of a material’s behavior at its interface,and simulation technologies in addition to microfabrication and precision measuring techniques. Based on the technologies we have cultivatedthrough our photomask business, we have been pursuing development in collaboration with materials and equipment manufacturers.
&

Financial Section

PRODUCTSSERVICES

Development of various products

Transparent
template
Light-sensitive
resin
Substrate

Contact andUV exposure

Replica
templateon whichpattern has
been formed

Release(replica)

DNP Annual Repor t 2 016

AppendixNanoimprinting is being studied for its potential use infields like next-generation semiconductor lithography,
ultrahigh density HDD media manufacturing, and opticalelements. Quartz or silicon is generally used for making
master templates (dies), and dry etching is used for forming
a concavo-convex shape on the template surface. DNP
has developed a replica template by using nanoimprinting
lithography and a master template made with electron
beam lithography. We plan to supply this next-generation
technology to a wide variety of corporate clients.

How DNP Works to Achieve
Sustainable Development

Nanoimprinting

117Precision
Coating

Precision coating refers to processing that covers a surface by causing a film to adhere to it uniformly.
By combining material design technologies with film thickness control, multi-layering, surface
processing and other technologies, we can bestow diverse functions such as optical properties,
barrier properties, and heat resistance.
With extremely broad possibilities for application, this is one of DNP’s core technologies and we
make use of it across business unit boundaries.

High-speed Thin Film Coating Technology
TECHNOLOGIESDNP has coating technologies that we employ in the manufacture of ink ribbons
for dye-sublimation thermal transfer printers that print digital images, whichenable us to apply various functional materials in a uniform layer about 1μm*
thick onto ultrathin film only about 5μm thick, at a speed of several hundred
meters per minute. We have also developed materials such as coloring agentsthat are exceptionally well-suited for thin film coating and overcoat materials,
enabling us to succeed at high-speed thin-film coating in terms of both
* μm (micrometer): one millionth of a meter
processing and materials.
PRODUCTS&◉ Dye-sublimation thermal transfer
Cyan dyestuff
layer

Ink ribbon(ultrathin film)

Heat-resistantlayer
Base film
Magenta dyestuff
layer
Yellow dyestuff
layer

Receiverpaper

Image-receiving
layer

Protective
layer

Thermalhead

Substrate

PlatenrollerSERVICES

Dye-sublimation thermal transfer printing media
Printers that use dye-sublimation thermal transfer printing media form images by transferring dyestuffs from ink ribbons to receiver paper.
Controlling heat energy in the printer’s thermal head makes it possible to adjust the concentration of dyestuffs in each dot. Because they can
reproduce some 16,700,000 colors in a single dot, these printers can produce high quality images. In addition to manufacturing and selling ink
ribbons and receiver paper, DNP is further expanding and evolving its photo print business by developing new printing systems and providing
a variety of solutions that make use of its systems.

Precision Thin-Film Clean Coating
TECHNOLOGIESThis technology is based on a printing technique that involves applying a filmof liquefied polymeric material while very precisely controlling film thickness.
The manufacturing processes that allow sub-micron film thickness control
and simultaneous application of multiple layers are performed in a highlevel clean environment. By combining material design and optical design
technologies that DNP has accumulated through years of printing experience,
we will continue to supply functional optical films with both desirable opticalcharacteristics and high-quality appearance.
PRODUCTS&SERVICES

Anti-reflection films◉ Main types of anti-reflection films
Anti-glare (AG) film
External
light

Scattered light

Low-reflection (LR) film
Fineparticles

External
lightLight reflectedfrom surface
Light reflectedfrom interface
Low-reflection layer

Antiglare layers

Film substrate

Film substrate

Unevenness of the surface ofthe film causes light to scatter,making glare less noticeable.
It has a matte surface.

Glare is reduced because
reflected light waves arecanceled due to interference.
The surface is shiny.

Anti-reflection films for displays—used to suppress glare from fluorescent or other types of light—were developed as a result of applying
DNP’s precision thin film clean coating technology. DNP’s anti-reflection films hold one of the top shares in the world market for antireflection films used on liquid crystal displays. One of the reasons for the films’ popularity is the multi-layer thin film coating used in DNP’sfilms, which makes more effective use of optical interference compared to single-layer coatings.

