DKS REPORT 2022

DKS Co. Ltd.

Contents
Who We Are
1

DKS’ Identity

2

DKS’ Raison D’etre and Vision for 2030

4

Value Creation Process of the DKS Group

6

Explanation of the Value Creation Process

8

Risks and Opportunities

10

Material Issues

What Sort of Value Has DKS Been Creating?
12

Message from the CEO

16	Philosophy in Practice—The History of DKS Business
Development
18

Review of the Medium-Term Management Plans

Overview of the Medium-Term Management Plan
19	
“FELIZ 115”
20

Financial and Nonfinancial Highlights

Financial/Capital Strategies and Total Shareholder
22	
ReturnWhat Sort of Value Will DKS Create?
24

Message from the President

28	Special Feature
Tradition to Change Chemistry into Happiness andInnovation as a 100-year-old Company
Contribution of DKS to renewable energy

 DKS Report 2022 Editorial Policy
In 2016, the DKS Group began to publish its integrated annual
report (DKS Report), which added information about the Company’s
finances and management strategy to what had been in its
Environmental and Social Report. From 2017, we referred to theInternational Integrated Reporting Framework promoted by theInternational Integrated Reporting Council (IIRC*), which became
part of the Value Reporting Foundation in a June 2021 merger.
We are continuously publishing an English-language edition. As
our business activities become increasingly international in nature,
we aim to communicate to all our stakeholders including thoseoutside Japan. Starting with the disclosure of environmental, socialand governance (ESG), and nonfinancial information associated with
DKS’ sustainable growth, we will also convey management’s vision,business results, growth strategy, capital policy and otherinformation.
In this Report, by visualizing those “invisible assets” that raise
corporate value, we attempt to describe the Company’s current
conditions and its journey to the future, so as to be able to informthe readers of the creation of value across the short, medium andlong terms. Looking to the future, we will use the DKS Report as acommunication tool with all our stakeholders.
Please refer to our official website for detailed information about
the financial and nonfinancial information of the DKS Group.
*In June 2022, IIRC was integrated into ISSB, the IFRS foundation.

 Organizations Covered by this Report
DKS Co. Ltd. (“DKS” or “the Company”) and Group companies(collectively “the DKS Group” or “the Group”)

 Period Covered by this Report
In principle, this Report contains our activities and data during fiscal
2021 (from April 1, 2021, to March 31, 2022). The data on the Industrial
Accident Severity Rate (ASR) and the Industrial Accident Frequency
Rate (AFR) were obtained from January to December 2021.

30

Research and Development

32

Quality Management

36

Human Resource Management

40

Consideration for the Environment

42

TCFD Efforts

 Reference Guidelines

44

Contributing to a Collaborative SocietyInternational Integrated Reporting Framework by the IFRSFoundation (Value Reporting Foundation merged with the IFRSFoundation in July 2022), “Guidance for Collaborative Value
Creation” by the Ministry of Economy, Trade and Industry,“Environmental Reporting Guideline 2012” by the Ministry of theEnvironment, “Environmental Accounting Guideline 2005” by the
Ministry of the Environment, “Environmental Accounting Guideline
for Chemical Industries (November 2003)” by the Japan Chemical
Industry Association (JCIA)

Value Creation Innovation
46

Organizational Resilience

55

Message from an Outside Director

56

Dialogue with Shareholders and Investors

57

Life Sciences Sidebar

58	
Board of Directors, Audit & Supervisory Board, andExecutive Officers

Initiatives by Business
60

Business Activities Report

Data Section
66

Proprietary Technologies of DKS

68

Fundamental Knowledge of Surfactants

70

Glossary72

Domestic/Overseas Network

74

Financial and Nonfinancial 11-Year Summary

76

Consolidated Financial Statements

79	
Environmental Data/Compliance Awareness Survey
Results81	Corporate Data/On Publishing the DKS Report 2022/
Editor’s Note

Posted on the Website
The Emissions and Transfer Volumes of Notification
Substances under the PRTR Law in Fiscal 2021
Transition of the Environmental Impact at Branches
and Yokkaichi Chemical Co., Ltd.
Initiatives for Sustainable Growth - Securing Safety
and Disaster Prevention[Forward-Looking Statements]
Statements contained in this report regarding the plans, projections andstrategies of DKS that are not historical fact constitute forward-looking
statements about future financial results and are subject to risks anduncertainties. As such, actual results might differ significantly from these forwardlooking statements due to changes in various external environmental factors.
Consequently, DKS hopes for your understanding as it does not guarantee thecertainty of such forward-looking statements.

Who We Are

DKS’ Identity

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DKS Credo

f sa f e

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r’s poemustoContributing to the nation and society
through industry, s ecure

DKS Mottoes

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Quality First, Cost Reduction, R&D Efforts

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DKS Group Logo

The DKS Group logo symbolizes “Act for a Leap,” our step for globalization.
It describes the bridge for growth toward “Challenge to 1000.”DKS REPORT 2022

1

Who We Are

DKS’ Raison D’etre and Vision for 2030
DKS Group Products Around Us
DKS Group products support a variety of other products used in our daily lives. Here are some examples found insociety and our living environment.

Additives for food,cosmetics, etc.
Coatings forbuilding materials
and furniture
Silicon wafer
detergents

Shampoos

IT & electronics
materials
Surface modifiers
Flame retardants

Optical fiberconnectors

Sealants forelectric insulation
Health foods

Rock hardening
agentsConductive pastes
for solar cells

Oil spill treatment
agentsSix Core Business Segments

Synthetic
lubricantsFeedbinders

Precisioncleaning agents

Net sales for the fiscal year ended March 31, 2022
¥62.6 billion

Life Sciences¥476 million (1%)

Electronic Device Materials¥7,316 million (12%)

Surfactants¥18,564 million (30%)

Sales by Segment

Functional Materials¥19,928 million (31%)

2

DKS REPORT 2022

Surfactants
We have been providing highly functionalsurfactants since the Company’s founding in
1909.

Amenity Materials
Amenity Materials¥8,092 million (13%)
Polyurethane Materials¥8,294 million (13%)

We provide materials and peripheral
application technologies necessary for a
comfortable living environment.

Vision for 2030
In the year 2030, Japan will be facing social challenges from major impacts to employment, health care, and social
welfare from a shrinking workforce due to an aging and declining population. DKS Group aims to use the power ofchemistry to be a smart chemical partner solving various problems people face.
Realizing active
lifestyles throughhealth foods
P.65
Employees

Supporting abundant
lifestyles with
distinctive cosmetics
P.61

Shareholders

A smart chemical partnerthat solves various problems
for people
Environmental
conservation
P.40

Regional
revitalization

Innovation
P.28

Customers

Society

Contributing to safe
and secure lifestyles
through the field ofhealth care

Polyurethane Materials

Electronic Device Materials

We provide industrial materials andpolyurethane raw materials, for example, paints,
adhesives, civil engineering and construction
materials, and electric insulating materials.

We provide ceramic materials andconductive pastes for applications in home
appliances and electronics components.

Functional Materials

Life Sciences

We provide products such as flame
retardants, radcure resins, and waterborne
polyurethanes for applications in home
appliances and daily necessities.

We provide naturally derived health foods
and technologies for extraction,
concentration, and powdering of natural
products.
DKS REPORT 2022

3

Who We Are

Value Creation Process of the DKS Group
Based on its technologies and trust accumulated over the past 113 years, the DKS Group applies originality andimagination to limited resources in delivering materials that enrich our way of life.

DKS Credo Contributing to the nation and society through industry
DKS Mottoes Quality First, Cost Reduction, R&D Efforts

Business Model

InputsFiscal year ended March 31, 2022

 Financial capital
Net assets: ¥40,383 million
Interest-bearing debt: ¥27,763 million

 Manufactured capital
Manufacturing bases: 14(includes 4 overseas)

Market needs

 Intellectual capital
Patents held: 1,005(of which held overseas: 483)

Sales

 Human capital

A 113-year history
and technologicalcapabilities able
to respond to
the times

MarketingDiverse productgroups andcombinations

Strengths ofDKSbusinesses

Employees (consolidated): 1,096
Ratio of female employees: 20.3%
Overseas employees: 197
Employment ratio for people withdisabilities: 2.57%

Broad customer baseInspiring/Inspired Partners

Production
management

 Social and Relationship capital

Research andtechnology
development

Procurement

Inspiring/Inspired Partners (specificbusiness partners with whom DKS
can keep a mutually-inspiring
relationship)
Cooperation with local
governments & universities Natural capital

Uni-Top strategy

Providing unique products that do not pursue scale

DKS’ Seven Critical Issues of Importance(management foundation)

Consideration for the Environment

P.40

Quality Management

P.32

Regional Society Contributions

P.44

Research and Development

P.30

Organizational Resilience

P.46

Human Resource Management

P.36

Tackling NEXT and DREAM Businesses

P.57

Energy consumption: 24,600 kL/year
Raw materials used: Petroleum,coal, ore minerals, wood, plants,
biological materials

4

DKS REPORT 2022

Shareholders

Customers

Society

Employees

A smart chemical partner that solves various problems for people
Outputs

Outcomes
Fiscal year ended March 31, 2022

Six core businesssegments

 Financial capital

Surfactants

DREAM (New Businesses)

P.60

 Manufactured capital

Amenity Materials

P.61

NEXT (Peripheral Businesses)

Net assets: ¥86,469 million
Dividend per Share: ¥80
Free Cash Flows: ¥2,820 million
Total Shareholder Return for the Past
10 Years:10.5%
ROIC (4.6%) >WACC + α

Polyurethane Materials

Yokkaichi Chemical Co., Ltd.:
expanded plant facilities
Kyoto Elex Co., Ltd.: started operationof new plant in China
Capital expenditures: ¥1,925 million

 Intellectual capital
Number of patent applications: 91 (ofwhich held overseas: 33)
R&D expenses: ¥2,946 million

P.62

P.63

Ratio of females in managerial
positions: 9.1%
Retention ratio of employees withdisabilities: 85%
Percentage of paid leave used: 67.4%
Selected as a Health & Productivity
Stock for the third consecutive year

Electronic Device Materials

 Social and Relationship capital

Functional Materials

ACTUAL (Existing Businesses)

Medium-Term Management
Plan “FELIZ 115”

 Human capital

Regional revitalization,
local community revitalization
P.19
P.64

ESG-based management
initiatives
E: Mitigating environmental impact
of products and raw materials
100-million mulberry tree planting
campaign
S: Appointment of female officers
G: Establishment of an Advisory Board Natural capital
Contributions to a recycling-oriented
society (CN2050)
Energy reduction rate: 9.1%
GHG emissions: 48,500 tons
(reduction of 400 tons)
Generated waste amount: 16,662 tons
(reduction of 1,769 tons)

Life Sciences

P.65

DKS REPORT 2022

5

Who We Are

Explanation of the Value Creation Process

1 Business Model
DKS strives to be a company praised for our Uni-Top strategy:
providing unique products that do not pursue scale. Our
business development has the fundamental value-chain cycleof: understanding customer and market needs marketingstrategies that leverage the Company’s strengths
development of products (prototypes, generating orders)grounded in our R&D prowess efficient procurement tofacilitate production appropriate production andmanagement sales activities with strict adherence todelivery deadlines further understanding of market needs.
We have developed products with added value and closealignment with customer needs by leveraging expertise fromour diverse technologies (see p. 66), our transactions in a
broad spectrum of industrial fields, and our ability to combinerich lineups of product groups that number in the thousands.
Our existing businesses (ACTUAL) encompass a broad
B-to-B customer platform, while our peripheral businesses(NEXT) utilize R&D for specific customers, in addition to
specialized production plants. With our relationships withinspiring/inspired partners in particular, we have built up apartner (customer) base that anticipates the needs of (B-to-Bto-C) end-users and is able to mutually inspire andcollaborate with new approaches.
Furthermore, with regard to new businesses (DREAM) thatare our medium- to long-term growth areas, we will continue
to invest in new growth businesses, such as in life sciences,and pursue product development that enhances QOL andcontributes to society in ways that help solve issues such as
the aging population and environmental conservation.

