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, the originals
shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any otherforms of damages arising from the translations.
Denka Co., Ltd.
(Securities Code: 4061)
NOTICE OF CONVOCATION OF
THE 161ST ORDINARY GENERAL MEETING OF SHAREHOLDERS
Date and Time:

Friday, June 19, 2020 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 Seven (7) Directors (Excluding Directors who are Audit & Supervisory
Committee Members)
Election of One (1) Substitute Director who is an Audit & Supervisory Committee
MemberPlease exercise your voting rights in writing or via the Internet by
5:00 p.m. on Thursday, June 18, 2020.
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
Amid extremely uncertain circumstances, we will continue promoting specialization with an eye toward themegatrends of the future, while also making steady progress on our “Denka Value-Up” management plan, taking
post-coronavirus changes in the structure of the economy into consideration, based on the growth vision andgrowth strategies laid out in “Denka Value-Up.”
Enclosed please find the Notice of Convocation of the 161st Ordinary General Meeting of Shareholders.
We would like to take this opportunity to express our gratitude to you for your continued support of Denka
and make some observations concerning the Company’s results and current initiatives.
During the fiscal year ended March 31, 2020 (fiscal 2019), the Japanese economy faced difficult conditions,
including sluggish growth in personal consumption and a decline in exports, in addition to significant downward
pressure on the economy from the impact of the COVID-19 coronavirus infections from the beginning of theyear. The global economy continued to recover moderately, but in addition to prolonged trade friction between
the United States and China and issues surrounding the UK’s exit from the EU, the global spread of the virus
going into 2020 meant economic activity stalled, primarily in China, the United States, and Europe, resulting in a
rapid slowdown. In the chemicals industry, corporate earnings also declined owing to weak demand in Japan andoverseas in the second half of the period, despite a decline in the prices of naphtha and other raw materials.
Against this economic backdrop, in order to realize “The Denka Value,” our corporate philosophy, the Groupchanneled resources into expanding businesses and consolidating earnings, based on the growth visions and thegrowth strategies in the “Denka Value-Up” management plan.
As a result, during the year under review, sales decreased year on year, partly owing to revisions to selling
prices for certain products in step with declines in raw material prices and declines in volumes sold caused byfalling demand on the back of trade friction between the United States and China and the impact of thecoronavirus in the second half of the period, despite increases in volumes sold of products for use in electricvehicles (EVs) and healthcare products. Turning to profits, in addition to declines in volumes sold, the increased
cost burden from upfront investments for healthcare and other future growth businesses meant that operating
income, ordinary income, and profit attributable to owners of the parent all decreased year on year andunfortunately, we were unable to achieve our target of record high profits for three consecutive years.
In the current fiscal year, we will be midway through our five-year “Denka Value-Up” management plan, butthere is extreme uncertainty surrounding future economic conditions, including trends surrounding the
COVID-19 coronavirus, and we must accept that it will be a more difficult year than the previous fiscal year. On
the other hand, all the measures laid out in “Denka Value-Up” have been steadily put in place, and looking ahead,
we intend to continue promoting specialization with an eye toward the megatrends of the future, including
automotive evolution, the communication systems revolution from 5G, and advancement in the healthcare field,
while also making steady progress on “Denka Value-Up,” taking expected post-coronavirus changes in the
structure of the economy into consideration.
In addition, as explained previously, the Group underwent two significant reorganizations on April 1. First,
DENKA SEIKEN Co., Ltd. and Denka merged with the aim of strengthening the healthcare business, andsecondly, Akros Trading Co., Ltd. was newly established through the merger of Akros Trading Co., Ltd. and YK
Inoas Co., Ltd., with the aim of optimizing the Group’s trading house activities. Through these reorganizations,companies with different strengths and cultures will actively combine their diverse values, thereby causing areaction and maximizing synergies from integration.
At present, the global economy is truly in an unprecedented state of crisis owing to the impact of the COVID-19
coronavirus. Under these circumstances the Company quickly began work on the development of simple and rapid
testing kits for coronavirus infections, and, in response to a request from the Japanese government in April 2020,
decided to supply diethyl malonate, a raw material in the production of the anti-flu medicine Avigan® (genericname: Favipiravir), whose use as a treatment for infection by the new coronavirus is anticipated around the world.
Our first priority is to ensure we carry out these initiatives without fail, and thereby fulfill our social responsibility.
ESG lies at the core of our management, and as the Company strives to achieve the goals in our “Denka
Value-Up” management plan, we will take the SDGs, set forth by the United Nations, as our guide. We hope wecan count on the continued understanding and support of our shareholders in this endeavor.
* “Avigan” is a registered trademark of FUJIFILM Toyama Chemical Co., Ltd.
Manabu Yamamoto
Representative Director, President
2

May 2020

(Securities Code: 4061)
May 28, 2020
To Our Shareholders:Manabu Yamamoto
President
Denka Co., Ltd.
1-1, Nihonbashi-Muromachi 2-chome, Chuo-ku, TokyoNOTICE OF CONVOCATION OF
THE 161ST ORDINARY GENERAL MEETING OF SHAREHOLDERS
The 161st Ordinary General Meeting of Shareholders of Denka Co., Ltd. (the “Company”) will be held as
described below.
Recently, the national government and prefectural governors have been strongly requesting that people
refrain from leaving their homes, in order to prevent the spread of the COVID-19 coronavirus. After carefulconsideration in light of these circumstances, the Company has decided to hold the General Meeting of
Shareholders while taking appropriate measures to counter the spread of the virus (for details thereof, pleaserefer to the enclosed “Measures to Prevent the Spread of the COVID-19 Coronavirus at the 161st Ordinary
General Meeting of Shareholders”).
From the perspective of preventing the spread of the virus, the Company strongly requests that shareholders
make the utmost effort to refrain from attending the General Meeting of Shareholders, regardless of the statusof your health as an individual.
The Company strongly recommends that shareholders exercise voting rights in advance. Please review theattached Reference Documents for the General Meeting of Shareholders and exercise your voting rights inwriting by mail (Voting Rights Exercise Form) or via the Internet, etc., as described in the “Guide for Exerciseof Voting Rights” (Page 5), by no later than 5:00 p.m. on Thursday, June 18, 2020.
1. Date and Time:

Friday, June 19, 2020 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

3. Meeting Agenda:
Matters to be reported: 1. The Business Report, Consolidated Financial Statements for the Company’s
161st Term (from April 1, 2019 to March 31, 2020) and results of audits by
the Accounting Auditor and the Audit & Supervisory Committee of theConsolidated Financial Statements
2. Non-consolidated Financial Statements for the Company’s 161st Term (from
April 1, 2019 to March 31, 2020)
Proposals to be resolved:
Proposal No. 1: Appropriation of Surplus
Proposal No. 2: Election of Seven (7) Directors (Excluding Directors who are Audit &Supervisory Committee Members)
Proposal No. 3: Election of One (1) Substitute Director who is an Audit & Supervisory
Committee Member◎ The following are posted on the Company’s website at https://www.denka.co.jp/ in accordance withlaw and Article 16 of the Company’s Articles of Incorporation and thus are not included in the
documents attached to this notice of convocation.
•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 theControl of the Company) in the Business Report3•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
The Business Report, consolidated financial statements and the non-consolidated financial statements
audited by the Audit & Supervisory Committee and the Accounting Auditor include the above
documents posted on the Company’s website.
◎ If any revisions are made to the Business Report, Consolidated Financial Statements, Non-consolidated
Financial Statements, or Reference Documents for the General Meeting of Shareholders, they will be
posted on the Company’s website at https://www.denka.co.jp/.

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 Thursday, June 18, 2020.
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 Thursday,June 18, 2020.
(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 capital andcontributing 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 to achieve
dramatic growth globally.
While the Company has formulated an investment plan as we look to achieve these goals, in regard toshareholder returns, we will remain committed to the “Policy on Shareholder Returns,” with a 50% target
total payout ratio, reflecting our determination to return the profits yielded by the initiatives of the previous
management plan “Denka100” formulated in November 2014, even under the “Denka Value-Up”
management plan.
<Shareholder returns in the management plan “Denka Value-Up”>
Remain 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<Investment plan in the management plan “Denka Value-Up”>
Total for five years:¥200.0 billion
Of which strategic investment:¥75.0 billion (¥15.0 billion/year)
M&A, etc.:¥60.0 billion
Process reform:¥15.0 billion
Regular investment:¥125.0 billion (¥25.0 billion/year)
With respect to the year-end dividend for the 161st 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¥65 per share of common stock of the Company
Total amount of dividends: ¥5,608,354,245(3) Effective date of dividends from surplus
June 22, 2020

6

Proposal No. 2: Election of Seven (7) Directors (Excluding Directors who are Audit & Supervisory
Committee Members)
The terms of office of seven (7) Directors (excluding Directors who are Audit & Supervisory Committee
Members; hereinafter, the same applies in this proposal) will expire at the conclusion of this Ordinary
General Meeting of Shareholders. Accordingly, the election of seven (7) Directors is proposed.
The candidates for Directors are as follows.

No.

Name

Positions and responsibilities at the Company

1

Reappointed Shinsuke Yoshitaka Chairman, Board of Directors

2

Reappointed

3

Reappointed

4

Reappointed

5

Reappointed

Manabu Yamamoto

Representative Director, President and Chief Executive
Officer

Director and Senior Managing Executive Officer
Chief Scientific Officer (CSO)
Norihiro Shimizu Chief R&D Officer
In charge of New Business Planning & Development
Dept., R&D Promoting Dept., Intellectual Property Dept.
Director and Senior Managing Executive Officer
Chief Technical Officer (CTO)
Masaharu Suzuki In charge of Purchasing Dept., Logistics Dept., ElectricPower Dept., Production & Process Technology Dept.,
Engineering Dept., Digital Innovation Dept.
Director and Senior Managing Executive Officer
Chief Compliance Officer (CCO)
In charge of Corporate Planning Dept., Corporate
Toshio Imai
Communications Dept., Automotive Materials & Solutions
Dept., Denka Corporation, Denka Chemicals GmbHIn charge of Denka Value-Up Promotion

Reappointed
Outside6
Akio Yamamoto Director
Independent
Director
Reappointed
Outside7
Tatsutsugu Fujihara Director
Independent
Director
Reappointed: Candidate for reappointment as Director
Outside: Candidate for Outside Director
Independent Director: Independent Director as notified to the Tokyo Stock Exchange

7

Attendance atBoard ofDirectors
meetings
13/13(100%)
12/13
(92%)
12/13
(92%)

13/13
(100%)

13/13(100%)

13/13(100%)
13/13(100%)

