These documents have been translated from Japanese originals for reference purposes only.
In the event of any discrepancy between these translated documents and the Japanese originals, theoriginals shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or
any other forms of damages arising from the translations.
Denka Co., Ltd.
(Securities Code: 4061)
NOTICE OF CONVOCATION OF
THE 164TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
Date and Time:Thursday, June 22, 2023 at 10:00 a.m.

Place:

Nihonbashi Mitsui Hall, COREDO Muromachi 1 (reception desk on the 4th floor)
2-1, Nihonbashi-Muromachi 2-chome, Chuo-ku, Tokyo

Proposals to be resolved:
Proposal No. 1:
Proposal No. 2:
Proposal No. 3:

Appropriation of Surplus
Election of Five (5) Directors (Excluding Directors who are Audit Committee Members)
Election of Four (4) Directors who are Audit Committee Members

Please exercise your voting rights in writing or via the Internet by
5:00 p.m. on Wednesday, June 21, 2023.
This year, the Company will not distribute souvenirs or beverages at the General Meeting of Shareholders.
We appreciate your understanding.

1Message from the Management
To Our Shareholders
We will execute our new management plan, “Mission 2030,” and with the aim of “making the world a better placeas specialists in chemistry,” the Group will work as one to take on the challenge of bringing about furthertransformation.
Enclosed please find the Notice of Convocation of the 164th Ordinary General Meeting of Shareholders.
We would like to take this opportunity to express our gratitude to you for your continued support of Denka andmake some observations concerning the Company’s results and current initiatives.
May 31, 2023
Toshio Imai
Representative Director, President
During the fiscal year ended March 31, 2023 (fiscal 2022), the Japanese economy showed signs of recovery as
consumer spending and capital investment picked up. However, as commodity prices soared even higher and theyen rapidly depreciated, uncertainty about the future grew. The world economy showed increasing signs of aslowdown, as prices rose in many countries, the Ukraine crisis dragged on, and China’s zero-COVID policy curbed
economic activity.
Amid this economic environment, the Group pushed ahead with “Business Portfolio Shift” and “Introductionof Innovative Processes,” two strategies set forth in our “Denka Value-Up” five-year management plan launchedin fiscal 2018, and focused on expanding businesses and enhancing profitability. Moreover, we designated the past
two years up to and including the final year of the plan as an important preparatory period for rapid growth towards
the vision of the next management plan. As a first step towards being an indispensable corporate member of society,we engaged in three “Value-Up” initiatives, concerning our business, the environment, and human resources.
As a result, net sales totaled ¥407,559 million, up ¥22,709 million (5.9%) from the previous year. Althoughdemand for some of our core products declined due to the global economic slowdown, we revised our selling
prices in response to higher raw material and fuel prices and also benefitted from the weaker yen.
In terms of earnings, although we revised selling prices in response to rising raw material and fuel prices, sales
volumes for some mainstay products declined and costs associated with the development of specialty products
climbed, resulting in operating income of ¥32,324 million (down ¥7,799 million, or 19.4% year on year) and an
operating income ratio of 7.9% (down 2.5 points). Ordinary income was ¥28,025 million (down ¥8,449 million,
or 23.2% year on year), and profit attributable to owners of parent was ¥12,768 million (down ¥13,244 million, or
50.9%), reflecting extraordinary losses, including impairment losses on manufacturing facilities due to the decision
to withdraw from the cement business as part of the “Business Portfolio Shift,” as well as extraordinary gains fromthe paring back and sale of strategic stockholdings.
Under our previous management plan, “Denka Value-Up,” which lasted until fiscal 2022, we have beenworking to execute a “Business Portfolio Shift” by accelerating the growth of our specialty businesses, turning
specialty businesses into core businesses, and restructuring our commodity businesses with the aim of becoming
a “fusion of highly competitive specialty businesses that are unaffected by the terms of trade.” In addition, we havebeen focusing on environmental and human resource initiatives to strengthen ESG management. As a result, wehave broken our profit records three times in the past five years, and in fiscal 2022 total operating income in theenvironment and energy field and the healthcare field, our priority fields, was almost double the figure for fiscal
2017, just before we launched “Denka Value-Up.” However, as a result of sluggish profitability in some of ourcore businesses during the last fiscal year, our earnings unfortunately declined overall, and we still have some way
to go to complete the “specialization” of our businesses.
Our new management plan, “Mission 2030,” launched this fiscal year, is based on a newly established visionand the three growth strategies of “business value creation,” “human resources value creation,” and “management
value creation,” and with fiscal 2030 as the goal year, is designed to enhance enterprise value through theimplementation of initiatives focused on both financial and non-financial areas. In the realm of “business value
creation,” the core growth strategy, we have defined businesses that incorporate the three elements of “specialty,”
which is backed by our outstanding technologies, “megatrends,” which are the demands of society, and“sustainability,” which is a critical requirement for business operations, as “three-star businesses,” and will bemaking such businesses the central components of our portfolio. In addition, we aim to become a company where
each and every employee can demonstrate empathy and experience self-actualization and growth, and we will befurther reinforcing our managerial foundation through the advancement of corporate governance from theperspective of ESG management, thereby enhancing the value of our human resources and management.
With our new vision as the starting point, we will execute our new management plan, “Mission 2030,” andwith the aim of “making the world a better place as specialists in chemistry,” the Group will work as one to takeon the challenge of bringing about further transformation. We hope we can count on the continued understanding
and support of our shareholders in this endeavor.

2

(Securities Code: 4061)
May 31, 2023
Date of commencement of electronic provision measures
To Our Shareholders:Toshio Imai
President
Denka Co., Ltd.
1-1, Nihonbashi-Muromachi 2-chome, Chuo-ku, TokyoNOTICE OF CONVOCATION OF
THE 164TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
The 164th Ordinary General Meeting of Shareholders of Denka Co., Ltd. (the “Company”) will be held as
described below.
In convening this General Meeting of Shareholders, the Company provides electronically the Reference
Documents of the General Meeting of Shareholders and other information (matters subject to the electronic
provision measures) as the “Notice of the Convocation of the 164th Ordinary General Meeting of
Shareholders” and “Matters Subject to the Electronic Provision Measures (Matters for which Document
Delivery is Omitted)” on the Company website. Please access the following website to check the information.
The Company Website
https://www.denka.co.jp/ir/fact_04/ (available in Japanese)
The matters subject to the electronic provision are posted also on the website of the Tokyo Stock Exchange(TSE) as well as the above website. Please access the following TSE website (Listed Company Information
Service) and enter the Company’s name Denka or securities code “4061” to search, and select “Basic
Information” and “Documents for Public Inspection/PR Information” in order, and check the information.
TSE website (TSE-listed company information)
https://www2.jpx.co.jp/tseHpFront/JJK020010Action.do?Show=Show
If you are unable to attend the meeting, you may exercise your voting rights in writing by mail (Voting
Rights Exercise Form) or via the Internet, etc., as described in the “Guide for Exercise of Voting Rights” (page5). Please review the Reference Documents for the General Meeting and exercise your voting rights by 5:00
p.m. on Wednesday, June 21, 2023.
1. Date and Time:Thursday, June 22, 2023 at 10:00 a.m.

2. Place:

Nihonbashi Mitsui Hall, COREDO Muromachi 1(reception desk on the 4th floor)
2-1, Nihonbashi-Muromachi 2-chome, Chuo-ku, Tokyo
Please also consider viewing the live-streaming of the General Meeting of
Shareholders on the day of the meeting. Please refer to the enclosed “Guide forLive-streaming” for details.

3. Meeting Agenda:
Matters to be reported: 1. The Business Report, Consolidated Financial Statements for the Company’s
164th Term (from April 1, 2022 to March 31, 2023) and results of audits by
the Accounting Auditor and the Audit Committee of the Consolidated
Financial Statements
2. Non-consolidated Financial Statements for the Company’s 164th Term (from
April 1, 2022 to March 31, 2023)
3

Proposals to be resolved:
Proposal No. 1: Appropriation of Surplus
Proposal No. 2: Election of Five (5) Directors (Excluding Directors who are Audit Committee
Members)
Proposal No. 3: Election of Four (4) Directors who are Audit Committee Members••

Among the matters subject to the electronic provision measures, the following matters are not stated in
documents to be delivered to shareholders who make request for the delivery of hard copies, inaccordance with the relevant laws and regulations and the provisions of Article16 of the Article of
Incorporation of the Company. Therefore, the documents to be delivered to the shareholders whorequested the delivery of the hard copies are a part of the documents audited by the Audit Committee
and Accounting Auditor in preparing their Audit Reports.
• Company’s Systems and Policies (Systems to Ensure the Appropriateness of Operations,Operational Status of Systems to Ensure the Appropriateness of Operations, and Basic Policies
regarding the Control of the Company) in the Business Report• Consolidated Statement of Changes in Net Assets and Notes to Consolidated Financial
Statements• Non-consolidated Statement of Changes in Net Assets and Notes to Non-consolidated Financial
Statements
In the event of any modification to the matters subject to the electronic provision measures, theCompany will post the modification on the Company's website and the TSE’s website.

4<Guide for Exercise of Voting Rights>
The following three methods are available for exercising voting rights pertaining to the Company’s General
Meeting of Shareholders.

Exercise of Voting Rights in Writing by Mail (Voting Rights Exercise Form)
Please indicate your vote for or against the proposals on the enclosed Voting Rights Exercise Form and send
the completed form to us so that it is received by 5:00 p.m. on Wednesday, June 21, 2023. If no indication of
approval or disapproval is made on the Voting Rights Exercise Form, it will be treated as an indication of
approval of the Company's proposal.
Exercise of Voting Rights via the Internet etc.
Please access the website for exercising voting rights designated by the Company (https://www.web54.net),
use the “Voting Rights Exercise Code” and the “Password” indicated on the enclosed Voting Rights Exercise
Form, and follow the on-screen guidance. Please vote for or against the proposals by 5:00 p.m. on Wednesday,June 21, 2023.
(Inquiry about Exercise of Voting Rights via the Internet etc.)
Sumitomo Mitsui Trust Bank Stock Transfer Web Support Dial
Tel: 0120-652-031(office hours: 9:00 a.m. - 9:00 p.m.)●Exercise of Voting Rights by Attending the Meeting
Please bring the enclosed Voting Rights Exercise Form with you to the meeting and submit it to thereceptionist at the meeting venue.
* In the case of exercising voting rights by attending the meeting as a proxy, please submit a document
evidencing the authority of proxy to the receptionist at the meeting venue together with the Voting Rights
Exercise Form. Please note that such proxy must be one shareholder of the Company with voting rights
in accordance with Article 18 of the Company’s Articles of Incorporation.
Furthermore, the Company will not distribute souvenirs or beverages at the General Meeting of
Shareholders. We appreciate your understanding.
*Handling of duplicated exercise of voting rights
If you exercise your voting rights both by the method of exercising voting rights in writing by mail (Voting
Rights Exercise Form) and by the method of exercising voting rights via the Internet etc., the exercise of
voting rights by the method of exercising voting rights via the Internet etc. shall prevail regardless of the timeof arrival of the votes.
In addition, if you exercise your voting rights multiple times via the Internet, etc., the vote made last shallprevail.

5

Reference Documents for the General Meeting of Shareholders

Proposal No. 1: Appropriation of Surplus
It is proposed that the surplus be appropriated as follows:
Matters concerning year-end dividends
In the management plan “Denka Value-Up,” formulated in November 2017, the Company sets out its
basic concepts of safety as No. 1 priority, environmental awareness, fostering and tapping human capitaland contributing to the community, all of which are indispensable for continued growth of the Company. We
aim to realize sustainable and sound growth as a “Specialty-Fusion Company,” through new strategies toachieve dramatic growth globally.
While the Company has formulated an investment plan as we look to achieve these goals, we have alsoestablished a “Policy on Shareholder Returns,” with a 50% target total payout ratio.
<Shareholder returns in the management plan “Denka Value-Up”>
Committed to a 50% standard for the target total payout ratio. *Regarding shareholder returns, the dividend is prioritized, with flexible purchase of treasury shares,
depending on stock price movements and other factors.
* Total payout ratio = (Dividends paid + treasury stock purchased) / consolidated net income
Also, in the new eight-year management plan “Mission 2030” that started in fiscal 2023, we will continue
the 50% level of total payout ratio.
With respect to the year-end dividend for the 164th term, in view of the above, the Company proposes thefollowing.
(1) Type of dividend property
Cash(2) Allocation of dividend property and total amount thereof¥30 per share of common stock of the Company
Total amount of dividends: ¥2,588,272,350(3) Effective date of dividends from surplus
June 23, 2023
(Reference)
Shareholder returns over the five-year period of the “Denka Value-Up” management plan
Net income(Billions of yen)
Annual dividend
per share(yen)
Dividends paid
(Billions of yen)
Treasury stock
purchased(Billions of yen)
Sum of dividends
paid and treasury
stock purchased(Billions of yen)
Total payout ratio(%)

FY 2018
160th term

FY 2019
161st term

FY 2020
162nd term

FY 2021
163rd term

FY 2022164th term

25.0

22.7

22.8

26.0

12.8

120.00125.00125.00145.00100.00

10.5

10.8

10.8

12.5

8.6

2.1

–

–

–

–

12.6

10.8

10.8

12.5

8.6

50.2%

47.6%

47.3%

48.1%

67.5%

6

5-year cumulative(2018-2022)►

Total payout ratio
50.6%

Proposal No. 2: Election of Five (5) Directors (Excluding Directors who are Audit Committee
Members)
The terms of office of five (5) Directors (excluding Directors who are Audit Committee Members;hereinafter, the same applies in this proposal) will expire at the conclusion of this Ordinary General Meetingof Shareholders. Accordingly, the election of five (5) Directors is proposed.
The candidates for Directors are as follows.

No.

Name

Positions and responsibilities at the Company

1

Reappointed Manabu Yamamoto Chairman and Director

2

Reappointed

Toshio Imai

3

Reappointed

Kazuo Takahashi

4New
appointment

Ikuo Ishida

5

Reappointed
OutsideIndependent
Director

Representative Director, President and Chief Executive
Officer
Representative Director, Senior Managing Executive
Officer
Chief Technical Officer (CTO)
Chief Compliance Officer (CCO)
In charge of Purchasing Dept., Logistics Dept.,
Production & Process Technology Dept.,
Engineering Dept., Digital Strategy & Innovation Dept.
Managing Executive Officer
Chief Human Resource Officer (CHRO)
Corporate Planning Dept., HR Dept.,
In charge of Corporate Communications Dept., Denka
Corporation, Denka Chemicals GmbH, Chinese Business

Attendance atBoard ofDirectors
meetings
15/15(100%)

15/15(100%)

15/15(100%)

–/–
(–)

15/15
(100%)

Yoshiyuki Fukuda Director

Reappointed: Candidate for reappointment as Director
New appointment: Candidate for new appointment as Director
Outside: Candidate for Outside Director
Independent Director: Independent Director as notified to the Tokyo Stock Exchange

7

Name
(Date of birth)
No. [Director since][Director's term ofoffice]Career summary and significant concurrent positions, etc.

Number ofshares of theCompany held

April 1981
June 2004

Joined the Company
General Manager of Functional Ceramics Div. ofElectronics Materials Business Group of the Company
April 2009
Executive Officer, General Manager of Electronics
Materials Div. of Electronics Materials Business Group of(Reappointed)
the Company
24,949April 2011
Senior Executive Officer of the Company
Manabu Yamamoto(of the shares
Managing Executive Officer, Head of Electronics &(March 31, 1956) April 2013
above,
Innovative
Products of the Company
Age: 67
number ofJune 2013
Director and Managing Executive Officer of theshares to beCompany[June 2013]delivered
April 2015
General Manager of Corporate Planning Dept. of the[10 years
pursuant toCompany* at the conclusion ofstock delivery
April
2016
Director and Senior Managing Executive Officer of thetrust system
this Ordinary GeneralCompany
12,949)Meeting ofJune 2016
Outside Audit & Supervisory Board Member of Koatsu
Shareholders]
Gas Kogyo Co., Ltd. (until June 2019)
April 2017
Representative Director, President and Chief Executive
Officer of the Company
1
April 2021
Chairman and Representative Director of the Company
April 2023
Chairman and Director of the Company (present)[Reasons for selection as a candidate for Director]
Through work experience at overseas subsidiaries and many years of responsibility for theelectronics materials business division, Mr. Manabu Yamamoto possesses international
viewpoints and adequate operational experience. After he supervised new businessstrategies and accounting and finance strategies across the entire Denka Group as theexecutive responsible for management strategy, accounting and finance, and investor
relations and corporate communications divisions, Mr. Yamamoto promoted “Denka ValueAttendance at Board Up” as Representative Director, President. As Chairman and Director, he currently servesof Directors
in the position of the Chairman of the Board of Directors, based on his deep knowledge andmeetings
understanding of the Group. The Company has judged that he can appropriately fulfill the
15/15 (100%)role of supervising the business execution of Directors and Executive Officers, and requests
his election as Director.
[Message to shareholders]
I will strive for more sophisticated corporate governance that accurately reflects social
expectations, by strengthening the effectiveness of management advisory and supervisory
function and swifter decision-making through the further revitalization of the Board of
Directors, in order to promote “Mission 2030.”
Notes:1. No material relationship of interest exists between the Company and the above candidate.
2. The Company has entered into a directors and officers liability insurance contract with an insurancecompany as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover legal damages,
litigation expenses and others in the event that a claim for damages is made against the insured persons,
including Directors of the Company. If the appointment of the candidate above is approved, then he will
become an insured person under the contract. The Company intends to renew this insurance contract withthe same contents at the time of the renewal.