2 Inputs
The following is an overview of the various types of capitalthat support DKS’ business.
•Financial capital: Net assets as of the end of fiscal 2021
exceeded ¥40.0 billion for the first time. While maintaining asound financial footing resting on a net D/E ratio of 0.5, we
respond to future risks and opportunities from environmental
changes (see p.8), and emphasize capital efficiency, including
utilizing interest-bearing debt, that constantly keeps ROIC
above WACC.
•Manufactured capital: With 14 manufacturing bases insideand outside Japan, we are leveraging our 113 years oftechnology and experience to manufacture products of value.
Furthermore, with regard to capital expenditures, we have
stepped up facility upgrades and growth investments since
the fiscal year ended March 2015. In the 10 years preceding
the end of March 2022, we have implemented cumulative
capital expenditures of ¥42,300 million, with total
depreciation surpassing ¥17,200 million (see p.22).
•Intellectual capital: Utilizing the range of expertise
accumulated since our founding, and with over 1,000 patents
held, we go beyond simply providing materials through ourdiverse product lineup. DKS has technological capabilities

6

DKS REPORT 2022

that allow us to customize the function and performance of
products in line with customer requirements and to makeproposals based on the ideal product combination.
•Human capital: Human capital is the most importantbusiness resource for DKS, and, based on the idea of valuing
people, we have increased our consolidated workforce by
10%, mainly in Japan, over the past 10 years (see p.74). In
order to meet increasingly diverse social needs, we aim to
maintain talented human resources and diversity, and we
strive to improve our human capital.
•Social and Relationship capital: We emphasize theimprovement of our information gathering and R&D
capabilities through trusting relationships built up over many
years with our agencies and inspiring/inspired partners, aswell as through collaboration with local governments anduniversities. We also aim to increase social recognition andestablish our DKS brand through appropriate supply chain
management and public relations activities.
•Natural capital: As a chemical manufacturer, we consume avariety of natural raw materials. We have devised creative
approaches to using limited global resources efficiently andto contributing to a recycling-oriented economy. Throughthese efforts, and through continuous improvements toenergy consumption and waste product management, we
strive for environmental conservation and biodiversity
preservation.

3 Outputs
While the products and services provided by DKS to society
are quite diverse, they can be grouped into six core businesssegments, namely: Surfactants, Amenity Materials,
Polyurethane Materials, Functional Materials, Electronic
Device Materials, and the Life Sciences business, which was
newly added in fiscal 2019.
Surfactants, a product group DKS has developed for morethan 100 years, are used in a wide variety of fields andaccount for about 30% of consolidated net sales. Amenity
Materials provide materials and peripheral technologies
necessary for a comfortable living environment, while
Polyurethane Materials provide industrial materials such as
paints, adhesives, civil engineering and construction
materials, and electrical insulation materials, as well as raw
materials for polyurethane. Each of these businesses accountfor about 13% of consolidated net sales. The Functional
Materials business provides flame retardants, antistatic
agents, lubricants, antioxidants, and radiation-curable
monomers and oligomers for plastic materials, which are
indispensable in enhancing the functionality of rubber andplastics used in PCs, smartphones, home appliances, andhousing. Over the past 10 years, this business has almost
doubled in growth, accounting for over 30% of consolidated
sales. The Electronic Devices business, in response to the IT
society, develops ion-conductive polymers, ionic liquids,
ceramic materials, lithium-ion battery materials, and conductive
pastes for solar cells, which are manufactured by two affiliatedcompanies. (For details on each business, see p.60-65.)

1

2

3

4 Outcomes
The paragraphs before outline our primary value creation andreturns on capital through business operations and outputs inthe year ended March 31, 2022. We aim to create more value
for our four stakeholders going toward 2030.
•Financial capital: We are targeting total assets and net salesof ¥135.0 billion, with plans for aggressive growth investments
while maintaining the balance of capital and debt. Although
our long-term annual TSR rate is in the double-digits, we aim
to contribute to SDG 9 by leveraging future investments andtechnological innovation, building resilient infrastructure andfacilitating sustainable industrialization, thereby boosting
returns on financial capital.
•Manufactured capital: Although our sales volume for the
fiscal year ended March 31, 2022 has plateaued at ¥1.9 billion,
we will continue to expand new production capacity toachieve growth of ¥12.0 billion over five years, as planned
under “FELIZ 115.” In addition, SDG 12 is particularly
important for a chemical manufacturer. By enhancing ourmanufactured capital, we aim for the efficient use andsustainable management of natural resources by reducing,recycling, and reusing waste.
•Intellectual capital: From the viewpoint of effective
utilization and proper management of patents, the number ofpatents held at the end of the period slightly decreased, but
the number of new registrations during the period remained
high at 91 (see p.31). In our vision for 2030, we announced aspart of our medium-term management plan “FELIZ 115,” ourgoal of becoming a “technology developer pursuing
progress and innovation.” Through this, we will strive toboost our ratio of R&D spending to net sales from the 4%
range to the 5% range, so that we can deliver products and4

services with new value. In the Life Sciences business inparticular, we will support economic development and thegood health and well-being of people in order to contributeto expanding the technological innovation cited in SDGs 3
and 9.
•Human capital: Based on the plans laid out in “FELIZ 115,”
we will adopt a performance evaluation system that rewards
contributions to the Company as we continue employee
happiness-based management in order to help boost
employee enthusiasm and satisfaction, thereby enhancing
human capital and increasing corporate value (SDG 3).
Additionally, as an outcome of efforts toward human assets,
we will further promote diversity and emphasize our
employee’s health and higher satisfaction rates. (see p.37).
•Social and Relationship capital: We will strive for regional
revitalization and local community revitalization, which areimportant social issues in Japan, and we would like to achieve
collaborative value creation through strong ties withmunicipalities. Within this effort, Sericulture Innovation is one
important activity (see p.44), and we expect the establishmentof effective public-private-civic partnerships will contribute toimproving social value (SDG 8 and 17).
•Natural capital: Responding to the 2050 carbon neutral
goal (CN2050) and reducing energy consumption are urgent
challenges. In addition to promoting the reduction of GHG
emissions and waste generation, the DKS Group will
implement the Life Science business, as well as Sericulture
Innovation, with initiatives in cooperation with local
governments such as mulberry tree planting and the effective
use of mulberry trees and silkworms. Through these
initiatives, we promote environmental conservation and CO2
reductions, contributing to environmental and energy-related
issues (SDG 7 and 13).

DKS REPORT 2022

7

Who We Are

Risks and Opportunities
Although a risk event could damage the broad value of a company, risk might also lead to opportunities. While
steadfastly avoiding and mitigating risks, DKS also identifies risks considered to be material and implements
initiatives to transform them into opportunities.
Significant risks

Impacts from risks/Impacts on stakeholders

1Raw material price fluctuations

2

Reliance primarily on external
procurement for raw materials• Inability to control prices depending on raw material prices• BCP (Business Continuity Plan) measures become necessary• Stocking more inventory than necessary• Restrictions on the use of existing raw materials and manufacturingmethods due to changes in regulations in each country and changes insocial trends

3

Environmental and human rights risks• Restriction of business activities due to insufficient or delayed
responses to environmental and human rights issues

4(primarily naphtha)

Large number of customers• Profits influenced by the rate of cost fluctuations• Time taken for price negotiation activities to maintain the profit margin• Decline in market share, lost ground due to price negotiations (switch
to a product of another company in the same industry)• Time taken and costs incurred in to each customer response• Difficulty in narrowing in on target customers

5

Product composition consists of a large
variety of small-lot products• Declining cost competitiveness due to rising production costs• Time required for response from each department (research, sales, andhandling of complaints) due to the wide variety of products

6Increasing demand for inexpensive
products associated with growth inemerging nations• Replacement by inexpensive products from other companies

Employees Shareholders Customers

Employees

Customers

Employees Shareholders Customers

Employees

Customers

Employees

Customers

Society

Employees Shareholders Customers(Global growth opportunities are hard to seize)

7

Changes in the external environment

8Strengthened laws and regulations

9

Stricter quality controls

10

Aging facilities/equipment

118

IT security• Concerns about losing competitiveness in domestic and overseas
markets due the improving technological level and productivity ofneighboring countries• Concerns about patent infringements overseas

Employees

Customers

Employees

Customers

Society• Loss of trust from customers and society due to negligent quality
control• Particular know-how needed to enter fields that require a higher levelof quality control, such as energy, pharmaceuticals, and food

Employees

Customers

Society• Manufacturing trouble and quality issues arising from aging equipment• Rising rate of industrial accidents• Declining employee productivity

Employees Shareholders Customers

Society• Loss of trust due to leakage of internal information• Interrupted business activity from unauthorized external access• Business delays due to IT system failure• Pressure on earnings due to rising IT system operating costs

Employees Shareholders Customers

Society

Employees Shareholders Customers

Society• Cost and time impacts from switching to substitute products in order
to comply with regulations

12Impact on economic activity due to the
spread of an infectious disease• Interrupted business activity from employees contracting disease• Disrupted supply chain from suppliers/distributors contracting disease• Impacts on performance from delays/interruptions in product supply• Development delays due to less face-to-face interaction with customers

13 mployment diversification; changes inEthe human resources market• Intensifying competition for securing talented human resources• Rising retirement rate

DKS REPORT 2022

Employees

1Confirmation of risks recognized in the organizational risk management system

2

Identification of risks that should be recognized at the six business segments

3

Matrix analysis based on the importance of each risk (the degree of impact
on stakeholders) and the probability of risk becoming evident (possibility ofnegative impact due to occurrence/disclosure)

4

Extraction of significant risks from the viewpoint of material issues in the
integrated annual report

5

Analysis of impact and response to those risks when they occur

Prioritization of
the 1 – 13significant risks inthe table below

6

High
Probability of arising risk

Identifying Significant Risks

12
7
2

4

5

10

1

3

9
8
13

11

Low
Small

Responding to risks

Risk significanceLarge(impact on stakeholders)