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

April 1974
January 2001

Number ofshares of theCompany held

Joined the Company
General Manager of Corporate Planning Dept. of theCompany(Reappointed)
June 2006
Director, General Manager of Corporate Planning Dept.
and Investor Relations & Corporate Communications
Shinsuke Yoshitaka
Dept. of the Company(February 1, 1951)
June 2007
Senior Executive Officer of the Company
Age: 69
June 2008
Director and Senior Executive Officer of the Company
27,000[June 2008]
April 2010
Representative Director and Managing Executive Officer[12 yearsof the Company* at the conclusion of April 2011
Representative Director, President and Chief Executive
Officer of the Company
this Ordinary General
June 2011
Outside Director of Koatsu Gas Kogyo Co., Ltd. (present)
Meeting of
Shareholders]April 2017
Representative Director, Chairman, Board of Directors of
the Company
1
April 2019
Chairman, Board of Directors of the Company (present)[Reasons for selection as the candidate for Director]
Subsequent to responsibility for management strategy, medical business, accounting andfinance, and investor relations and corporate communications, Mr. Shinsuke Yoshitaka
promoted the “Denka100” management plan as Representative Director, President. In
addition to a wealth of experience and achievements as a manager, he serves as the
Chairmanof the Board of Directors, as the Chairman based on his deep knowledge andAttendance at Board
understandingof the Group. The Company has judged that he can appropriately fulfill theof Directors
roleofsupervising
the business execution of Directors and Executive Officers, and requests
meetings
hiselectionasDirector.
13/13 (100%)[Message to shareholders]
As a chemicals manufacturer, the Company’s corporate philosophy is to create new value
and contribute to social development. As Chairman of the Board of Directors, I willconsistently take the perspective of all our stakeholders as I endeavor to ensure that wecontribute to society through sound and fair management.
Note: No material relationship of interest exists between the Company and the above candidate.

8

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

April 1981
June 2004

Number ofshares of theCompany held

Joined the Company
General Manager of Functional Ceramics Div. ofElectronics Materials Business Group of the Company
April 2009
Executive Officer, General Manager of Electronics(Reappointed)
Materials Div. of Electronics Materials Business Group of
the Company
Manabu Yamamoto
April
2011
Senior Executive Officer of the Company(March 31, 1956)
April
2013
Managing
Executive Officer, Head of Electronics &Age: 64
Innovative Products of the Company
8,700
June 2013
Director and Managing Executive Officer of the[June 2013]
Company[7 years
General Manager of Corporate Planning Dept. of the* at the conclusion of April 2015
Company
this Ordinary General
April 2016
Director and Senior Managing Executive Officer of the
Meeting ofCompany
Shareholders]June 2016
Outside Audit & Supervisory Board Member of Koatsu
Gas Kogyo Co., Ltd.
April 2017
Representative Director, President and Chief Executive
2
Officer of the Company (present)[Reasons for selection as the 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 currently serves asAttendance at Board
Representative Director, President. Based on his rich experience and impressive trackof Directors
record in Company administration, it is hence judged by the Company that he canmeetings
appropriately fulfil the role of determining important business execution and supervising
12/13 (92%)
the business execution of Directors and Executive Officers, and requests his election as
Director.
[Message to shareholders]
I will endeavor to promote our management plan, “Denka Value-Up,” while enhancing
specialization of our business structure and productivity in order for the Company tobecome a sound company that grows continuously even amidst rapidly changing markets
and fulfills our social responsibility based on the SDGs as our guide.
Note: No material relationship of interest exists between the Company and the above candidate.

9

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

Career summary and significant concurrent positions, etc.

April 1980
October 2008

Number ofshares of theCompany held

Joined the Company
General Manager of Electronic Materials Research
Norihiro Shimizu
Institute of the Company(October 2, 1955) April 2009
Executive Officer of the Company
Age: 64
April 2011
Senior Executive Officer, General Manager of Central
Research Institute of the Company
5,000[June 2017]
April 2013
Managing Executive Officer, General Manager of[3 years
Research and Development Dept. of the Company* at the conclusion of June 2017
Director and Managing Executive Officer of thethis Ordinary GeneralCompany
Meeting ofApril 2018
Director and Senior Managing Executive Officer of the
Shareholders]Company (present)[Reasons for selection as the candidate for Director]
3
Mr. Norihiro Shimizu has ample operational experience, including oversight of researchand development activities for many years in the fields of polymers and electronicmaterials. Currently, as Chief Scientific Officer and Chief R&D Officer, he is responsible
for all research and development operations, and for business strategy including
Attendance at Board development of next-generation products and of new businesses. In light of his richexpertise and experience in research and development operations, it is hence judged by theof Directors
Companythat he can appropriately fulfil the role of determining important businessmeetings
executionand supervising the business execution of Directors and Executive Officers, and12/13 (92%)
requests his election as Director.
[Message to shareholders]Through continuous innovation leveraging the comprehensive capabilities of the Group, I
am committed to ensuring sustainable growth and improving corporate value byimplementing business strategy from a medium- to long-term perspective.
Note: No material relationship of interest exists between the Company and the above candidate.

10

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

April 1981
June 2005

Number ofshares of theCompany held

Joined the Company
Deputy General Manager, Shibukawa Plant of the(Reappointed)
Company
June 2007
Deputy General Manager, Omuta Plant of the Company
Masaharu Suzuki April 2011
Executive Officer of the Company, Director Chairman of(December 11, 1955)
Denka Chemicals Holdings Asia Pacific Pte., Ltd.
Age: 64
April 2015
Managing Executive Officer of the Company
April 2017
General Manager, Corporate Planning Dept. of the
4,000[June 2019]
Company[1 yearMay 2017
General Manager, Business Process Reform Promotion* at the conclusion ofDept. of the Company
this Ordinary General January 2018
General Manager, Denka Value-Up Promotion Dept. of
Meeting of
the Company
June 2019
Director and Managing Executive Officer of the Company
Shareholders]April 2020
Director and Senior Managing Executive Officer of the
4
Company (present)[Reasons for selection as the candidate for Director]
Mr. Masaharu Suzuki possesses adequate operational experience, including work
experience in research and development and plant manufacturing, responsibility for the
management of an overseas subsidiary, business strategy, and administrative divisions
such as investor relations and corporate communications. Currently, Mr. Suzuki directs the
Attendance at Board technical division overall as Chief Technical Officer, while also taking responsibility for
the Digital Innovation Dept., a department created to strategically build and operateof Directors
general information systems for the Group. It is hence judged by the Company that he canmeetings
appropriately fulfil the role of determining important business execution and supervising
13/13 (100%)
the business execution of Directors and Executive Officers, and requests his election as
Director.
[Message to shareholders]
I will endeavor to continuously boost the corporate value of the Company by promoting
ESG-oriented management from a global perspective.
Note: No material relationship of interest exists between the Company and the above candidate.

11

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

Joined the Company
General Manager, Styrene Div. of the Company
General Manager, Corporate Planning Dept. of theCompany
Toshio Imai
Executive Officer, Assistant to General Manager,(January 25 1959) April 2013
Elastomers & Performance Plastics of the Company
Age: 61
April 2015
General Manager, Elastomers & Performance Plastics of
6,900
the Company[June 2019]
April 2017Managing Executive Officer of the Company[1 year* at the conclusion of April 2019
General Manager, Denka Value-Up Promotion Dept. of
the Company
this Ordinary General
June 2019
Director and Managing Executive Officer of the Company
Meeting of
Shareholders]April 2020
Director and Senior Managing Executive Officer of theCompany (present)
5[Reasons for selection as the candidate for Director]
Mr. Toshio Imai possesses adequate operational experience, including work experience atoverseas subsidiaries, and taking responsibility for the styrene and elastomer businesses
over many years. Currently, Mr. Imai is in charge of business strategy for the Denka Group
as a whole, including overseas businesses, as the executive responsible for management
Attendance at Board strategy and investor relations and corporate communications divisions, and he ispromoting the management plan, “Denka Value-Up.” It is hence judged by the Company
of Directorsthat he can appropriately fulfil the role of determining important business execution andmeetings
supervising the business execution of Directors and Executive Officers, and requests his
13/13 (100%)
election as Director.
[Message to shareholders]
As the business environment changes rapidly, I will consider the actions we should take toachieve “sustained growth” and “sound growth” in order to meet the expectations of our
stakeholders towards the future.
(Reappointed)

April 1982
October 2006
June 2011

Number ofshares of theCompany held

Note: No material relationship of interest exists between the Company and the above candidate.

12

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

Career summary and significant concurrent positions, etc.

April 1974
April 1999
April 2004
April 2007

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.
Executive Officer of Mitsui & Co., Ltd. (until March
2010), President of Mitsui & Co. (Thailand) Ltd.
Representative Director and President of Mitsui Bussan
Plastic Trade Co., Ltd. (present Mitsui & Co. Plastics Ltd.)(until June 2014)
Counselor of Mitsui & Co. Plastics Ltd. (until June 2015)
Outside Director of the Company (present)

Number ofshares of theCompany held

Akio Yamamoto April 2009
(December 2, 1951)
Age: 68
June 2014[June 2015]
June 2015[5 years* at the conclusionof this Ordinary
General Meeting of
Shareholders][Reasons for selection as the candidate for Outside Director]
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
6
Director and President of Mitsui & Co. Plastics Ltd. He also has rich international
experience, including serving as a vice president at global enterprises. The Company
proposes that Mr. Yamamoto be elected as an Outside Director in the expectation that hewill utilize his knowledge in providing suggestions about the Company’s overseas businessexpansion strategy and management in general. Although he used to work at a company
that has 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 ator a recent operating officer of the said company; 2) although the Company’s sales to theBoard of Directors
said company account for 6.1% of the Company’s total sales, transactions between themeetings
Company and the said company are substantially payments of commission by the Company
13/13 (100%)to the said company for services offered by its trading company function and the amount ofcommission paid is modest (under 2% of the said company’s sales); and 3) he satisfies theCompany’s “Standards of Independence 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]
As the business environment surrounding companies undergoes major changes, an age isapproaching when all companies must reexamine their own raison d'être and mission. Whileearnestly taking on the Company’s future vision and a variety of issues, I have a renewed
desire to contribute to the sound development of the Company and boost the corporate
value of the Company.
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 limit 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. Yamamoto is approved, the Company plans to continue the same contract.