8

Name
(Date of birth)
No. [Director since][Director's term ofoffice]Career summary and significant concurrent positions, etc.

April 1982
October 2006
June 2011

Number ofshares of theCompany held

Joined the Company
General Manager, Styrene Div. of the Company(Reappointed)
General Manager, Corporate Planning Dept. of the
18,276Company
Toshio Imai(of the shares
April 2013
Executive Officer, Assistant to General Manager,(January 25 1959)
above,
Elastomers & Performance Plastics of the Company
Age: 64
number of
April 2015
General Manager, Elastomers & Performance Plastics ofshares to be
the Company[June 2019]delivered
April 2017Managing Executive Officer of the Company[4 years
pursuant toApril 2019
General Manager, Denka Value-Up Promotion Dept. of* at the conclusion ofstock delivery
the Company
this Ordinary General June 2019
Director and Managing Executive Officer of the Company trust system
6,676)
April 2020
Director and Senior Managing Executive Officer of the
Meeting ofCompany
Shareholders]April 2021
Representative Director, President and Chief Executive
2
Officer of the Company (present)[Reasons for selection as a candidate for Director]
Mr. Toshio Imai possesses an international perspective and adequate operational
experience, including work experience at overseas subsidiaries, and taking responsibility
for the styrene and elastomer businesses over many years. After taking charge of businessstrategy for the Denka Group as a whole, including overseas businesses, as the executive
Attendance at Board responsible for management strategy and investor relations and corporate communications
divisions, he currently serves as Representative Director, President. Based on his richof Directors
experience and impressive track record in Company administration, it is hence judged bymeetings
the Company that he can appropriately fulfil the role of determining important business
15/15 (100%)execution and supervising the business execution of Directors and Executive Officers, andrequests his election as Director.
[Message to shareholders]
In order to realize our “Vision,” I will do my utmost to build a structure that enables all
employees to become “specialists in making the world a better place.”
Notes:1. No material relationship of interest exists between the Company and the above candidate.
2. The Company has entered into a directors and officers liability insurance contract with an insurancecompany as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover legal damages,
litigation expenses and others in the event that a claim for damages is made against the insured persons,
including Directors of the Company. If the appointment of the candidate above is approved, then he will
become an insured person under the contract. The Company intends to renew this insurance contract withthe same contents at the time of the renewal.

9

Name
(Date of birth)
No. [Director since][Director’s term ofoffice](Reappointed)
Kazuo Takahashi(March 30, 1960)
Age: 63

Career summary and significant concurrent positions, etc.

April 1983
October 2013
April 2015
April 2017

Number ofshares of theCompany held

Joined the Company
Deputy General Manager, Chiba Plant of the Company
7,863
General Manager, Ofuna Plant of the Company(of the shares
Executive Officer, General Manager, Omuta Plant of theabove,
Company
number of
President of Denka Performance Elastomer LLC
shares to bedeliveredManaging Executive Officer of the Company
Director and Managing Executive Officer of the Company pursuant toRepresentative Director and Senior Managing Executive stock delivery
trust system
Officer of the Company (present)
2,063)

April 2019
[June 2021]
April 2021
[2 yearsJune 2021* at the conclusion of April 2023
this Ordinary General
Meeting of
Shareholders][Reasons for selection as a candidate for Director]
3
Mr. Kazuo Takahashi possesses adequate operational experience, including work
experience in plant manufacturing and overseas subsidiaries. Mr. Takahashi was in chargeof business strategy for the Denka Group as a whole, including overseas businesses, as theexecutive responsible for management strategy, human resources strategy, investor
relations, corporate communications and other divisions, and promoted the management
Attendance at Board
plan, “Denka Value-Up.” Currently, he oversees technical divisions as Chief Technology
of Directors
Officer, and also assists the President as Representative Director and Senior Managing
meetings
Executive Officer. It is hence judged by the Company that he can appropriately fulfil the
15/15 (100%)role of determining important business execution and supervising the business execution of
Directors and Executive Officers, and requests his election as Director.
[Message to shareholders]
I will do my very best to realize the new management plan “Mission 2030” that started thisfiscal year, ensuring consistent respect for stakeholders and rational and appropriate
decision-making and actions.
Notes:1. No material relationship of interest exists between the Company and the above candidate.
2. The Company has entered into a directors and officers liability insurance contract with an insurancecompany as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover legal damages,
litigation expenses and others in the event that a claim for damages is made against the insured persons,
including Directors of the Company. If the appointment of the candidate above is approved, then he will
become an insured person under the contract. The Company intends to renew this insurance contract withthe same contents at the time of the renewal.

10

Name
(Date of birth)
No. [Director since][Director’s term ofoffice]Career summary and significant concurrent positions, etc.

April 1985
April 2009

Number ofshares of theCompany held

Joined the Company
General Manager, Functional Films Dept., Electronics
5,100
Materials Div. of Electronics Materials Business Group of(New appointment)(of the shares
the Company
above,
October 2011 General Manager, Advanced Fillers Dept., Electronics
Ikuo Ishida
number ofMaterials Business Group of the Company(March 7, 1962)
shares to be
October 2013 General Manager, Advanced Specialty Materials Dept.,
Age: 61deliveredElectronics & Innovative Products of the Company
pursuant toApril 2017
Assistant General Manager, Electronics & Innovative
stock delivery[–]
Products of the Company
trust system[–]
April 2019
Executive Officer and General Manager, Electronics &–)Innovative Products of the Company
April 2023
Managing Executive Officer of the Company (present)[Reasons for selection as a candidate for Director]
4
Mr. Ikuo Ishida possesses an international perspective and adequate operational experience,
including work experience at overseas subsidiaries and taking responsibility for theelectronic materials business division for many years. He currently takes charge of businessstrategy for the Denka Group as a whole, including overseas businesses, as the executive
Attendance at Board
responsible for management strategy, human resources strategy, investor relations andof Directors
corporate communications divisions. It is hence judged by the Company that he canmeetings
appropriately fulfil the role of determining important business execution and supervising–/–
the business execution of Directors and Executive Officers, and requests his election as(–)
Director.
[Message to shareholders]
I will steadily promote the new management plan “Mission 2030” to achieve sustainablegrowth even in a drastically changing market environment, and will lead the initiative ofspecialization of our business and human resources.
Notes:1. No material relationship of interest exists between the Company and the above candidate.
2. The Company has entered into a directors and officers liability insurance contract with an insurancecompany as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover legal damages,
litigation expenses and others in the event that a claim for damages is made against the insured persons,
including Directors of the Company. If the appointment of the candidate above is approved, then he will
become an insured person under the contract. The Company intends to renew this insurance contract withthe same contents at the time of the renewal.

11

Name
(Date of birth)[Outside Director
No.
since][Outside Director’s
term of office]Career summary and significant concurrent positions, etc.

April 1979
April 2004

Number ofshares of theCompany held

Joined The Industrial Bank of Japan, Limited
General Manager, Business Division No.7 of Mizuho
Corporate Bank, Limited
March 2006
Executive Officer, General Manager, Corporate Banking
Division No.15 of Mizuho Corporate Bank, Limited
April 2007
Executive Officer, General Manager, Securities Division(Reappointed)of Mizuho Corporate Bank, Limited(Outside)
April 2008
Managing Executive Officer in charge of Corporate(Independent
Banking of Mizuho Corporate Bank, Limited
Director)
April 2010
Managing Executive Officer, Chief Compliance Officer
and Chief Credit Officer of Mizuho Corporate Bank,
Yoshiyuki Fukuda
Limited(September 8, 1956) April 2011
Managing Executive Officer, Head of Corporate Banking
Age: 66–
Unit of Mizuho Corporate Bank, Limited
April 2012Managing Executive Officer, Head of Corporate Banking[June 2021]
Unit (Large Corporations) and Corporate Banking Unit ofMizuho Corporate Bank, Limited (until March 2013)[2 years
Deputy President and Deputy President-Executive Officer,* at the conclusion of April 2013
Head of Investment Banking Division, Head of Public &this Ordinary General
Financial Institutions Group of Mizuho Securities Co.,
Meeting ofLtd. (until March 2014)
Shareholders]April 2014
Chairman of Shinko Asset Management Co., Ltd. (until
November 2015)
November 2015 President & CEO of Fund Corporation for the Overseas
5
Development of Japan’s ICT and Postal Services Inc.
(until June 2021)
June 2021
Outside Director of the Company (present)[Reasons, etc. for selection as a candidate for Director, and summary of expected roles]
Having worked in corporate management at financial institutions for many years, Mr.
Yoshiyuki Fukuda has rich experience and broad insight as a manager and possesses
advanced insights regarding corporate finance, and to utilize these insights and receive
recommendations toward the Company’s overall management, his election as Outside
Director is requested. Additionally, although he used to work at a financial institution thathas transactions with the Company, the Company considers that there is no risk thatconflict of interest with other general shareholders will arise because 1) he is not a current
Attendance at Board or a recent operating officer of the said financial institution; 2) a significant number ofyears have passed since he retired from the said financial institution (10 years have passedof Directors
since his retirement as of the day of this Ordinary General Meeting of Shareholders); 3) the
meetings
composition of borrowings relative to net assets of the Company is low at approximately
15/15 (100%)30%, and the Company’s dependency on the said financial institution is low as it accounts
for less than 10% of overall borrowings; and 4) he satisfies the Company’s “Standards ofIndependence for Outside Directors” and thus, the Company considers that the said
financial institution has no special impact on the Company’s decision-making by the Boardof Directors, etc.
[Message to shareholders]
I will calmly assess the turbulent global conditions, and use this insight to enhance theCompany’s risk management.
Notes:1. No material relationship of interest exists between the Company and the above candidate.
2. Based on Article 427, Paragraph 1 of the Companies Act, the Company currently has a liability limitation
contract with the candidate that limits his liability for damages of Article 423, Paragraph 1 of said Act to apredefined amount of ¥5 million or more or the amount stipulated by laws and regulations, whichever ishigher. If the election of Mr. Fukuda is approved, the Company plans to continue the same contract.

12

3. The Company has entered into a directors and officers liability insurance contract with an insurancecompany as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover legal damages,
litigation expenses and others in the event that a claim for damages is made against the insured persons,
including Directors of the Company. If the appointment of the candidate above is approved, then he will
become an insured person under the contract. The Company intends to renew this insurance contract withthe same contents at the time of the renewal.

13

Proposal No. 3:

Election of Four (4) Directors who are Audit Committee Members

The terms of office of four (4) Directors who are Audit Committee Members will expire at the conclusionof this Ordinary General Meeting of Shareholders. Accordingly, the election of four (4) Directors is
proposed.
The consent of the Audit Committee has been obtained for the submission of this proposal.
The candidates for Directors are as follows.

No.

Name

Positions and responsibilities
at the Company

1 New Appointment Mizuhiro Uchida Assigned to the Audit Committee

2

Reappointed
OutsideIndependent
Director

Toshio Kinoshita Director, Audit Committee Member

Attendance at Attendance atBoard of
Audit
Directors
Committee
meetings
meetings
–/–
(–)

–/–
(–)

14/14
(100%)

15/15(100%)

Reappointed
Outside
14/14
3
Akio Yamamoto Director, Audit Committee Member(100%)
Independent
Director
Reappointed
Outside
14/14
4
Miyuki Matoba Director, Audit Committee Member(100%)
Independent
Director
Reappointed: Candidate for reappointment as Director (Audit Committee Member)
New appointment: Candidate for new appointment as Director (Audit Committee Member)
Outside: Candidate for Outside Director (Audit Committee Member)
Independent Director: Independent Director as notified to the Tokyo Stock Exchange

14

15/15
(100%)
15/15(100%)

Name(Date of birth)
No. [Director since][Director’s term ofoffice]Career summary and significant concurrent positions, etc.

April 1984
April 2008

Number ofshares of theCompany held

Joined the Company
5000
General Manager, Business Planning Dept., Resin Process (of the shares(New appointment)
above,
Div., Resin Process Business Group of the Company
number of
April 2010
General Manager, Purchasing Dept. of the Company
Mizuhiro Uchidashares to be
Deputy General Manager, Chiba Plant of the Company(September 24, 1961) April 2014
July 2017
General Manager, Internal Auditing Dept. of the Company delivered
Age: 61
pursuant to[–]April 2021
General Manager, Internal Control Dept. of the Company
stock delivery[–]
April 2023
Assigned to the Audit Committee of the Company
trust system(present)–)[Reasons for selection as a candidate for Director who is an Audit Committee Member]
1
Mr. Mizuhiro Uchida possesses adequate operational experience, including work
Attendance at Audit experience in accounting and systems departments and plants, and taking responsibility for
Committee meetings the department responsible for internal control of the entire Group. The Company judgesthat the abundant and broad knowledge and insight of Mr. Uchida is necessary for the/ (-)
supervision and audit of the Company’s management, and proposes that he be elected as
Attendance at Board Director who is an Audit Committee Member.
of Directors[Message to shareholders]meetings
In addition to the broad knowledge and perspective I have cultivated through my career I/ (-)
will contribute to the enhancement of corporate value over the medium- to long-term bytaking a sincere attitude toward management supervision and auditing, keeping in mind abroad perspective and sense of ethics.
Notes:1. No material relationship of interest exists between the Company and the above candidate.
2. The Company has entered into a directors and officers liability insurance contract with an insurancecompany as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover legal damages,
litigation expenses and others in the event that a claim for damages is made against the insured persons,
including Directors of the Company. If the appointment of the candidate above is approved, then he will
become an insured person under the contract. The Company intends to renew this insurance contract withthe same contents at the time of the renewal.

15

Name
(Date of birth)[Outside Director
No.
since][Outside Director’s
term of office]Career summary and significant concurrent positions, etc.

July 1983
July 1989

Number ofshares of theCompany held

Registered as Certified Public Accountant
Partner, U.S. Coopers & Lybrand L.L.P (current
PricewaterhouseCoopers) (until June 1998)
June 1994
Representative employee of Chuo Audit Corporation(until July 2005)
July 1998
Senior Managing Partner for North America, New York
Head Office, U.S. PricewaterhouseCoopers L.L.P. (until
June 2005)
July 2005
Management Board Member for International Business ofTokyo Office of ChuoAoyama PricewaterhouseCoopers(Reappointed)(until June 2007)(Outside)
July 2007
Chief Executive of The Japanese Institute of Certified(Independent–
Public Accountants (JICPA) (until July 2013)
Director)(ofthesharesJuly 2013
Council Member of JICPA (until July 2016)
above,
Outside Audit & Supervisory Board Member of PanasonicToshio Kinoshita June 2014
number of
Corporation (current Panasonic Holdings Corporation)(April 12, 1949)
sharesto be(until June 2022)
Age: 74
delivered
July 2014
Representative Director of Global Professional Partners
pursuant to(present)[June 2019]stock
August 2014
Outside Corporate Auditor of Weathernews Inc. (until[4 years]deliverytrust
August 2018)* at the conclusion ofsystem–)Outside Director of Asatsu-DK Inc. (until December
this Ordinary General March 20152018)
Meeting of2
June 2015
Outside Audit & Supervisory Board Member of the
Shareholders]Company
June 2015
Outside Director of TACHI-S CO., LTD. (present)
July 2015
Outside Director of Mizuho Bank, Ltd. (until September
2019)
January 2018
Outside Director of ThreePro Group Inc. (current GiG
Works Inc.) (until January 2022)
June 2019
Outside Director (Audit Committee Member) of theCompany (present)(to date)[Reasons for selection as a candidate for Outside Director who is an Audit Committee
Member and summary of expected roles]
Mr. Toshio Kinoshita has experience and rich accounting knowledge gained as a certified
Attendance at Audit public accountant who practiced in Japan and the U.S. for many years and is well versed inCommittee meetings international accounting. The Company proposes that Mr. Kinoshita be elected as an
Outside Director who is an Audit Committee Member in the expectation that he will utilize
14/14 (100%)
his knowledge in supervision and audit of the Company’s management.
Attendance at Board [Message to shareholders]of Directors meetings The Denka Group must change and make a great leap forward in order to enhance its
15/15 (100%)
corporate value. The foundation for this bold change and significant progress is theestablishment of corporate governance. As an Outside Director and Audit Committee
Member, I will strive to enhance corporate value supervising the management of theCompany under the accurate corporate governance.

16

Notes:1. No material relationship of interest exists between the Company and the above candidate.
2. Based on Article 427, Paragraph 1 of the Companies Act, the Company currently has a liability limitation
contract with the candidate that limits his liability for damages of Article 423, Paragraph 1 of said Act to apredefined amount of ¥5 million or more or the amount stipulated by laws and regulations, whichever ishigher. If the election of Mr. Kinoshita is approved, the Company plans to continue the same contract.
3. The Company has entered into a directors and officers liability insurance contract with an insurancecompany as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover legal damages,
litigation expenses and others in the event that a claim for damages is made against the insured persons,
including Directors of the Company. If the appointment of the candidate above is approved, then he will
become an insured person under the contract. The Company intends to renew this insurance contract withthe same contents at the time of the renewal.