Vapor Deposition
TECHNOLOGIES

Vapor deposition is a coating technology whereby a gasified substance forms a coating
on a plastic film within a vacuum. Alumina and silica are used in vapor deposition, withsilica being used particularly in a method called “chemical vapor deposition.” In chemical
vapor deposition, because silica is deposited on the film surface at the molecular level, it
is possible to form a minute layer with strong barrier properties despite its thinness. DNP
creates a variety of products by continuously performing chemical vapor deposition on
flexible plastic film.
PRODUCTS&◉ Transparent gas barrier film
Watermolecules

Inorganic oxides (silica or alumina)
Plastic film (polyethylene terephthalate (PET), nylon, etc.)

SERVICES

Barrier films
Barrier films are used to package goods such as foods and medical supplies in order to prevent oxidation or drying,
and to keep out moisture. Unlike aluminum foil and aluminum-based vapor deposition films, DNP’s transparent vapor
deposition IB* film can be used in a microwave oven and is amenable to detection of metallic impurities. Also, IB film
is an environmentally friendly product whose production consumes less energy than that of aluminum foil.
* Innovative Barrier

118

Oxygenmolecules

Postprocessing

Starting with bookbinding and processing of paper products and moving on to film
packaging, plastic forming and aseptic bottle filling systems, DNP has developed one
post-printing processing technology after another.
We have also acquired advanced technologies through testing, measuring, andanalyzing a variety of products.

TECHNOLOGIESDNP has developed aseptic systems for filling sterilized packaging materials with food or beverages in a sterile environment, thereby
contributing to improving food safety and decreasing the burden placed by packaging materials on the environment. In addition to foodpreservation and sterilization technologies, we make use of a wide variety of technologies in the development of these systems, including
filling machinery design, control, sensing technologies, and packaging materials design technologies.
PRODUCTS&SERVICES◉ Aseptic filling system for PET(polyethylene terephthalate) bottles

Special Feature

DNP’s aseptic filling systems can be adapted for various packaging formats and filling volumes
and can be used for high-quality filling. One aseptic filling system for pasta sauce, noodle brothor other liquid foods can be used to fill any amount from 10 to 1,000mL; in other words, it can
manufacture anything from a single-portion package to a commercial use product. Furthermore,
DNP’s system allows the supply of products that were difficult to process by conventional retort
methods because those methods required heating for longer time periods, which tended to break
down the contents. Because DNP’s aseptic PET plastic bottle filling systems enable filling at room
temperature, unlike conventional systems that required filling at high temperatures, it is possible
to use lighter, thinner bottles that are good for reducing the burden placed on the environment.

DNP in Brief

Aseptic filling systems

To Our Shareholders

Aseptic Filling

Assessment and Analysis Technologies
TECHNOLOGIESPRODUCTS&SERVICES

Segment Information

Assessment and analysis technologies are indispensable to strengthening and developing manufacturing in today’s changing market
environment. In our product development, DNP combines the latest analysis and measuring equipment and theories, identifies materials thatcan form product value, and explicates the mechanisms by which those materials express their functionality. We bring visualizing and sensing
technologies into each factory and analyze its production processes in order to stabilize quality and boost productivity. We endeavor to
improve working environments so as to add further protection to workers and solve all types of problems that arise on the factory floor.

Analyzing breaking strength based on drop test of packaging cup
How DNP Works to Achieve
Sustainable Development

The market wants packaging cups made of thinner resin in order to minimize weight and cost, but
without sacrificing strength. In conventional strength testing, cups are actually dropped and theirstrength is evaluated based on observation of broken cups, but by this method it is difficult todetermine the specific point at which breakage was triggered. Therefore, we began using a highspeed camera to enable detailed analysis of breakdown behavior. By capturing the breaking point,
we were able to select the most suitable resin and design optimal manufacturing processes.

Breaking point

Machinery and Equipment Design Technologies
Some of DNP’s equipment requires a high level of precision and quality that existing equipment manufacturers cannot provide. In addition to
making use of mechatronics, for the past 20 years DNP has been using structural analysis technologies in its design processes rather thanrelying exclusively on the experience and intuition of veteran designers. Moreover, we continually work to make our equipment more reliable
based on vibration analysis and equipment maintenance information generated in house.
PRODUCTS&

Financial Section

TECHNOLOGIESSERVICES
Appendix

Printer frame deformation analyzer
Because the printers that make books, packaging materials and other products have precisionprocessed cylindrical plates that rotate with a high degree of precision, they must be assembled
to a highly accurate margin of error of less than 50μm. Also, because the paper or other print
stock that gets pushed onto the plate can weigh more than 500kg, it is important that themachine be designed to prevent deformation of its frame and reduce resulting effects on printed
matter. DNP uses a scaled-down model for experimentation as well as strength and vibration
analysis in order to predict characteristic number of vibrations and amount of frame deformation.