Opportunities• Survey of raw material price trends, including naphtha• Survey trends of other companies• Gather information from customers• Implement prompt price revisions (securing profit)• Adopt a raw materials formula (naphtha-linked pricing)• Coordinate with suppliers, agencies, and customers• Cost reduction• Inventory adjustment• If costs cannot be absorbed through our own efforts, we will pass along prices• Secure multiple sources for raw materials• Coordinate with suppliers• Draft BCP measures• Fixed costs not needed; superiority arises during economic downturns• Cost reductions are possible by searching out less expensive raw materials• Diversify raw material procurement sources• Strengthen BCP measures• Strengthen supply chain management• Formulation and observance of numerical environmental targets (GX strategic
targets) by the Company itself, and their observance• Response to climate change and promotion of information disclosure throughscenario analysis based on TCFD recommendations• Promotion of respect for human rights based on The Ten Principles of the UN
Global Compact• Formulation and implementation of green transformation (GX) strategy with a viewto carbon neutrality by 2050
• Respect the basic human rights, diversity, personalities, and individuality ofcolleagues working in the Company, and create a rewarding workplace free of
discrimination and harassment• Select and focus on themes• Deepen market strategies (through “FELIZ 115”) including revenue management• Information on each industry is easily obtainable due to having customers in every
field• Prioritize important themes• Deepen relationships with inspiring/inspired partners• Improve open innovation outcomes• Revise product composition under “FELIZ 115”
• Thorough profit management for each product• Raise prices for products with a smaller contribution to earnings• Boost productivity by discontinuing products• Possessing a lineup of products that can be used in each field enables a variety ofsolutions to be proposed• Range of options for products increases• Product composition that takes profit performance into account• Promote a differentiation strategy through solution proposals, cost reductions,Japanese quality and customization• Halt sales of low-priced products. Accelerate the shift to highly profitable products bydeepening customer relationships; proposing solutions, customizing products, etc.
• Uni-top strategy (pursue uniqueness, not scale)• Alliance and coordination with companies, universities, etc.
• Strengthen the IP Department; strengthen IP asset management (investigate IP
asset rights of other asset holders)• Intellectual property strategies• Gather information on legal revisions• Strengthen internal oversight/checking systems• Reinforcement of compliance• Should the same thing happen with another company’s product, it can be regarded
as an opportunity to replace it with a DKS product• Improve market share through legally compliant product development• Improve trust through rigorous compliance practices• Promote the development and supply of environmentally and user-friendly products• Utilize PL prevention/management guidelines• Acquire GMP certification• Use PL insurance to avoid liability risks• Ensure safety in the food product field by acquiring HACCP certification• Build and operate a quality control system• Expand business opportunities by leverage of certification• Ability to provide customers with the value of a specialized industry• Improve the level of trust from customers and deliver the feeling of security andassurance• Consider structural reforms through digital transformation (DX)• Promote production system enhancements and improved production efficiency
by making the Kasumi Plant a mother plant• An opportunity to make business continuity decisions, enabling the beginning of aportfolio review• Improve the profitability of aging factories; promote DX• Strengthen management of routine repairs and preventative maintenanceleveraging DX• Strengthen compliance through employee training and appropriate measuresagainst unauthorized access• Enhance the security of in-house systems• Progress of DX (efforts for digitization based on the “Digital Roadmap”)• Ability to build an advanced information security system by promoting DX• Promote work-style reform through working from home and telework• Review the supply chain and strengthen BCP measures• Improve the environment for working from home and teleworking• Reduce fixed costs by aggregating and reducing bases• Strengthen coordination with various associations and educational institutions to
help secure human resources• Implement a human resources training program• Promote Health and Productivity Management• Implement harassment prevention training• Promote work-style reform (develop systems for working from home, child-careleave, reemployment after life events, etc.)• Accommodate hiring of senior workers and extension of retirement• System reforms in response to societal changes• Review and implement personnel system reforms• Improve the work environment of manufacturing sites that accommodate female
workers• Strengthen Health and Productivity Management

DKS REPORT 2022

9

Who We Are

Material Issues
ESG Basic Policy

Priority themes

We are confronted with a broad range of issues, from environmental problems such as
global warming, resource depletion and a crisis of biodiversity to an increasing populationthat causes food resource and energy problems amid rapid globalization and anincreasingly information-based society. We look to take on these challenges and to protect
our environment and way of life while improving safety and levels of comfort. To do thesethings, we believe that “chemistry provides a solution” and shall contribute to theestablishment of a sustainable society.

1 Quality Management

P.32

2 Research and Development

P.30

3 Human Resource Management

P.36

Important Issue Identification Process
At DKS, we are identifying material issues, tackling important issues from a long-term
perspective in management. Based on existing social issues and our corporate philosophy,
we have identified seven important themes from the two perspectives of their significanceto DKS and our stakeholders. At the same time, we have specified the material issues ofchallenges toward addressing these themes. In the identification of those material issues,
we have referenced the UN’s Sustainable Development Goals (SDGs), ISO 26000, and otherglobal guidelines, given the important demands the international society places on DKS as
we work to advance business globally.
Step 1

Step 2

Step 3

Step 4

Identify theimportance for theCompany

Identify theimportance forstakeholders

Draw a material
issues map

Identify the material
issuesImportant Issue Identification Aims

Corporate Philosophy andManagement Policy• Corporate mission stated in thefounding spirit and the Company
Credo• Happiness-based management

4 Consideration for the EnvironmentP.40

1 Quality Management
Importance to stakeholders

Issues for society• Environmental issues
Climate change, energy depletion,
biodiversity, etc.
• Social issues
Changes in social structure due topopulation growth, increased security
risks due to technological advances
and the advent of the informationsociety, public health, food crises,
elimination of disparities, etc.

2 Research andExtremely
high

Development

3 Human Resource

Management

4 Consideration for theEnvironmentHigh

5 Contributing to a

Collaborative Society

6 Organizational
Importance to DKS

Resilience
7 Tackling NEXT andDREAM Businesses

Priority Themes & Focuses of SDGs

5 Contributing to a Collaborative Society

6 Organizational Resilience

P.44

P.46

Following the principles of our Company Credo and Company Mottoes, and taking into
consideration the technologies and various experiences we have amassed over 113 years
as a chemical manufacturer, we have taken the SDGs (17 goals and 169 targets) and linked
them with specific themes related to contributions that DKS can make to solving social
issues. From this, we identified five SDGs to which we will dedicate particular effort.
Five focus SDGs determined from discussions in 2017:
3: Health and Productivity Management, an aging society with a declining birthrate
7: Renewable energy, environmentally conscious raw materials
9: Development and provision of industrial materials for building social infrastructure
12: Environmental pollution, natural resource
depletion
17: Inspiring/Inspired Partners

10

DKS REPORT 2022

7 Tackling NEXT and DREAM
Businesses

P.57, 60

Material Issues for DKS

Relevant
stakeholders

DKS initiatives

KPI• Thorough quality assurance
systemCustomers• Global supply chain management• Food hygiene management initiatives (HACCP certification)• Initiatives towards a management system equivalent to handlingpharmaceuticals• Promoting occupational safety
and health

Employees• Continuous improvements through occupational safety andhealth management systems• Implement hands‑on safety education• Zero occupational accidents (lost time)• R&D framework aligned with
Uni‑Top strategies

Shareholders
Customers• Establishment of research centers for each customer• Strengthen initiatives with inspiring/inspired partners• R&D expenses to sales ratio of 5.0% or
higher• Developing products that
contribute to the environment

Customers
Society• Promote product development with lower environmental
impacts, such as additives for biodegradable plastics• Promoting an intellectual
property strategy

Employees
Shareholders• Prompt applications for IP rights and aggressive pursuit of quick
IP rights acquisition• Diversity

Employees
Society• Provide workplaces and opportunities for the active participationof female employees• Appoint female officers and hire overseas employees• Work‑style reforms• Implement personnel system reforms with an emphasis on
outcomes• Employment initiatives for people with disabilities• Human resource development

Employees• Implementation of a DX human resource development program• Secure and train global human resources• Health and Productivity
Management initiatives

Employees
Society• Improve health awareness by adopting a health information app• Efforts to establish exercise habits (DKS Calisthenics)• Percentage of employees who exceed
abdominal girth standards: 25.0%• Percentage of employees at risk for orexperiencing metabolic syndrome: 22.0%• Reduction of absenteeism to 2.0% or less• Improvement of work engagement andachievement of a normalized score of 51(both targets for FY2024)• Responding todecarbonization and reducing
environmental burdens

Shareholders
Society• Green transformation (GX) initiatives• Renewable energy (biomass power generation)• Product development for moving beyond green vehicles(strengthen the battery cell business)• Formulate climate change countermeasures, CN2050 plan,
strategies, KPI• Initiatives for TCFD

• Reduce greenhouse gas (GHG) emissions(Scope 1, Scope 2) for the entire DKSGroup in Japan by 30% compared to
FY2013 by FY2030• Female manager ration of 10% or higher• Contributing to a
recycling‑oriented society

Society• Contribution to a recycling-oriented society through responsible
care activities• Traceability systems (review inventory volume, product loss rates,
product profit margins)• 10% reduction in waste generation per unit
(FY2030 target)• Appropriate management ofchemical substancesSociety• Respond to more stringent legal regulations• Reduce emissions of PRTR Regulation-designated substance• Final waste disposal rate of 0.1% or less
(FY2030 target)• Regional revitalization

Society• Promotion of initiatives with local governments• Industry-government-academia collaboration• Initiatives for Sericulture Innovation• Co-prosperity with the supply
chain

Society• Switch to renewable resources and natural materials• Effective use of the peeled skins of sudachi (Japanese citrus)• Work to improve added value throughout the supply chain from“Tier N” to “Tier N+1”

• Responding to the digitizationof society

Employees
Shareholders
Society• Superior, imitation‑proof craftsmanship (Uni‑Top strategy)• Rebuild core technologies and know‑how (standardize expert
craftsmanship)• Acquisition of DX Certification• Strengthen information security measures, cybersecurity response• Digitization of information
dissemination

Employees
Shareholders
Customers• Digitize communication/PR tools• Strengthen communication/PR with individual consumers• Acquisition of new customers through web marketing• Further deepening ofcorporate governance

Employees
Shareholders
Customers
Society• Strategies for improving medium‑ to long‑term corporate value• Improve effectiveness of the Board of Directors and establish an
appropriate remuneration scheme• Strengthening dialogue with shareholders and investors• Create a governance system in line with ESG strategies• 10% increase in the number of dialogues
compared to last year

• Development of the Life
Science business

Shareholders
Customers
Society• Initiatives to extend healthy life expectancy• Establish B-to-C business• Notification of food products with functional claims• R&D to improve cognitive function• Sales of ¥10.0 billion yen in 2025

• Development of the NEXTbusinesses

Shareholders
Customers
Society• Open innovation• Respond to industry reorganization• Execute M&A that contributes to growth• Sales in 2025
 Solar cell, exhaust gas business: net
sales of ¥10.0 billion
 5G business: net sales of ¥10.0 billion

DKS REPORT 2022

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What Sort of Value Has DKS Been Creating?

Message from the CEO

SAKAMOTO Takashi
Chairman CEO

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DKS REPORT 2022

Continuing to Pursue Happiness-BasedManagement under the New Management Structure
Three Elements of Happiness-Based Management
I am pleased to share with you my thoughts as CEO as we look back on 2021 and on how I formulated a new management
structure for 2022. The second year of our medium-term management plan “FELIZ 115” was a year all DKS employees should be
proud of, as we received much recognition. We were blessed with consecutive selection as a Health & Productivity Stock by the
Ministry of Economy, Trade and Industry (METI) and the Tokyo Stock Exchange (TSE), as a White 500 Organization, and as a Sports
Yell Company. We also received the Minister of Economy, Trade and Industry Award from the 100nen Keiei no Kai. Now I will
explain the three elements which form the axis of happiness-based management using the word “Tenchijin” meaning “Heaven(ten), Earth (chi), and People (jin), the three elements that make up the world.” In my concluding remarks, I will speak on the future.