17

Name
(Date of birth)[Outside Director
No.
since][Outside Director’s
term of office](Reappointed)(Outside)(Independent
Director)

Career summary and significant concurrent positions, etc.

April 1974
April 1999
April 2004

April 2007
Akio Yamamoto(December 2, 1951) April 2009
Age: 71

Number ofshares of theCompany held

Joined Mitsui & Co., Ltd.
President of Mitsui & Co., Benelux S.A./N.V.
Vice President of Synthetic Resin & Inorganic Chemical–
Products Business Unit of Mitsui & Co., Ltd.
(of the shares
Executive Officer of Mitsui & Co., Ltd. (until Marchabove,
2010), President of Mitsui & Co. (Thailand) Ltd.
number ofRepresentative Director and President of Mitsui Bussanshares to be
Plastic Trade Co., Ltd. (present Mitsui & Co. Plastics
deliveredLtd.) (until June 2014)
pursuant toCounselor of Mitsui & Co. Plastics Ltd. (until June 2015)stock
Outside Director of the Company
delivery trust
Outside Director (Audit Committee member) of thesystem –)Company (present)[June 2015]
June 2014[8 yearsJune 2015* at the conclusion of June 2021
this Ordinary General
Meeting of
Shareholders][Reasons, etc. for selection as a candidate for Outside Director who is an Audit Committee
Member and summary of expected roles]
Mr. Akio Yamamoto has rich experience and broad insight as a manager in Japan andoverseas through his involvement in corporate management for many years. His career
includes serving as an Executive Officer of Mitsui & Co., Ltd. and the Representative
Director and President of Mitsui & Co. Plastics Ltd. He also has rich international
3
experience, including serving as a vice president at global enterprises and has provided
suggestions about the Company’s overseas business expansion strategy and managementin general based on this knowledge. The Company proposes that Mr. Yamamoto be elected
as an Outside Director who is an Audit Committee Member in the expectation that he will
Attendance at Audit
utilize his abundant and broad knowledge and insight in the supervision and audit of theCommittee meetings
Company’s management
14/14 (100%)
Although he used to work at a company that has transactions with the Company, theCompany considers that there is no risk that conflict of interest with other general
Attendance at Board
shareholders will arise because 1) he is not a current or a recent operating officer of theof Directors
said company; 2) although the Company’s sales to the said company account for 5.3% of
meetings
the Company’s total sales, transactions between the Company and the said company are
15/15 (100%)
substantially payments of commission by the Company to the said company for services
offered by its trading company function and the amount of commission paid is modest(under 2% of the said company’s sales); and 3) he satisfies the Company’s “Standards ofIndependence for Outside Directors” and thus, the Company considers that the said
company has no special impact on the Company’s decision-making by the Board of
Directors, etc.
[Message to shareholders]
I intend to firmly maintain a medium- to long-term perspective and a fair attitude, andcontribute to the enhancement of corporate value. In particular, I will strive to build a soundand profitable business portfolio, and to develop and leverage human resources.

18

Notes:1. No material relationship of interest exists between the Company and the above candidate.
2. Mr. Yamamoto served as the Representative Director and President of a specified related party of theCompany until June 2014.
3. Based on Article 427, Paragraph 1 of the Companies Act, the Company currently has a liability limitation
contract with the candidate that limits his liability for damages of Article 423, Paragraph 1 of said Act toa predefined amount of ¥5 million or more or the amount stipulated by laws and regulations, whichever ishigher. If the election of Mr. Yamamoto is approved, the Company plans to continue the same contract.
4. The above candidate is an incumbent Outside Director who is an Audit Committee Member, and he will
have served in the position for two years at the conclusion of this Ordinary General Meeting of
Shareholders. However, he served as an Outside Director for six years from June 2015 to June 2021, andincluding that period, he will have served for eight years.
5. The Company has entered into a directors and officers liability insurance contract with an insurancecompany as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover legal damages,
litigation expenses and others in the event that a claim for damages is made against the insured persons,
including Directors of the Company. If the appointment of the candidate above is approved, then he will
become an insured person under the contract. The Company intends to renew this insurance contract withthe same contents at the time of the renewal.

19

Name
(Date of birth)[Outside Director
No.
since][Outside Director’s
term of office]Career summary and significant concurrent positions, etc.

April 2000
April 2013

Number ofshares of theCompany held

Registered as a lawyer (Tokyo Bar Association)
Executive Governor of the Japan Federation of Bar
Associations (until March 2014)(Reappointed)(Outside)
October 2015 Senior Leader, Management Support Division of MOS–(Independent
FOOD SERVICES, INC.
Director)
April 2018
Risk Management & Compliance Group Leader of MOS (of the shares
above,
FOOD SERVICES, INC. (until March 2019)
number of
Miyuki Matoba
April 2019
General Manager, Risk Management & Compliance(August 15, 1973)
Office of MOS FOOD SERVICES, INC. (until September shares to bedelivered
Age: 49
2020)
September 2020 Intellectual Property and Legal Div., General Affairs H.Q. pursuant tostock delivery[2 yearsof NITTO KOHKI CO., LTD.
trust system* at the conclusion of April 2021
General Manager, Intellectual Property and Legal Div.,–)
this Ordinary General
General Affairs H.Q., and compliance supervisor of
Meeting of
NITTO KOHKI CO., LTD. (present)
Shareholders]June 2021
Outside Director (Audit Committee Member) of theCompany4(to date)[Reasons, etc. for selection as a candidate for Outside Director who is an Audit Committee
Member and summary of expected roles]
Ms. Miyuki Matoba has abundant legal knowledge acquired over many years as a lawyer.
The Company proposes that Ms. Matoba be elected as an Outside Director who is an Audit
Attendance at Audit
Committee Member in the expectation that she will utilize her knowledge in the supervision
Committee meetings
and audit of the Company’s management, while also providing advice from a perspective
14/14 (100%)
based on diversity. Although she has never been directly involved in corporate
management, she has extensive knowledge of corporate legal affairs as a lawyer, andAttendance at Board
sufficient insight regarding corporate governance, including through her experience asof Directors
corporate counsel. It is hence judged by the Company that she can appropriately fulfill the
meetings
duties of an Outside Director who is an Audit Committee Member.
15/15 (100%)[Message to shareholders]
In the rapidly changing environment, I will contribute to enhancing the Company’s
corporate value by working to ensure the proper functioning of our corporate governancefrom a medium- to long-term perspective and with integrity.
Notes:1. No material relationship of interest exists between the Company and the above candidate.
2. Based on Article 427, Paragraph 1 of the Companies Act, the Company currently has a liability limitation
contract with the candidate that limits her liability for damages of Article 423, Paragraph 1 of said Act toa predefined amount of ¥5 million or more or the amount stipulated by laws and regulations, whichever ishigher. If the election of Ms. Matoba is approved, the Company plans to continue the same contract.
3. The Company has entered into a directors and officers liability insurance contract with an insurancecompany as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover legal damages,
litigation expenses and others in the event that a claim for damages is made against the insured persons,
including Directors of the Company. If the appointment of the candidate above is approved, then she will
become an insured person under the contract. The Company intends to renew this insurance contract withthe same contents at the time of the renewal.

20

(Reference)
1. The Company’s views regarding the election of Directors
Under the new vision, in order to achieve the eight-year management plan “Mission 2030” through fiscal
2030, the Company aims to strengthen the management structure with Directors and Executive Officers,
while enriching the governance structure and supervisory function.
In electing Directors, internal Directors are chosen from persons who possess a wealth of experience andachievements in various divisions within the Company, while also possessing insights and adequate
specialized knowledge as Director, and Outside Directors are chosen from persons who possess
specialization required for continuous growth and improvement in corporate value of the Company and wide
insights based on a wealth of business experience and management experience at other companies. The
Company believes that it is important for the Board of Directors as a whole to elect a good balance of
personnel with a variety of knowledge, experience, and abilities, and ensure that the composition of theBoard of Directors is diverse in terms of gender, international background, work history, and other factors.
Additionally, the Company believes that Independent Outside Directors should comprise at least onethird of Directors. The present ratio is approximately 44%.

21

2. Skills Matrix of the Company’s Board of Directors*If Proposals 2 and 3 are approved as submitted.
SkillsCorporate

Attributes

Human

GlobalFinancial

Legal/

Management Resources

Business

Strategy /Compli-

Accounting

ance/Corporate

Value

Planning

Creation

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

Business

Research/ Technology

E

Sustainability/ESG
S

G

Value

Intellectual / Manufac-(Environ-(Society)(Govern-

Creation andance)

Marketingment)propertyDX

turingAge: 67

ManabuChairman andYamamoto Director

Years ofservice: 10

〇

〇

〇

〇

〇

Male

ToshioImai

Kazuo
Takahashi

Ikuo
IshidaRepresentative
Director,
President andChief Executive
Officer
Representative
Director andSeniorManaging
Executive
Officer
Director andManaging
Executive
Officer

Age: 64
Years ofservice: 4

〇

Male

Age: 63
Years ofservice: 2

〇

〇

〇

〇

Male
Age: 61
Years ofservice: 0〇

Male
Independent
Outside

Yoshiyuki
FukudaDirector

Age: 66
Years of〇〇service: 2
MaleMizuhiro
UchidaDirector
Full-time
Audit
Committee
MemberAge: 61
Years of〇service: 0

〇

〇

〇

〇

Male
IndependentToshioKinoshita

Director
Audit
Committee
MemberOutsideAge: 74〇

Years of〇〇service: 8
Male
Independent

Director
Audit
Akio
Yamamoto Committee
MemberOutsideAge: 71
Years of

〇

〇

〇

〇

service: 8
Male
Independent

MiyukiMatobaDirector
Audit
Committee
MemberOutsideAge: 49〇

Years of〇〇〇service: 2
Female*The matrix above shows the skills that the Board of Directors expects from them among knowledge and experience they possess.
*Age and years of service are shown as of June 22, 2023.

22

(Reference)
Skill matrix of the Executive Officers who are not Directors
Nobuyuki
YoshinoKazuyaTokumoto

Managing
Executive
OfficerManaging
Executive
Officer

HidekiTakahashiManaging
Executive
Officer

RimiruHayashida

Managing
Executive
Officer

Age: 65
Years ofservice: –

〇

〇

〇

〇

〇

〇

〇

〇

Male
Age: 64
Years ofservice: –

〇

〇

Male
Age: 63
Years ofservice: –

〇

〇

〇

〇

Male
Age: 61
Years ofservice: –

〇

〇

Male

23

3. Necessary skills for the Company’s Directors and the reason they were selected
The skills considered necessary for the Company’s Board of Directors to make important decisions andsupervise management under the new vision to reach the goals of the Company's eight-year management
plan through fiscal 2030, and to promote ESG management through the priority management materiality
issues are as follows.
SkillsCorporate Management andCorporate Planning

Human Resources Value Creation

Global Business

Financial Strategy/Accounting

Legal/Compliance

Sustainability/
ESG

E (Environment)

S (Society)

G (Governance)

Business Value Creation andMarketingReason for the selection of the skills
Directors are needed who have extensive management experience andachievements to establish and review management plans aimed at realizing
the Denka’s Vision and supervise the execution of duties to achieve theseplans.
Directors are needed who have extensive knowledge and experience related tohuman resources value creation in order to realize human resource investment
and system reforms, aiming to become a company where each and every
employee can gain experience self-realization and personal growth.
Directors are needed who have extensive experience in global business tofulfill our Purpose to “making the world a better place as specialists inchemistry” with an awareness of global megatrends.
Directors are needed who have extensive knowledge and experience in thefinancial strategy and the accounting field not only to ensure the accurate
disclosure of financial information, but also to drive selection andconcentration of businesses, pursue optimal capital structure and improve
profitability and efficiency.
Directors are needed who have robust knowledge and experience in the legal
and compliance fields to ensure fair and trustworthy corporate activities
appropriately responding to increasingly complex legal systems andregulations in Japan and abroad.
Directors with extensive knowledge and experience in E (Environment) areneeded to fulfill corporate social responsibility working on the precondition
for continuation of business, “Achievement of carbon neutrality,”“Sustainable cities and fulfilling daily lives,” and “Environmental
conservation and minimization of environmental footprint.”
Directors with solid knowledge and experience in S (Society) are needed tofulfill corporate social responsibility through the provision of safe and highquality products, respect for human rights, and participation in the effort tobuild a better community.
Directors with solid knowledge and experience in G (Governance) are needed
to fulfill corporate social responsibility building a more advanced andeffective corporate governance system that ensures transparency and fairness
based on high ethical standards.
Directors are needed who have market insight based on a broad perspective,
as well as extensive business experience to ensure that all the three focus
areas, ICT & Energy, Healthcare, and Sustainable Living, will be fully madeup of “three-star businesses” that incorporate the three elements of specialty,
megatrends, and sustainability, while promoting the transformation ofbusiness portfolio, considering also selling or exiting a business that isdifficult to convert to a “three-star business.”24

R&D/Intellectual Property

Technology/Manufacturing

DX

Directors are needed who have a track record of promotion of innovation, as
well as deep knowledge in science and technology and a wealth of experiencein proprietary technologies and intellectual property, in order to createbusiness value in the three focus areas of ICT & Energy, Healthcare, andSustainable Living.
Directors are needed who are deeply familiar with technology, and who haveextensive practical experience and robust insight into manufacturing in orderto create management values through process innovation to improve
productivity, ensure trustworthiness in manufacturing, and establish a safe
work environment.
Directors are needed with a profound knowledge and extensive experience
related to digital technologies and data utilization, as well as the ability tounderstand and analyze the nature of the Group’s business, and use thisinsight to transform it, in order to promote transformation of business modeland organization through process innovation.

4. Standards of Independence for Denka Outside Directors
The Company selects candidates for Outside Directors based mainly on practical considerations, such aswhether we can expect the candidate to contribute to an increase in the corporate value of the Company as anindependent officer. Specifically, the Company has defined the following standards, in accordance with therequirements for independence stipulated in the Companies Act, in addition to the standards forindependence defined by the Tokyo Stock Exchange and other factors.
Standards of Independence for Outside Directors
The standard of independence for an Outside Director of the Company shall be persons that do not fallunder any of the categories defined in items (1) through (5) below.
(1) An executor of business (*4) at a main customer (*1), main supplier (*2), or main lender (*3)
that is a main trading partner of the Company;(2) A consultant, accountant, lawyer, or other such person that has received money or other property
exceeding ¥10 million in value per year from the Company, excluding officer compensation, inthe most recent fiscal year;(3) A person belonging to a group for whom the amount paid by the Company makes up 2% or moreof the group’s revenues or total income in the most recent fiscal year, in cases where the entity
receiving property under item (2) above is a group;(4) A person that has fallen under any of the above categories (1) through (3) within the past year;(5) A spouse or relation within the second degree of a person falling under any of the categories
below (excluding an insignificant person):i.
A person that falls under any of the above categories (1) through (4);ii.
A person that is or was an executor of business at the Company or a subsidiary of theCompany now or within the past year.
(*1) Main customer: A customer from whom the amount paid has made up 2% or more of theCompany’s revenues in the most recent fiscal year(*2) Main supplier: A supplier to whom the amount paid from the Company has made up 2% ormore of the supplier’s revenues in the most recent fiscal year(*3) Main lender: A lender that was essential for the Company’s funding, and that the Company
relied on to the extent the lender was irreplaceable, as of the end of the most recent fiscal
year(*4) Executor of business: An executive director, executive, executive officer, or other
employee, etc.

25

(Reference)
Denka’s Corporate Governance Initiatives
Basic Approach to Corporate GovernanceIn order to fulfill the expectations and trust of its many stakeholders, including shareholders, customers,
local society, and employees, based on the Denka’s Vision (a vision of the future) comprising the Core Valuethat is the Company’s DNA to serve as the foundation to support the tiers above, Purpose that serves as theNorth Star to guide the Company, and the Mission that the Company aspires to accomplish by 2030, theCompany strives to strengthen its business foundation by improving its earnings power and expanding thescope of operations, while also working to improve corporate value by making every effort to continue being
a company that can win the trust and sympathy of society.
The Company considers corporate governance as the foundation for the above, and so we have striven tostrengthen governance, in order to fulfill the responsibilities we owe to all our stakeholders, and ensure thetransparency and soundness of our management.
Current Corporate Governance System

Board of Directors and optional committees■Board of Directors (Met 15 times in fiscal 2022)
To accomplish the Company’s Mission in the Vision, the Board of Directors monitors and supervises
major operational decision-making and execution of business duties by executive officers, based on strategic
and management planning. The Board of Directors as a whole appoints candidates to be Directors in linewith the standards for the appointment of both internal and Outside Directors, based on the belief that it isimportant to appoint a good balance of people with a variety of expertise, experiences, and skills. For further
details of our approach in appointing members of the Board of Directors, please see page 21.