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Glossary
1. DNP-related Terms■ DNP Group Vision 2015

The DNP Group’s basic management
policies. A revised version of the “DNP
Group Vision for the 21st Century”
that was drawn up in 2001, DNPGroup Vision 2015 was officiallyadopted in October 2015. The vision
is comprised of three main elements,
the first of which is central: Corporate
Philosophy, Business Vision, andGuiding Principles.

■ 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.
● “P&I innovations” means thecreation of new value—somethingthat did not exist before—in
the form of innovative concepts,
products, or services etc. madeby combining DNP’s strengths (inprinting (P) and information (I), in
technology, sales, project planning,etc.) with the strengths of ourmany partners.
● The four growth areas are
Knowledge and Communication,
Food and Healthcare, Lifestyleand Mobility, and Environment andEnergy. Of the social issues that
DNP analyzed, we designated as
growth areas those areas where
we can likely solve problems byapplying new value generated
through P&I innovations, and where
we can increase DNP’s corporate
value and contribute to society bysolving those problems.

■

120

Guiding Principles:
Taiwa (dialogue) and cooperation● Each and every DNP employee
should become a professional in his
or her field and generate innovative
products and services as a resultof actively engaging in “taiwa andcooperation” within and outside of
DNP.

■ The DNP Group Code of Conduct

A set of codes underlying all typesof activities aimed at achieving ourGroup Vision. All DNP employees mustobey these codes.
・ Contributing to the development ofsociety
・ Social contribution as a good
corporate citizen
・ Compliance with the laws and social
ethics・ Respect for human dignity anddiversity
・ Environmental conservation and therealization of a sustainable society
・ Realization of a ’universal society’・ Ensuring the safety and quality ofour products and services
・ Ensuring information security
・ Proper disclosure of information
・ Realization of a safe and vibrantworkplace

2. Information Communication■ Augmented reality (AR)A technology for displaying text,
images, or other virtual information
superimposed on or otherwise
integrated into the scene or objects
found in a person’s actual physicalenvironment, enabling the expressionof an enhanced or augmented
experience of reality. For example,
when someone uses a webcam ormobile phone-mounted camera to
photograph an actual scene together
with an identifying symbol or image,the photograph will appear as asynthesis, with a 3D computergenerated image or other preregistered information integrated into
the surrounding environment.

A picture book using augmented reality■ Big data

A general term for massive amountsof data of various types. Big data
is attracting attention for providing
indicators that are affecting how
companies do business. For example,
companies may refer to information
service usage trends or productpurchasing histories when predicting
consumers’ preferences or buying
patterns.

■ Business Process Outsourcing (BPO)

Commissioning of some or all of theprocesses that make up a business’s
various activities to be performedby an outside company that has
specialized expertise, an advanced
information security environment, andoperational infrastructure.
A special feature of DNP’s BPO
business is its comprehensive nature.
Rather than simply performing
secretarial functions, we start fromscratch and design optimal businessprocesses, prepare an operationalframework, build systems and/or
operate them according to eachbusiness’s characteristics and needs.

■ Card-linked offers (CLOs)

CLOs use knowledge of individual
credit card holder’s personal
attributes and purchasing history to
select card holders who are likely to
buy a particular product. Information
about relevant special offers is
distributed directly by smartphoneor email, etc., directing customer
traffic to participating merchants andpromoting use of the credit card.

■ Digital signage

An information medium that usuallyuses large, ﬂat-panel displays linked
to an information network in orderto deliver advertisements or otherinformation tailored to a particulartime and place. It is installed instores, public institutions, train
stations, airports and other public
spaces, and may have a variety ofbuilt-in functions. For example, it may
enable consumers to obtain specificinformation by using a touch panel ormobile terminal, etc.

■ Electronic library■ Lippmann hologram

3.
Lifes
3. Lifestyle and Industrial Supplies■ Biomass material“Biomass” may refer to the total quantityof organisms living in a particulararea, or it may mean organic resources
derived from living things other thanpetroleum or other fossil resources.
Biomass material is made from resourcesof biological origin, such as vegetable
resins or natural fibers. Biomass
material has attracted attention as amaterial that puts relatively little strain
on the environment due to the idea that
CO2 absorbed by plants during theirgrowing process cancels out the CO2
emitted when the material is burned.
Since biomass material is a renewable
resource, supplies are expected to bestable.