Heaven (ten) – Awareness of the Environment Surrounding DKSFirst, I would like to share my thoughts about the first element ofmanagement, Heaven (ten) – awareness of the environment
surrounding DKS. There are two current issues the future ofwhich we cannot foresee even at this time. These are the spreadof COVID-19 and the military conflict in Ukraine, events whichwere considered unthinkable in the 21st century. Many assumed
the medical advances of the 20th century would have prevented
such a pandemic. Or that humanity learned its lesson about
apocalyptic global conflicts after witnessing the atomic bombingof Hiroshima and Nagasaki. Unfortunately, this was not the case.
These events were brought about by biological competition forsurvival and the self-righteousness of those in power. Bothphenomena have exposed the weaknesses of humankind, and I
consider them to be warnings that our species must keep inmind if we want to continue living on this earth.
The invention of the steam locomotive, the discovery ofelectricity, the advent of computers, and the use of artificial
intelligence — these were all part of the Industrial Revolution.
Now in the 21st century, we seem to have entered a completely
different dimension that some call “Society 5.0.” Speaking oftechnology, the era of hardware and analog has shifted to oneof software and digital. Such disparities have been spurred on
for a while. Is this really what we want? I believe that COVID-19
and the conflict in Ukraine called a halt to this shift anddisparities. Look at our human origins. It is a fine balance
between hardware and software, of analog and digital. One
could call it the “equilibrium between the value and price” of acommodity. The conflict in Ukraine has illustrated the economic
principle of supply and demand. This 21st century is a Nouvelle
Renaissance, a return to humanity.
Toshishun is a Chinese folk story rewritten by AKUTAGAWA
Ryunosuke, a novelist active in the Taisho period in Japan.

One evening in the city of Luoyang, capital of the ancient
Chinese Tang Dynasty, a young man named Toshishun
laments his failed business venture that left him penniless. An
old hermit appears to him asking, “What do you wish for?”“Money,” he replies. And his wish is granted. But his venture
loses a second time. Again, the hermit asks the defeatedyoung man leaning against the wall, and again his wish formoney is granted. He succeeds for a time, then loses
everything. Upon the third time, Toshishun’s wish is tobecome the hermit’s disciple. When I was in the first grade ofelementary school, our teacher told us this story using
kamishibai (a form of storytelling using sets of illustrated
boards displayed in a miniature stage-like device). And eversince, I have felt the yearning to become a hermit. I haveabout 150 books on the subject of hermits from China, Japan,
and other countries in my collection. It is very human to chaseafter pipe dreams. Toshishun endured harsh ascetic practices
imposed by the hermit, such as burning and whipping. His
final task was to remain silent no matter what. He saw his oldmother being tortured by demons. He closed his eyes,
unable to endure the sight. She gasped: “Stay silent!”“Mother!” At his own voice, Toshishun found himself
standing in front of the wall of Luoyang. The hermit told him
that, had he not cried out, he would have killed Toshishun
himself. He admonished Toshishun never to lose his humanity.
Humans are mysterious beings. The Arabs pursued alchemy,
trying and failing to create gold. This was the beginning ofchemistry, the chasing after a dream. In China, they sought
the elixir of eternal youth. COVID-19 and the conflict in
Ukraine pose the same question for those who live in the 21st
century today: If we lose sight of our human principles, will
we be able to survive?

Earth (chi) – DKS’ Situation
On April 11, 2001, the day of my induction interview, DKS wasat rock bottom. After my interview, one top manager said
something that struck me: “I want you to save the Company.”
I will write about this in the next section, People. For aquarter of a century since 1980, total assets and net sales of
DKS had stagnated at around 40 billion yen. The losses fromJapan’s burst bubble economy were weighing heavily on the
Company. One senior finance executive, bowing his head,said a few heavy words I will never forget: “Please create asuccess story for our employees.” My first six months in DKS
began with shaking hands with the labor union, followed by atour of factory sites. During that time, I wrote down 108 notes

DKS REPORT 2022

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What Sort of Value Has DKS Been Creating?

Message from the CEOof ideas in my memo pad. Summarized into three points:
First, make capital investments for growth, aiming for a total
asset turnover ratio of 1.0. Second, set the profit target forinvestment to ROIC  WACC (the return on investment is tobe greater than or equal to the average cost of capital). Third,
enter into the medical and health care fields, as the “S” in
DKS stands for seiyaku (pharmaceuticals in Japanese).
I was convinced that realizing these three goals would
create a success story for our employees. My 108 notes are
the origin of these three elements of management. I canmention five things in particular that we have implemented
and shaped over the past 20 years. (1) In December 2001, weentered into an exclusive product sales agreement with BASF,
a world-leading conglomerate. (2) We made Yokkaichi
Chemical Co., Ltd., a wholly owned subsidiary in 2011 from a
33% share when I first joined DKS. (3) In 2012, we purchased
100,000 square meters of land from BASF in Kasumi,
Yokkaichi City. (4) We built a factory on the land in Kasumi,
which became one of our five business sites to date. (5) We
welcomed Biococoon Laboratories, Inc. in Iwate Prefecture
and Ikeda Yakusou Co., Ltd. in Tokushima Prefecture into theGroup and started manufacturing and sales in the Life
Science business and contract manufacturing organization forpharmaceuticals (CMO/CDMO).
Three sacred treasures have been handed down fromgeneration to generation in DKS’ 113-year history. Our
Company Credo: “Contributing to the nation and society
through industry.” Our Company Motto: “Quality First, Cost
Reduction, and R&D Efforts.” And our Company Song,
written by DOI Bansui, one of Japan’s leading lyricists of thetime. It expresses the Dai-ichi Kogyo (DKS) Spirit in four
verses, concluding with the words, “Enhance brightness ofculture.” It is comparable to Johnson & Johnson’s “Our
Credo.” Our philosophy which we have upheld since ourfounding, is like an early version of the 17 SDGs of the United
Nations and ESGs today.
When I joined the Company, I read the Company’s 30-, 50-,
and 80-year histories, and in the 80-year history there ismention of a temporary improvement in earnings due to the
bubble economy. By the time of printing, the bubble had
burst, and DKS suffered huge losses. The moral of the story is
to stay out of anything other than the core businesses.
In the fall of that year, we had to release the 26,000 m2 ofland for our headquarters, factory, and laboratory that had
already been decided to be sold off. Over the past 20 years,
we have regained about ten times the amount of land we
gave up. During the previous five-year management plan,“REACT1000,” we achieved record profits four times. The
equity ratio, which was not even in the low 20% range when
we hit rock bottom, improved to 43%. I declare now that ourpath to stability and development as a chemical manufacturer
is not about expanding company scale. It is about becoming
Uni-Top — a company valued for its uniqueness. For thispurpose, we must (1) combine existing and new technologicalfields, (2) expand contract manufacturing related topharmaceutical Good Manufacturing Practices (GMP), and (3)expand product sales and R&D in the Life Sciences business,
which is the theme of humanity. These three steps also go
hand in hand with TCFD and climate change risk management.

People (jin)— Encounters at DKS
I would like to note my thoughts on the personnel affairs
accompanying the new management structure introduced
this April. Throughout my career, I have held the belief that
there are two options: let people work in their fields ofexpertise, or challenge them in a new field. I have been
pondering this for 21 years since I joined DKS. As the current
medium-term management plan “FELIZ 115” comes tocompletion, how shall we lay the foundation for the nextmanagement plan? We have, however, laid the grounds for
those who do take on the challenge. We have taken note of
the experience and career paths required for management
through personnel changes for each employee. Since thetime when Yokkaichi Chemical Co., Ltd. became a wholly
owned subsidiary, we have had current President Yamaji
involved in strategy and planning to learn the essentials ofmanagement. At the beginning of the current plan, thedivision system was changed to a headquarters system. We
expect the officers in charge of sales, R&D, andadministration to think and act in innovative ways. We haveassigned a skilled professional to our Production
Headquarters whom we have welcomed as our “secretweapon.”When I first arrived at the Company on June 11, 2001, twomonths after my hiring interview, three people of DKS,

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DKS REPORT 2022

including one retiree, gave me the starting point. The first
person was the finance executive I mentioned previously, an
accounting specialist, who gazed at me sharply and implored
me to give his employees a success story that would break aquarter century of stagnation. The second person explained
the philosophy of the Management Quality Award, which was
the basic principle of all of the 108 notes of ideas I jotted
down over my first six months. The third person was ourCompany’s own walking encyclopedia. She has served undersuccessive presidents and knows DKS like the back of her
hand. She has an orderly and accurate memory of DKS’
history, our relationships with those with whom we dobusiness and other organizations, and everything else. I am
deeply grateful for all the rich encounters I have had both
inside and outside the Company.
Now I will mention another three mentors in particular by
name, if I may. First, Mr. UETA Takehiko, the President of DKS
at the time I was hired. He hired me as the Company’s firstfull-time officer. Although I had experience in asset
management and had knowledge of companies in the 33
industry sectors of the TSE, I was a complete stranger to thechemical business. Despite this, Mr. Ueta entrusted me with
our strategic department, then known as the Corporate
Planning Headquarters. This was the department that had

The second year of the“FELIZ 115” management
plan was a year of gaining
recognition, in which all our
employees can take pride.

been creating management plans since I joined theCompany: “ADD21” in 2004, “CHANGE100 Stage I & II” from2009 to 2014, “REACT1000” in 2015, and the “FELIZ 115”
plan in 2020. I was charged with creating the principles,policies, environmental awareness, strategies, tactics, andnumerical targets of these management plans. Our balance
sheets, income statements, and cash flow statements makethe success of these plans clear.
The second mentor I would like to mention is Mr. Yamauchi,
our investor. Since he was publicly announced as our second
largest shareholder, I will intentionally introduce him by hisreal name. As our major shareholder, I met with him threetimes to explain general information about the Company.
The collapse of Lehman Brothers occurred in the year prior
to April 1, 2009, our 100th anniversary. Taking this opportunity,
we conceived a management plan to achieve a V-shaped
recovery, called “CHANGE100.” At that time, the stockrelated indices were 8.0 PER and 0.6 PBR, which were
undervalued and incongruent with profit levels. It was only
after March 8, 2011, when DKS made its first public offering in
50 years,that the Company seemed to attract Mr. Yamauchi’s
interest. Suddenly, he became our second largest

shareholder. When I met him, he said to me, “You will carryout your plan.” I took that as encouragement. I am immensely
grateful to him for discovering our Company’s stock andholding it for the medium term.
And the third mentor of mention is Dr. SUZUKI Koichi,
founder of Biococoon Laboratories, Inc. I was once talking to
the person in charge of underwriting securities for public
offerings about my hobby of studying hermits. “I know a 21st
century hermit you’d like to meet,” he said. That hermit was
Dr. Suzuki. He had been searching for a drug for dementia
and identified a substance extracted from a medical fungus
grown on the pupae of domestic silkworms, which hadpartially recovered the brain cell functions of senescenceaccelerated mice. A gentleman dedicated to his work, Dr.
Suzuki had founded a university-launched startup. Since ourCompany’s founding was also triggered by surfactants related
to silkworms, we hit it off at our first meeting. And just like
that, the influential life science company which we had been
searching for joined the Group. Unfortunately, he was later
taken from us by a disease that had gone undetected for too
long. He left us with what would become a core business of
the DKS Group.

