November
mber 8, 2017
Company name:
Representative:
Contact:

Denka Company Limited
Manabu Yamamoto, President & CEO
Noriyuki Shimizu,Shimizu General Manager,
CSR & Corporate Communications Dept.
(TEL: +81-3-5290-5011)+815011)

Denka Reveals “Denka“Denka Value-Up,”
Value,” a New Management Plan to Be Implemented from
Fiscal 2018 to Fiscal
iscal 2022 with the Aim of Recreating Itself as a SpecialtySpecialty-Fusion
Fusion Company
Denka Company Limited (hereinafter “Denka” or the “Company”) hereby announces that it has established“Denka ValueValue-Up,”
Up,” a new management plan spanning five years from fiscal 2018 to fiscal 2022.
In line with the current Denka100 management plan, we have been focusing on the three growthstrategies
strategies. Specifically,pecifically, we have endeavored to “create the most optimal production system,” “scrutinize
every cost element” and “focus management resources on new growth drivers and develop
next-generation
generation products.” Thesee initiatives have yielded steady and remarkable operating results
results, helping
the Company gain a greater presence inn such priority fields as healthcare, the environment and energy, andinfrastructure
infrastructure. We have also proactively engaged in forward-looking
forward looking growth investment aimed at securing
more robust profit bases for each business segment.
Having formulated Denka Value Up, we havere-adjusted
adjusted our focus to the following factors
essential to sustainable corporate growth:“placing the uutmost
tmost priority on safety”; “givingdue consideration to environmental concerns”;“nurturing and better utilizing humanresources”; and “making social contributions.”
Having positioned these creeds as fundamental
components of its corporate philosophy,
Denkaa now aims to achieve significant
cant growth
at home and abroabroadad and, to this end, execute
its new growth strategies designed to help it tobecome a “Specialty“Specialty-Fusion
Fusion Company”
capable of securing both “Sustained Growth”
and “Sound Growth.”
Outline of “Denka Value-UpUp”

1. Growth Vision(1)Become
Become a Specialty-Fusion
Specialty Fusion Company with a Strong
trong Global PresenceP
Become a company that boasts outstanding global competitiveness backed by a robust portfolio ofspecialty businesses and products along with its technological strengths and human resource capabilities(2)Maintain
Maintain Sustained Growth by Significantly Enhancing Productivity through Innovative Processes
Strive to aachieve
chieve a drastic improvement in productivity and, to this end, focus on truly essential
operations and introduce innovative processes
processes through the utilization of IoT, AI and other cutting
cutting-edge
digital technologies
technologies,, thereby securing ability to secure sustained growth regardless of external conditions(3)Secure
Secure Sound Growth through Work Style Reforms
Develop a working environment that is inclusive of diverse working styles, with the aim of bettercollaborating with employees to pursue stakeholder happiness and to ensure sound corporate growth12. Numerical Targets

3. Growth Strategies(1)BusinessBusiness Portfolio Shift(i)Accelerate
Accelerate growth of specialty businesses
We will focus our management resources on the following three priority fields, with the aim ofachieving numerical targets through proactive strategic investments (e.g., execution of M&M&A
A andbusiness alliance, reinforcement of our R&D structure and reallocation of human resources).
Healthcare (EBITDA ratio: 30%)
Policy:In addition to illness prevention and early diagnosis, we are expanding into cancer remedy and genealteration analy
analysis
sis to help enhance people’s quality of life.
Primary themes:
Diagnostic reagents to measure lipoprotein subclasses, services aimed at facilitating genome
genome-based
based
cancer treatment (particularly the selection of candidate drugs for molecular-targetedmolecular targeted therapy), methods
for mass
mass-producing
producing oncolytic viruses,
viruses and technologies to manufacture proteins using the tobacco plant
The environment and energy (EBITDA ratio: 20%)
Policy:Wee employ such core technologies as cutting
cutting-edge
edge inorganic materials in product development, with theaim of better satisfying the latest needs for solutions that help achieve zero emissions
emissions, support
autonomous
utonomous driving systems and assist in other technological pursuits aimed at creating a clean and safe
future societysociety.
Primary
ary themes:
Lithium ion battery materials, films as alternatives for coatings and materials for surface decoration ofinteriors
High-value
value-added
added infrastructure (EBITDA ratio: 10%)
Policy:We strive to meet high-profile
high profile infrastructure development needs in countries around the world throughthe provision of cutting
cutting-edge
edge materials and solutions.
Primary themes:
Promote global expansion via M&A,
M&A, the marketing of pr
products
oducts tailored to meet region
region-specificspecific needs
and cutting
cutting-edge
edge infrastructure diagnosis services employing ICT technologies
Note: EBITDA ratio = (operating income + depreciation and amortization) / net sales2

(ii)Specialize our key operations
To secure resilience to changes in external conditions, we will work to increase “specialty grade” ratio in
product lineup while shifting our focus to the solution business.
Example: Place greater emphasis on product functionalities to promote specialization of our chloroprenerubber business Apply our special cement additive technologies to develop such products as weed-preventing soil
solidifiers, thereby stepping up the provision of comprehensive solutions in our agri-products
business(iii)Redefine the positioning of the commodity businesses
We are restructuring strategies for our commodity businesses that are intrinsically unsuitable for
specialization and, to this end, will establish a new Head Office department to redefine their positioning.
Examples: Suspended the production of calcium carbide at the Omuta Plant, decisively overhaulingoperations boasting a century-long track record dating back to Denka’s founding Entered an alliance with Sumitomo Osaka Cement Co., Ltd. to launch a joint logistics scheme Stepped up collaboration with external companies housed in the same industrial complex inChiba to streamline utilities(2) Introduction of Innovative Processes
Rather than adhering to precedent, we proactively work to introduce cutting-edge ICT technologies;
focus on truly essential operations and the standardization of our processes to achieve drastic
improvements in productivity; create new businesses; execute work style reforms; and promote
workforce diversity.
① Production process reforms
 Restructure our production facilities into ICT-based next-generation smart factories
 Build a robust, overarching information platform capable of managing all data on a real-time basis
 Realize manufacturing operations with greater productivity and superior stability② R&D process reforms
 Identify R&D themes oriented toward specialization
 Develop R&D assistance systems employing ICT
 Nurture diverse human resources by providing them with strategically designed career paths③ Operational process reforms
 Facilitate active in-house collaboration through the introduction of futuristic office functions
 Enhance operational productivity (streamline routine work, improve the efficiency ofmeetings, etc.)
 Develop a location-free working environment
Work style reforms/Diversity promotion
 Shift our focus from “quantity” to “quality” in terms of working hours
 Help employees enhance their quality of life Create an innovation-oriented organization by welcoming diverse human resources andhelping them achieve success
4. Investment Plan
We will invest a total of ¥200 billion over a five-year period.
Of this, strategic investment: ¥75 billion (¥15 billion/year)
M&A, etc.:¥60 billion
Process reforms: ¥15 billion
Regular investment:¥125 billion (¥25 billion/year)
5. Shareholder Returns
We will keep committed to the targeted total shareholder return ratio of 50%.
(Total shareholder return ratio = (cash dividends + shares repurchased) / net income attributable toowners of the parent for the fiscal year)
In addition, we focus on maintaining the stable payment of cash dividends while flexibly carrying out
share repurchases by giving due consideration to such factors as a trend in stock prices.

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