13

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

April 1976
May 2000

Number ofshares of theCompany held

Joined The Dai-Ichi Kangyo Bank, Ltd.
General Manager, Osaka Sales Department of The Dai-Ichi
KangyoBank, Ltd.
(Reappointed)
April 2002
General Manager, Osaka Sales Department III of Mizuho(Candidate for
Corporate Bank, Limited
Outside Director)
March
2003
Executive Officer of Mizuho Corporate Bank, Limited(Independent(untilApril 2003), General Manager, Corporate
Director)
Department II (until April 2003)
Managing Executive Officer of Orient Corporation (until
Tatsutsugu Fujihara June 2003
March
2005)
(November 23, 1952)
April
2005
Managing
Executive Officer of Mizuho Corporate Bank,
Age: 67
Limited (until March 2007)
June 2007
Director and President of Mizuho Marketing Experts Co.,
[June 2016]
Ltd. (until March 2013)[4 yearsRepresentative Director and President of KSO Corporation* at the conclusion June 2013
June 2014
Representative Director and Chairman of KSO Corporationof this Ordinary
General Meeting of April 2016
Director of KSO Corporation
Shareholders]June 2016
Chairman and Executive Officer of KSO Corporation (until
June 2018)
June 2016
Outside Director of the Company (present)
7[Reasons for selection as the candidate for Outside Director]
Having worked in corporate management at financial institutions for many years, Mr.
Tatsutsugu Fujihara 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 that conflictof interest with other general shareholders will arise because 1) he is not a current or a
recent operating officer of the said financial institution; 2) a significant number of years
Attendance athave passed since he retired from the said financial institution (13 years have passed since
Board of Directors 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
13/13 (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 intend to contribute to the creation of an organization that approaches matters with a fairstance, not affected by opinions of others easily, and has a diversity that enables suchorganization to purge itself of negative influences.
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 limit 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. Fujihara is approved, the Company plans to continue the same contract.

14

Proposal No. 3:

Election of One (1) Substitute Director who is an Audit & Supervisory Committee
MemberIn order to ensure that the number of incumbent Directors who are Audit & Supervisory Committee
Members does not fall short of that required by laws and regulations or the Articles of Incorporation of theCompany, the election of one (1) substitute Director who is an Audit & Supervisory Committee Member is
proposed.
The consent of the Audit & Supervisory Committee has been obtained for the submission of this
proposal.
The candidate for substitute Director who is an Audit & Supervisory Committee Member is as follows:
Name(Date of birth)[Director since][Director’s term ofoffice]Career summary, positions, responsibilities
and significant concurrent positions, etc.
April 1974
April 1999
April 2004

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.
April 2007
Executive Officer of Mitsui & Co., Ltd. (until March
2010), President of Mitsui & Co. (Thailand) Ltd.
April 2009
Representative Director and President of Mitsui Bussan
Plastic Trade Co., Ltd. (present Mitsui & Co. PlasticsLtd.) (until June 2014)(Candidate forCounselor of Mitsui & Co. Plastics Ltd. (until June 2015)
Substitute Outside June 2014
Director who is an June 2015
Outside Director of the Company (present)
Audit &
[Reasons for selection as the candidate for substitute Outside Director who is an Audit&
Supervisory
Supervisory Committee Member]Committee
Mr. Akio Yamamoto has rich experience and broad insight as a manager in Japan andMember)overseas through his involvement in corporate management for many years. His career
includes serving as an Executive Officer of Mitsui & Co., Ltd. and the Representative
Akio Yamamoto Director and President of Mitsui & Co. Plastics Ltd. He also has rich international(December 2, 1951) experience, including serving as a vice president at global enterprises. Accordingly, he has
Age: 68
utilized these insights to provide advice from his standpoint as Outside Director in regard to
the Company’s overseas business expansion strategy and other aspects of management in[June 2015]
general.
[5 years
The Company proposes that Mr. Yamamoto be elected as a substitute Outside Director who* at the conclusion is an Audit & Supervisory Committee Member, in the expectation that he will utilize his richof this Ordinary and great insight, knowledge, and experience in supervision and audits of the Company’s
General Meeting of management.
Shareholders]
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 generalshareholders will arise because 1) he is not a current or a recent operating officer of the said
company; 2) although the Company’s sales to the said company account for 6.1% of theCompany’s total sales, transactions between the Company and the said company aresubstantially 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.
Notes: 1. No material relationship of interest exists between the Company and the above candidate.
2. If Proposal No. 2 “Election of Seven (7) Directors (Excluding Directors who are Audit &Supervisory Committee Members)” is approved as originally proposed, the Company intends forthe candidate to be appointed as a Director who is not an Audit & Supervisory Committee
Member, but if the number of Directors who are Audit & Supervisory Committee Members falls
short of that required by laws and regulations, the candidate is expected to resign from his
position as Director who is not an Audit & Supervisory Committee Member and be appointed as a
Director who is an Audit & Supervisory Committee Member.
15

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 provided for in Article
423, Paragraph 1 of said Act to a predefined amount of ¥5 million or more or the amountstipulated by laws and regulations, whichever is higher. If the candidate assumes the position of
Outside Director who is an Audit & Supervisory Committee Member, the Company plans tocontinue the same contract.
4. As the candidate satisfies the conditions for independent officers as defined by Tokyo Stock
Exchange, Inc., the Company has notified the Exchange of his designation as an independent
officer, and if he assumes the position of Director who is an Audit & Supervisory Committee
Member, the Company plans to continue to designate him as an independent officer.

16

(Reference)
The Company’s views regarding the election of Directors
In order to promote the management plan, “Denka Value-Up” aimed at realizing “The Denka Value,” theCompany’s corporate philosophy, the Company aims to strengthen the management structure with Directors
and Executive Officers, while enriching the governance structure and supervisory functions.
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. The Company believes that it is important for the Boardof Directors as a whole to elect a good balance of personnel with a variety of knowledge, experience, andabilities, and ensure that the composition of the Board of Directors is diverse in terms of gender,international background, and other factors.
Additionally, the Company believes that Independent Outside Directors should comprise at least
one-third of Directors, and implements this policy.
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.

17

(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 Value” (corporate philosophy), which forms the basis forthe activities of the Denka Group, the Company strives to strengthen its business foundation by improving its
earnings power and expanding the scope of operations, while also working to improve corporate value bymaking 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.
The Denka Value (Corporate Philosophy)“The Denka Value” (corporate philosophy) consists of the “Denka Mission,” which represents ouruppermost mission statement, and the “Denka Principles,” a set of precepts guiding actions taken by every
Group employee.
“The Denka Value” lies at the pinnacle of all corporate activities, including management plans, andthrough implementing “The Denka Value,” the Company will work to respond to the expectations and trustof society.
“The Denka Value” (Corporate Philosophy)
The Denka Mission
Taking on the challenge of expanding the possibilities of chemistry to create new value and contribute tosound social development.
Note: Based on the corporate slogan “Possibility of chemistry.”
The Denka PrinciplesWe: Boldly confront challenges with determination and sincerity.
 Think and take action today with the future in mind.
 Deliver new values, and inspire customers through innovative monozukuri.* Respect the environment and create a cheerful workplace that prioritizes safety.
 Contribute to a better society, whilst taking pride in being a trusted corporate citizen.
*Japanese-style craftsmanship18Current Corporate Governance System

Board of Directors and optional committees■Board of Directors (Met 13 times in fiscal 2019)
To realize the Company’s corporate philosophy, “The Denka Value,” the Board of Directors monitors andsupervises major operational decision-making and execution of business duties by executive officers, basedon strategic and management planning. The Board of Directors as a whole appoints candidates to be
Directors in line with the standards for the appointment of both internal and Outside Directors, based on the
belief that it is important to appoint a good balance of people with a variety of expertise, experiences, andskills. For further details of our approach in appointing members of the Board of Directors, please see page
17.
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.
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 & Supervisory Committee Members) terms to one year, in order to facilitate
flexible checks on directors at the General Meeting of Shareholders.
■Nomination & Remuneration Advisory Committee (Met once in fiscal 2019)
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
decision-making, informed by a wide range of opinion and advice from Outside Directors.

19

In the previous fiscal year, this Committee received reports and advice from the Board of Directors
regarding remuneration and redeployments at the Director and Executive Officer level.
■D&A Round Table (Met 11 times in fiscal 2019)
In order to facilitate in-depth discussions regarding management matters that are of particular importance,
the D&A Round Table is organized once a month, in principle, 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 the previous fiscal year, we reaffirmed that discussion was reinvigorated at the Board of
Directors, by ensuring an appropriate Board size and composition (in terms of achieving the right balance ofexpertise, experience, ability and diversity) and an appropriate meeting frequency and duration, as well as
through various initiatives including prior explanation of agenda items, to deepen the understanding ofoutside officers of the Company, enabling them to make proactive contributions at the Board of Directors
meetings.
Furthermore, in the previous year’s appraisal, in order to foster deeper discussion of business strategy for
the whole Denka Group and business strategy for individual units, there was a view that it is important toadjust the allocation of time at meetings of the Board of Directors, and to ensure details of medium-to-longand short-term business strategy are shared by internal and outside officers.
In light of the above, we enhanced the “D&A Round Table,” which serves as a forum for free,open-minded, constructive discussions, etc. in order to facilitate in-depth discussions regarding management
matters that are of particular importance, and the “Business and Research Policy Briefings,” which are held
to have outside officers understand the Company’s medium- to long-term and short-term business andresearch policies.
As a result of these measures, we reaffirmed that deliberations on agenda items, based on sufficientunderstanding of business strategy, were reinvigorated.
At the same time, there were views that ways to further optimize the operation of the Board of Directors
should be considered, including the revision of standards for agenda items and matters reported.
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.
Audit & Supervisory Committee (Met 11 times in fiscal 2019)
In accordance with their fiduciary responsibilities to shareholders, Audit & Supervisory Committee
Members and the Audit & Supervisory 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 the businesses of the Company, investigations pertaining to business duties andaccounting, and the appointment, dismissal, non-reappointment, and remuneration of an auditing firm.
In addition, the Audit & Supervisory Committee forms views on matters related to the election, etc. andcompensation, etc. of Directors (excluding Directors who are Audit & Supervisory Committee Members),
including matters to be put forward at the General Meeting of Shareholders.
Furthermore, the Company appoints candidates for Directors who are Audit & Supervisory Committee
Members based on its judgment that, in order for the Audit & Supervisory Committee to fulfill its roles andresponsibilities, Audit & Supervisory Committee Members should possess appropriate experience and ability
as required for their duties, and that in particular, there should be at least one person with expertise in financeand accounting.
Message from Directors who are Audit & Supervisory Committee Members
Mitsukuni Ayabe, Director, Full-time Audit & Supervisory Committee Member
I am committed to further improving the corporate value of the Company so that it becomes more trusted
by stakeholders, through audits and other operations conducted fairly and without bias.
Junichi Kimura, Director, Full-time Audit & Supervisory Committee Member
As our society is beset by frequent unexpected circumstances, I intend to prioritize the appropriateness of
the Company’s risk management function with regard to various types of risk in my audits.