26

In addition, in principle, the Company has discontinued the use of executive titles, (such as Senior
Managing Director, Managing Director) for Directors, such that all Directors may focus on monitoring andsupervising the execution of business duties from an equal standpoint. Also, the Company has set the lengthof Directors’ (excluding Audit Committee Members) terms to one year, in order to facilitate flexible checks
on them at the General Meeting of Shareholders.
Additionally, the Nomination & Remuneration Advisory Committee has been established as an advisoryorgan of the Board of Directors, to strengthen the roles of the Board of Directors and foster higher standardsof objectivity and transparency. It also organizes the D&A Round Table, aimed at enriching deliberations on
major matters of particular management concern.
■Nomination & Remuneration Advisory Committee (Met 4 times in fiscal 2022)
For major management matters such as nomination, remuneration and other elements of governance, theBoard of Directors has set up the Nomination & Remuneration Advisory Committee, comprising all Outside
Directors, the Chairman and the President, to foster transparency and objectivity in management decisionmaking, informed by a wide range of opinion and advice from Outside Directors.
In fiscal 2022 this Committee received inquiries from the Board of Directors regarding the executive andgovernance structure, the formulation of a skills matrix, succession planning, and revision of remuneration
system for officers, and made recommendations and proposals regarding the results of these inquiries after
deliberations at the Committee. The committee is chaired by an Outside Director as of fiscal 2023.
[Topics] Outline of the revision of officer remuneration system
In response to the report and recommendations of the Nomination & Remuneration Advisory Committee,
the Board of Directors resolved at its meeting held on March 13, 2023 to revise the officer remuneration
system, with a focus on strengthening incentives, in order to make the system more conducive to theachievement of the “Mission 2030” management plan.
(1) Revision of Remuneration Composition Ratio / Strengthening of Short-term Incentives
Increase variable remuneration for each officer to be strongly mindful of achieving profit targetsof the management plan.
(2) Introduction of an individual performance evaluation system
Introduce an individual target management and evaluation system to encourage each officer tostrongly commit to achieving the financial/non-financial targets of the division under his/her
control, and reflect the evaluations in the remuneration.
Concept of the percentage of each component of remuneration paid to Directors (excluding
Outside Directors)

The above is the approximate ratio when operating income based on the management plan isachieved and the evaluation for individual performance-linked remuneration is standard.
(3) Introduction of stock-based remuneration for Executive Officers
Introduce a new stock-based remuneration system to raise awareness of the need to contribute tomedium- and long-term performance improvement and increase in corporate value in the samemanner as Directors.

27

■D&A Round Table (Met 7 times in fiscal 2022)
In order to facilitate in-depth discussions regarding management matters that are of particular importance,
the D&A Round Table is organized as a forum for free, open-minded, constructive discussions, exchange of
opinions and information, and strengthening of cooperation between internal and Outside Directors.
■Evaluation of the Effectiveness of the Board of Directors
At Denka, the effectiveness of the Board of Directors is analyzed and evaluated annually. As a result of
measures taken in fiscal 2022, we reaffirmed that the frequency and duration of meetings of the Board of
Directors, and that the Board size and composition (in terms of achieving the right balance of expertise,
experience, ability and diversity) was becoming more appropriate. In addition, we affirmed that themonitoring and supervision of the management were being appropriately implemented by the Board of
Directors, 44% of the members of which are Outside Directors.
On the other hand, with regard to the further enhancement of discussions at the Board of Directors
meetings, a view was expressed that there have been improvements in the monitoring and follow-up of longterm business strategies and major investment projects, yet the role of the Board of Directors needs to befurther strengthened through the use of the D&A Round Table. As for the further utilization of theNomination & Remuneration Advisory Committee, there was an opinion that while its effectiveness is
improving with more concrete discussions than in the past, in the future, we should continue to work toenhance discussions on matters such as succession planning, etc.
It was also suggested that there was room for improvement in the explanation of matters to be discussed
and reported at the Board meetings.
Looking ahead, in light of these constructive opinions, we will take steps to further improve theeffectiveness of the Board of Directors, aiming to improve medium-to-long-term corporate value, andrespond to the expectations and trust placed in us by our shareholders and numerous other stakeholders.
Audit Committee (Met 14 times in fiscal 2022)
In accordance with their fiduciary responsibilities to shareholders, Audit Committee Members and the
Audit Committee work with the support of the full-time staff of the Audit Committee Dept., whose
independence from management is ensured, to conduct audits of the execution of directors’ duties, internal
control, business duties, and accounting, by exercising statutory rights that include requesting reports on thebusinesses of the Company, investigations pertaining to business duties and accounting, and the appointment,
dismissal, non-reappointment, and remuneration of an auditing firm.
In addition, the Audit Committee forms views on matters related to the election, etc. and compensation,etc. of Directors (excluding Directors who are Audit Committee Members), including matters to be put
forward at the General Meeting of Shareholders.
Furthermore, the Company appoints candidates for Directors who are Audit Committee Members basedon its judgment that, in order for the Audit Committee to fulfill its roles and responsibilities, Audit
Committee Members should possess appropriate experience and ability as required for their duties, and thatin particular, there should be at least one person with expertise in finance and accounting.
Outside Directors
Regarding Outside Directors, the Company selects candidates based mainly on practical considerations,such as whether we can expect the candidate to contribute to an increase in the corporate value of theCompany as an independent officer, and has also defined its own standards of independence (please see page25, in accordance with the requirements for independence stipulated in the Companies Act, in addition to thestandards for independence defined by the Tokyo Stock Exchange and other factors.
In addition, by enhancing their understanding of the Company, the Company strives to create anenvironment that allows those appointed as Outside Directors to perform their roles for the sake of thesustainable growth of the Company and the increase of its corporate value.
Specifically, in addition to tours of offices, plants, and other facilities, the Company has been
implementing the following initiatives:■Objective briefings (Met twice in fiscal 2022)
Briefings are held in order to have Outside Directors understand the Company’s medium- to long-termand short-term business and research policies.

28

■Outside Officer Liaison Committee (Met 4 times in fiscal 2022)
Outside officers frankly discuss the nature of agenda and operation of the Board of Directors, as well as
the Company’s medium- to long-term issues and their solutions, from an independent standpoint and share
the results of the discussions with internal Directors, so as to contribute to management.
Strategic shareholdings■ Policy on strategic shareholdings
The Company will hold such shareholdings if it judges that they will contribute to building a stablebusiness relationship and maintaining and strengthening business alliances in accordance with its growthstrategy, thereby enhancing the Company’s corporate value over the medium to long term. The Company
will sell shareholdings that are not in line with this policy.
■ Review of strategic shareholdings by the Board of Directors
In accordance with the above policy, the Company’s Board of Directors conducts a comprehensive
review of such shares from various perspectives, including the financial condition of the issuing company,
the volume of transactions with the Company and the economic rationality of such transactions, and acomparison with the Company’s cost of capital. The purpose of shareholding of such shares is stated in the
Annual Securities Report. The Company conducts this verification on an ongoing basis each year.
As a result of this ongoing verification, the number of issues of strategic shareholdings as of March 31,
2023 decreased by 20 from the end of the previous fiscal year to 70, and the ratio to consolidated net assets
decreased by 1.68 percentage points to 9.97% from the end of the previous fiscal year.
Trends in strategic shareholdings
FY 2016
FY 2017
158th
159th
term
term
Number111
106
of issues
AmountonbalanceA
33,13436,233sheet(Millionsof yen)Total net
assetsB
227,487242,780(Millionsof yen)A/B
14.57%
14.92%FY 2018
160thterm

FY 2019
161stterm

FY 2020
162ndterm

FY 2021
163rdterm

FY 2022
164th
term

102

97

93

90

70

32,665

26,46833,24334,03429,956

250,481

254,014270,036

292,094

300,351

13.04%

10.42%

12.31%

11.65%

9.97%■ Criteria for exercising voting rights with regard to strategic shareholdings
When exercising its voting rights with regard to shareholdings held by the Company as strategic
shareholdings, in principle, while the Company basically respect the management policies and strategies of
the issuing company, each division of the Company in charge of the management of such shares considers
the business conditions, etc. of the issuing company. The Company ultimately makes a judgement examining
each proposal individually from the perspective of whether or not it will contribute to improving shareholder
value.
In particular, in the following cases, the Company will engage in dialogue with the issuing company asnecessary and make a careful decision as to whether or not to approve the proposal.
(1) When a significant deterioration in business performance has continued for a certain period of time(2) When serious misconduct has occurred(3) In any other cases in which the item of business may damage shareholder value

29

Initiatives to Corporate Governance Thus Far
PurposeTo speed up decision-making
2007
Ensure that Directors monitor and supervise theexecution of business on an equal footing
Clear separation of monitoring and supervisory
functions from the execution of business
Flexibly perform checks on directors
Step up checks on management from anexternal perspective
2008
Create system enabling appropriate advicegiving even outside of meetings of the Board of
Directors, by arranging ample exchange of
opinions
Speed up decision-making by deepening
discussions of important management matters

2015

2016

2017

Improve the governance framework and raise
standards of transparency and soundness ofmanagement
Create venues for free, vigorous andconstructive deliberations, exchange of
opinions and information and alliancestrengthening for internal and Outside
Directors and Audit & Supervisory Board
Members
Achieve optimum standards of corporate
governance to ensure sustainable growth andimprove medium to long-term corporate value
Deepen understanding of the Company’sbusiness, and stimulate debate at meetings ofthe Board of Directors
From a standpoint independent of theCompany, outside officers freely discuss theagendas and administration of Board meeting
agenda, medium- to long-term issues facing theCompany, and their solutions, and share theirviews with Inside Directors
Promote understanding of the Company’s
medium- to long-term and short-term businessand research objectives
Ensure adequate auditing and supervision ofbusiness execution by executive officers
Step up the effectiveness of the Board of
Directors

Foster greater transparency and objectivity inbusiness decision-making, with the Board of
Directors accepting diverse opinions andadvice from the outside officers with regard to
major business topics including appointments,
remuneration and other governance matters

30

MeasuresCut the number of directors by half andintroduce an executive officer system
Abolition of executive titles (such as Senior
Managing Director, Managing Director)
Reassigning the authority of business execution
and executive titles from directors to executive
officers
Shortening the length of directors’
appointments to one year
By appointing two Outside Directors, thenumber of appointments of outside officers
rises to four, including two Outside Audit &Supervisory Board Members (per statutory
requirements)
Implement regular opportunities for outside
officers to exchange opinions with top
management
Establishment of a Management Committee
comprising Directors, Audit & Supervisory
Board Members (internal), and some executive
officers
Increasing the number of Outside Directors(from two to three) and reducing the number ofmembers of the Board of Directors (by two)
To step up round-table meetings of Outside
Directors and Audit & Supervisory Board
Members formerly held twice per year, hold around-table conference of Directors and Audit& Supervisory Board Members (current D&A
Round Table)
Compilation of the Denka Corporate
Governance Guidelines
Enhance the provision of advance explanationfor outside officers regarding specific agenda
items that require adequate explanation
Holding “Outside Officer Liaison Committee”
four times per year

Holding business and research objective
briefings (currently referred to as objective
briefings) for outside officers twice a year
Clarification of the details of agenda and reportmaterials at the Board of Directors meetings
Arrangement for all Directors and all Audit &Supervisory Board Members to annually
analyze and evaluate the effectiveness of theBoard of Directors, and disclose the results in
the Corporate Governance Report
Establishment of the Management Advisory
Committee comprising all Outside Directors,
all Outside Audit and Supervisory Board
Members, the Chairman and the President(current Nomination & Remuneration Advisory
Committee)

2019

2021

PurposeFurther strengthen corporate governance andimprove corporate value by further
strengthening the supervisory role of the Boardof Directors, by enabling more rapid decisionmaking and vesting directors who are membersof the Audit Committee with voting rights at
the Board of Directors meeting
Review of regulations regarding theappointment of retirees from the office ofChairman and President as Counselors andAdvisors.
Clarify the roles of the Board of Directors andthe executive structure, further enhance theeffectiveness of discussions at Board of
Directors meetings, and further expedite its
decision-making process
Effective committee administration throughgreater independence and objectivity
Strengthening of incentives

2023

Sustainability-related activities, progress withachievement of non-financial targets and KPIs,
and responses to risks and earning
opportunities

31

Measures
Shift from the “Company with Audit &Supervisory Board” model to that of a“Company with Audit Committee”

Abolish the office of Counselor

Reduce the number of Directors from 12 to 9,
and raise the proportion of Outside Directors
on the Board of Directors to over 44%
Appoint an Outside Director as chair of theNomination & Remuneration Advisory
Committee
Revise the officer remuneration system- Revision of remuneration composition
ratio and strengthening of short-term
incentives- Introduction of an individual performance
evaluation system- Introduction of stock-based compensation
for Executive Officers
Established the Sustainability Committee, with
Outside Directors and full-time Audit
Committee Members as observers

[Attached Documents]

Business Report(From April 1, 2022 to March 31, 2023)

1. Overview of the Group(1)

Business Progress and Results
During the fiscal year under review, the Japanese economy showed signs of recovery as consumer
spending and capital investment picked up. However, as commodity prices soared even higher and theyen rapidly depreciated, uncertainty about the future grew. The world economy showed increasing signsof a slowdown, as prices rose in many countries, the Ukraine crisis dragged on, and China's zero-COVID
policy curbed economic activity.
Against this economic backdrop, in order to realize “The Denka Value” corporate philosophy, theGroup pushed ahead with “Business Portfolio Shift” and “Introduction of Innovative Processes,” twostrategies set forth in our “Denka Value-Up” five-year management plan launched in fiscal 2018, andfocused its efforts on expanding businesses and enhancing profitability, under the three elements of our
growth vision, namely, “Specialty-Fusion Company,” “Sustainable Growth,” and “Sound Growth.” The
Group designated the two years from fiscal 2021 as an important preparatory period for rapid growth
towards the vision of the next management plan.
As a first step towards being an indispensable corporate member of society, we engaged in three“Value-Up” initiatives, concerning our business, the environment, and human resources.
As a result, net sales totaled ¥407,559 million, up ¥22,709 million (5.9%) from the previous year.
Although demand for some of our core products declined due to the global economic slowdown, we
revised our selling prices in response to higher raw material and fuel prices and also benefitted from theweaker yen.
In terms of earnings, although we revised selling prices in response to rising raw material and fuelprices, sales volumes for some mainstay products declined and costs associated with the development ofspecialty products climbed, resulting in operating income of ¥32,324 million (down ¥7,799 million, or
19.4% year on year) and an operating income ratio of 7.9% (down 2.5 points). Ordinary income was¥28,025 million (down ¥8,449 million, or 23.2% year on year). Profit attributable to owners of parent was¥12,768 million (down ¥13,244 million, or 50.9%), reflecting extraordinary losses, including impairment
losses on manufacturing facilities due to the decision to withdraw from the cement business as part of the“Business Portfolio Shift.”(Reference)
Sales
Operating income
Ordinary income
Profit attributable to ownersof parent¥407.6 billion(YoY 5.9%)¥32.3 billion(YoY -19.4%)¥28.0 billion(YoY -23.2%)¥12.8 billion(YoY -50.9%)

Results of operations by division are described below.
Electronics & Innovative Products Division(Sales: ¥93,541 million; Operating Income: ¥17,975 million)
Principal products: Electronic packaging materials, fine ceramics, fused silica, acetylene black,electronic circuit substrates, industrial tapes, etc.