Segment Information

A type of hologram, which is a threedimensional image recorded using a
split laser beam. Lippmann holograms
are excellent for expressing verticaland horizontal three dimensionality
and a sense of depth. They are
extremely hard to counterfeit because
their production requires special
equipment. These holograms havegarnered praise around the world forproviding a high level of security andpotential for outstanding designs.

and development of new fonts. We
created a digital version in the 1970s
and have been licensing its use since
2001.

Special Feature

A service offered by DNP that sells both
paper and electronic books by integrating
DNP’s e-book sales service, online mailorder bookstore, and physical bookstoresoperated by Maruzen, Junkudo andBunkyodo. The service provides suchfeatures as a “recommend function”
that suggests books a customer might
like based on previous purchasing
history, a “point service” program thatallows customers to combine loyalty
points regardless of which formats
they use, and an “electronic bookshelffunction” that can display a single
list of all of a customer’s paper andelectronic book purchases together.
Full-fledged operation of “honto”
began in June 2012.

An electronic settlement method thatallows customers who do not have acredit card to use settlement terminals
that belong to international credit
card brands like Visa or MasterCard.
The prepaid cards can generally be
used by customers of any age, atbusinesses that accept major credit
cards. Because they are prepaid, there
are no worries about overspending.
DNP is also offering international
brand debit cards, whereby payments
are immediately deducted from thecustomer’s bank account, as part of its
focus on electronic settlement services
involving international credit card
brands.

DNP in Brief■ Hybrid bookstore network “honto”■ International brand prepaid cards

To Our Shareholders

A service that lends electronic books
to libraries and provides the content toreaders via the Internet after the publisher
or other rights holder has authorized
distribution. The system is expected toprovide new opportunities for making
use of published content. Many Japaneselibraries are already participating.

■ Electron Beam (EB) technologies■ Information Processing Services (IPS)■ Shueitai

Appendix

DNP’s original font, which we havebeen developing since the Meiji
Era that began in the late 1860s.
The sleek and graceful font elicits
high praise from book publishers
and readers for being beautiful aswell as easy to read. From 2005 to2012 we carried out a major project
involving renewal of our existing fontFinancial Section

DNP’s own term for our uniquely broadmenu of services including inputting
and safely transmitting massive
amounts of personal information andother data, editing and processing,
printing, producing, mailing and/ortransmitting invoices, statements, andother forms of personalized mail—all inenvironments protected by advanced
information security systems.

How DNP Works to Achieve
Sustainable Development

Maruzen’s main bookstore inTokyo’s Marunouchi district

EB technologies use electron beam
exposure to instantly provide advanced
functionality to resins and coating films.
Depending on the type of resin and EB
exposure conditions, some materials
may take on extra functionality
not exhibited by normal resins. The
technology is environmentally friendly
since production processes do not
require the use of solvents, andconsume less energy and generate less
CO2 than conventional coating methods.

Personalized mail

DNP Annual Repor t 2 016

121

■ Photovoltaic module components

Back sheets are weatherproof films
that protect photovoltaic modules
from external elements. They
prevent precipitation from entering
modules, making it possible to usethem outdoors for a long periodof time. Back sheets must be very
durable and moisture proof, andhave good electrical insulating
properties.
● Encapsulants are protective sheets
used to secure photovoltaic cells
and their peripheral wiring in place,and to form photovoltaic modules.
An encapsulant forms a strong
bond between a module’s backsheet and its front glass.
● Bus line sheet is a sheet configured
with electrode circuit patterns usedin photovoltaic cells. DNP’s bus
line sheet configures electrodes
by attaching them to the backof a (back-contact) photovoltaic
cell. Since electrodes positioned at
the back of the cell do not block
sunlight exposure, “shadow loss”
is reduced and power generation
efficiency is increased.

■ Regenerative medicine

A therapeutic method using artificiallycultivated cells or tissues to restore
or recover the function of tissueor organs lost through disease or
accident.

●

Structure of an array of photovoltaic cells (solar cells)■ Universal design (UD)The term “universal design” is said tohave been coined by North Carolina
State University professor Ronald
Mace, who defined it as “the designof products and environments to
be usable by all people, to thegreatest extent possible.” Unlike theterm “barrier-free,” which refers toremoving obstacles for people withphysical disabilities, UD proposesthat products, services, all types offacilities and living environments
should be designed so that mostpeople can enjoy them not only
whether or not they have a disability,
but also regardless of differences inage, gender, nationality or personalabilities.