20

Yasuo Sato, Director, Audit & Supervisory Committee Member (Outside)
In a spirit of rationality and fairness, I am determined to contribute to the medium- to long-term growthof the Company and boosting its corporate value, as I focus on further strengthening corporate
governance and enhancing awareness of compliance as an Audit & Supervisory Committee Member.
Toshio Kinoshita, Director, Audit & Supervisory Committee Member (Outside)
I will identify potential risks and contribute to enhancing corporate governance at the Company, in orderto ensure Denka’s sustainable growth and enhance corporate value over the medium- to long-term.
Hiroko Yamamoto, Director, Audit & Supervisory Committee Member (Outside)
I intend to contribute to enhancing corporate value, while focusing on the fullest compliance and theeffectiveness of corporate governance in a spirit of diversity.
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 page17.), in accordance with the requirements for independence stipulated in the Companies Act, in addition to
the standards 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:■Business and research policy briefings (Met twice in fiscal 2019)
Briefings are held in order to have outside officers understand the Company’s medium- to long-term andshort-term business and research policies.
■Outside Officer Liaison Committee (Met 4 times in fiscal 2019)
The Company holds “Outside Officer Liaison Committee” meetings to facilitate the exchange of
information and mutual awareness among outside officers concerning matters related to Denka’s corporate
governance and business.

21

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
2008

Step up checks on management from an external
perspective
Create system enabling appropriate advice-giving
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

2019

Improve the governance framework and raise
standards of transparency and soundness ofmanagement
Create venues for free, vigorous and constructive
deliberations, exchange of opinions andinformation and alliance-strengthening forinternal 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 of theBoard of Directors
Enable exchange of information and formation ofconsensus among outside officers
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 and advice
from the outside officers with regard to major
business topics including appointments,
remuneration and other governance matters

Further strengthen corporate governance andimprove corporate value by further strengthening
the supervisory role of the Board of Directors, byenabling more rapid decision-making and vesting
directors who are members of the Audit &Supervisory Committee with voting rights at theBoard of Directors meeting

22

MeasuresCut the number of directors by half and introduce
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, the number
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 (fromtwo 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 once a month, inprinciple
Compilation of the Denka Corporate Governance
Guidelines
Enhance the provision of advance explanation foroutside officers regarding specific agenda items
that require adequate explanation
Holding “Outside Officer Liaison Committee”
four times per year
Holding business and research 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 the Board 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
Renaming the “round-table conference of
Directors and Audit & Supervisory Board
Members” the “D&A Round Table”
Shift from the “Company with Audit &Supervisory Board” model to that of a “Company
with Audit & Supervisory Committee”

Change the name of the “Management Advisory
Committee” to the “Nomination & Remuneration
Advisory Committee

[Attached Documents]

Business Report(From April 1, 2019 to March 31, 2020)

1. Overview of the Group(1)

Business Progress and Results
During the fiscal year under review, the Japanese economy faced difficult conditions including
sluggish growth in personal consumption and a decline in exports. From the beginning of 2020, theimpact of the COVID-19 coronavirus infections put significant downward pressure on the economy.
The global economy continued to recover moderately, but in addition to trade friction between the
United States and China and the prolonging of issues surrounding the UK’s exit from the EU, thepandemic of COVID-19 coronavirus infections going into 2020 meant economic activity stalled,
primarily in China, the United States, and Europe, resulting in a rapid slowdown.
In the chemical industry, corporate earnings also declined due to weak demand in Japan andoverseas in the second half of the period, despite a decline in the prices of naphtha and other raw
materials.
Against this economic backdrop, in order to realize “The Denka Value” corporate philosophy, theGroup channeled resources into expanding businesses and consolidated earnings, based on the growthvisions and the growth strategies in the “Denka Value-Up” management plan. As a result, during theyear under review, sales decreased ¥32,324 million or 7.8% year on year to ¥380,803 million, partly due
to revisions to selling prices for certain products in step with declines in raw material prices anddeclines in sales volumes caused by falling demand as a result of trade friction between the UnitedStates and China and the pandemic of COVID-19 coronavirus infections in the second half of the fiscal
year, despite increases in sales volumes of products for use in electric vehicles (EVs) and healthcare
products. Turning to earnings, in addition to declines in sales volumes, the increased cost burden fromupfront investments for future growth businesses including healthcare meant that operating income
decreased by ¥2,641 million or 7.7% year on year to ¥31,587 million, and the ratio of operating income
to net sales was 8.3%. Furthermore, ordinary income decreased ¥2,776 million or 8.5% to ¥30,034
million, and profit attributable to owners of the parent decreased ¥2,342 million or 9.4% to ¥22,703
million.
Results of operations by division are described below.
Elastomers & Performance Plastics Division (Sales: ¥149,325 million)
Principal products: Chloroprene rubber, styrene monomer, polystyrene resin, ABS resin,
CLEAREN, heat-resistant resin, transparent resin, POVAL, etc.
Demand for chloroprene rubber fell back, overall, causing sales volume to decline and sales todecrease. In addition, sales of styrene monomer, ABS resin, polystyrene resin and MS resin at Denka
Singapore Pte., Ltd., our Singapore subsidiary were generally robust in volume terms, but sales
revenues fell owing to revisions to selling prices in step with the decline in prices of raw materials.
As a result, division sales decreased ¥29,912 million or 16.7% year on year to ¥149,325 million.
Infrastructure &Social Solutions Division (Sales: ¥54,802 million)
Principal products: Cement, special cement additives, fertilizers, calcium carbide, fire resistantmaterials, environmental materials, etc.
Sales revenues from special cement additives increased as a result of higher shipments and revised
selling prices, while sales of corrugated drainpipes for agriculture and civil engineering were also
generally robust, but sales of cement, fertilizers, fire resistant materials, and steel materials were down
year on year.
As a result, division sales decreased ¥44 million or 0.1% year on year to ¥54,802 million.

23

Electronics & Innovative Products Division (Sales: ¥68,028 million)
Principal products: Fused silica, electronic circuit substrates, fine ceramics, electronic packaging
materials and acetylene black, etc.
Sales volumes and revenues increased for spherical alumina, high-purity conductive carbon black,and other products for use in EVs, while sales of electronic circuit substrates and ALSINK, highly
reliable heat-dissipating plate, ALONBRIGHT SiAlON phosphors for LED performed well. However,sales of functional films including THERMO FILM ALS for transportation and packing of electronic
components and semiconductors and spherical fused silica fillers were down year on year.
As a result, division sales increased ¥914 million or 1.4% year on year to ¥68,028 million.
Life Science & Environmental Products Division (Sales: ¥36,973 million)
Principal products: Food packaging materials, housing materials, industrial tapes, synthetic fiber for
wigs, etc.
Sales of plastic rain gutters and industrial tapes were robust, while sales of film for food packaging
material and processed products from DENKA Polymer Co., Ltd. were also generally on par with theprevious year, but sales volume of “TOYOKALON” synthetic fiber for wigs was down year on year.
As a result, division sales decreased ¥2,060 million or 5.3% year on year to ¥36,973 million.
Life Innovation Division (Sales: ¥35,510 million)
Principal products: Joint function improvers, vaccines, and diagnostic reagents, etc.
Domestic and export sales volumes and revenues increased for DENKA SEIKEN Co., Ltd.’sreagents, and shipments of influenza vaccines were up year on year.
As a result, division sales increased ¥1,405 million or 4.1% year on year to ¥35,510 million.
Others Division (Sales: ¥36,163 million)
Principal business: Plant engineering etc.
Transaction volumes of Akros Trading Co. Ltd. and other trading companies decreased, and thevalue of projects completed by Denka Consultant & Engineering Co., Ltd. was also down year on year.
As a result, division sales decreased ¥2,627 million or 6.8% year on year to ¥36,163 million.

24

(2)

Capital Investment
In the “Denka Value-Up” management plan, investments totaling 200 billion over five years will bemade in two growth strategies, our refocusing of the business portfolio and introduction of innovative
processes, to meet numerical targets. In the fiscal year ended March 31, 2020, the Group carried out
capital investments totaling ¥34,205 million.
Capital investment in the Elastomers & Performance Plastics Division amounted to ¥7,257 million.
Principal items were construction for increased MS resin capacity at Denka Singapore Pte. Ltd., inaddition to investments at the Company’s Omi Plant, Chiba Plant, etc.
In the Infrastructure & Social Solutions Division, capital investment amounted to ¥8,444 million,
which mostly concerned the Company’s Omi Plant.
In the Electronics & Innovative Products Division, capital investment amounted to ¥8,697 million.
The investments were mostly works to expand spherical alumina production capacity and works toexpand high purity carbon black capacity at the Company’s Omuta Plant and our Singapore subsidiary
Capital investment in the Life Science & Environmental Products Division amounted to ¥2,045
million mainly for the Company and DENKA Polymer Co., Ltd.
In the Life Innovation Division, capital investments of ¥7,561 million were made, in regard toconstruction of new influenza vaccine manufacturing facilities at DENKA SEIKEN Co., Ltd. (currently
the Gosen Site of the Company) and other items.
Main capital investment projects completed during fiscal 2019 included works to increase
production capacity for electronics and highly advanced product lines at the Omuta and Shibukawa
Plants. In addition, capital investment projects currently under construction include a new hydroelectric
power facility at the Omi Plant.
In addition to the above, in the healthcare domain, one of three priority areas, the Company acquired
33.4% of the shares of PlexBio Co., Ltd., a strategic partner in Taiwan, via a third-party allotment
conducted by PlexBio Co., Ltd., with the aim of strengthening our alliance with PlexBio Co., Ltd.

(3)

Financing
In fund procurement, the Company issued ¥15 billion in corporate bonds in December 2019, to meetcosts of redemption of previously issued corporate bonds.