In Conclusion
Who has loved DKS as much as they have? To this day, I am
grateful for my comrades and all their support behind thescenes. I spoke of the past, present, and future, of the threeelements of Heaven, Earth, and People (“tenchijin”). I am
reminded of prophetic thinkers Jacques Attali and Naomi
Klein as I contemplate three milestone years: 2045, theSingularity, when artificial intelligence will surpass humans;
2047, when humanity’s global food supply will reach its limit;
and 2050, the year of carbon neutrality and zero GHG
emissions target. Our Company has been pursuing the same
principles that later became the basis of SDGs, ESG, and
TCFD since its foundation in the Meiji era. “Survival throughuniqueness,” linking Company Credo, Company Motto, andCompany Song, is what Uni-Top means. August 2022, theeighth month, was a summer of heartfelt thoughts. Eight isconsidered a lucky number in Japan, because the shape of
the Kanji character spreads widely at the bottom like a pinetree, symbolizing growth, as the green of the pines. August isalso a month of the growth of green leaves. The month
August was named after Emperor Augustus, who built theglory of Rome. What kind of company will we have grown into
for our 125th anniversary? Our resilience (endurance) is being
put to the test in the midst of uncertainty (COVID-19, theUkraine conflict). Under the new management structure, wewill continue to pursue happiness-based management.

DKS REPORT 2022

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What Sort of Value Has DKS Been Creating?

Philosophy in Practice—The History of DKS Business Development
1909 Founded1969 Nippon Levulose Co., Ltd.
(later Shiga Plant of DKS) established1914 General partnership company Ohno
Kogyo Seiyakusho established1959 Yokkaichi Chemical Co., Ltd.
established to manufacture andsell nonionic surfactants

1970 Constructed sucrose fatty acid ester plant(later Shiga Plant)
1978 Capital participation in
Chin Yee Chemical
Industries Co., Ltd.
in Taiwan, accompanying
the textile industry’s shift
to Southeast Asia

1918 Dai-ichi Kogyo Seiyaku Co., Ltd. established1960 Ohgata Plant opened
Japan’s first solvent-method
manufacturing of
CMC [CELLOGEN] started

1939 Yokkaichi Plant opened

1973 Gembu Co., Ltdestablished1949 Listed as a public company

1950/3Socialchanges

1960/3

1970/31900s

1930s–1950s

Rapid Growth of the Spinning Industry
With the advent of World War I, the spinning industry
undergoes dramatic growth. Textile goods exceed
50% of Japanese exports.

Industrial Modernization, Shift to Synthetics
Following World War I, the industry undergoes a period of modernization, during whichtime the textile industry sees an accelerating shift from natural fibers to synthetic
alternatives.

1909 S ILKREELER cocoon unwinding agent (chemical agentsfor spinning)
1915 Gembu Marseille Soap (industrial soap for textile)1934 M ONOGEN higher alcohol-based detergent
1950 CELLOGEN synthetic thickener

Trademarks of the Company (from left: Seiryo, Suzaku, Byakko and Gembu)

Developmentof DKS

Main products of this time

1909–1950s

1960s

Founded as an Oil Agent Manufacturer, Aimed to Become aComprehensive Chemical Industry Manufacturer

Establishing a Foundation for Future GrowthFounded in 1909 based on the “Dai-ichi Kogyo Spirit,” the Company
developed and sold the silkworm cocoon unwinding agent, a chemical
for spinning waste cocoons. The Company responded to textile industry
needs by developing and selling a number of textile oil agents using
sulfation and compounding technologies.
In 1915, the Company introduced the first domestically produced soap,
Gembu Marseille Soap, into the textile industrial soap market, which had
been completely dependent on imported soap. The Company
strengthened efforts to expand into household products such as shampoo
and laundry and bath soap, which provided a breakthrough contribution tobusiness performance during wartime and postwar turmoil.
With the development of the textile industry, the Company establisheda position as a textile oil agent manufacturer. During this period, theCompany developed the nonionic surfactant NOIGEN, the cationicsurfactant CATIOGEN, and various progenitors for other surfactants,
setting the stage for its rise to the top of the industry.

 Dai-ichi Kogyo (DKS) Spirit and DKS Mottoes
The Dai-ichi Kogyo (DKS) Spirit states that “We must demonstrate
the traditional spirit of the Japanese people—the Yamato spirit—in
our industry, always realize coexistence and co-prosperity between
ourselves and others based on the concept of service, and maintainsincerity to contribute to the prosperity of the nation, society andmankind.” Sincere efforts to manifest this spirit continue to bepassed down through our three Company Mottoes: “Quality First,”“Cost Reduction” and “R&D Efforts.”

16

1980/3

DKS REPORT 2022

In the 1960s, against the backdrop of intensifying price competition inindustrial fields, the Company expanded the scope of and diversified its
industrial products. In anticipation of the future potential of thepolyurethane market—positioned as a downstream sector within the
petrochemical industry—the Company commenced its polyether
business. Moreover, the Company launched one business after anotherthat would serve as a foundation for the future, including flame retardants
and sucrose fatty acid esters.

1980s–1990s
Becoming a Leading Highly Functional Chemical Products Company
In the transition to high-value-added products, the Company enhanced
research and development in the priority areas of “Resources andEnergy,” “Electronics and IT,” “Food, Pharmaceuticals and Cosmetics”
and new materials. The Company developed various highly functional

 Source of Original Technologies
During the post-World War I recession, the Company constructedlaboratories in 1918, research incentives were stipulated in 1919 and“inventor award provisions” were enacted one after another in 1920
to encourage the creation of new products. The Company createdsuperior new products and patents and strove to conduct research.
In 2002, the Company implemented a patent incentive systemahead of other companies, contributing to the development andcreation of new businesses such as the current Life Sciences business.

1985 Dai-ichi Kagaku Kogyo Co., Ltd. established(former Nippon Levulose Co., Ltd.)

2006 R&D labs relocated to Kisshoin, Kyoto,
to develop new technologies

1986 Kyoto Elex Co., Ltd. established to manufactureand sell electronic materials
2015 Newly established
the Kasumi Plant in Yokkaichi

1988 Dai-ichi Ceramo Co., Ltd.
established to strengthen
the electronic materials sector
1996 P.T. Dai-ichi Kimia
Raya established inIndonesia

2009 100th anniversary of thefounding2011 Yokkaichi ChemicalCo., Ltd. become
wholly owned
subsidiaries

2002 
ElexcelCorporation
established

Net Sales(Billions of yen)2018 
Biococoon Laboratories, Inc.
and Ikeda Yakusou Co., Ltd.
become wholly owned
subsidiaries

70
60
50
40
30
20
10

Product development and business deployment that address global events and expand net sales

0
1990/3

2000/3

2010/32022/31960s–1990s

2000s

Growing Environmental and Safety Concerns Lead toHigh-Value-Added Materials
Following the oil shocks of the 1970s, the industry transitions to high-value-added
products. In the 1990s, greater interest is placed on environmental considerationand safety, which accelerates the greater functionalization of existing materials.

Highly Functional Chemicals Sector Developments Resolve
Social Issues
Japan’s chemical industry begins to see the development of highly
functional sectors that actively create and deliver added value to society.

1969 P YROGUARD flame retardant for plastics
1970 DK ESTER food emulsifier
1981 NEW FRONTIER UV/EB-curable monomers and oligomers
1982 SUPERFLEX waterborne polyurethane1990 EIMFLEX polyurethane resins
1992 HITENOL polymerizable surfactant

surfactants and polyurethane products. In aiming to become a leader inhighly functional chemicals, the Company began collaborating with otherindustries as a way of addressing new needs. Moreover, the Company
developed nonionic surfactants with a low environmental impact incollaboration with an overseas manufacturer.

2000s
Qualitative Change and Second Renaissance
Since 2004, the Company has constructed a business portfolio for ahighly profitable structure and promoted the development andexpansion of new businesses with high added value. With electronic
and IT materials as the next generation of business pillars, the Company
began to take steps to transition from a traditional surfactant company
to a leading industrial chemical supplier. In 2009, the 100th anniversaryof our founding, the Company started a six-year management plan withthe aim of qualitative change and promoted the transition to a businessdivision system, management infrastructure development and non-

 A Corporate Culture of Respect for Quality
As early as 1922, uniform product standards were developed and thedivision of duties clearly stated that research staff were responsiblefor quality checks. In 1951, a quality management committee wasestablished to cultivate a corporate culture of respect for quality andengage in organizational development. In the 1960s, QC circles wereactively developed at plants across Japan led by young engineers,and in 1974, these activities were unified, and together with research
efforts DKS established a reputation as a technology company.

2005 E LEXCEL IL ionic liquid2013 RHEOCRYSTA cellulose nanofibers
2017 TRIBIO polylactic acid resin modifier
2018 I. Japonica-Bombyx Fungus (health food)Sudachin (citrus sudachi peel extract powder)2021 Announcement of Naturido, a new active ingredient expected to improve
cognitive function
2022 TENCHUKASOU (health food)

petrochemicals, thereby strengthening our financial position. The
Company transformed its corporate structure placing emphasis on the
DKS Credo and created a platform for further growth.
In 2015, the Company formulated a five-year plan for new value
creation, and in the same year, the new Kasumi Plant was constructed in
Yokkaichi of Mie Prefecture, as a mother factory with the aim ofintegrating production, sales and development functions, preparing thefoundation for a second renaissance.

Life Sciences Business Launched, Full-Scale Shift to DREAM
Businesses
With its full-scale entry into the business field of life sciences in 2018,
the Company acquired Biococoon Laboratories, Inc. and Ikeda Yakusou
Co., Ltd. as wholly owned subsidiaries. As an initiative that links
achieving healthy longevity and revitalizing communities, the Life
Sciences business has, along with the environment and energy, and IT
and electronics materials fields, become part of the foundation onwhich the Company is focused for creating a better future.

 The Uni-Top strategy is a strategy to provide uniqueproducts without pursuing scale, aiming to be a company
that is top rated in terms of uniqueness.
 DKS calls business partners who provide each other withspark “inspiring/inspired partners,” with whom we promote
initiatives.

DKS REPORT 2022

17

What Sort of Value Has DKS Been Creating?

Review of the Medium-Term Management Plans
CHANGE100 Stage I

CHANGE100 Stage II

REACT1000—Changing the Corporate Culture—Expansion along with Earnings— Act for a Leap —April 2009–March 2012

April 2012–March 2015

April 2015–March 2020

Targeted
Figures

Consolidated net sales ¥55 billion or higher

Consolidated net sales ¥60 billion or higher

Consolidated net sales ¥75 billion or higher

Ratio of ordinary income to sales 4% or higher

Ratio of ordinary income to sales 5% or higher

Ratio of ordinary income to sales 8.0%

Slogan“Each of Us Holds the Key to Success”“Each of Us Holds the Key to Success”“Act for a Leap”

VisionBuilding a Business Structure
Necessary as a Leading Industrial
Chemical Company

Staying Ahead of the Times as a
Leading Industrial Chemical
Company

Practicing the concept of “chemistry provides asolution,” we will take up the challenge ofcarrying out our management plan REACT1000

1. Securing a stable profit structure

1. Expanding peripheral business fields

1. Create new corporate value

2. Pursuing greater business efficiency

2. Enhancing and reinvigorating
domestic production facilities

2. Create a clear corporate image

Management
Policies

3. Developing and strengthening our
foundation to realize the“technology makes the Company”
concept
4. Accelerating the creation of new
products
5. Enhancing compliance management
6. Improving managerial skills andhuman resource development

3. Accelerating the creation of new
businesses
4. Pursuing cost reductions
5. Improving management capabilities
and developing human resources

1. Enhancing the enterprise’s power (marketing clout, cost-saving ability,
technical strength and organizational power) = Heightening our corporatevalue
2. Promoting selection and concentration = Determining the withdrawal fromunderperforming segments based on our exit rule
3. Optimizing the allocation of management resources = Funneling people,
goods and capital
4. Seeking more productivity = Seeking more profitability through the integrated
business division approach
5. Creating new businesses and strengthening cooperation with the parties
concerned = Developing inorganic materials, dispersion technology,
electronics materials, etc.
6. Focusing on priority business segments = Promptly reaping the benefits of an
existing, ongoing, highly profitable business

Review

Successes

18

6. Accelerate and enhance mother plant functions

There are five priority qualitative targets for
implementing the management policy.
1. RETURN: pursuing profitability = sharing returns
with stakeholders (appropriate distribution of profits)
2. EXPORT: improving overseas sales ratio = global
strategies responding to paradigm shifts (overseas
sales ratio of 20%)
3. ADVANCE: moving forward with new plantinvestment = pursuing efficiency for core businesses(restructuring domestic bases)
4. CREATE: establishing new businesses = quickly
commercializing newly developed materials (newbusiness creation fund)
5. TRAIN: systematic human resources training =fostering personnel to pursue ‘leaps’ (coordinatingwith consulting companies)

The initial year saw lingering impacts
from the financial crisis triggered by
the Lehman Brothers bankruptcy. With
revenues growing over the next two
years, however, DKS successfully
achieved a target of the plan byrecording final-fiscal-year (fiscal year
ended March 31, 2012) consolidated
net sales of ¥56.2 billion. In contrast,
the Company was unable to reach theplan’s final-fiscal-year operating
income target due to sharp demand
drops and ongoing high raw materials
prices.