4. Electronics■ Lead frame

Photovoltaic cell
The smallest unit that functions
as a photovoltaic battery; incrystalline photovoltaic modules,
a cell consists of a silicon wafer■

ModuleA unit that is packaged in special
material to maintain thephotovoltaic cells’ electricalefficiency and to allow them towithstand harsh environmental
conditions

Array
An arrangement ofmultiple modules

Structure of an array of photovoltaic cells (solar cells)
Encapsulants

Metal frame, etc.
Sunlight

Surface glass

A sheet of material that seals
the cell and protects it from theelements, i.e. rain, wind, snow,
and temperature changes

Cell
Back sheet
Wiring, etc. Weatherproof film that protects the back of
the photovoltaic module from the roof orother surface that it rests on

122■

MEMS (Micro Electro Mechanical
System)An electronic device that integrates
components like IC chips, sensors
and electronic circuits into a threedimensional structure mounted on abase, which is usually a silicon wafer.
Organic EL (electroluminescent)display
Organic electroluminescence is aphenomenon that occurs when avoltage is applied to certain organic
compounds, whereby the compoundemits light while producing almost
no heat. An organic light-emitting
diode (OLED) is a product that takes
advantage of this phenomenon. Unlike
liquid crystal displays (LCDs), organic
EL displays do not require a backlightbecause they use self-luminescent■ Touch panel sensor

A component of a touchscreen displaythat receives, in the form of a signal,
the location where a user’s finger
has touched a display. Touchscreensallow intuitive operation of devices
like smartphones, tablets, and digital
signage, making it possible to enlargeor shrink images, to turn pages or
select information etc. by touching
the screen with one or more fingers.
In order to supply touch panel
manufacturers with sensors, DNP uses
its patterning technologies to givesensory function to glass or film byforming a minute electrode patternalong its length and breadth.

front surface of display (direction in which light moves)

cover glass
touch panel
polarizer
glass (CF) side
glass (TFT) sidepolarizer

light guide plate

Example of a touch panel
combined with a liquid crystal display panel

liquid crystal display panel

A metal component inside asemiconductor package that supports
the semiconductor chip or chips andtransmits electric signals.

OLEDs. This means they can bethinner, lighter and consume lesselectric power. Since they also offer
the possibility of using substrates
made of plastic or other flexible
materials that can withstand bending
and curling, organic EL displays
are attracting attention as a nextgeneration alternative to LCDs.

Sources of Information about DNPWeb Site (English: http://www.dnp.co.jp/eng/)

Publications■■

Annual Report (Japanese and English versions)
Each year around the end of July, we release Japanese and English versions simultaneously.
This comprehensive report contains various types of information, including reports aboutbusiness activities based on our Group Vision, financial information and non-financial information,
all pertaining to a particular fiscal year.
Data Book

グラフィックエレメント A（ヨコ）株 主メモ［ General Stock Information］

業

年

度

毎年4月1日から翌年3月31日まで

株主通信

定時株主総会開催時期

6月

上記総会における
議 決 権 の 基 準 日

3月31日
その他必要のある場合は、取締役会の決議によりあらかじめ公告して設定します。

剰余金の配当基準日

期末配当金

株 主 名 簿 管 理 人

東京都中央区八重洲一丁目2番1号

3月31日

中間配当金

DNP Report Vol.86（証券コード：7912 ）

9月30日
みずほ信託銀行株式会社

第122期 決算のご報告

本店証券代行部平成27年4月1日〜平成28年3月31日

上 場 証 券 取 引 所

東京証券取引所公

電子公告により行います。
（当社のウェブサイト http://www.dnp.co.jp/ir/）
ただし、事故その他やむを得ない理由によって電子公告ができない場合は、日本経済新聞に掲載
して行います。

告方

法

株式事務に関するご案内

1. 住所変更、配当金受取方法の変更等のお問い合わせ先、お手続き窓口● 一般口座（証券会社の口座）にある株式
株主様が口座を開設されている証券会社の本支店● 特別口座（みずほ信託銀行の口座）にある株式（お問い合わせ先）みずほ信託銀行 証券代行部 〒168-8507 東京都杉並区和泉二丁目8番4号
フリーダイヤル 0120-288-324（土・日・祝日を除く 9:00～17：00）（お 手 続 き 窓 口 ）みずほ信託銀行 本店および全国各支店（トラストラウンジを除く）
みずほ証券
本店および全国各支店
プラネットブース（みずほ銀行内の店舗）■“DNP Report” Report to Shareholders (in Japanese)