32

Sales of high purity conductive carbon black increased due to the same level of demand as theprevious year and the revision of sales price. Sales of silicon nitride also increased due to steadydemand for use in xEVs. On the other hand, sales volume of high-performance films and spherical fusedsilica filler for electronic components and semiconductor-related fields decreased due to decline indemand for consumer products such as PCs and smartphones. Demand for spherical alumina for xEV
and 5G-related applications remained strong, but overall sales volume was down year on year due to a
decline in demand for consumer applications. In addition, sales of HITTPLATE aluminum substrates forautomotive applications and ALONBRIGHT SiAlON phosphors for LED were also down year on year.
As a result, division sales increased ¥3,388 million or 3.8% year on year to ¥93,541 million, while
operating income decreased ¥680 million or 3.6% year on year to ¥17,975 million.
Life Innovation Division(Sales: ¥47,525 million; Operating Income: ¥14,378 million)
Principal products: Vaccines, diagnostic reagents, oncolytic virus agents, joint function improvers,
etc.
Shipments of influenza vaccines increased year on year due to expanded production capacity. On theother hand, shipments of COVID-19 rapid antigen test kits and dual COVID-19 and influenza test kitsincreased as demand for testing at hospitals expanded due to the spread of infection, but selling prices
fell sharply due to a reduction in insurance points, resulting in lower sales. In addition, sales of othertest reagents decreased due to a decline in demand for tests in China following the zero-COVID policy
and restriction of activities.
As a result, division sales increased ¥1,427 million or 3.1% year on year to ¥47,525 million, but
operating income decreased ¥1,117 million or 7.2% year on year to ¥14,378 million.
Elastomers & Infrastructure Solutions Division(Sales: ¥123,827 million; Operating Loss: ¥1,100 million)
Principal products: Chloroprene rubber, cement, special cement additives, fertilizers, calcium carbide,
fire resistant materials, environmental materials, etc.
The division was significantly affected by the rise in raw material and fuel prices triggered by thecrisis in Ukraine. Sales volume of chloroprene rubber decreased year on year, yet sales increased due tothe revision of selling prices in response to the rise in raw material and fuel prices. In addition, sales offertilizers increased year on year, and sales of special cement additives were generally in line with theprevious year. On the other hand, cement sales declined due to a delay in passing on the sharp rise in
raw material and fuel prices.
As a result, division sales increased ¥16,948 million or15.9 % year on year to ¥123,827 million, andoperating loss was ¥1,100 million (operating loss in the previous fiscal year was ¥3,473 million.)
Polymer Solutions Division(Sales: ¥127,569 million; Operating Loss: ¥1,228 million)
Principal products: Styrene monomer, polystyrene resin, ABS resin, CLEAREN, heat-resistant resin,transparent resin, POVAL, synthetic fiber for wigs, food packaging materials, etc.
The division revised selling prices of each product in response to rising raw material and fuel prices.
In terms of volume, sales of ABS resins and transparent resins decreased due to the impact ofautomobile production cutbacks and sluggish consumer demand associated with the slowdown of theChinese economy, and demand for MS resins for TVs and monitors of Denka Singapore Pte. Ltd.
decreased. Also, sales volume of sheets for food wrapping materials and its processed products, and the
TOYOKALON® synthetic fiber for wigs also decreased year on year. Also, the cost of styrene
monomer increased due to the implementation of periodic repairs once every four years.
As a result, division sales increased ¥991 million or 0.8% year on year to ¥127,569 million, andoperating loss was ¥1,228 million (operating income in the previous fiscal year was ¥7,905 million.)33

Others Division(Sales: ¥15,094 million; Operating Income: ¥2,512 million)
Principal business: Plant engineering etc.
Transaction volumes of Akros Trading Co. Ltd. and other trading companies remained roughly
unchanged year on year.
As a result, division sales decreased ¥46 million or 0.3% year on year to ¥15,094 million, andoperating income increased ¥607 million or 31.9% year on year to ¥2,512 million.
(2)

Capital Investment
In the “Denka Value-Up” management plan, the Group actively implemented strategic investment
under the two growth strategies of “Business Portfolio Shift” and “Introduction of Innovative
Processes,” to meet numerical targets. During the five-year term of the management plan, from fiscal
2018 to fiscal 2022, the Group planned cumulative capital investment to reach ¥210 billion, and in thefiscal year under review, the Group carried out capital investments totaling ¥39,369 million.
In the Electronics & Innovative Products Division, capital investments of ¥18,740 million weremade for construction projects to increase the production capacity of high-purity conductive carbon
black at the Company’s Chiba Plant and silicon nitride at the Company’s Omuta Plant.
In the Life Innovation Division, capital investments of ¥2,540 million were made for the Company’s
Gosen Site and others.
In the Elastomers & Infrastructure Solutions Division, capital investments of ¥11,150 million weremade in the Company’s Omi Plant and others.
In the Polymer Solutions Division, capital investments of ¥6,954 million were made in the
Company’s Chiba Plant and others.
Major construction projects completed during the fiscal year under review include the work toincrease production capacity of spherical alumina at Denka Advantech Pte., Ltd., a subsidiary in
Singapore, and the installation of a high-efficiency gas turbine generator at the Company’s Chiba Plant.
Construction projects underway in the Life Innovation Division include the work to enhance
production capacity of rapid antigen diagnostic kits and test reagents at the Company’s Gosen Site.
Construction projects underway in the Electronics & Advance Products Division include the work toenhance production capacity of the next-generation functional spherical fillers at the Company’s Omuta
Plant, the work to install new production facilities for heat-dissipating sheets at the Company’s
Shibukawa Plant as well as the work to expand production capacity of spherical silica at Denka
Singapore Pte., Ltd.

(3)

Financing
In fund procurement, the Company did not obtain any financing through the issue of new shares or
corporate bonds during the fiscal year under review.

(4)

Significant Business Reorganization
Effective March 31, 2023, the Company transferred the Company’s cement and cement productrelated sales business to TD Cement Sales Co., Ltd. (wholly-owned subsidiary of the Company) byconducting an absorption-type company split and transferred all the shares of TD Cement Sales Co.,
Ltd. to Taiheiyo Cement Corporation. The Company plans to cease cement production and limestonemining by around first half of 2025, and completely withdraw from the cement business.

(5)

Issues to be Addressed
Since fiscal 2018, the Company has been striving, under the “Denka Value-Up” five-year management
plan, to become a “fusion of highly competitive specialty businesses that are unaffected by the terms oftrade.” As a result, we have broken our profit records three times in the past five years, and in fiscal 2022
total operating income in the environment and energy field and the healthcare field, our priority fields,
was almost double the figure for fiscal 2017, just before we launched “Denka Value-Up.” Here we would
like to describe some of the recent initiatives implemented under the “Denka Value-Up” plan.
First, in the environment and energy area, we determined to make an additional investment in thesilicon nitride facilities at the Company’s Omuta Plant, which started operation in March 2023, to increase
production by 1.5 times. Our silicon nitride is characterized by the high thermal conductivity, high34

strength, high heat resistance, and also light weight thanks to our proprietary high-temperature sinteringand nitriding technologies. It has been highly demanded in automotive applications, which have strict
requirements for performance. The demand for conventional electronic substrates is rapidly increasing
with the progress of electrification of automobiles, while at the same time the demand for the use of ballbearings for motors is shifting from conventional materials. It is an urgent need to secure a stable supply,
and as a leading manufacturer of silicon nitride, we will further strengthen our production system.
Second, in the healthcare area, we decided to make a strategic investment of approximately ¥12billion in the Company’s Gosen Site and Niigata Plant in order to strengthen the business foundationand increase supply capacity for G47Δ (Delta) virus agents for cancer treatment. The product is aformulation of live virus itself and requires advanced technology including large-scale virus culture andtesting techniques. We have been developing and manufacturing vaccines and test reagents for viral
infections for many years, and our technology and know-how are utilized to develop and manufacture
G47Δ. In the future, we intend to utilize this investment to establish a presence as a contract
manufacturer and developer of pharmaceuticals, focused on viral agents.
Moreover, we transferred our cement sales business to a newly established wholly owned subsidiaryand then transferred all shares of the subsidiary to Taiheiyo Cement Corporation as of March 31, 2023.
The cement produced at the Company’s Omi Plant is sold by the new company under the brand name of
Taiheiyo Cement from April 1, 2023. We also decided to terminate cement production by around the firsthalf of 2025 and to withdraw completely from in-house limestone mining and cement manufacturing
operations. We entered the cement business in 1954. Accepting by-products generated during the
manufacturing of other products in the plant as well as waste from outside the Company, and effectively
utilizing them as raw fuel for cement, we established a unique “carbide chain” that enabled us to gain
competitiveness of products and pursue zero emissions in the plants. In recent years, we are in a difficult
situation where our cement business has been affected by sluggish domestic demand, and upgrading of
aging facilities and large investment for carbon neutrality are inevitable. We positioned our cementbusiness as a commodity business in need of restructuring and have been considering structural reforms.
As a result, we came to the conclusion that it would be difficult to maintain and grow the business in the
future by the Company alone, and decided to carry out portfolio reforms.
We have thus steadily promoted the initiatives under the “Denka Value-Up” management plan andachieved certain results. However, as a result of sluggish profitability in some of our core businesses
during the last fiscal year, our earnings unfortunately declined overall, and we still have some way to go
to complete the “specialization” of our businesses.
In these circumstances, a new “Vision” and a new management plan, “Mission 2030,” were launchedthis fiscal year. Under the three core values of Initiative, Integrity, and Empathy, we have defined as our
Purpose that will guide us: “Make the world a better place as specialists in chemistry.” We also definedbusinesses that incorporated the three elements of specialty, megatrends, and sustainability as “three-starbusinesses” and determined to make our business portfolio concentrated on these “three-star businesses”
by 2030. We have also set specific financial and non-financial targets for 2030 in the three-fold initiativesof “Business Value Creation,” “Human Resources Value Creation,” and “Management Value Creation.”
We aim to steadily achieve these goals and accomplish our new management plan, “Mission 2030.”
As we launched the new “Vision” and management plan, we also created a corporate message,“Possibility of chemistry” as a way to communicate our thoughts clearly both internally and externally.
As a unique and world-class company that we can be proud of, we will aim to make the world a better
place as specialists in chemistry.

35

(6)

Financial Position and Results of Operations
Item

161st term(Millions of yen, unless otherwise stated)
162nd term
163rd term
164th term(from April 1, 2019 to (from April 1, 2020 to (from April 1, 2021 to (from April 1, 2022 toMarch 31, 2020)
March 31, 2021)
March 31, 2022)
March 31, 2023)

Net sales
380,803354,391
384,849
407,559
Operating income
31,58734,72940,12332,324
Ordinary income
30,03432,14336,47428,025
Profit attributable to22,70322,78526,012
12,768owners of parent
Net income per share
262.62264.24301.67148.8(yen)Total assets
501,448
526,035
557,646
592,158
Total net assets
254,014270,036
292,094
300,351
Net assets per share
2,906.95
3,101.92
3,345.34
3,438.28(yen)
Total shareholders’
50.0
50.8
51.7
50.1
equity ratio (%)
Return on equity
9.1
8.8
9.4
4.4
(ROE) (%)
Total dividends paid
10,785
10,785
12,5108,627
Dividends per share
125.00125.00145.00100.00(yen)
Notes: 1. Net income per share is calculated using the average number of shares issued andoutstanding excluding treasury stock. Net assets per share are calculated using thenumber of shares issued and outstanding at the end of the fiscal year excluding
treasury stock.
2. For total dividends paid and dividends per share for the 164th term, the sum of theinterim dividend paid in December 2022 and the dividend proposed for resolution at
this Ordinary General Meeting of Shareholders is indicated.

36

(7) Significant Subsidiaries (as of March 31, 2023)
1) Significant subsidiaries
Company name

CapitalDenka Chemicals Holdings
Asia Pacific Pte., Ltd.

USD 68,700 thousand

Denka Singapore Pte., Ltd.

SGD 69,410 thousand

Denka Advantech Pte., Ltd.

SGD 17,000 thousand

Denal Silane Co., Ltd.

JPY 500 million

Denka Advanced Materials(Suzhou) Co., Ltd.

CNY 55,440 thousand

Denka Electronic Materials
Dalian Co., Ltd.

JPY 1,000 million

Denka Advanced Materials
Vietnam Co., Ltd.

USD 12,000 thousand

Denka Performance
Elastomer LLC

USD 121,000 thousand

Hinode Kagaku Kogyo

JPY 300 million

Nishi-nihon Koatsu Gas Co.,Ltd.

JPY 80 million

Denka RENOTEC Co., Ltd.

JPY 50 million

Denka Azumin Co., Ltd.

JPY 300 million

Denka Inorganic Materials
Tianjin Co., Ltd.
Denka Infrastructure
Malaysia Sdn Bhd.
Denka Construction Solutions
Malaysia Sdn Bhd.

JPY 250 million
MYR 8,649 thousand
MYR 1,500 thousand

PT. Hissan Trading Indonesia IDR 5,372,640 thousand
DENKA Polymer Co., Ltd.
Denka Astec Co., Ltd.

JPY 2,080 million
JPY 50 million

Denka Chemicals Shanghai
Co., Ltd.

USD 2,000 thousand

Denka Chemicals GmbHEUR 256 thousand

37

The
Company’s
percentage ofequityparticipation

Principal business

Regional headquarters forSoutheast and South Asia
Manufacturing and sales of
100.0
acetylene black and functional(100.0)resin products
Manufacturing and sales of
100.0 fused silica, spherical(100.0) alumina, and synthetic fiber
for wigs and hairpieces
Manufacturing and sales of
51.0
monosilane gas, etc.
Manufacturing, processing,
100.0 and sales of electronic
packaging materials
Processing and sales of
100.0
electronic materials
Manufacturing and sales of
100.0
electronic packaging materials(100.0)and vinyl tapes
70.0 Manufacturing and sales of(70.0) synthetic rubbers
Manufacturing and sales of
100.0 fertilizers and chemical
products
Manufacturing and sales of
99.6
high-pressure gas
Repair, design, engineering
100.0 and management work forconcrete structures
Manufacturing and sales of
100.0 fertilizers and agricultural
materials
Manufacturing and sales of
100.0
special cement additives
100.0 Manufacturing and sales of(100.0) construction chemicals
100.0 Manufacturing and sales of(100.0) construction chemicals
100.0 Sales of special cement(100.0) additives, etc.in Indonesia
Manufacturing and sales of
100.0 various packaging materials
and plastic containers
Manufacturing, processing,
100.0
and sales of rain gutters
Sales of various products and100.0 headquarters for Group
companies in China
Import, export and sales of
100.0 chemical and electronics
products
100.0

Company name

The
Company’s
percentage ofequityparticipation

CapitalPrincipal business

Design and engineering of
100.0 various industrial facilities,
transportation facilities, etc.
Sales of inorganic industrial
products, organic industrial
Akros Trading Co. Ltd.
JPY 1,200 million
76.8 products, civil engineeringand construction materials,
interior materials, etc.
Akros Trading China Co.,
100.0 Sales of electronic packaging
USD 300 thousandLtd.
(100.0) materials, etc.
Sales of resins andAkros Trading Taiwan Co.,
100.0
TWD 29,000 thousandsemiconductor-related
Ltd.
(100.0)materials, etc.
Note: The Company’s percentage of equity participation is calculated by dividing the number ofshares held by the Company by the number of shares issued and outstanding. The figure
within parentheses indicates the percentage of indirect ownership by subsidiaries.
Denka Consultant &Engineering Co., Ltd.

JPY 50 million

2) Significant affiliates
Company nameToyo Styrene Co., Ltd.
Denak Co., Ltd.
Kurobegawa Power Plant

The
Company’s
percentage ofequityparticipation

CapitalJPY 5,000 million
JPY 600 million
JPY 3,000 million

38

Principal business

Manufacturing processing
50.0 sales of polystyrene resin andstyrene-based special resin.
Manufacturing and sales of
50.0
monochloroacetic acid
Operation of electric power
50.0 business and other incidental
business

(8) Principal Business Details (as of March 31, 2023)
The Company manufactures and sells the following products.
Business division

Main productsElectronics & Innovative
Products Division

Electronic packaging materials, fine ceramics, fused silica, acetylene
black, electronic circuit substrates, industrial tapes, etc.
Vaccines, diagnostic reagents, oncolytic virus agents, joint function
improvers, etc.

Life Innovation Division
Elastomers &Infrastructure Solutions
Division
Polymer Solutions Division
Others Division(9)

Chloroprene rubber, cement, special cement additives, fertilizers,
calcium carbide, fire resistant materials, environmental materials, etc.
Styrene monomer, polystyrene resin, ABS resin, CLEAREN, heatresistant resin, transparent resin, POVAL, synthetic fiber for wigs, foodpackaging materials, etc.
Plant engineering etc.

Principal Offices and Factories (as of March 31, 2023)
Company namePrincipal offices
Head Office:1-1, Nihonbashi-Muromachi 2-chome, Chuo-ku,
TokyoBranches:
Tokyo, Osaka, Nagoya, Fukuoka, Kanetsu(Saitama) Sapporo
Denka Co., Ltd.
Plants:Omi (Itoigawa, Niigata Prefecture), Omuta, Chiba(Ichihara, Chiba Prefecture), Shibukawa, Ofuna(Kamakura, Kanagawa Prefecture), Isesaki, Gosen
Research Institutes: Denka Innovation Center (Machida, Tokyo)
Denka Chemical Holdings
Head Office: Singapore
Asia Pacific Pte., Ltd.
Denka Singapore Pte., Ltd. Head Office and Plants: Singapore
Denka Advantech Pte., Ltd. Head Office and Plant: Singapore
Denal Silane Co., Ltd.
Head Office: Chuo-ku, Tokyo
Denka Advanced Materials
Head Office and Plant: Suzhou, Jiangsu, China(Suzhou) Co., Ltd.
Denka Electronic Materials
Head Office and Plant: Dalian, Liaoning, China
Dalian Co., Ltd.
Denka Advanced Materials
Head Office and Plant: Hung Yen, Vietnam
Vietnam Co., Ltd.
Denka Performance
Head Office and Plant: Louisiana, United States
Elastomer LLC
Hinode Kagaku Kogyo
Head Office and Plant: Maizuru, Kyoto Prefecture
Nishi-nihon Koatsu Gas
Head Office: Fukuoka, Fukuoka PrefectureCo., Ltd.
Denka RENOTEC Co.,
Head Office: Chuo-ku, TokyoLtd.
Denka Azumin Co., Ltd.
Head Office and Plant: Hanamaki, Iwate Prefecture
Denka Inorganic Materials
Head Office and Plant: Tianjin, China
Tianjin Co., Ltd.
Denka Infrastructure
Head Office and Plant: Selangor, Malaysia
Malaysia Sdn Bhd.
Denka Construction
Solutions Malaysia Sdn
Head Office and Plant: Selangor, Malaysia
Bhd.
PT. Hissan Trading
Head Office: Jakarta, Indonesia
Indonesia

39Company name
DENKA Polymer Co., Ltd.
Denka Astec Co., Ltd.
Denka Chemicals Shanghai
Co., Ltd.
Denka Chemicals GmbH
Denka Consultant &Engineering Co., Ltd.
Akros Trading Co., Ltd.
Akros Trading China Co.,Ltd.
Akros Trading Taiwan Co.,Ltd.