(4)

Issues to be Addressed
Since fiscal 2018, the Company has been focusing significant efforts on promoting the “Denka
Value-Up” five-year management plan, in order to realize the “The Denka Value” concept.
As specific measures in fiscal 2019, the second year of the plan, first, in the healthcare domain, theCompany acquired 33.4% of the shares of PlexBio Co., Ltd., a strategic partner in Taiwan, via athird-party allotment conducted by PlexBio Co., Ltd., with the aim of strengthening our alliance with
PlexBio Co., Ltd. With this investment, the Company will take full advantage of the features of theIntelliPlexTM system, including its multiplex-assay capability, while drawing on technological resources
possessed by the Company to achieve breakthroughs in the field of disease diagnosis.
Likewise, in the electronics and innovation field, mainstay products of the Company arecontributing to society and global environmental conservation as essential high-performance products
for megatrends expected to develop rapidly in future, namely acetylene black, silicon nitride, AN
PLATE, SN PLATE, spherical silica and alumina, and phosphors for 5G and other trends in the electricand electronics industries, and the automotive industry, as represented by xEV and its aim to achieve azero-carbon society. In future, the Company will continue rolling out products, not just in Japan, butaround the world.
Furthermore, in the performance plastics field, the Company decided to halt production ofpolystyrene at its subsidiary in Singapore and invest approximately ¥2.7 billion to overhaul production
facilities and increase MS resin capacity. The current supply capacity of MS resin is insufficient as it isused in an expanding range of optical applications, such as light guiding substrates for backlights, forwhich demand is rapidly increasing, and non-optical applications, such as containers for cosmetics, forwhich there is significant growth in the Asia Pacific region. To address the increasing demand for MS
resin as a leading producer of MS resin, the Company will overhaul existing facilities for the productionof polystyrene, which is in a state of excess supply, thereby doubling our MS resin production capacityand promoting further specialization in this area.
With regard to recent economic trends, we are truly in a situation that may be described as a national
crisis as we are now facing the pandemic of COVID-19 coronavirus infections, prior to which there was
the stagnation of the global economy as a result of geopolitical factors such as trade friction between the25

United States and China, frequent natural disasters, and unrest in the Middle East since the start of theyear. Amid these circumstances, the Company has steadily implemented strategic investments aimed atfurther specialization, with an eye to the megatrends of the future, and innovations to processes throughthe introduction of advanced digital technologies. In addition, we have also focused on the promotion ofworkstyle reform, including promoting a healthy work-life balance and diversity. In future, we will once
again ensure that the goal of “Denka Value-Up” permeates the entire Denka Group, i.e. our vision torecreate ourselves with an advanced corporate structure capable of sustainable, ongoing growth evenamidst various changes in the market environment.
Now, as described above, the world is threatened by COVID-19 coronavirus infections. DENKA
SEIKEN Co., Ltd., with which Denka entered into a business integration on April 1, 2020, has longserved a role in preventing epidemics in Japan through vaccines and diagnostic reagents, and it has
already begun development of simple and rapid testing kits for COVID-19 coronavirus infections.
Looking ahead, the Company aims to create a structure capable of mass-producing up to 100,000 testing
kits per day within the fiscal year. In addition, in April 2020, the Company also decided, in response to
the Japanese government’s request, to supply diethyl malonate, a raw material in the production of theanti-flu medicine Avigan® Tablet (generic name: Favipiravir), which is administered to patients infectedwith COVID-19 coronavirus.
This crisis represents a significant risk, but the Company will use it as an opportunity to further
enhance the efficiency of our operations, and come together as a Group to defeat the national crisis byconsistently promoting “Denka Value-Up,” based on the keywords of “reform and coordination.”
Through January 27, 2020, multiple lawsuits were brought against the Company’s subsidiary in the
United States, Denka Performance Elastomer LLC (hereinafter, referred to as “DPE”), in the state ofLouisiana. In these lawsuits, multiple residents of the area surrounding a DPE factory are seeking
damages, alleging that they have suffered physical, proprietary, and mental damage from chloroprenemonomer emitted from the DPE factory, which manufactures Neoprene. Accordingly, DPE intends to
respond appropriately to the litigation after carefully examining the content of the complaints.
Furthermore, DPE adheres to regulatory emission standards for chloroprene monomer in its
operations and has succeeded in drastically curbing emissions. DPE has also asked the United States
Environmental Protection Agency (EPA) to reconsider the current toxicity assessments of chloroprenemonomer, and the EPA has accepted and will review the new evaluation method that DPE submitted to
the EPA. At the present time, DPE’s operations have not been notably affected by this litigation.
* “Avigan” is a registered trademark of FUJIFILM Toyama Chemical Co., Ltd.

26

(5)

Financial Position and Results of Operations
Item

158th term(Millions of yen, unless otherwise stated)
159th term
160th term
161st term(from April 1, 2016 to (from April 1, 2017 to (from April 1, 2018 to (from April 1, 2019 toMarch 31, 2017)
March 31, 2018)
March 31, 2019)
March 31, 2020)

Net sales
362,647
395,629
413,128
380,803
Operating income
25,84433,652
34,22831,587
Ordinary income
23,15831,49932,81130,034
Profit attributable to18,14523,03525,04622,703owners of parent
Net income per share
205.05261.80286.18262.62(yen)
Total assets
454,944473,799483,827
501,448
Total net assets
227,487242,780
250,481
254,014
Net assets per share
2,526.42
2,727.94
2,839.16
2,906.95(yen)
Total shareholders’
49.1
50.5
51.0
50.0
equity ratio (%)
Return on equity
8.3
10.0
10.3
9.1
(ROE) (%)
Total dividends paid
6,194
9,206
10,47910,785
Dividends per share
70.00
105.00120.00125.00(yen)
Notes: 1. The Company conducted a consolidation of shares at a ratio of five shares to one sharewith an effective date of October 1, 2017. As a result, net income per share, net assets
per share and dividends per share in the above chart are provided assuming that theshare consolidation had been conducted at the beginning of the 158th term.
2. 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.
3. For total dividends paid and dividends per share for the 161st term, the sum of theinterim dividend paid in December 2019 and the dividend proposed for resolution at
this Ordinary General Meeting of Shareholders is indicated.
4. The Company applied Partial Amendments to Accounting Standards for Tax EffectAccounting (Accounting Standards Board of Japan (“ASBJ”) No. 28, February 16,2018) from the beginning of the 160th term, and these standards have been
retrospectively applied to the details of assets and profit/loss in the 159th term.

27

(6) Significant Subsidiaries (as of March 31, 2020)
1) Significant subsidiaries
Company name

CapitalDenka Singapore Pte., Ltd.

SGD 69,410 thousand

Denka Chemicals Holdings
Asia Pacific Pte., Ltd.
Denka Performance
Elastomer LLC

USD 68,700 thousand
USD 62,000 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
Technologies Shanghai Co.,Ltd.
Denka Infrastructure
Malaysia Sdn Bhd.
Denka Construction Solutions
Malaysia Sdn Bhd.

JPY 250 million
JPY 210 million
MYR 7,151 thousand
MYR 1,500 thousand

PT. Hissan Trading Indonesia

USD 300 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 Polymer Co., Ltd.

JPY 2,080 million

Nakagawa Techno IndustrialCo., Ltd.

JPY 50 million

DENKA SEIKEN Co., Ltd.

JPY 1,000 million

28

The
Company’s
percentage ofequityparticipation

Principal business

Manufacturing and sales of
100.0
acetylene black and functional(100.0)polystyrene resin products
Regional headquarters for
100.0
Southeast and South Asia
70.0 Manufacturing and sales of(70.0) synthetic rubbers
Manufacturing and sales of
100.0 fertilizers and chemical
products
Manufacturing and sales of
93.3
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
Business headquarters for100.0 special cement additives in
China
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
fused silica and synthetic fiber(100.0)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
Manufacturing and sales of
100.0 various packaging materials
and plastic containers
Manufacturing, processing,
100.0
and sales of metal rain gutters
Manufacturing and sales of
100.0 vaccines and clinicaldiagnostic reagentsCompany name

The
Company’s
percentage ofequityparticipation

CapitalPrincipal business

Sales of raw materials forindustrial applications, civil
YK Inoas Co., Ltd.
JPY 100 million
100.0 engineering and construction
materials, and interiormaterials
Import, export and sales ofDenka Chemicals GmbHEUR 256 thousand
100.0 chemical and electronics
products
Design and engineering of
Denka Consultant &JPY 50 million
100.0 various industrial facilities,
Engineering Co., Ltd.
transportation facilities, etc.
Sales of inorganic industrial
Akros Trading Co. Ltd.
JPY 1,200 million
69.4 products, organic industrial
products, industrial resins, 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.
Notes: 1. The Company’s percentage of equity participation is calculated by dividing thenumber of shares held by the Company by the number of shares issued and outstanding.
The figure within parentheses indicates the percentage of indirect ownership by
subsidiaries.
2. Effective April 1, 2020, the Company conducted an absorption-type merger with
DENKA SEIKEN Co., Ltd.
3. Effective April 1, 2020, Akros Trading Co., Ltd. and YK Inoas Co., Ltd. conducted anabsorption-type merger, with Akros Trading Co., Ltd. as the surviving company and
YK Inoas Co., Ltd. as the absorbed company.
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

29

Principal business

Manufacturing processing
50.0 sales of polystyrene resin andstyrene-based special resin.
Manufacturing and sales of
50.0
monochloroacetic acid50.0 Electric power supply

(7) Principal Business Details (as of March 31, 2020)
The Company manufactures and sells the following products.

(8)

Business division

Main products

Elastomers & Performance
Plastics Division
Infrastructure & Social
Solutions Division
Electronics & Innovative
Products Division
Life Science &Environmental Products
DivisionLife Innovation Division
Others Division

Chloroprene rubber, styrene monomer, polystyrene resin, ABS resin,
CLEAREN, heat-resistant resin, transparent resin, POVAL, etc.
Cement, special cement additives, fertilizers, calcium carbide, fire
resistant materials, environmental materials, etc.
Fused silica, electronic circuit substrates, fine ceramics, electronic
packaging materials, acetylene black, etc.
Food packaging materials, housing materials, industrial tapes, synthetic
fiber for wigs, etc.
Joint function improvers, Vaccines, diagnostic reagents, etc.
Plant engineering etc.

Principal Offices and Factories (as of March 31, 2020)
Company namePrincipal offices
Head Office:1-1, Nihonbashi-Muromachi 2-chome, Chuo-ku,
TokyoBranches:
Osaka, Nagoya, Fukuoka, Niigata, Hokuriku(Toyama), Sapporo, Tohoku (Sendai)
Plants:Omi (Itoigawa, Niigata Prefecture), Omuta, Chiba(Ichihara, Chiba Prefecture), Shibukawa, Ofuna(Kamakura, Kanagawa Prefecture), Isesaki
Denka Co., Ltd.
Research Institutes: Denka Innovation Center (Advanced Technologies
Research Institute, Life Innovation ResearchInstitute, Infrastructure & Solutions Development
Research Institute) (Machida, Tokyo)
Polymer & Processing Technology Institute(Ichihara, Chiba Prefecture)
Denka Singapore Pte., Ltd. Head Office and Plants: Singapore
Denka Chemical Holdings
Head Office: Singapore
Asia Pacific Pte., 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
Technologies Shanghai
Head Office: Shanghai, China
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
Denka Advantech Pte., Ltd. Head Office and Plant: Singapore
Denal Silane Co., Ltd.
Head Office: Chuo-ku, Tokyo
30

Company name
Denka Advanced Materials(Suzhou) Co., Ltd.
Denka Electronic Materials
Dalian Co., Ltd.
Denka Advanced Materials
Vietnam Co., Ltd.

Principal offices
Head Office and Plant: Suzhou, Jiangsu, China
Head Office and Plant: Dalian, Liaoning, China
Head Office and Plant: Hung Yen, Vietnam

DENKA Polymer Co., Ltd.

Head Office: Koto-ku, Tokyo
Plants: Sakura, Katori (Tako-machi, Chiba Prefecture), Goi (Ichihara,
Chiba Prefecture)

Nakagawa Techno
Industrial Co., Ltd.