2. 未払配当金のお支払窓口（払渡し期間経過後の配当金領収証によるお受け取り）（ お 支 払 窓 口 ）みずほ信託銀行 本店および全国各支店（トラストラウンジを除く）
みずほ銀行
本店および全国各支店（ 取 次 所 ）みずほ証券
本店および全国各支店
プラネットブース（みずほ銀行内の店舗）※ 単元未満株式に関するお知らせ
1,000株に満たない株式（単元未満株式）を所有されている株主様が、当社に対しその単元未満株式と合わせて1単元（1,000株）になる数の株式を買増請求できる「単元未満株式の買増制度」を導入しております。また、単元未満株式の買取請求につきましても、お取り扱いしております。

This report is delivered quarterly to shareholders. Aimed mainly at individual investors, its
contents include summaries of financial results, special features about business activities, andintroductions to various technologies.

MS-01160003● DNP Report に関するお問い合わせ先■

広報室 〒 162-8001 東京都新宿区市谷加賀町一丁目1番1号
TEL : 03-3266-2111（総合案内）

この報告書を印刷する際は、の電力（1,200kWh）
自然エネルギーでまかなわれています。

この印刷物は、NPO法人カラーユ
ニバーサルデザイン機構が認証したCUDマネジメントシステムに則り、色覚の個人差を問わず、より多くの方に見やすく配慮しています。

2016.6“DNP Report” to shareholders

Special Feature

DNP Group CSR Report(Japanese and English versions; available only as PDF file for download from web site)
We report about DNP’s role in society from the standpoint of its business activities and relevant
processes. We release the Japanese version at the end of June, and the English version at theend of August.

■

DNP in Brief(Bilingual: Japanese/English; available only as PDF file for download from web site)
Issued near the end of July every year, the Data Book contains values from financial statementsof the past 10 years, and financial analysis values in the form of tables and graphs, etc.
Financial statement values are taken from securities reports.
事

DNP English Web Site
(http://www.dnp.co.jp/eng/)

To Our Shareholders

Our web site introduces our operations in a format that is easy to understand. In addition todisclosing information at appropriate times and in appropriate ways, we are continuously improving
the site. The following publications and reports are also available as PDF files that can be
downloaded from the web site.

DNP Group Environmental Report(Japanese and English versions; available only as PDF files for download from web site)
This report explores in detail the environmental management activities that are among DNP’s
CSR initiatives. We release the Japanese version at the end of June, and the English version at
the end of August.

DNP Corporate Profile (Corporate Brochure: Japanese and English versions)This publication introduces each segment’s products and services, operating locations in Japanand around the world, company history, a summary of our activities, and other basic information
about DNP.

DNP Group CSR Report

Segment Information■

Reports■“Yuho” Annual Securities Report, etc. (in Japanese)■“Tanshin” Earnings Release (Japanese and English versions)
In accordance with Tokyo Stock Exchange rules, we prepare earnings releases for each quarter. In addition to consolidated financial
statements, we report on the status of sales, etc.

Note: Trademarks mentioned in this annual report in connection with DNP products or services are used or registered in Japan.

How DNP Works to Achieve
Sustainable Development

In accordance with Article 24 of the Securities Exchange Law, DNP submits quarterly reports to the Finance Ministry in August,November, and February. In June, DNP submits a quarterly report combined with a “Yuho” annual securities report. These arebroad-ranging reports that include consolidated financial statements with auditing reports attached, non-consolidated financial
statements, performance reviews, information about shares and corporate directors, etc.

Financial Section

About the Cover Illustration“DNP Group Vision 2015” contains DNP’s corporate philosophy: “The DNP Group connects individuals and society,and provides new value.” Our design is based on this concept: it shows how DNP supports society in a variety ofways, encourages society’s development, and contributes to the development of a sustainable society.

Design by groovisions

Annual Report 2016

Appendix

Design studio established in 1993. Primarily focused on graphics and video, groovisions works in a wide variety of media
including music, print, product and interior design, fashion and the web. Main projects include stage visuals for PIZZICATO FIVE,
editorial design for Metro Min. magazine and other publications, motion graphics for EXPO 2005 AICHI JAPAN, Maison Hermès
shop window direction, and ggg’s (Ginza Graphic Gallery’s) 301st exhibition.

The PDF file of this report was produced
using the data from the certified
document printed on certified paper.

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