Principal offices
Head Office: Koto-ku, Tokyo
Plants: Sakura, Katori (Tako-machi, Chiba Prefecture), Goi (Ichihara,
Chiba Prefecture)
Head Office: Minato-ku, Tokyo
Plant: Kasai, Hyogo Prefecture
Head Office: Shanghai, China
Head Office: Düsseldorf, Germany
Head Office: Ichihara, Chiba Prefecture
Head Office: Minato-ku, Tokyo
Head Office: Shanghai, China
Head Office: Hsin-Chu, Taiwan(10) Employees (as of March 31, 2023)
1) The Group
Business segment
Number of employees
1,628
[180]
Electronics & Innovative Products Division
Life Innovation Division
979
[280]
Elastomers & Infrastructure Solutions Division
1,541
[242]
Polymer Solutions Division
1,187
[209]
Others Division
688
[158]
Corporate (common)
383
[67]
Total
6,406 [1,136]
Notes: 1. The number of employees indicated is the number of full-time employees and theannual average number of temporary employees is indicated in brackets.
2. The number of employees indicated for “Corporate (common)” is the number of
employees who belong to administrative divisions that cannot be classified into a
specific business.
2) The Company
Increase (Decrease)from the previous
Average age
Average service years
fiscal year-end
4,198 [765]117 [39]
40.7
16.4
The number of employees indicated is the number of full-time employees and the annual
average number of temporary employees is indicated in brackets.

Number of employees
Note:

40

(11) Principal Lenders (as of March 31, 2023)
LenderOutstanding borrowings (Millions of yen)
Syndicated loan
74,000Mizuho Bank, Ltd.
20,119The Norinchukin Bank
6,065
Sumitomo Mitsui Banking Corporation
5,218
MUFG Bank, Ltd.
3,981
Note: The syndicated loan is managed by Mizuho Bank, Ltd. and Sumitomo Mitsui Banking
Corporation and is co-financed.
(12) Other Significant Matters concerning the Group’s Current Situation
Not applicable.

41

2. Status of Shares (as of March 31, 2023)(1) Total Number of Authorized Shares

290,000,000 shares(2) Shares of Common Stock Issued

88,555,840 shares(including 2,280,095 shares of treasury stock)(3) Number of Shareholders

51,889(4) Major Shareholders
Number of shares
held(hundred shares)
162,786
85,40432,158

Shareholder name

Percentage ofshares held
(%)
18.87
9.90
3.73

The Master Trust Bank of Japan, Ltd. (Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)
Mizuho Trust & Banking Co., Ltd. Retirement Benefit
Trust Mizuho Bank Account(Account re-entrusted by Custody Bank of Japan, Ltd.)
National Mutual Insurance Federation of Agricultural
29,007
3.36
Cooperatives
TAIJU LIFE INSURANCE COMPANY LIMITED
23,816
2.76
SSBTC CLIENT OMNIBUS ACCOUNT
17,141
1.99
STATE STREET BANK AND TRUST COMPANY
13,9921.62505001
Denka Employee Stockholding Association
13,308
1.54
JP MORGAN CHASE BANK 385781
11,532
1.34
Custody Bank of Japan, Ltd. (Trust Account 4)
11,2951.31
Notes: 1. 2,280,095 shares of treasure stock have been excluded from the above list of major
shareholders.
2. Treasury stock is excluded for calculation of the percentage of shares held.
(5) Other Significant Matters concerning Shares
Not applicable.

3. Matters concerning the Company’s Stock Acquisition Rights (as of March 31, 2023)
Not applicable.

424. Company Officers(1)

Directors (as of March 31, 2023)
Name
Manabu Yamamoto
Toshio Imai

Position
Chairman and
Representative
Director
Representative
Director, President

Tetsuya Shinmura

Director

Kazuo Takahashi

Director

Responsibilities and significant concurrent positions

President and Chief Executive Officer
Senior Managing Executive Officer
Chief Technical Officer (CTO)
In charge of Purchasing Dept., Logistics Dept.,
Production & Process Technology Dept.,
Engineering Dept., Digital Strategy & Innovation Dept.
Managing Executive Officer
Chief Compliance Officer (CCO)
Chief Human Resource Officer (CHRO)In charge of HR Dept., Corporate Planning Dept.,
Corporate Communications Dept., Denka Corporation,
Denka Chemicals GmbH

Yoshiyuki Fukuda

Director (Outside)
Director (Full-time
Masaharu Suzuki
Audit Committee
Member)Director (Outside)
Representative Director of Global Professional Partners
Toshio Kinoshita(Audit Committee
Outside Director of TACHI-S CO., LTD.
Member)Director (Full-time
Akio Yamamoto
Audit Committee
Member)Director (Outside)
General Manager, Intellectual Property and Legal Div.,
Miyuki Matoba(Audit Committee
General Affairs H.Q., and compliance supervisor of
Member)
NITTO KOHKI CO., LTD.
Notes: 1. Directors Mr. Yoshiyuki Fukuda, Mr. Toshio Kinoshita, Mr. Akio Yamamoto, and Ms.
Miyuki Matoba are outside directors as stipulated in Article 2, Item 15 of theCompanies Act.
2. Director who is an Audit Committee Member, Mr. Toshio Kinoshita is a certified
public accountant, and has an adequate level of knowledge regarding finance andaccounting.
3. Director who is an Audit Committee Member, Mr. Toshio Kinoshita retired as Outside
Audit & Supervisory Board Member of Panasonic Holdings Corporation in June 2022.
4. The Company has appointed Director Mr. Masaharu Suzuki as a Full-time Audit
Committee Member, in order to enhance the effectiveness of audits through better
information gathering and sufficient coordination with the Internal Control Dept., etc.,
and thereby strengthen audit and supervisory functions.
5. The Company designated Directors Mr. Yoshiyuki Fukuda, Mr. Toshio Kinoshita, Mr.
Akio Yamamoto, and Ms. Miyuki Matoba as independent officers as defined by Tokyo
Stock Exchange, Inc. and notified it of the designation

43

(Reference) Executive Officers (as of April 1, 2023)
Title
Name
Responsibility
Toshio Imai
President and Chief
Executive Officer
Chief Technical Officer (CTO)
Senior Managing
Kazuo Takahashi
Chief Compliance Officer (CCO)
Executive Officer
In charge of Purchasing Dept., Logistics Dept.,
Production & Process Technology Dept.,
Engineering Dept., Digital Strategy & Innovation Dept.
Managing Executive Nobuyuki Yoshino
Chief Scientific Officer (CSO)
Officers
General Manager, New Business Development
President of Denka Performance Elastomer LLC
Kazuya Tokumoto
Hideki Takahashi
General Manager, Life Innovation
Rimiru Hayashida

Yasuo Nakatomi

In charge of Accounting & Finance Dept., Finance
Dept.
Chief Human Resource Officer (CHRO)In charge of HR Dept., Corporate Planning Dept.,
Corporate Communications Dept., Denka Corporation,
Denka Chemicals GmbH, Chinese Business
General Manager, Gosen Site

Yukio Sasagawa

General Manager, Omuta Plant

Hideki Toya

Michio Kawamura

Assistant to New Business Development
General Manager, Innovation CenterIn charge of Supervisor of Environmental Measures
Promotion
Environment and Safety Dept., Sustainability
Promotion Dept., Quality Assurance Dept.
Managing Director, DCHA, DSPL, DAPL

Masahiro Kawai

General Manager, Chiba Plant

Takeshi Hagiwara

General Manager, Omi Plant

Masahiro Omata

General Manager, Elastomers & Infrastructure
Solutions
General Manager, Polymer Solutions

Ikuo Ishida

Executive Officers

Masanobu Kosaka

Kei Hara
Ken Watanabe
Hiroto Horiuchi

In charge of Administrative Dept., Legal Dept., Internal
Control Dept., Secretary Dept.
General Manager, Electronics & Innovative Products

Tetsuo Noguchi

General Manager, Shibukawa Plant

Notes: DCHA: Denka Chemicals Holdings Asia Pacific Pte., Ltd.
DSPL: Denka Singapore Pte., Ltd.
DAPL: Denka Advantech Pte., Ltd.

44

(2) Summary of Liability Limitation Agreements
Based on Article 427, Paragraph 1 of the Companies Act, the Company currently has liability
limitation contracts with Directors Mr. Yoshiyuki Fukuda, Mr. Toshio Kinoshita, Mr. Akio Yamamoto,and Ms. Miyuki Matoba that limit their liability for damages provided for in Article 423, Paragraph 1 ofsaid Act. The limit of liability under the contract is set to a predefined amount of ¥5 million or more or
the amount stipulated by laws and regulations, whichever is higher.
(3) Summary of Directors and Officers Liability Insurance
The Company has entered into a directors and officers liability insurance contract with an insurancecompany as stipulated in Article 430-3, Paragraph 1 of the Companies Act. The Company’s Directors(including Directors who are Audit Committee Members), Executive Officers, and Directors, Corporate
Auditors and Executive Officers of some of the Company’s Group companies are insured parties under
the contract. As a rule, the insured parties are not responsible for paying insurance premiums.
The Directors and officers liability insurance covers legal damages and litigation expenses in theevent that a claim for damages is made against the insured persons due to an act committed by aninsured person in his/her capacity as such. However, measures have been implemented to ensure thatproper execution of duties by officers, etc. is not impaired. These include an exclusion where theCompany makes a claim for damages against the insured parties, as well as the establishment of adeductible amount.
(4) Remuneration and Other Payments to Directors
1) Policy on the determination of remuneration and other payments to individual Directors
The Board of Directors of the Company has decided on the following policy for determining
remuneration and other payments to individual Directors (hereinafter referred to as the “Decision
Policy”), after receiving recommendations and proposals from the Nomination & Remuneration
Advisory Committee.
[Basic Policy]
Remuneration for individual Directors (excluding Directors who are Audit Committee Members; thesame applies hereinafter) shall be in accordance with each Director’s roles and responsibilities, and shallbe determined by the Board of Directors after receiving recommendations and proposals from theNomination & Remuneration Advisory Committee, and set forth in internal regulations, in order toenhance objectivity and transparency.
The structure of Directors’ remuneration shall, in addition to a fixed monthly amount of basic
remuneration, consist of performance-linked cash remuneration, designed to increase motivation to
improve the financial results for each fiscal year, and stock remuneration, designed to increase
motivation to contribute to improving medium- and long-term performance and enhancing corporate
value. These function as sound incentives to maintain growth. However, in view of the duties performedby Outside Directors and non-executive Directors, remuneration for these Directors shall consist solelyof basic remuneration.
[Policy on the determination of remuneration and other payments to individual Directors]i) Policy on the determination of the amount and calculation method of basic cash remuneration
Basic remuneration shall be determined in accordance with each Director’s roles andresponsibilities, taking into consideration factors such as the level of employee pay. It shall be paidin a fixed amount every month.
ii) Policy on the determination of the performance indicators, amount and calculation method of
performance-linked cash remuneration
The total amount of performance-linked remuneration shall be determined with reference toconsolidated operating income, a key indicator under the Company’s management plan. It shall thenbe allotted in accordance with each Director’s roles and responsibilities, and paid promptly after thefinancial results are finalized. However, if consolidated operating income is below a certain level, ora massive extraordinary loss is recorded, or if a serious compliance breach has occurred, then no
payment shall be made, or the payment amount shall be reduced.
iii) Policy on the determination of the details, amount and calculation method of stock remuneration
The stock remuneration scheme shall utilize a trust structure. Points shall be granted to Directors
each month in accordance with rank, based on stock delivery regulation established by theCompany, and shares of the Company’s stock shall be delivered to Directors through the trust on
retirement, based on the number of points they have accumulated. The maximum amount of money45

to be contributed by the Company to the trust for the purpose of delivering the Company’s shares to
Directors shall be ¥40 million per year.
iv) Policy on the determination of the proportions of the total amount of remuneration paid as basic
remuneration, performance-linked remuneration, and stock remuneration
No policy is established specifically to determine the proportion of Directors’ remuneration to be
paid as basic remuneration, performance-linked remuneration, and stock remuneration. However, if
the operating income target under the management plan is achieved, then the proportions will beapproximately 70%, 20% and 10% respectively.
v) Method used to determine remuneration and other payments to individual Directors
The details of remuneration and other payments to individual Directors shall be determined by the
Board of Directors, after receiving recommendations and proposals from the Nomination &Remuneration Advisory Committee, and set forth in internal regulations.
2) Reason why the details of remuneration and other payments to individual Directors are judged by
the Board of Directors to be in accordance with the Decision Policy
The Board of Directors establishes the details of remuneration in internal regulation, in accordancewith the Decision Policy, after receiving recommendations and proposals from the Nomination &Remuneration Advisory Committee. Remuneration for individual Directors is determined based on theseregulations. Therefore, the Board of Directors deems it to be in accordance with the Decision Policy.
The Company’s Board of Directors, at its meeting held on March 13, 2023, resolved to make thefollowing changes to the Company’s decision-making policy, based on the report and recommendationsof the Nomination & Remuneration Advisory Committee, effective as of April 1, 2023. Changes areunderlined.
[Basic Policy]
Remuneration for individual Directors (excluding Directors who are Audit Committee Members; thesame applies hereinafter) shall be in accordance with each Director’s roles and responsibilities andperformance, and shall be determined by the Board of Directors after receiving recommendations andproposals from the Nomination & Remuneration Advisory Committee, and set forth in internal
regulations, in order to enhance objectivity and transparency.
The structure of Directors’ remuneration shall, in addition to a fixed monthly amount of basic
remuneration, consist of performance-linked cash remuneration, designed to increase motivation to
improve the Company-wide and individual performance for each fiscal year, and stock remuneration,
designed to increase motivation to contribute to improving medium- and long-term performance andenhancing corporate value. These function as sound incentives to maintain growth. However, in view ofthe duties performed by Outside Directors and non-executive Directors, remuneration for these Directors
shall consist solely of basic remuneration.
[Policy on the determination of remuneration and other payments to individual Directors]i) Policy on the determination of the amount and calculation method of basic cash remuneration
Basic remuneration shall be determined in accordance with each Director’s roles andresponsibilities, taking into consideration factors such as the level of employee pay. It shall be paidin a fixed amount every month.
ii) Policy on the determination of the performance indicators, amount and calculation method of
performance-linked cash remuneration
Performance-linked remuneration shall consist of Company-wide performance-linked remunerationand individual performance-linked remuneration. However, the Chairman and President shallreceive only Company-wide performance-linked remuneration.
The total amount of Company-wide performance-linked remuneration shall be determined withreference to consolidated operating income, a key indicator under the Company’s management plan.
It shall then be allotted in accordance with each Director’s roles and responsibilities, and paid
promptly after the financial results are finalized. However, if consolidated operating income isbelow a certain level, or a massive extraordinary loss is recorded, or if a serious compliance breachhas occurred, then no payment shall be made, or the payment amount shall be reduced. Individual
performance-linked remuneration shall be linked to each Director’s individual evaluation of theachievement and others of financial and non-financial targets, and shall be paid promptly after the46

financial results are finalized in accordance with internal regulations determined by the Company inadvance.
iii) Policy on the determination of the details, amount and calculation method of stock remuneration
The stock remuneration scheme shall utilize a trust structure. Points shall be granted to Directors
each month in accordance with rank, based on stock delivery regulation established by theCompany, and shares of the Company’s stock shall be delivered to Directors through the trust on
retirement, based on the number of points they have accumulated. The maximum amount of money
to be contributed by the Company to the trust for the purpose of delivering the Company’s shares to
Directors shall be ¥40 million per year.
iv) Policy on the determination of the proportions of the total amount of remuneration paid as basic
remuneration, performance-linked remuneration, and stock remuneration
No policy is established specifically to determine the proportion of Directors’ remuneration to be
paid as basic remuneration, performance-linked remuneration, and stock remuneration. However, if
the operating income target under the management plan is achieved, and the evaluation of individual
performance-linked compensation is standard, then the proportions will be approximately 60%, 30%
and 10% respectively.
v) Method used to determine remuneration and other payments to individual Directors
The details of remuneration and other payments to individual Directors shall be determined by the
Board of Directors, after receiving recommendations and proposals from the Nomination &Remuneration Advisory Committee, and set forth in internal regulations.
The individual performance-linked component of the remuneration for Directors shall be
determined by the President, who has been delegated this authority, after individual evaluation inaccordance with the internal regulations determined by the Board of Directors. In order to ensurethat the President exercises this authority appropriately, the Board of Directors shall establish inadvance the amount of remuneration linked to individual evaluations in the internal regulations andshall receive reports on the details of such remuneration.