Head Office and Plant: Kasai, Hyogo Prefecture

DENKA SEIKEN Co., Ltd.

Head Office: Chuo-ku, Tokyo
Plant: Gosen, Niigata Prefecture
Head Office: Bunkyo-ku, Tokyo
Head Office: Düsseldorf, Germany

YK Inoas Co., Ltd.
Denka Chemicals GmbH
Denka Consultant &Head Office: Chuo-ku, Tokyo
Engineering Co., Ltd.
Akros Trading Co., Ltd.
Head Office: Minato-ku, Tokyo
Akros Trading China Co.,
Head Office: Shanghai, China
Ltd.
Akros Trading Taiwan Co.,
Head Office: Hsin-Chu, Taiwan
Ltd.
Notes: 1. Effective April 1, 2020, the Company conducted an absorption-type merger with
DENKA SEIKEN Co., Ltd.
2. Effective April 1, 2020, Akros Trading Co., Ltd. and YK Inoas Co., Ltd. conducted anabsorption-type merger, with Akros Trading Co., Ltd. as the surviving company and
YK Inoas Co., Ltd. as the absorbed company.
(9) Employees (as of March 31, 2020)
1) The Group
Business segment
Number of employees
1,037
[104]
Elastomers & Performance Plastics Division
Infrastructure & Social Solutions Division
1,027
[121]
Electronics & Innovative Products Division
1,196
[125]
Life Science & Environmental Products Division
1,023
[168]
Life Innovation Division
948
[272]
Others Division
714
[175]
Corporate (common)
371
[55]
Total
6,316 [1,020]
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
3,349 [518]+99 [+3]
40.7
17.1
Note:
The number of employees indicated is the number of full-time employees and theannual average number of temporary employees is indicated in the brackets.
Number of employees

31

(10) Principal Lenders (as of March 31, 2020)
LenderOutstanding borrowings (Millions of yen)
Syndicated loan
20,000Mizuho Bank, Ltd.
16,197
M&A loans
12,442The Norinchukin Bank
5,655
Sumitomo Mitsui Banking Corporation
5,478
Notes: 1. The syndicated loan is managed by Mizuho Bank, Ltd. and Sumitomo Mitsui Banking
Corporation and is co-financed.
2. M&A loans refers to an overseas M&A support loan system maintained by the Japan
Bank for International Cooperation in cooperation with private banks.
(11) Other Significant Matters concerning the Group’s Current Situation
Not applicable32

2. Status of Shares (as of March 31, 2020)(1) Total Number of Authorized Shares

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

88,555,840 shares(including 2,273,467 shares of treasury stock)(3) Number of Shareholders

33,024(4) Major Shareholders
Number of shares
held(hundred shares)
101,817
81,008

Shareholder name

Percentage ofshares held
(%)
11.80
9.39

The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Service Bank, Ltd. (Trust Account)
Trust & Custody Services Bank, Ltd.
(Mizuho Corporate Bank, Ltd. Retirement Benefit Trust
32,1583.73
Account re-entrusted by Mizuho Trust and Banking Co.,Ltd.)
National Mutual Insurance Federation of Agricultural
29,007
3.36
Cooperatives
TAIJU LIFE INSURANCE COMPANY LIMITED
23,816
2.76
STATE STREET BANK AND TRUST COMPANY
16,2021.88505001
JP MORGAN CHASE BANK 385151
15,886
1.84
Japan Trustee Service Bank, Ltd. (Trust Account 5)
14,602
1.69
Mitsui Sumitomo Insurance Company, Limited
13,832
1.60
The Nomura Trust and Banking Co., Ltd. (Trust Account)
13,336
1.55
Notes: 1. 2,273,467 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, 2020)
Not applicable33

4. Company Officers(1)

Directors (as of March 31, 2020)
Name

Position

Manabu Yamamoto

Chairman, Board of
Directors
President

Norihiro Shimizu

Director

Masaharu Suzuki

Director

Toshio Imai

Director

Shinsuke Yoshitaka

Akio Yamamoto
Tatsutsugu Fujihara
Mitsukuni Ayabe
Junichi Kimura
Yasuo Sato

Toshio Kinoshita

Director (Outside)
Director (Outside)
Director (Full-time
Audit & Supervisory
Committee Member)
Director (Full-time
Audit & Supervisory
Committee Member)
Director (Outside)(Audit & Supervisory
Committee Member)
Director (Outside)(Audit & Supervisory
Committee Member)

Responsibilities and significant concurrent positions
Outside Director of Koatsu Gas Kogyo Co., Ltd.
President and Chief Executive Officer
Senior Managing Executive Officer
Chief Scientific Officer (CSO)
Chief R&D Officer
In charge of New Business Planning & Development
Dept., R&D Promoting Dept., Intellectual Property
Dept.
Managing Executive Officer
Chief Technical Officer (CTO)
In charge of Purchasing Dept., Logistics Dept., ElectricPower Dept., Production & Process Technology Dept.,
Engineering Dept., Digital Innovation Dept.
Managing Executive Officer
In charge of Corporate Planning Dept., Investor
Relations Dept., CSR & Corporate Communications
Dept., Automotive Materials & Solutions Dept., Denka
Corporation, Denka Chemicals GmbH
General Manager, Denka Value-Up Promotion Dept.

Chairman and Director of Wisemech Corporation
Representative Director of Global Professional Partners
Outside Audit & Supervisory Board Member ofPanasonic Corporation
Outside Director of TACHI-S CO., LTD.
Outside Director of GiG Works Inc.
Lawyer, Sasanami Law OfficeDirector (Outside)(Audit & Supervisory
Committee Member)
Notes: 1. On June 20, 2019, the Company transitioned to a Company with Audit & Supervisory
Committee, pursuant to the resolution passed at the 160th Ordinary General Meetingof Shareholders held on the same day.
2. Directors Mr. Akio Yamamoto, Mr. Tatsutsugu Fujihara, Mr. Yasuo Sato, Mr. Toshio
Kinoshita, and Ms. Hiroko Yamamoto are outside directors as stipulated in Article 2,
Item 15 of the Companies Act.
3. Director who is an Audit & Supervisory Committee Member, Mr. Toshio Kinoshita is acertified public accountant, and has an adequate level of knowledge regarding financeand accounting.
4. Director who is an Audit & Supervisory Committee Member, Mr. Toshio Kinoshita
retired as Outside Director of Mizuho Bank, Ltd. in September 2019.
5. The Company has appointed Directors Mr. Mitsukuni Ayabe and Mr. Junichi Kimura
as Full-time Audit & Supervisory Committee Members, in order to enhance theeffectiveness of audits through better information gathering and sufficient coordination
Hiroko Yamamoto

34

with the Internal Auditing Dept., etc., and thereby strengthen audit and supervisory
functions.
6. The Company designated Directors Mr. Akio Yamamoto, Mr. Tatsutsugu Fujihara, Mr.
Yasuo Sato, Mr. Toshio Kinoshita, and Ms. Hiroko Yamamoto as independent officers
as defined by Tokyo Stock Exchange, Inc. and notified it of the designation.
(Reference)
Executive Officers (as of April 1, 2020)
Position
President and Chief
Executive Officer
Senior Managing
Executive Officer

Managing Executive
Officer

Executive Officer

Name

Responsibilities

Manabu Yamamoto
Chief Scientific Officer (CSO)
Chief R&D Officer
Norihiro Shimizu In charge of New Business Planning & Development
Dept., R&D Promoting Dept., Intellectual Property
Dept.
Chief Technical Officer (CTO)
In charge of Purchasing Dept., Logistics Dept., Electric
Masaharu Suzuki
Power Dept., Production & Process Technology Dept.,
Engineering Dept., Digital Innovation Dept.
Chief Compliance Officer (CCO)
In charge of Corporate Planning Dept., Corporate
Communications Dept., Automotive Materials &Toshio Imai
Solutions Dept., Denka Corporation, Denka Chemicals
GmbH
In charge of Denka Value-Up Promotion
Tetsuya Shinmura General Manager, Omi Plant
Supervisor of Environmental Measures Promotion
In charge of Internal Auditing Dept., Environment and
Hideki Hirano
Safety Dept., Sustainability Promotion Dept., Quality
Assurance Dept.
Hideki Watanabe General Manager, Chiba Plant
General Manager, Elastomers & Performance Plastics
Koki Tabuchi
Toyoki Yokoyama General Manager, Infrastructure & Social Solutions
Shojiro Watanabe General Manager, Omuta Plant
Assistant to Chief R&D Officer
In charge of Innovation Center
Nobuyuki Yoshino
General Manager, Advanced Technologies ResearchInstituteKazuya Tokumoto Managing Director, DCHA, DSPL, and DAPL
Hideki Takahashi General Manager, Life Innovation
Kazuo Takahashi President of Denka Performance Elastomer LLC
Rimiru Hayashida General Manager, Accounting & Finance Dept.
General Manager, Life Science & Environment
Jinichi Osuga
Products
Yoshimi Ishizuka General Manager, Shibukawa Plant
In charge of HR Dept., Legal Dept., Secretary Dept.
Kiyoshi Asami
General Manager, Administrative Dept.
General Manager, Electronics & Innovative Products
Ikuo Ishida
Yasuo Nakatomi General Manager, Gosen Site

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

35

(2)

Directors and Audit & Supervisory Board Members that Retired During the Fiscal Year
Under Review
Positions, responsibilities, andsignificant concurrent positions
at time of retirement
Director, Executive Vice
President
Supervisor of Life Innovation
Mitsukuni Ayabe June 20, 2019
Term of office expired Division
President and Representative
Director of DENKA SEIKEN
Co., Ltd.
Director
Kenji Nakano
June 20, 2019
Term of office expired Executive Advisor of Akros
Trading Co., Ltd.
Yasuo Sato
June 20, 2019
Term of office expired Director (Outside)
Full-time Audit & Supervisory
Shohei Tamaki
June 20, 2019
Term of office expired
Board Member
Masanori
Full-time Audit & Supervisory
June 20, 2019
Term of office expired
Sakamoto
Board Member
Tsunehiro
Audit & Supervisory Board
June 20, 2019
Term of office expired
Sasanami
Member (Outside)
Audit & Supervisory Board
Toshio Kinoshita June 20, 2019
Term of office expired
Member (Outside)
Notes: 1. On June 20, 2019, the Company transitioned to a Company with Audit & Supervisory
Committee, pursuant to the resolution passed at the 160th Ordinary General Meetingof Shareholders held on the same day. In line with this transition, Audit & Supervisory
Board Members Mr. Shohei Tamaki, Mr. Masanori Sakamoto, Mr. Tsunehiro Sasanami,
and Mr. Toshio Kinoshita retired from their positions as Audit & Supervisory Board
Members due to expiration of their terms of office. Of these persons, Mr. Toshio
Kinoshita was appointed as a Director who is an Audit & Supervisory Committee
Member on the same day. In addition, Mr. Mitsukuni Ayabe and Mr. Yasuo Sato
resigned from their position as Director due to expiration of their term of office, andwere appointed as a Director who is an Audit & Supervisory Committee Member on
the same day.
2. Effective April 1, 2020, the Company conducted an absorption-type merger with
DENKA SEIKEN Co., Ltd.
3. Effective April 1, 2020, Akros Trading Co., Ltd. and YK Inoas Co., Ltd. conducted anabsorption-type merger, with Akros Trading Co., Ltd. as the surviving company and
YK Inoas Co., Ltd. as the absorbed company.
Name

Date ofretirement

Reason for retirement(3) 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. Akio Yamamoto, Mr. Tatsutsugu Fujihara, Mr. Yasuo Sato, Mr.
Toshio Kinoshita, and Ms. Hiroko Yamamoto that limit their liability for damages provided for in Article
423, Paragraph 1 of said 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.