Although DKS aimed to increase net
sales from ¥56.2 billion to ¥60 billion,
the fiscal year ended March 31, 2015
(the final year of the plan) ended with
net sales at ¥55.5 billion, below thetarget because of delays in investment
to raise production in core businesses
and stagnation in the solar cell field.
On the other hand, DKS achieved its
operating margin target given recordhigh operating income, ordinary
income, and net income.

On the quantitative side, sales were revised downward
in the third year of the plan due to an extreme slump insolar cell sales, but the operating income target was left
unchanged, and in the first half of the plan reached arecord high for the third consecutive year. After that,
however, rising production costs for 5G materials, which
far exceeded expectations, insufficient response tosoaring raw material prices, and the COVID-19
pandemic led to operating income of ¥4.1 billion in
fiscal 2019, the final year of the plan, unfortunately
resulting in our falling short of the targets. The 20 itemsin the matrix, which are qualitative elements, have alllaunched or are in progress. As a result, our view is thatthe foundation for creating the future has been laidaccording to plan.

• Increased business divisions’ profits
by instilling a profitability mind-set• Upgraded the management
infrastructure (e.g., commenced
introducing a new ERP system) for
the future• Expanded business peripheral areas (NEXT) andefforts to create new businesses (DREAM)• Launched and promoted the Human
Resources Development Project
aimed at instilling an awareness ofmanagement in all departments• Maintained a healthy balance sheet(increased the capital adequacy ratio)• Made new investments for growth(made Yokkaichi Chemical Co., Ltd. awholly owned subsidiary) to expand
business fields, purchased land,
began preparation for a new plant

Improve the corporate culture to bringa profitability mind-set to the forefront

Issues

4. Maintain and increase optimal ROE levels
5. Create advantages through collaboration

6. Enhancing overseas expansion andstrengthening administration

Basic Strategies

Plan Outline

3. Ensure more profound corporate governanceRealize a balance in three areas(Balance sheet / business portfolio /human resources)

DKS REPORT 2022

Maintain a robust and healthy balance
sheet to increase earnings• Focused on business development with new capital
investment and R&D expenses• Changed the balance sheet composition andincreased total assets 1.3 times compared with theend of the final year of the previous plan
• Brought life sciences-related Biococoon Laboratories
Inc. and Ikeda Yakusou Co., Ltd. into the Group• Laid the foundation for realizing business income andprofits commensurate with total assets, including
up-front investment in new businesses
1. Insufficient precision in market forecasting
2. Delays in reorganizing unprofitable businesses
3. Vague customer countermeasures (selection &concentration)
4. Negative effects of the business division system

What Sort of Value Has DKS Been Creating?

Overview of the Medium-Term Management Plan “FELIZ 115”
“FELIZ 115”About

F UTUREE NVIRONMENTL IFE
I NNOVATION
Z -FLAG/CHALLENGE

FELIZThis word means happiness in Spanish. DKS chose “FELIZ” because we want to provide all
stakeholders with happiness. Each letter in the word FELIZ represents one of the five themes ofour medium-term management plan in English.

115

Looking ahead to the final year of this plan in 2025,
this number expresses our plans for the 115th
anniversary of our founding.

Current medium-term management plan

PeriodPeriodApril 2025–March 2030

April 2020–March 2025

Theme

Basic Approach Achieve qualitative enhancements in ACTUAL (existing)businesses, expand and reinforce NEXT (peripheral)businesses, and develop and cultivate DREAM (new)businesses.
 Maximize the use of total assets (asset turnover ratio
target of 1.0 times).
 Establish a headquarters system; optimally allocate
management resources.
Continue employee happiness-based management with aperformance evaluation system that rewards contributions.

Previous medium-term
management plan
PeriodApril 2015–March 2020

Next medium-term
management plan (tentative)

DKS
2030

Realization of a highly profitable
Uni-Top company
Targets(Consolidated)

March 2030

Net sales¥135.0 billion(twice that of March 2020)

Operating income¥18.0 billion(triple that of March 2020)

Targets

Results(Consolidated)

Targets

March 2020
results¥67.0 billion ¥61.4 billion

Net sales
Operating income¥6.0 billion¥4.1 billion

9.0%

6.8%

Profit¥3.6 billion¥2.0 billion

ROE

10.0%

6.4%

Overseas sales ratio

20.0%

16.8%

Operating margin(Consolidated)

March 2025

Net sales¥85.0 billion

Operating income¥10.0 billion

Operating margin
Total assets
Asset turnover ratio
Capital expenditures

11.7%¥92.0 billion (forecast)
1.0 times¥12.0 billion (five-year
cumulative)

5.0%
10.0% or higher

R&D expenses-to-sales ratio
ROE

Priority Measures
Strengthen the management foundation

Restructure management resources

Enhance earnings power

Withdraw from noncontributing businesses within
the first 1–2 fiscal years.

Realize early returns on advanced business investmentsin the Kasumi Plant and other areas.

Revise the performance evaluation and remuneration
systems; establish a system corresponding tocontributions.

Priority Measures
Business Restructuring Timeline
April 1, 2020

April 2021

Business Expansion Timeline
April 2022

April 2023

April 2023

March 31, 2025

Withdraw from noncontributing businesses
Realize returns on advanced business investments in the Kasumi Plant and other areas
Accelerate alliances with partner companies and achieve rapid commercialization at the Kasumi Plant and in the Life Sciences businesses
Reorganize the corporate structure with an emphasis on customer orientation; shift to Company-wide organizational sales activities
Revise performance evaluation and remuneration systems to a system that evaluates contributions
Establish SDGs/ESG-based management objectives; contribute to society through business activities; aim to enhance corporate value
Continue employee happiness-based management; conduct activities to maintain the “Health & Productivity Stock” selection; create comfortable working environments

Review of the Second Year
In addition to moving forward with various measures, such as revising
prices, we accelerated the review of our business portfolio.
We dramatically improved the profitability of “ACTUAL” businesses(existing businesses) and reinforced the foundation that supports profit.
The state of operation at all plants in the Yokkaichi Branch Kasumi Plant
is making it possible to increase production to match customer
demand.
We announced our full entry into the Life Sciences business (introductionof new brand “TENCHUKASOU” and launch of our own EC website).

In addition to actively undertaking investor relations activities, centeredon the Public & Investor Relations Department, which is directly under
the president, we expanded dialogue with stakeholders.
We created a system to draw out abilities as much as possible while
respecting individuality by establishing the DKS Challenge Center, thepurpose of which is to centralize the information and awareness of
employing people with disabilities.
We established a Sustainability Committee, strengthened our climatechange-related initiatives, and expressed our support for TCFD
recommendations.

Ikeda Yakusou Co., Ltd.’s “Sudachin” (tablet type) was approved for the
Shikoku Health Support Food (Healthy Four) system.

Selected as a “Health & Productivity Stock” for three consecutive years.

In order to start and build out new businesses, we revamped our R&D
framework to place priority on profitability.

Certified as a “Sports Yell Company” three consecutive years.

We will reform our corporate culture so that contributions to corporate
earnings are fairly evaluated and aim to create an HR system that takes
into consideration the happiness of employees.

Certified as a “White 500 Organization” for the fifth year in a row.
Received the highest rank in the DBJ (Development Bank of Japan Inc.)
Health Management Ranking Program for five years in a row.

DKS REPORT 2022

19

What Sort of Value Has DKS Been Creating?

Financial and Nonfinancial Highlights
Financial Highlights (Consolidated)
Net Sales/Overseas Sales Ratio

Operating Income/Operating Margin（%）(Millions of yen)
80,00060,00056,95559,57461,45659,140

17.4

17.0

45.0

4,500

30.0

3,000

15.0

0

0

3/20183/20193/20203/2021

20.0

4,341

4,154

4,626

4,485

7.3

7.4

7.6

6.8

1,500

5.0

0

3/202203/20183/20193/20203/2022

3/2021

 Net Sales
Overseas Sales Ratio
In the fiscal year ended March 31, 2022, although sales of radcure
resin materials in the Functional Materials segment slumped greatly,
sales of conductive pastes for solar cells in the Electronic Device
Materials segment dramatically expanded, leading to sales of¥62,672 million, up 6.0% year on year. The overseas sales ratio was
22.5% (up 5.4 percentage points year on year).

 Operating Income
Operating Margin
Operating income for the fiscal year ended March 31, 2022, came to¥4,626 million (up 3.1% year on year) due to sales efforts such as
significant price revisions in the Surfactants segment and companywide endeavors to reduce costs, despite increased R&D expenses
for the future. The operating margin was 7.4% (down 0.2 percentage
points year on year).

Dividend per Share/Dividend on Equity (DOE)

Interest-Bearing Debt
（%）

(Yen)

80

80
70

70

70

2.5

2.3

2.3

2.3

2.1

40

20

0

40,0003.0

30,0002.0

20,000

1.0

10,00003/20183/2019(Millions of yen)

4.0

70

60

3/20203/2021

29,94623,863

23,4663/20183/201928,52927,7633/2021

3/20220

3/2022

3/2020 Dividend per ShareDividend on Equity (DOE)
The annual dividend per share was comprehensively set at ¥80 inconsideration of the Company’s financial conditions, future businessdevelopment, and enhanced shareholder returns.

Interest-bearing debt as of March 31, 2022, decreased by ¥766
million to ¥27,763 million, due to the repayment of long-termborrowings.

ROE

Cash Flows(Millions of yen)

(%)
12.0

11.8

7,000
5,017

9.0

3,500

8.4

7.7
6.4

6.0

5,520

4,955
3,766

3,886 3,236

2,820

7.0
1,150

0
-1,130-3,5003.0-2,458-2,076-3,804-7,00003/20183/20193/20203/2021

3/2022

ROE decreased from the previous fiscal year, reaching 7.0%. The
capital turnover rate rose due to net sales increasing as total capitalrose; however, ROE was lower than the previous year due to the
profit margin on sales dropping from lower profits.

20

15.0

10.0

8.9

22.5

17.1

16.8

6,000
5,053

62,67240,00020,000（%）(Millions of yen)

60.0

DKS REPORT 2022

3/2018-5,694-5,8423/20193/2020 Operating Cash Flows
Free Cash Flows
For more details, see p. 22.