473) Remuneration and other payments to Directors

Category

Numberofpersons

Amount of
remuneration,
etc.
(Millions ofyen)

Breakdown
Cash remuneration
Performance-linked
Basic remuneration
remuneration
Number
Total
Number
Totalof(Millionsof(Millionspersonsof yen)personsof yen)Stockremuneration
Numberofpersons

Total(Millionsof yen)Directors(excluding
Directors
who are
Audit
5
279
5
231
4
25
4
Committee
(1)
(12)
(1)
(12)
(–)
(–)
(–)
Members)(of whichOutsideDirectors)
Directors(AuditCommittee
4
74
4
74
–
–
–
Members)
(3)
(36)
(3)
(36)
(–)
(–)
(–)
(of whichOutsideDirectors)
Total(of which
9
353
9
306
4
25
4
Outside
(4)
(48)
(4)
(48)
(–)
(–)
(–)
Directors)
Notes: 1. The maximum amount of cash compensation remuneration for Directors (excluding
Directors who are Audit Committee Members) is ¥490 million per year (of which the
maximum amount of remuneration for Outside Directors is ¥40 million, excluding the
portions of their salaries as employees) as resolved at the 160th Ordinary General
Meeting of Shareholders held on June 20, 2019. There were 7 Directors (excluding
Directors who are Audit Committee Members), including 2 Outside Directors, as of
the conclusion of the 160th Ordinary General Meeting of Shareholders.
2. The maximum amount of remuneration for Directors who are Audit Committee
Members is ¥166 million per year as resolved at the 160th Ordinary General Meetingof Shareholders held on June 20, 2019. There were 5 Directors who are Audit
Committee Members as of the conclusion of the 160th Ordinary General Meeting of
Shareholders.
3. Regarding the amount of stock remuneration for Directors (excluding Directors who
are Audit Committee Members or Outside Directors), the maximum amount of cash to
be contributed by the Company is ¥40 million per year, and the maximum number ofpoints to be awarded to Directors is 110,000 points per year, as resolved at the 160th
Ordinary General Meeting of Shareholders held on June 20, 2019. There were 5
Directors (excluding Directors who are Audit Committee Members or Outside
Directors) as of the conclusion of the 160th Ordinary General Meeting of
Shareholders.
4. The total amount of stock remuneration is the amount of expenses recorded for the
fiscal year under review for the stock remuneration plan that allots shares of theCompany (a stock remuneration plan wherein a trust established by the Company
makes acquisitions using funds contributed by the Company, and shares of theCompany and cash equivalent to the disposal conversion amount of the Company’s
shares are allotted to Directors (excluding Directors who are Audit Committee
Members and Outside Directors) through said trust).
5. The amount of performance-linked remuneration paid is determined with reference tothe consolidated operating income for each fiscal year. If consolidated operating
income is below a certain level, or massive amount of extraordinary loss is recorded,
48

21
(–)

–
(–)

21
(–)

or if a serious compliance breach has occurred, then no payment is made, or thepayment amount is reduced. The reason why consolidated operating income has been
selected as an index is because it is a key indicator in the Company’s management
plan. The trend in operating income for fiscal 2022 and other years is presented in 1.
(6) Financial Position and Results of Operations.
6. The remuneration for the current fiscal year is the amount determined in accordance with theDecision Policy prior to the time when the Board of Directors approved the change at its
meeting held on March 13, 2023.
(5) Outside Officers
1) Significant concurrent positions as business executors at other companies, etc. and therelationship between the Company and such companies, etc.
Director who is an Audit Committee Member Mr. Toshio Kinoshita is Representative Directorof Global Professional Partners. There are no significant transactions between the Company andGlobal Professional Partners.
Director who is an Audit Committee Member Ms. Miyuki Matoba is General Manager of theIntellectual Property and Legal Div. of NITTO KOHKI CO., LTD. There are no significant
transactions between the Company and NITTO KOHKI CO., LTD.
2) Significant concurrent positions as outside officers etc. at other companies, etc. and therelationship between the Company and such companies, etc.
Director who is an Audit Committee Member Mr. Toshio Kinoshita is Outside Director of
TACHI-S CO., LTD.
He was also Outside Director of Outside Audit & Supervisory Board Member of PanasonicHoldings Corporation until June 2022.
There are no significant transactions between the Company and TACHI-S CO., LTD. There arebusiness transactions with business companies of Panasonic Holdings Corporation, yet there is no
special relationship between these companies and the Company.
3) Relationship with specified related parties such as major customers
Not applicable.
4) Principal activities in the fiscal year ended March 31, 2023
[Board of Directors meetings]
The Board of Directors met 15 times in the fiscal year ended March 31, 2023. Director, Mr.
Yoshiyuki Fukuda, attended all 15 meetings of the Board of Directors held (attendance rate: 100%).
Directors who are Audit Committee Members, Mr. Toshio Kinoshita and Mr. Akio Yamamoto, and
Ms. Miyuki Matoba attended all 15 meetings of the Board of Directors (attendance rate: 100%). Mr.
Yoshiyuki Fukuda, based on his rich experience and wide views as a corporate executive and highlevel knowledge of corporate finance, actively made necessary inquiries and recommendations.
In addition, as Directors who are Audit Committee Members, Mr. Toshio Kinoshita, based on
his experience and rich accounting knowledge as a certified public accountant in Japan and the US,
Mr. Akio Yamamoto, based on his rich experience and wide views as a corporate executive and richinternational experience serving as a business manager at global companies, and Ms. Miyuki Matoba,
based on her rich experience and expert knowledge as a lawyer, actively made necessary inquiries andrecommendations.
[Audit Committee]
The Audit Committee met 14 times in the fiscal year ended March 31, 2023. Mr. Toshio Kinoshita,
Mr. Akio Yamamoto and Ms. Miyuki Matoba attended all 14 meetings of the Audit Committee(attendance rate: 100%.) Each member of the Audit Committee worked closely with the Internal
Control Dept., etc. to perform efficient and effective audits of the Company’s divisions anddepartments, business sites and subsidiaries and receive briefings on the status of business execution atperiodic divisional report meetings. They reported the results of these activities to the Audit
Committee and had necessary discussions with other Directors who are Audit Committee Members.

49

Board of Directors
meetings
Attendance
Attendance
rate
Director
Yoshiyuki Fukuda
Director (Audit
Committee Member)
Toshio Kinoshita
Director (Audit
Committee Member)
Akio Yamamoto
Director (Audit
Committee Member)
Miyuki Matoba

Audit Committee
Attendance

Attendance
rate

15/15

100%

–

–

15/15

100%

14/14

100%

15/15

100%

14/14

100%

15/15

100%

14/14

100%

50

5) Summary of Duties Fulfilled by Outside Directors Related to Their Expected Roles
Summary of duties performed related
Expected roles
to expected roles
Recommendations and supervision
Inquiries and recommendations
regarding the Company’s management regarding finance strategy for the
Directorin general, based on his rich experience entire Group and risk management for
Yoshiyuki Fukuda
and wide views as a manager, andnew businesses.
expert knowledge of corporate finance
Inquiries and recommendations
Supervision and audit of theregarding the strengthening of
Director (Audit
Company’s management, based on his
governance structures at Groupexperience and rich accounting
Committee Member)companies and financing.
knowledge as a certified public
Toshio Kinoshitaaccountant in Japan and the US
Recommendations and supervision
Inquiries and recommendations
regarding the Company’s management, regarding risk management in overseas
Director (Audit
based on his rich experience in Japanbusiness and new businesses.
Committee Member)and overseas and wide views as a
Akio Yamamoto
corporate executive, and richinternational experience serving as abusiness manager at global companies
Supervision and audit of theInquiries and recommendations
Director (Audit
Company’s management, based on her regarding the strengthening ofCommittee Member)rich experience and expert knowledge
compliance systems and business risk.
Miyuki Matoba
as a lawyer

51

5. Accounting Auditor(1)

Accounting Auditor’s Name
Ernst & Young ShinNihon LLC(2)Accounting Auditor’s Remuneration, etc. for the Fiscal Year Ended March 31, 2023
Amount paid (thousands of yen)
Remuneration, etc. for the Accounting Auditor for the
97,000fiscal year ended March 31, 2023
Monetary or property benefits to be paid by the Company
131,170
and its subsidiaries to the Accounting Auditor
Notes: 1. Under the audit agreement between the Company and its Accounting Auditor,
remuneration for audits based on the Companies Act and that for audits based on the
Financial Instruments and Exchange Act are not strictly distinguished and they cannot
be substantially distinguished. Consequently, the sum of the amounts of these
remunerations is stated as the amount of remuneration, etc. for the Accounting Auditor
for the fiscal year ended March 31, 2023.
2. The Audit Committee of the Company, in observance of the “Practical Guidelines for
Cooperation with Accounting Auditors” published by the Japan Audit & Supervisory
Board Members Association, has confirmed the time taken to audit each audit item
compared to audit plans for previous fiscal years and comparisons with amounts forother companies as disclosed for the fiscal year ended March 31, 2022, and agrees tothe fees, etc., of the Accounting Auditor under Article 399, Item 1 of the Companies
Act.
3. Financial statements (including corresponding statements) of some of the Company’s
significant subsidiaries are audited (subject to regulations of the Companies Act andthe Financial Instruments and Exchange Act; including corresponding laws andregulations overseas) by Certified Public Accountants or Audit Corporations(including persons with qualifications that correspond to these qualifications overseas)other than the Company’s Accounting Auditor.

(3)

Non-audit Services
The Company pays fees to Ernst & Young ShinNihon LLC mainly for confirmation provided inrelation to applications for reduction or exemption under the Japanese renewable energy feed-in-tariff(FIT) scheme.

(4)

Policy for Determination of Dismissal or Non-reappointment of the Accounting Auditor
If the Audit Committee considers that it has become difficult for the Accounting Auditor to perform
its duties appropriately or otherwise considers it necessary, the Audit Committee will make a resolution
for dismissal or non-reappointment of the Accounting Auditor, and will submit a proposal to theGeneral Meeting of Shareholders.
If it is deemed appropriate to dismiss the Accounting Auditor is deemed, because it falls under any
item of Article 340, Paragraph 1 of the Companies Act, the Audit Committee will dismiss the
Accounting Auditor upon consent of all the Audit Committee Members.

(5)

Disposition of Suspension of Business of the Accounting Auditor during the Past Two Years
Not applicable.

(6)

Outline of the Limited Liability Contracts
Not applicable.

52

Consolidated Financial Statements
Consolidated Balance Sheet(As of March 31, 2023)(Millions of yen)Account item
(Assets)
Current assets(Reference)
163rd term
557,646

164th term

Account item

592,158(Liabilities)

218,164

251,793

20,21020,199101,026

98,081

Current liabilities
Notes and accounts payabletrade
Short-term loans payable

55,79081,461

4,516

5,477

Current portion of longterm loans payable
Accounts payable-other

25,352

34,183

Income taxes payable

11,485

12,607

Accrued consumption taxes

(218)

(216)

339,482(Reference)
163rd term
265,552

164th term
291,807

166,679

164,457

50,03247,96940,54544,754

8,000

6,000

12,47011,97523,53922,018

5,439

4,228

298

231

Accrued expenses

13,631

13,068340,365

Provision for bonuses

2,904

3,022

263,171

262,711

Other

9,817

11,18751,30831,27950,64230,318

Noncurrent liabilities
Bonds payable

98,87237,000127,349
37,00089,00592,592Long-term loans payable

39,01670,000

1,001

693

5,995

1,369

4,666

4,360

8,401

8,367

63,4942,141
20,276

63,1802,824
18,097

Deferred tax liabilities
Deferred tax liabilities forland revaluation
Net defined benefit liability
Provision for stock benefits
Other

5,074
60
3,324

5,366
81
5,165

Intangible assets

10,391

11,001(Net assets)

292,094

300,351

Software
Goodwill
Right of using patent
Investments and otherassetsInvestment securities
Long-term loans
receivable
Long-term prepaid
expenses

1,111
5,989
3,291

1,279
5,992
3,729

Shareholders’ equity
Capital stock
Capital surplus

261,879
36,99849,397262,145
36,99849,406

65,91866,652Retained earnings

183,128

183,391

60,552

58,072(7,645)(7,650)140117

26,592

34,334

1,447

3,052

16,883

16,350

Deferred tax assets

1,326

2,995

(348)

(246)

Other
Allowance for doubtful
accounts

2,524

2,486

10,377

10,407(73)(72)

Treasury stock
Accumulated othercomprehensive income
Valuation difference on
available-for-sale securities
Deferred gains or losses onhedges
Revaluation reserve for land
Foreign currency translation
adjustment
Remeasurements of defined
benefit plans
Non-controlling interests

2,410

11,101(2,731)(3,277)

3,621

3,871

557,646

592,158

Cash and deposits
Notes and accounts
receivable-trade, andcontract assets
Merchandise andfinished goods
Work in process
Raw materials andsupplies
Other
Allowance for doubtful
accounts
Noncurrent assets
Property, plant andequipment
Buildings
Structures
Machinery andequipment
VehiclesTools, furniture andfixturesLand
Lease assets
Construction in progress

Commercial paper

Total
557,646
592,158
Total(Note) Amounts are rounded down to the nearest million yen.

53

Consolidated Statement of Income(From April 1, 2022 to March 31, 2023)(Millions of yen)
(Reference)
163rd term
384,849

Account item
Net sales
Cost of sales
Gross profit
Selling, general, and administrative expenses
Operating income

164th term
407,559

277,674

305,217

107,175

102,342

67,05170,017

40,12332,324Non-operating income
Interest and dividend income

1,661

2,234

Equity in earnings of affiliates

876

2,328

Other

606

3,144

704

5,268

Non-operating expenses
Interest expenses

924

Other

5,869

Ordinary income

1,157
6,793

8,409

36,474

9,567
28,025Extraordinary income
Loss on sales of investment securities
Gains on shares of sale of subsidiaries andassociates
Extraordinary loss

100

Costs related to voluntary product recall

972–

Impairment losses

968

–

-

Loss on liquidation of business-

Income before income taxes

4,970
100

1,940

425

18,83034,633

Income taxes-current

8,428

Income taxes-deferred

1,240

5,396

18,83014,590

7,327
9,668

(5,773)

1,553

Profit24,965

13,037

Profit (loss) attributable to non-controlling interests(1,047)

268

Profit attributable to owners of parent(Note) Amounts are rounded down to the nearest
million yen.

26,012

12,76854

Non-consolidated Financial Statements
Non-consolidated Balance Sheet(As of March 31, 2023)

Account item
(Assets)
Current assets
Cash and deposits(Reference)
163rd term
465,179
169,399

164th term
482,552
196,219

4,272

5,901

4,535

5,399

80,84070,604Merchandise andfinished goods

45,67969,393Work in progress

4,176

5,082

20,091

26,328

1,655

Account item
(Liabilities)
Current liabilities
Accounts payabletrade
Short-term loans
payable(Millions of yen)
(Reference)
164rd term
163rd term
239,387
261,646
148,591
144,092
36,33035,97927,67527,675

8,000

6,000

12,466

11,975

21,74821,281

Income taxes payable

4,273

2,489

2,154

Accrued expenses

11,51010,404224

230

Deposits received

23,32022,300

7,937

11,134

Provision forbonuses

2,270

2,399

(12)

(11)

996

3,589

295,780

286,333

Noncurrent liabilities

90,795

117,553

221,699

214,192

Bonds payable

37,00037,000

Buildings

43,80842,46738,97570,000

Structures

28,93824,166

5,657–

Machinery andequipment

68,86867,569

8,401

8,367

892

598

60

81

Tools, furniture andfixtures

3,763

3,525

129

1,823

Land

61,69061,466

571

281

206

172

(Net assets)

225,792

220,906

13,53014,226

Shareholders’ equity

200,314

196,455

1,298
837
461

1,348
972
376

Capital stock

36,99836,998

Capital surplus

49,28449,28472,78170,79349,28449,284

Notes receivabletrade
Accounts receivabletrade

Raw materials andsupplies
Prepaid expenses
Short-term loans
receivable
Other
Allowance for
doubtful accounts
Noncurrent assets
Property, plant andequipment

VehiclesLeased assets
Construction inprogress
Intangible assets
SoftwareRight of using patent
Investments andother assets

Commercial paper
Current portion of
long-term loans
payableAccounts payableother

Other

Long-term loans
payableDeferred tax
liabilities
Deferred tax
liabilities for land
revaluation
Provision for stock
benefits
Asset retirement
obligations
Other

Legal capital surplus

55

Account item
Investment securities
Stocks of
subsidiaries andaffiliates
Long-term loans
receivable(Reference)
163rd term
34,15234,807164th term

Account item

30,075

Other capital surplus

34,241Retained earnings

Other retained
earnings
Reserve forLong-term prepaid
advanced
1,072
2,586
expensesdepreciation of
noncurrent assets
Retained earnings
Prepaid pension cost
1,071
1,542
brought forward
690
Deferred tax assets
Treasury stock–
Valuation andOther investments
1,549
1,540
translation
adjustments
Valuation
Allowance fordifference on(1)(1)
doubtful accounts
available-for-salesecurities
Revaluation
reserve for land
482,552 Total
Total
465,179(Note) Amounts are rounded down to the nearest million yen.
130

117

56

(Reference)
163rd term
0

164rd term
0

121,676

117,823

121,676

117,823

3,749

3,602

117,927

114,220(7,645)(7,650)25,47724,45015,09914,043

10,377

10,407465,179

482,552

Non-consolidated Statement of Income(From April 1, 2022 to March 31, 2023)(Millions of yen)
(Reference)
163rd term
299,641

Account item
Net sales
Cost of sales
Gross profit
Selling, general, and administrative expenses
Operating income

164th term
327,019

215,385

252,966

84,25574,05350,451

51,95433,80322,098Non-operating income
Interest and dividend income

1,869

Other

987

3,984
2,856

1,618

5,602

Non-operating expenses
Interest expenses

509

Other

6,806

Ordinary income

1,001
7,316

5,730

29,343

6,732
20,969Extraordinary income
Gain on sales of investment securities
Gains on shares of sale of subsidiaries andassociates
Extraordinary loss
Loss on valuation of shares of subsidiaries andassociates
Costs related to voluntary product recall
Loss on liquidation of business

100
-

4,961
100

1,093

5,165

-

972

-

-

Income before income taxes

6,137

18,75023,305

Income taxes-current

7,047

Income taxes-deferred

304

Profit57

18,750
8,274

5,408
7,351
15,953(Note) Amounts are rounded down to the nearest million yen.