36(4) Remuneration for and Other Payments to Directors and Audit & Supervisory Board Members
1) Prior to the transition to a Company with Audit & Supervisory Committee (from April 1, 2019
until the conclusion of the 160th Ordinary General Meeting of Shareholders (June 20, 2019))

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(of which
8
74
8
68
5
Outside
(3)
(9)
(3)
(9)
(-)
(-)
(-)
Directors)
Audit &
Supervisory
Board
Members(of which
419
419Outside
(2)
(6)
(2)
(6)
(-)
(-)
(-)
Audit &
Supervisory
Board
Members)
Total(of which
12
93
12
88
5
outside
(5)
(15)
(5)
(15)
(-)
(-)
(-)
officers)
Notes: 1. The maximum amount of cash compensation remuneration for Directors is ¥500
million per year (of which the maximum amount of remuneration for Outside Directors
is ¥50 million, excluding the portions of their salaries as employees) as resolved at the158th Ordinary General Meeting of Shareholders held on June 22, 2017.
2. The maximum amount of remuneration for Audit & Supervisory Board Members is¥13 million per month as resolved at the 147th Ordinary General Meeting of
Shareholders held on June 29, 2006.
3. 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 Outside Directors) through said trust).

37

5
(-)

(-)

5
(-)

2) After the transition to a Company with Audit & Supervisory Committee (from the conclusion of
the 160th Ordinary General Meeting of Shareholders (June 20, 2019) until March 31, 2020)

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 areAudit &
7
253
7
198
5
38
5
16
Supervisory
(2)
(18)
(2)
(18)
(-)
(-)
(-)
(-)
Committee
Members)(of whichOutsideDirectors)
Directors(Audit &Supervisory
Committee
568
568Members)
(3)
(27)
(3)
(27)
(-)
(-)
(-)
(-)
(of whichOutsideDirectors)
Total(of which
12
321
12
266
5
38
5
16
Outside
(5)
(45)
(5)
(45)
(-)
(-)
(-)
(-)
Directors)
Notes: 1. The maximum amount of cash compensation remuneration for Directors (excluding
Directors who are Audit & Supervisory 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.
2. The maximum amount of remuneration for Directors who are Audit & Supervisory
Board Members is ¥166 million per year as resolved at the 160th Ordinary General
Meeting of Shareholders held on June 20, 2019.
3. 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 & Supervisory
Committee Members and Outside Directors) through said trust).

38

(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 & Supervisory Committee Member Mr. Yasuo Sato is Chairman and
Director of Wisemech Corporation. There are no significant transactions between the Company
and Wisemech Corporation.
Director who is an Audit & Supervisory Committee Member Mr. Toshio Kinoshita is
Representative Director of Global Professional Partners. There are no significant transactions
between the Company and Global Professional Partners.
Director who is an Audit & Supervisory Committee Member Ms. Hiroko Yamamoto is alawyer with Sasanami Law Office. There are no significant transactions between the Company and
Sasanami Law Office.
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 & Supervisory Committee Member Mr. Toshio Kinoshita is Outside
Audit & Supervisory Board Member of Panasonic Corporation and Outside Director of TACHI-S
CO., LTD., and Outside Director of GiG Works Inc.
He also served as Outside Director at Mizuho Bank, Ltd. until September 2019.
There are no significant transactions between the Company and TACHI-S CO., LTD., or GiG
Works Inc.
The Company has transactions with Panasonic Corporation and Mizuho Bank, Ltd., but there
are no special interest relationships.
3) Relationship with specified related parties such as major customers
Not applicable4) Principal activities in the fiscal year ended March 31, 2020
i. Outside Directors[Board of Directors meetings]
The Board of Directors met 13 times in the fiscal year ended March 31, 2020. Mr. Akio Yamamoto,
Mr. Tatsutsugu Fujihara, Mr. Yasuo Sato, and Mr. Toshio Kinoshita attended all 13 meetings of theBoard of Directors (attendance rate: 100%), and Ms. Hiroko Yamamoto attended all 10 meetings ofthe Board of Directors (attendance rate: 100%) after assuming office as Director on June 20, 2019. 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 Mr. Tatsutsugu
Fujihara, based on his rich experience and wide views as a manager, and expert knowledge ofcorporate finance, actively made inquiries and recommendations on risk management and businessstrategy at subsidiaries, primarily overseas.
In addition, as Directors who are Audit & Supervisory Committee Members, Mr. Yasuo Sato,based on his rich experience and wide views as a corporate executive and rich international experience
serving as a business manager at global companies, Mr. Toshio Kinoshita, based on his experience andrich accounting knowledge as a certified public accountant in Japan and the US, and Ms. Hiroko
Yamamoto, based on her rich experience and expert knowledge as a lawyer, actively made inquiries
and recommendations on the Group’s businesses and intellectual property strategies.
[Audit & Supervisory Board meetings]
The Audit & Supervisory Board met 5 times in the fiscal year ended March 31, 2020. Mr. Toshio
Kinoshita attended all 5 meetings of the Audit & Supervisory Board (attendance rate: 100%). He also
attended the Board of Directors meetings and other important meetings. In addition, he reviewed
important minutes, authorization documents, etc., investigated the Company’s divisions anddepartments, business sites and subsidiaries, and received briefings on the status of business execution
at periodic divisional report meetings. He reported the results of these activities to the Audit &Supervisory Board and had necessary discussions with other Audit & Supervisory Board Members.
[Audit & Supervisory Committee]
The Audit & Supervisory Committee met 11 times in the fiscal year ended March 31, 2020. Mr.
Yasuo Sato attended 10 out of the 11 meetings of the Audit & Supervisory Committee (attendance
rate: 91%), and Mr. Toshio Kinoshita and Ms. Hiroko Yamamoto attended all 11 meetings of the Audit& Supervisory Committee (attendance rate: 100%). Each member of the Audit & Supervisory39

Committee worked closely with the Internal Auditing Dept., etc. to perform efficient and effective
audits of the Company’s divisions and departments, business sites and subsidiaries and receive
briefings on the status of business execution at periodic divisional report meetings. They reported theresults of these activities to the Audit & Supervisory Committee and had necessary discussions withother Audit & Supervisory Committee Members.
Board of Directors
Audit & Supervisory
Audit & Supervisory
meetings
Board meetings
Committee
Attendance
Attendance
Attendance
Attendance
Attendance
Attendance
rate
rate
rate
Director
13/13
100%
Akio Yamamoto
Director
13/13
100%
Tatsutsugu Fujihara
Director (Audit &Supervisory
Committee
13/13
100%
10/11
91%
Member)Yasuo Sato
Director (Audit &Supervisory
Committee
13/13
100%
5/5
100%
11/11
100%
Member)Toshio Kinoshita
Director (Audit &Supervisory
Committee
10/10
100%
11/11
100%
Member)Hiroko Yamamoto
Note: On June 20, 2019, the Company transitioned to a Company with Audit & Supervisory Committee,
pursuant to the resolution passed at the 160th Ordinary General Meeting of Shareholders held on thesame day. The above table shows attendance at meetings of the Audit & Supervisory Board prior to thetransition and meetings of the Audit & Supervisory Committee after the transition.

40

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, 2020
Amount paid (thousands of yen)
Remuneration, etc. for the Accounting Auditor for the fiscal
82,640year ended March 31, 2020
Monetary or property benefits to be paid by the Company
128,856
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, 2020.
2. The Audit & Supervisory 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 withamounts for other companies as disclosed for the fiscal year ended March 31, 2019,
and agrees to the fees, etc., of the Accounting Auditor under Article 399, Item 1 of theCompanies 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 advice and guidance
provided in relation to the introduction of accounting standards for revenue recognition.

(4)

Policy for Determination of Dismissal or Non-reappointment of the Accounting Auditor
If the Audit & Supervisory Committee considers that it has become difficult for the Accounting
Auditor to perform its duties appropriately or otherwise considers it necessary, the Audit & Supervisory
Committee will make a resolution for dismissal or non-reappointment of the Accounting Auditor, andwill submit a proposal to the General 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 & Supervisory Committee will
dismiss the Accounting Auditor upon consent of all the Audit & Supervisory 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 applicable41

Consolidated Financial Statements
Consolidated Balance Sheet(As of March 31, 2020)

Account item
(Assets)
Current assets
Cash and deposits
Notes and accounts
receivable-trade
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 inprogress
Intangible assets
Software
Goodwill
Right of using patent
Investments and otherassets(Reference)160th term
483,827
190,730

161st term

Account item

501,448
198,452(Liabilities)
Current liabilities
Notes and accounts
payable-trade

13,902

29,172

95,78085,63747,455(Millions of yen)
(Reference)161st term
160th term
233,346
247,434
154,047
160,80752,92443,005

Short-term loans payable

43,101

51,92952,159Commercial paper

2,000

9,000

4,389

4,037

Current portion of
long-term loans payable

5,062

10,01019,911

19,582Current portion of bonds

5,000

-

9,802

8,156

Accounts payable-other

18,504

18,079

(511)

(293)

Income taxes payable

3,010

3,550

487

1,431

293,097

302,995

Accrued consumption
taxes
Accrued expenses
Provision for bonuses
Other
Noncurrent liabilities

10,881
3,122
9,953
79,298

11,194
2,992
9,613
86,626

218,677

231,815

22,00037,00040,497
21,89540,733
21,77034,9694,961

26,4003,245

70,35969,098

8,403

8,403

796

691

7,269

7,874

3,820

4,146

63,366307

Bonds payable

44

58

63,3702,260Long-term loans payable
Deferred tax liabilities
Deferred tax liabilities forland revaluation
Net defined benefit
liability
Provision for stock
benefits
Other(Net assets)

1,650
250,4813,644
254,014

17,63429,745

Shareholders’ equity

225,498

235,628

12,415
978
8,312
3,124

11,808
1,002
7,544
3,261

36,99849,353
144,638(5,492)

36,99849,365
156,857(7,593)62,00459,371

Capital stock
Capital surplus
Retained earnings
Treasury stock
Accumulated othercomprehensive income

21,362

15,09242

Investment securities

55,02851,200

236

178

1,699

2,423

Deferred tax assets

2,736

3,160

Other

2,422

2,526

Long-term loans
receivable
Long-term prepaid
expenses

Valuation difference on
available-for-salesecurities
Deferred gains or losses
on hedges
Revaluation reserve forland
Foreign currencytranslation adjustment
Remeasurements ofdefined benefit plans

Allowance for
(118)
(117)
Non-controlling interests
doubtful accounts
Total
483,827
501,448
Total(Note) Amounts are rounded down to the nearest million yen.