3/2021

 Investing Cash Flows-2,7003/2022

Nonfinancial Highlights (Group/Non-consolidated)
Number of Patents Held (Group)

Amount of Waste Generated (Group)(t)(Patents)
1,200

900

25,000

427

453

479

514

483

20,00020,77921,65819,605

18,431

16,662

3/2021

3/2022

15,000
600
497

508

533

542

522

300

10,0005,000

003/20183/20193/20203/2021

3/2022

 Japan  Outside JapanThe number of patents held totaled to 1,005 (a decrease of 51
patents year on year). In consideration of future businessdevelopment, we are actively promoting the application andacquisition of intellectual property rights based on the results ofresearch and development.

3/20183/20193/2020

The amount of waste generated was 16,662 tons (down 1,769 tons
year on year).

 umber of Employees to Utilize the Child-Care Leave/NChild-Care Part-Time Work Systems (Non-consolidated)

Geenhouse Gas Emissions (Group)(1,000 t)(Persons)

60

15
53.6

52.6

53.8
48.9

48.5

40

12
10

10

10

10

7

7
20

5

0

5

4

3

0

3/20183/20193/20203/2021

3/20223/20183/2019

4
2

8
6

3

1

3/20203/2021

3/2022

Greenhouse gas emissions totaled 48,500 tons (down 400 tons year
on year). In order to help prevent global warming, we will continue
our efforts such as those for improving our energy efficiency.

 Male  Female  Child-Care Part-Time Work System
The number of employees using the child-care leave system was 13(up 6 from the previous year). The number of employees using thechild-care part-time work system was 8 (down 2 from the previous year).

Ratio of Female Employees (Non-consolidated)

Annual Paid Leave Rate (Non-consolidated+Assigned Employees)

(%)

(%)

21.0

80.0

20.3

20.0
19.0

18.8

18.0
17.5

18.9

75.0

73.2

70.0
67.4

68.5
66.1

65.0

17.8

67.4

60.0

17.0

0

0

3/20183/20193/20203/2021

3/2022

The ratio of female employees to total employees was 20.3% (up 1.4
percentage points year on year). We will continue to carry out
measures aimed at promoting women’s participation andadvancement.

3/20183/20193/20203/2021

3/2022The percentage of paid leave used was 67.4% (up 1.3 percentage
points year on year).

DKS REPORT 2022

21

What Sort of Value Has DKS Been Creating?

Financial/Capital Strategies and Total Shareholder Return
Financial Position
As of the end of the fiscal year ended March 31, 2022, theCompany had total assets of ¥86.4 billion (up 1.7% year onyear), net assets of ¥40.3 billion (up 8.0% year on year), and an
equity ratio of 42.5% (up 1.8 percentage points year on year).
Interest bearing debt was ¥27.7 billion (down 2.7% year onyear) due to stronger free cash flow, which improved the net
D/E ratio from 0.45 in the previous fiscal year to 0.38, further
improving financial stability. Cash flows provided byoperating activities were ¥5.5 billion, an increase of 11.4%

compared with the previous fiscal year, and the highest levelin our history. Capital investments decreased to ¥1.9 billion
from ¥4.6 billion, and cash flows used in investing activities
were negative ¥2.7 billion. Free cash flows were positive at¥2.8 billion. Net cash provided by financing activities totaled
negative ¥2.3 billion yen, as we repaid debt and paid
dividends. As a result, our balance of cash and deposits at
fiscal year-end rose ¥0.6 billion, to ¥12.1 billion.

Financial Analysis of the Past 10 Years
An analysis and comparison of the performance and financial results of the DKS Group for the period from April 2011 to March2022 are as follows. (Cumulative totals are the totals over the 10-year period from April 2012.)
April 2011–March 2012 April 2021–March 2022

Net Sales¥56.2 billion¥62.6 billion

Up 6.0% YoY, the highest level in our history

Operating Income¥2.03 billion¥4.62 billion

Up only 3.1% YoY

Operating Margin

3.6 %

7.4 %

¥0.16 billion¥2.49 billion

1.0%

7.0%

Total Assets¥51.3 billion¥86.4 billion

Up 71.8% over 10 years due to growth investments, etc.

Net Assets¥16.9 billion¥40.3 billion

Exceeded ¥40.0 billion to increase approximately 2.4 times
over 10 years

Interest-Bearing Debt

¥15.7 billion¥27.7 billion

Reduced from the previous fiscal year due to free cash
flow (¥2.82 billion)

0.60

0.38

Net Profit
ROE

Net D/E Ratio

Totals for the Past 10 Years

22

Assessment/Comments

Continue efforts for improvement toward our target of
double digits
Level comparable with the previous fiscal year, so aim forfurther improvement
On-going target is 10% or higher as we aim to improve ourcapital efficiency ratio

Stable financial foundation due to higher net assets

Assessment/Comments

Continuous profit level at or above ¥2.0 billion since thefiscal year ended March 31, 2016

Net Profit Cumulative
Total¥21.6 billion

Capital Investment
Cumulative Total¥42.3 billion

Depreciation Cost
Cumulative Total¥25.1 billion

R&D Expenses
Cumulative Total¥25.6 billion

R&D expenses for the previous fiscal year reached ourhighest level in history, at ¥2.94 billion

FCF Cumulative Total¥0.03 billion

Reflecting growth investments, operating CF andinvestment CF trended at approximately the same level

Dividend Cumulative
Total¥5.76 billion

Dividends per share have increased 2.3 times over the past
10 years (from 35 yen to 80 yen)

Capital Increase¥3.5 billion

Capital increase through public offering in December 2014

Share Buybacks¥1.0 billion

Determined as a shareholder return policy finalized in
January 2017

DKS REPORT 2022

Since the fiscal year ended March 31, 2015, growthinvestment became more aggressive; implemented capital
investment with cumulative depreciation costs exceeding¥17.2 billion over the past 10 years

Total Shareholder Return for the Past 10 Years
Total shareholder return (TSR) by dividend and stock price isshown in the graph and table below. The stock price over the
past year has seen a substantial correction. The medium- tolong-term TSR over the past five years was 7.9% annually,
whereas the annual TSR rate was 10.5% over the past 10

years, which is comparable with the returns of the TOPIX and
TOPIX Chemicals total return index. These levels exceeded
the shareholder capital cost (approximately 6.0–7.0%)
anticipated by the Company.

DKS(Index)TOPIX

TOPIX Chemicals Index

3/20203/2021

500

400

300

200

100

0

3/20123/20133/20143/20153/20163/20173/20183/20193/2022

Note: Share price trends including dividends (closing price data for March 31, 2012 = 100)

Future Financial Strategies/Shareholder Returns
1 year

3 years

5 years

10 years

Cumulative total

Annual rate

Cumulative total

Annual rate

Cumulative total

Annual rate

DKS

(22.9%)(14.4%)(5.0%)

46.1%

7.9%

171.9%

10.5%

TOPIX

2.0%

31.2%

9.5%

44.3%

7.6%

183.3%

11.0%

TOPIX Chemicals Index(7.9%)

15.6%

5.0%

37.3%

6.6%

227.3%

12.6%

Note: The annualized conversions are geometric averages of cumulative returns.

Future Financial Strategies/Shareholder Returns
In “FELIZ 115,” our medium-term management plan thatstarted in April 2020, we are aiming to maximize the use of
total assets resulting from systematic capital expenditures,
while also growing net sales and achieving an asset turnoverratio of 1.0 times in the fiscal year ending March 31, 2025. At
the same time, we will need strategies that emphasize capitalefficiency so that ROIC can exceed our added-value target
for weighted average cost of capital (WACC). On thefinancial front, we intend to continue recognizing the cost ofshareholders’ equity and implement financial and capital
policies to support TSR that exceeds this cost of equity.
In addition to our ROIC target, our financial goals
include:1) realize an ROE of 10.0% or higher in the fiscal year
ending March 31, 2025, 2) stably increase the P/B ratio by

1.0 times or more by maintaining ROE above the cost ofshareholders’ equity in each fiscal year of the plan, 3) ensure
financial discipline while reducing the cost of capital to areasonable level using moderate leverage, and 4) achievesustainable growth in addition to stable dividends. We willconsider optimizing the cost of capital through flexible
shareholder return measures that also include sharebuybacks.
Moreover, in terms of M&A as part of growth investment,
we will select investment projects for which ROIC exceeds
the cost of capital and aim for a strategy emphasizing postmerger integration (PMI) that contributes to greater
corporate value over the medium- to long-term.

DKS REPORT 2022

23

What Sort of Value Will DKS Create?

Message from the President

YAMAJI Naoki
President COO

24

DKS REPORT 2022

To ensure DKS’ sustainable growth,differentiating between what we treasure andwhat we need to change
Encountering DKS and my career after joining the Company
My journey to entering DKS started when I was studying
agricultural biochemistry in college. One day my professor
asked me, “How would you like to do chemistry research at
DKS? What you’re studying now is basically the same in termsof both being chemistry.” Actually, one of his formerclassmates had become an officer at DKS. It was a fortunate
encounter. At the time, I was studying something a bit
different from the petrochemistry done at DKS, namely, thefunctions of various substances extracted from plants andother biological sources, which is more similar to what we dotoday in our Life Sciences business.
For about 17 years after joining the Company, I was researchingwaterborne urethane resin, which can be applied or processed tometals, plastics, paper, and fibers to express their functions.
Although I say “research,” our basic style was to accompany oursales staff to listen to customers’ requests and develop products. I
developed products by repeatedly submitting samples, having
them evaluated, and making improvements, with the spirit to“meet the customers’ needs before our competitors do.” This
spirit remains unchanged today.
My next transfers came with a series of unexpected events.
In 2008, I was transferred from the R&D department, where I
had worked for many years, to the Business Planning

Department of Kyoto Headquarters. There, I was given theopportunity to participate in major projects that I would
seldom experience, such as the acquisition of Yokkaichi
Chemical Co., Ltd. and the purchase of land in the Kasumi
area. Looking back, it is no exaggeration to say that theseexperiences had a great impact on my life at DKS. Afterward,
during the two years from 2015 to 2017, I experienced thesales department as the General Manager of the Plastic
Materials Business Division, where I worked on reforming theexisting structure. Next, in April 2017, I was appointed as
Executive General Manager in charge of Corporate Planning
Headquarters and in April 2020, I was given the responsibility
as Administrative Supervisor, which involved looking at thebusiness from a Company-wide perspective. In particular, in
the area of human resources, we started to build a new
personnel system that rewards employees who produce
results, and I had many face-to-face discussions with thepeople involved. In April 2021, I began to focus on the
restructure of our R&D system as the R&D Supervisor, and in
April 2022, I was appointed President. I cherished the wishes
and thoughts of my predecessor, Chairman Sakamoto as hepassed the baton to me and I turned over a new leaf.