6,055

(5,786)

(377)
8,652

Transcript of Accounting Auditor’s Audit Report on Consolidated Financial Statements

Independent Auditors’ Report(English Translation)
May 9, 2023
To the Board of Directors
Denka Co., Ltd.
Ernst & Young ShinNihon LLC
Tokyo office
Mineo Kambayashi
Certified Public Accountant
Designated and Engagement Partner
Yasuyuki Kitamura
Certified Public Accountant
Designated and Engagement Partner
Yuki Nakano
Certified Public Accountant
Designated and Engagement Partner

OpinionPursuant to Article 444, Paragraph 4 of the Companies Act, we have audited the accompanying
consolidated financial statements, which comprise the consolidated balance sheet, the consolidated statementof income, the consolidated statement of changes in net assets and the notes to the consolidated financial
statements of Denka Co., Ltd. (the “Company”) for the fiscal year from April 1, 2022 through March 31,2023.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position and results of operations of the Denka Group, which consists of the Company and its
consolidated subsidiaries, for the period covered by the consolidated financial statements in conformity withaccounting principles generally accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibility under the auditing standards is stated in “Auditor’s Responsibility for the Audit of theConsolidated Financial Statements.” We are independent of the Company and its consolidated subsidiaries inaccordance with the provisions related to professional ethics in Japan, and are fulfilling other ethicalresponsibilities as an auditor. We believe that we have obtained sufficient and appropriate audit evidence toprovide a basis for our audit opinion.
Other Information
Other information refers to the business report and supplementary schedules. Management is responsible forthe preparation and disclosure of other information. The Audit Committee are responsible for monitoring theexecution of Directors’ duties related to designing and operating the reporting process for other information.
Other information is not included in the scope of our opinion on the consolidated financial statements, andwe express no opinion on it.
58

Our responsibility with respect to the audit of the consolidated financial statements is to read through otherinformation and, in this process, to consider whether any material differences exist between other informationand the consolidated financial statements or knowledge we have gained through the auditing process; also, toremain alert for any other indications of material error in other information.
We are required to report any matter that we consider constitutes a material error in other information,
based on the work we have undertaken.
We have nothing to report regarding other information.
Responsibilities of Management and the Audit Committee for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statementsin accordance with accounting principles generally accepted in Japan, and for designing and operating suchinternal control as management determines is necessary to enable the presentation and fair presentation of theconsolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing whether it isappropriate to prepare the consolidated financial statements in accordance with the premise of a going
concern, and for disclosing matters relating to going concern when it is required to do so in accordance withaccounting principles generally accepted in Japan.
The Audit Committee are responsible for monitoring the execution of Directors’ duties related to designingand operating the financial reporting process.
Auditor’s Responsibility for the Audit of the Consolidated Financial Statements
Our responsibility is to obtain reasonable assurance about whether the consolidated financial statements as awhole are free from material misstatement, whether due to fraud or error, and to express an opinion on the
consolidated financial statements from an independent standpoint in an audit report, based on our audit.
Misstatements can occur as a result of fraud or error, and are deemed material if they can be reasonably
expected to, either individually or collectively, influence the decisions of users taken on the basis of theconsolidated financial statements.
We make professional judgment in the audit process in accordance with auditing standards generally
accepted in Japan, and perform the following while maintaining professional skepticism.
・ Identify and assess the risks of material misstatement, whether due to fraud or error. Design andimplement audit procedures to address the risks of material misstatement. The audit procedures shall beselected and applied as determined by the auditor. In addition, sufficient and appropriate audit evidence
shall be obtained to provide a basis for the audit opinion.
・ In making those risk assessments, the auditor considers internal control relevant to the entity’s audit inorder to design audit procedures that are appropriate in the circumstances, although the purpose of theaudit of the consolidated financial statements is not to express an opinion on the effectiveness of theentity’s internal control.
・ Assess the appropriateness of accounting policies adopted by management and the method of theirapplication, as well as the reasonableness of accounting estimates made by management and the adequacyof related notes.
・ Determine whether it is appropriate for management to prepare the consolidated financial statements on
the premise of a going concern and, based on the audit evidence obtained, determine whether there is asignificant uncertainty in regard to events or conditions that may cast significant doubt on the entity’s
ability to continue as a going concern. If there is a significant uncertainty concerning the premise of agoing concern, the auditor is required to call attention to the notes to the consolidated financial statementsin the audit report, or if the notes to the consolidated financial statements pertaining to the significant
uncertainty are inappropriate, issue a modified opinion on the consolidated financial statements. While theconclusions of the auditor are based on the audit evidence obtained up to the date of the audit report,
depending on future events or conditions, an entity may be unable to continue as a going concern.
・ Besides assessing whether the presentation of and notes to the consolidated financial statements are inaccordance with accounting principles generally accepted in Japan, assess the presentation, structure, and59

content of the consolidated financial statements including related notes, and whether the consolidated
financial statements fairly present the transactions and accounting events on which they are based.
・ Obtain sufficient and appropriate audit evidence regarding the financial information of the Company andits consolidated subsidiaries in order to express an opinion on the consolidated financial statements. The
auditor is responsible for instructing, supervising, and implementing the audit of the consolidated financial
statements, and is solely responsible for the audit opinion.
The auditor reports to the Audit Committee regarding the scope and timing of implementation of theplanned audit, material audit findings including material weaknesses in internal control identified in thecourse of the audit, and other matters required under the auditing standards.
The auditor reports to the Audit Committee regarding the observance of provisions related to professional
ethics in Japan as well as matters that are reasonably considered to have an impact on the auditor’s
independence and any safeguards that are in place to reduce or eliminate obstacles.

Interest
Our firm and engagement partners have no interests in the Company or its consolidated subsidiaries
requiring disclosure under the provisions of the Certified Public Accountants Act of Japan.

The above represents a translation, for convenience only, of the original report issued in the Japanese
language.

60

Transcript of Accounting Auditor’s Audit Report on Non-consolidated Financial Statements

Independent Auditors’ Report(English Translation)
May 9, 2023
To the Board of Directors
Denka Co., Ltd.
Ernst & Young ShinNihon LLC
Tokyo office
Mineo Kambayashi
Certified Public Accountant
Designated and Engagement Partner
Yasuyuki Kitamura
Certified Public Accountant
Designated and Engagement Partner
Yuki Nakano
Certified Public Accountant
Designated and Engagement Partner

OpinionPursuant to Article 436, Paragraph 2, Item 1 of the Companies Act, we have audited the accompanying
financial statements, which comprise the balance sheet, the statement of income, the statement of changes in
net assets and the related notes, and the accompanying supplementary schedules of Denka Co., Ltd. (the“Company”) for the 164th fiscal year from April 1, 2022 through March 31, 2023.
In our opinion, the financial statements and the accompanying supplementary schedules referred to above
present fairly, in all material respects, the financial position of the Company as of March 31, 2023, and theresults of its operations for the year then ended in conformity with accounting principles generally accepted inJapan.

Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibility under the auditing standards is stated in “Auditor’s Responsibility for the Audit of the Financial
Statements and the Accompanying Supplementary Schedules.” We are independent of the Company inaccordance with the provisions related to professional ethics in Japan, and are fulfilling other ethicalresponsibilities as an auditor. We believe that we have obtained sufficient and appropriate audit evidence toprovide a basis for our audit opinion.
Other Information
Other information refers to the business report and accompanying supplementary schedules. Management is
responsible for the preparation and disclosure of other information. The Audit Committee are responsible formonitoring the execution of Directors’ duties related to designing and operating the reporting process for otherinformation.
Other information is not included in the scope of our opinion on the financial statements and accompanying
supplementary schedules, and we express no opinion on it.
61

Our responsibility with respect to the audit of the financial statements and accompanying supplementaryschedules is to read through other information and, in this process, to consider whether any material
differences exist between other information and the financial statements and accompanying supplementaryschedules, or knowledge we have gained through the auditing process; also, to remain alert for any otherindications of material error in other information.
We are required to report any matter that we consider constitutes a material error in other information,
based on the work we have undertaken.
We have nothing to report regarding other information.
Responsibilities of Management and the Audit Committee for the Financial Statements and the Accompanying
Supplementary Schedules
Management is responsible for the preparation and fair presentation of the financial statements and theaccompanying supplementary schedules in accordance with accounting principles generally accepted in Japan,
and for designing and operating such internal control as management determines is necessary to enable thepreparation and fair presentation of the financial statements and the accompanying supplementary schedules
that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements and the accompanying supplementary schedules, management is
responsible for assessing whether it is appropriate to prepare the financial statements and the accompanying
supplementary schedules in accordance with the premise of a going concern, and for disclosing mattersrelating to going concern when it is required to do so in accordance with accounting principles generally
accepted in Japan.
The Audit Committee are responsible for monitoring the execution of Directors’ duties related to designingand operating the financial reporting process.
Auditor’s Responsibility for the Audit of the Financial Statements and the Accompanying Supplementary
Schedules
Our responsibility is to obtain reasonable assurance about whether the financial statements and theaccompanying supplementary schedules as a whole are free from material misstatement, whether due to fraud
or error, and to express an opinion on the financial statements and the accompanying supplementary schedules
from an independent standpoint in an audit report, based on our audit. Misstatements can occur as a result offraud or error, and are deemed material if they can be reasonably expected to, either individually orcollectively, influence the decisions of users taken on the basis of the financial statements and theaccompanying supplementary schedules.
We make professional judgment in the audit process in accordance with auditing standards generally
accepted in Japan, and perform the following while maintaining professional skepticism.
・ Identify and assess the risks of material misstatement, whether due to fraud or error. Design andimplement audit procedures to address the risks of material misstatement. The audit procedures shall beselected and applied as determined by the auditor. In addition, sufficient and appropriate audit evidence
shall be obtained to provide a basis for the audit opinion.
・ In making those risk assessments, the auditor considers internal control relevant to the entity’s audit inorder to design audit procedures that are appropriate in the circumstances, although the purpose of theaudit of the financial statements and the accompanying supplementary schedules is not to express an
opinion on the effectiveness of the entity’s internal control.
・ Assess the appropriateness of accounting policies adopted by management and the method of theirapplication, as well as the reasonableness of accounting estimates made by management and the adequacyof related notes.
・ Determine whether it is appropriate for management to prepare the financial statements and theaccompanying supplementary schedules on the premise of a going concern and, based on the audit
evidence obtained, determine whether there is a significant uncertainty in regard to events or conditions
that may cast significant doubt on the entity’s ability to continue as a going concern. If there is a significant
uncertainty concerning the premise of a going concern, the auditor is required to call attention to the notes
to the financial statements and the accompanying supplementary schedules in the audit report, or if the62notes to the financial statements and the accompanying supplementary schedules pertaining to thesignificant uncertainty are inappropriate, issue a modified opinion on the financial statements and theaccompanying supplementary schedules. While the conclusions of the auditor are based on the audit
evidence obtained up to the date of the audit report, depending on future events or conditions, an entity
may be unable to continue as a going concern.
・ Besides assessing whether the presentation of and notes to the financial statements and the accompanying
supplementary schedules are in accordance with accounting principles generally accepted in Japan, assess
the presentation, structure, and content of the financial statements and the accompanying supplementaryschedules including related notes, and whether the financial statements and the accompanying
supplementary schedules fairly present the transactions and accounting events on which they are based.
The auditor reports to the Audit Committee regarding the scope and timing of implementation of theplanned audit, material audit findings including material weaknesses in internal control identified in thecourse of the audit, and other matters required under the auditing standards.
・ Obtain sufficient and appropriate audit evidence regarding the financial information of the components
included in the financial statements and the accompanying supplementary schedules in order to express an
opinion on the financial statements and the accompanying supplementary schedules. The auditor is
responsible for instructing, supervising, and implementing the audit of the financial information of thecomponents, and is solely responsible for the audit opinion.
The auditor reports to the Audit Committee regarding the observance of provisions related to professional
ethics in Japan as well as matters that are reasonably considered to have an impact on the auditor’s
independence and any safeguards that are in place to reduce or eliminate obstacles.
Conflicts of Interest
Our firm and engagement partners have no interests in the Company requiring disclosure under theprovisions of the Certified Public Accountants Act of Japan.

The above represents a translation, for convenience only, of the original report issued in the Japanese
language.

63

Transcript of the Audit Report by the Audit Committee

Audit Report(English Translation)
The Audit Committee has audited the Directors’ performance of their duties during the 164th term from
April 1, 2022 to March 31, 2023 and hereby reports the method and results thereof as follows:
1. Auditing Method and Details Thereof
The Audit Committee received regular reports from Directors, employees, etc. on the details of
resolutions of the Board of Directors related to matters listed in Article 399-13, Paragraph 1, item (i), (b) and(c) of the Companies Act and the creation and operational status of systems developed pursuant to such
resolutions (internal control systems), requested explanations as necessary, and expressed its views, inaddition to conducting audits via the methods below.
1) Audit Committee Members conformed with the Audit Committee Audit Standards set forth by the
Audit Committee and, in accordance with audit policies, the assignment of duties, etc., worked with theInternal Control Department and other internal control departments to attend meetings of important
committees, receive reports on matters related to the execution of duties from Directors, employees,
etc., requested explanations as necessary, reviewed important approval documents, etc., andinvestigated the status of operations and assets at head office and important business sites. In addition,with regard to subsidiaries, Audit Committee Members took steps to communicate and exchange
information with the Directors, Audit & Supervisory Board Members, etc. of subsidiaries, and received
business reports from subsidiaries as necessary.
2) With respect to the basic policy set forth in Article 118, Item 3 (i) of the Ordinance for Enforcement of
the Companies Act and the measures set forth in Item 3 (ii) of the said article, which are described in
the Business Report, the Audit Committee examined the content based on the status of deliberations at
meetings of the Board of Directors and other meetings.
3) The Audit Committee monitored and verified whether the Accounting Auditor maintained its
independence and implemented appropriate audits, received reports from the Accounting Auditor
regarding the status of the performance of its duties, and requested explanations as necessary. In
addition, the Audit Committee received notice from the Accounting Auditor that the “system forensuring that duties are performed properly” (matters set forth in each item of Article 131 of theOrdinance for Corporate Accounting) had been prepared in accordance with the “Quality Control
Standards Relating to Auditing” (issued by the Business Accounting Council on October 28, 2005) andother relevant standards, and requested explanations as necessary.
Based on the above method, the Audit Committee reviewed the non-consolidated financial statements(non-consolidated balance sheet, non-consolidated statement of income, non-consolidated statement ofchanges in net assets, and notes to non-consolidated financial statements) and the accompanying
supplementary schedules, as well as the consolidated financial statements (consolidated balance sheet,consolidated statement of income, consolidated statement of changes in net assets, and notes to consolidated
financial statements), and the business report and its accompanying supplementary schedules for the fiscal
year in question.
2. Results of Audit(1) Results of Audit of Business Report, etc., and Other Relevant Documents
1) In our opinion, the Business Report and the accompanying supplementary schedules present fairly
the conditions of the Company in conformity with the applicable laws and regulations and the
Articles of Incorporation of the Company.
2) We have found no instances of misconduct or material violation of the applicable laws andregulations or the Articles of Incorporation with respect to performance of duties by the Directors.
3) In our opinion, the contents of the resolutions of the Board of Directors related to the internal
control systems are fair and reasonable. In addition, we have found no matters requiring special
mention regarding the description in the Business Report and the performance of duties by the
Directors related to such internal control systems.
644) We have found no matters requiring special mention with respect to the basic policies andinitiatives regarding the determination of policies on control of the finances and business of theCompany described in the Business Report.
(2) Results of Audit of Non-consolidated Financial Statements and the Accompanying Supplementary
Schedules
In our opinion, the method and the results of the audit performed by Ernst & Young ShinNihon
LLC are fair and reasonable.
(3) Results of Audit of Consolidated Financial Statements
In our opinion, the method and the results of the audit performed by Ernst & Young ShinNihon
LLC are fair and reasonable.
May 9, 2023
Audit Committee, Denka Co., Ltd.
Audit Committee Member
Audit Committee Member
Audit Committee Member
Audit Committee Member(Note)

Masaharu Suzuki
Toshio Kinoshita
Akio Yamamoto
Miyuki Matoba

Audit Committee Members Toshio Kinoshita, Akio Yamamoto, and Miyuki Matoba are
Outside Directors as stipulated in Article 2, Item 15 and Article 331, Section 6 of theCompanies Act.

65