43

15,182

10,691

(345)

(551)

10,260

10,259

(120)

(876)

(3,614)(4,429)

3,620

3,294

483,827

501,448

Consolidated Statement of Income(From April 1, 2019 to March 31, 2020)(Millions of yen)
(Reference)160th term
413,128

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

161st term
380,803

310,839

281,465

102,289

99,33868,06067,75034,22831,587

Non-operating income
Interest and dividend income

2,313

1,552

Equity in earnings of affiliates

1,384

1,170

Other

495

4,193

822

3,545

Non-operating expenses
Interest expenses

762

Other

4,849

Ordinary income

866
5,611

4,231

32,811

5,098
30,034Extraordinary income
Loss on sales of investment securities

689

689

280

280

Extraordinary loss
Loss on liquidation of business

389

940

Loss on disaster

718

249

Other

-

Income before income taxes

1,108

113

32,392

Income taxes-current

6,480

Income taxes-deferred

978

1,303
29,011

6,344
7,459

131

6,475

Profit24,933

22,535

Profit (loss) attributable to non-controlling interests

(112)

(167)

Profit attributable to owners of parent

25,04622,703(Note) Amounts are rounded down to the nearest million yen.

44

Non-consolidated Financial Statements
Non-consolidated Balance Sheet(As of March 31, 2020)

Account item
(Assets)
Current assets(Reference)160th term
371,751
120,635

161st term
391,666
133,727

Cash and deposits

4,609

17,556

Notes receivable-trade

3,971

3,637

Accounts
receivable-trade

59,91257,262Merchandise andfinished goods

31,82236,515

Raw materials andsupplies

12,223

11,962

Prepaid expenses

1,319

1,420

Short-term loans
receivable

1,855

756

Other

4,921

4,616

(1)

(1)

Allowance for doubtful
accounts

Noncurrent assets

251,116

257,939

Property, plant andequipment

167,866

173,160

Buildings

28,10028,586Structures

19,37019,293

Machinery andequipment

46,622

46,619672

559

Tools, furniture andfixtures

2,670

2,793

Land

60,45160,375

Vehicles45

Account item
(Liabilities)
Current liabilities
Accounts
payable-trade
Short-term loans
payableCommercial
paper
Current portionof long-termloans payable
Current portionof bonds
Accounts
payable-other
Income taxes
payableAccruedconsumption
taxes
Accruedexpenses
Deposits
received
Provision forbonuses
Other
Noncurrent
liabilities
Bonds payable
Long-term loans
payableDeferred tax
liabilities
Deferred tax
liabilities forland
revaluation
Provision for
retirement
benefits
Provision forstock benefits
Asset retirement
obligations(Millions of yen)
(Reference)161st term
160th term
195,453
216,290
124,321
141,764
31,00524,057

27,67538,675

2,000

9,000

5,053

10,0005,000-

16,265

16,269

783

1,201

106

844

6,909

6,983

27,45232,526

1,747

1,807

321

398

71,13274,52622,00037,00034,442

24,442

5,346

3,889

8,403

8,403

68

-

44

58

128

129

Construction inprogress
Intangible assets

9,978

14,932

Other

830

1,216

Software529

618

Right of using patent
Investments and otherassets301

597(Net assets)
Shareholders’equityCapital stock

82,41983,56232,783

26,58645,094

48,280

1,879

4,654

1,178

1,930

-

614

1,483

1,496

(1)

(1)

Investment securities
Stocks of subsidiaries
and affiliates
Long-term loans
receivable
Long-term prepaid
expenses
Prepaid pension cost

Other investments
Allowance for doubtful
accounts

Capital surplus
Legal capitalsurplus
Other capitalsurplusRetainedearnings
Other retained
earnings
Reserve foradvanceddepreciationof noncurrent
assetsRetainedearnings
brought
forwardTreasury stock

Valuation andtranslation
adjustments
Valuationdifference on
available-forsale securities
Revaluation
reserve for
land
Total
371,751
391,666 Total(Note) Amounts are rounded down to the nearest million yen.

46

700

603

176,297

175,376

152,402

155,726

36,99836,99849,28449,28449,28449,2840071,61077,036

71,61077,036

3,804

3,786

67,80673,250(5,492)(7,593)23,895

19,64913,635

9,389

10,260

10,259371,751

391,666

Non-consolidated Statement of Income(From April 1, 2019 to March 31, 2020)(Millions of yen)
(Reference)160th term
243,735

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

161st term
228,249

178,540

165,432

65,19462,81745,94946,796

19,24516,020Non-operating income
Interest and dividend income

7,834

Other

1,056

6,571
8,890

1,060

7,631

Non-operating expenses
Interest expenses

524

Other

3,706

Ordinary income

660
4,231

3,237

23,904

3,897
19,753Extraordinary income
Gain on sales of investment securities

689

689

280

280

Extraordinary loss
Loss on liquidation of business

389

Loss on disaster

481

Income before income taxes

730
870

249

23,723

Income taxes-current

3,850

Income taxes-deferred

603

Profit47

19,053
2,991

4,453
19,269(Note) Amounts are rounded down to the nearest million yen.

980

241

3,232
15,821

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

Independent Auditors’ Report(English Translation)
May 12, 2020
To the Board of Directors
Denka Co., Ltd.
Ernst & Young ShinNihon LLC
Tokyo office
Mineo Kambayashi
Certified Public Accountant
Designated and Engagement Partner
Shigeyuki Honda
Certified Public Accountant
Designated and Engagement Partner
Yasuyuki Kitamura
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, 2019 through March 31,
2020.
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.
Responsibilities of Management and the Audit & Supervisory 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.
48

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 with accounting
principles generally accepted in Japan.
The Audit & Supervisory Committee are responsible for monitoring the execution of Directors’ duties
related to designing and 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
a whole 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 and implement
audit procedures to address the risks of material misstatement. The audit procedures shall be selected andapplied as determined by the auditor. In addition, sufficient and appropriate audit evidence shall beobtained 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 thepremise 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, andcontent 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 and its
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 & Supervisory Committee regarding the scope and timing of
implementation of the planned audit, material audit findings including material weaknesses in internal
control identified in the course of the audit, and other matters required under the auditing standards.
The auditor reports to the Audit & Supervisory 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 theauditor’s independence and any safeguards that are in place to reduce or eliminate obstacles.

49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.

50

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

Independent Auditors’ Report(English Translation)
May 12, 2020
To the Board of Directors
Denka Co., Ltd.
Ernst & Young ShinNihon LLC
Tokyo office
Mineo Kambayashi
Certified Public Accountant
Designated and Engagement Partner
Shigeyuki Honda
Certified Public Accountant
Designated and Engagement Partner
Yasuyuki Kitamura
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 161st fiscal year from April 1, 2019 through March 31, 2020.
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, 2020, 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.
Emphasis of Matter
As discussed in the Notes to Significant Subsequent Events, on April 1, 2020, the Company conducted anabsorption-type merger with consolidated subsidiary DENKA SEIKEN Co., Ltd.
This matter does not affect the Auditor’s opinion.

51

Responsibilities of Management and the Audit & Supervisory 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 & Supervisory Committee are responsible for monitoring the execution of Directors’ duties
related to designing and 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 and implement
audit procedures to address the risks of material misstatement. The audit procedures shall be selected andapplied as determined by the auditor. In addition, sufficient and appropriate audit evidence shall beobtained to provide a basis for the audit opinion.
・ In making those risk assessments, the auditor considers internal control relevant to the entity’s audit in orderto design audit procedures that are appropriate in the circumstances, although the purpose of the audit of
the financial statements and the accompanying supplementary schedules is not to express an opinion on theeffectiveness 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 thenotes 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.

52

The auditor reports to the Audit & Supervisory Committee regarding the scope and timing of
implementation of the planned audit, material audit findings including material weaknesses in internal
control identified in the course of the audit, and other matters required under the auditing standards.
The auditor reports to the Audit & Supervisory 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 theauditor’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.

53

Transcript of the Audit Report by the Audit & Supervisory Board

Audit Report(English Translation)
The Audit & Supervisory Committee has audited the Directors’ performance of their duties during the
161st term from April 1, 2019 to March 31, 2020, and hereby reports the method and results thereof as
follows:
1. Auditing Method and Details Thereof
The Audit & Supervisory Committee received regular reports from Directors, employees, etc. on thedetails 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 tosuch resolutions (internal control systems), requested explanations as necessary, and expressed its views, inaddition to conducting audits via the methods below.
1) Audit & Supervisory Committee Members conformed with the Audit & Supervisory Committee Audit
Standards set forth by the Audit & Supervisory Committee and, in accordance with audit policies, theassignment of duties, etc., worked with the Internal Auditing 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., and investigated the status of operations and assets at head office
and important business sites. In addition, with regard to subsidiaries, Audit & Supervisory 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 asnecessary.
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 & Supervisory Committee examined the content based on the status of
deliberations at meetings of the Board of Directors and other meetings.
3) The Audit & Supervisory 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 & Supervisory Committee received notice from the Accounting Auditor that the“system for ensuring that duties are performed properly” (matters set forth in each item of Article 131of the Ordinance 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 & Supervisory Committee reviewed the non-consolidated financial
statements (non-consolidated balance sheet, non-consolidated statement of income, non-consolidated
statement of changes 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
54

mention regarding the description in the Business Report and the performance of duties by the
Directors related to such internal control systems.
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 12, 2020
Audit & Supervisory Committee, Denka Co., Ltd.
Full-time Audit & Supervisory Committee
MemberFull-time Audit & Supervisory Committee
MemberAudit & Supervisory Committee Member
Audit & Supervisory Committee Member
Audit & Supervisory Committee Member(Note)

Mitsukuni Ayabe
Junichi Kimura
Yasuo Sato
Toshio Kinoshita
Hiroko Yamamoto

Audit & Supervisory Committee Members Yasuo Sato, Toshio Kinoshita and Hiroko
Yamamoto are Outside Directors as stipulated in Article 2, Item 15 and Article 331, Section 6of the Companies Act.

55