DKS culture and strengths, challenges and solutions
I have always believed that R&D at a manufacturing company
must have a bit of playfulness and free thinking in order tomeet the demands of customers. I think that organization
should be as flat as possible regardless of positions in orderto improve openness within a company. At DKS, for a longtime, we have often referred to our supervisors by theirnames without their job titles, which is rare in Japan. Casuallycalling coworkers by name creates an atmosphere offriendliness where it is easier to conversate, even about trivial
things. One of our organizational strengths is the ease ofvoicing suggestions and opinions, not just from the top
down, but also from the bottom up.
In recent years, DKS has been making a conscious effort tobe thoroughly customer-oriented. When customers areseeking solutions to their problems or new functions, themost important thing for us to do is to get close to thecustomer, listen carefully to their requests, and makeproposals in a timely manner. We must never impose our own
technology on the customer, nor insist on a closed-innovation
approach, which leads to missed opportunities. If it becomesdifficult to solve a problem with a single technology or
product, we must immediately change our mindset and playthings by ear by combining some of our many proprietary
technologies. Searching for a way to achieve the end result
envisioned by the customer is what “customer-orientated”
means. First, one must get to know one’s customer. We haveto at least have an idea of their focus areas and where they’reheading to, before the conversation can really begin.
This is where our “customer account record” comes in. We
have been working on gathering all kinds of customer
information, centered on our inspiring/inspired partners, suchas who are the key players? what are their focus areas andspecialty technologies? what kind of press releases have they
put out? By making this information accessible to all parties
concerned at all times, we have created a system that allows us
to speedily make proposals in accordance with the customer’sbusiness strategy and medium-term management plan.
In addition, we have established research centers for eachcustomer so that members of the sales and R&D departments
can work in unison. The role of these customer research
centers is to organize teams of researchers acrossorganizational boundaries in response to customer requests,
and to produce results in a short-term, intensive manner. We
have just begun this project starting with our inspiring/

DKS REPORT 2022

25

What Sort of Value Will DKS Create?

Message from the President

inspired partners, and I hope that the leaders of this projectwill proceed with flexible attitudes and ideas that can
respond to changing circumstances.
In Japan, there is a tradition called uchimizu of sprinklingwater on gardens and streets for cooling and cleansing on
hot summer days. In Kyoto in particular, we have an unspoken
rule of not sprinkling any water on our neighbor’s territory outof respect for them. This consideration should not be
mistaken for “only minding one’s own business.” In order todeal with customers successfully, it is necessary to always
think and act as if it is “one’s own business.” The actions of
our employees are gradually changing, especially among
younger people.

Standardize invisible assets through DX
In this day and age, human resources, non-financial
information, and intangible assets are of great importance. A
little while ago, technology and customer information were
attributed to individuals, and as soon as someone retired or
was transferred away, the accumulation of such information
could be reduced to zero. “Learn as much as you can fromhim before he’s gone!” was something I used to hear a lot
from my supervisors and superiors. In this digitized society, it
is essential to standardize information, technology, and knowhow as much as possible.
We have been trying to visualize intangible assets for sometime. Our efforts to visualize factory data through DX haveadvanced considerably over the past few years. R&D andsales members have started working on this in earnest sincelast year. The same goes for the aforementioned “customer
account record.” In recent years, we have hired more midcareer workers as well as new graduates. Even those whoaren’t experts can get a good start from these visualizations,because they make all the information easily accessible. I feelthat setting up such a system is important for speedy
development of human resources that are fit to bebusinesspeople.
The next step in developing human resources and aiming

for higher goals is to create a corporate culture thatencourages people to take on challenges with optimism anda sense of fulfillment and motivation. In other words, we need
to foster a culture that makes “other people’s business” into
“my own business.” Take, for instance, an impromptu,
unstructured meeting. There are some people who do not
speak up, perhaps out of shyness. If someone else takes on acentral role in the discussion, others will quickly pull back andsay, “I’ll just leave it up to this person.” Even in team projects,
most of the burden falls on the person who expresses theiropinions and is capable of carrying out the task, making it
difficult to achieve results as a team. This is where the teamleader’s managerial skills come into play. By creating anenvironment that makes it easy for each team member toexpress their opinions and by setting up a system that allows
them to do so spontaneously, everything becomes “my own
business.” A good manager also gives positive recognition to
those who take on challenges, even if they fail. I believe thatthe introduction of such a personnel and compensation
system is also very important for human resource
development, and we are now considering its
implementation.

Sustainability initiatives cannot wait
We have set forth ESG-based management objectives in our
medium-term management plan “FELIZ 115.” The first is“Environment (E).” Amid growing global demand to address
climate change and decarbonization, we announced our
support for the TCFD recommendations at the end of Marchof this year and disclosed our climate-related financial
information in May. Activities such as buying renewableenergy and reducing greenhouse gas (GHG) emissions are
already underway, mainly at our factory plants.
Many raw materials are now petrochemical-related. As forrenewable raw materials, there are some we have beenhandling for a while, such as carboxymethyl cellulose andcellulose nanofibers derived from pulp, and sucrose fatty acid
esters made from sugar. In the business field, our productlineup includes environmentally friendly synthetic lubricantsrelated to CFC regulations, conductive pastes for solar panels,
and modifiers for polylactic acid resin (a typical biodegradable
resin) and we expect demand for these products to keepincreasing. Furthermore, I. Japonica-Bombyx Fungus that weare focusing on in the Life Sciences business requires mulberry

26

DKS REPORT 2022

trees and silkworms as raw materials. We aim to achieve early
results as this will truly be a de-petrochemicalization business.
Next is “Society (S).” In particular, we are focusing on
Health and Productivity Management. Business expansion
depends on the health of employees and their families. Each
year, the Ministry of Economy, Trade and Industry, incollaboration with the Tokyo Stock Exchange, selects fromamong its listed companies those that consider employee
health management from a managerial perspective andengage in it strategically as “Health & Productivity Stocks.” In
2022, for three consecutive years, DKS has been selected as
one of the “Health & Productivity Stocks.” We were ranked
7th overall among participating companies and 1st in thechemical sector. Within DKS, we are implementing various
initiatives to maintain the health of our employees, including
the introduction of a health app to raise health awarenessand our original “DKS Calisthenics,” which is set at 3:00 p.m.
every day as the exercise hour for all employees, and walk-athons in which employees compete over the number of steps
they walked during the period. As a result, each employee’s

Making “other people’sbusiness” into “my own
business”

health awareness has increased, and the health checkup rateis almost 100%, with almost all employees subject tore-examination undergoing the re-checkup.
Lastly, we have “Governance (G).” We have increased theratio of outside directors to more than one-third, and thisyear we welcomed our first female outside director. The
Corporate Governance Code has required us to ensure thediversity of the Board of Directors for several years, and I
believe that we were fortunate to find someone with suchexcellent qualifications. I have also heard her statement that
she would like to create a structure that will enable us tocompete on the global stage, based on a firm understandingof our Company’s strengths and weaknesses. With theaddition of diverse human resources to management, we can
expect to break the bounds of our existing frameworks into
becoming a new type of company.

Toward the spread of integrated thinking management
This is the seventh year since we started producing the DKS
Report, our integrated report, and we realize that it cannot be
produced without integrated thinking. The question is how
well integrated thinking is spread to employees, which isquite a difficult task in terms of balancing so-called social
value and economic value. We have been using the DKS
Report within the Company in training sessions for new
employees and management workshops, and to show for
management the direction DKS should be taking, but there
are still challenges to be overcome as far as its permeation
into the total workforce. I feel that further management
efforts are needed to deeply instill the targets (matrix),
customer-orientated ideas, and profit-oriented perspective of
the medium-term management plan “FELIZ 115.”In April of this year, we introduced TUNAG, a digital
in-house newsletter. Employees can easily view it anytime via
PC or smartphone for easy access to information concerning
the direction the DKS is headed, management concepts,
financial results, systems, organizations, people, and anything
related the Company. The ultimate goal is to deepen
interactive communication, improve work engagement, andto strengthen the organization itself.
I have been sending out messages in the digital newsletter
twice a month about what I am currently thinking, what kindof action I desire from employees, and a wide range of topics
from the difficult topics to hobbies. I especially want young

employee readership. I happily look forward to seeing thenumber of views and comments enabled by this digital
media. I also comment on employee posts. This newsletter
allows employees who rarely get to meet in person to easilyinteract, and to be exposed to opinions that otherwise haveno space to be expressed. Over the past couple years during
the COVID-19 pandemic, there have been very few
opportunities for employees to get together to know eachother in person. It has become difficult to obtain information
within the Company, which used to spread from senior
employees to junior employees, from supervisors tosubordinates, and from casual conversations among peers. I
plan to keep actively posting my own thoughts on thisplatform and I hope that many employees will feel free toconnect with each other in both directions.
Finally, for DKS to grow sustainably, we must share
integrated thinking and ensure that everyone understands
our goals, strategies, performance, and evaluations. The
second-year goal of “FELIZ 115,” to review the businessportfolio and change the profit structure, was achieved
qualitatively. While responding to current challenges such as
geopolitical risks and high raw material prices, the entire
Company is determined to make a united push towardachieving our goals for fiscal 2025, the final year of the “FELIZ
115” plan.

DKS REPORT 2022

27

What Sort of Value Will DKS Create?

Tradition to Change Chemistry into Happiness andSpecial Feature

Contribution of DKS to renewable energy
As the world shifts to renewable energy with the aim of realizing adecarbonized society, the demand for solar cells used in solar power
generation is increasing. DKS will utilize its and its group companies’ unique
technologies to promote high efficiency solar cells and contribute to thefight against global warming.

Material issue• Development of Environmentally
Friendly Products

Global Expansion of Solar Power Generation
Renewable energy is attracting increasing attention as acountermeasure against global warming, and solar power
generation in particular is driving growth in the amount of
power generated by renewable energy as a whole. In 2021,
the world’s solar power generation capacity reached 847GW,

an increase of about 19% from the previous year. Thisaccounts for approximately 28% of all renewable energy
generation, surpassing wind power generation(approximately 27%).

Global solar capacity trends

Performance trends over the past five years of Kyoto Elex Co., Ltd.
（％）

（GW）
1,000

192

200
847

750

141

714
586

500

100

486

397

115

100

103

3/20183/2019

250
0

0

2017

2018

2019

2020

2021

* Source: Renewable Capacity Statistics 2017-2021(International Renewable Energy Agency)

3/20203/2021

3/2022* Since sales are not disclosed, FY3/18 is assumed to be 100, and the growth rate until
FY3/22 is shown.

Heterojunction (HJT) Type Realizes Highly Efficient Solar Power Generation
A solar cell is an energy conversion device that absorbs thelight energy of the sun and converts it directly into electricity.
Improving the conversion efficiency of incident light energy
to electrical energy has become an issue. The current

mainstream PERC (current type) has a conversion efficiency of
20-23%, which is already approaching the theoretical
efficiency limit, and no significant improvement in thosecharacteristics can be expected in the future.

Solar cell composition
Cells are connectedwith busbar electrodes

Array

The lightreceiving area
is small because

Cells

it is only on thesurfaceModuleThe lightreceiving area
is large because
it is on both thefront and backsides

Busbar electrodes (silver paste)that conduct collected
electricity
Finger electrodes (silver paste)that collect electricity
generated by cells

The back side has
items like an electrodeplate

Silicon semiconductor
with a crystal structure

Current (PERC) type28

DKS REPORT 2022

Amorphous silicon
semiconductor

The back side electrodes have thesame structure as the front side

Next generation (HJT) type

Innovation as a 100-year-old Company
The next-generation HJT type was developed, and theconversion efficiency has been improved to 24%. The HJTtype has electrodes on both sides, and because theabsorption rate of light energy can be increased, conversion
efficiency can be greatly increased even more. In addition,
the HJT type has the advantage of reducing the amount ofsilicon material used and the cost by reducing the
manufacturing process and using silicon semiconductors with
an amorphous structure to make the silicon semiconductors
thinner. Therefore, domestic and foreign cell manufacturers
and module manufacturers are paying attention to theintroduction of the HJT type.

Refining our Technology to Maintain our Top Share in the World, and Continue to Respond toStrong Demand
Kyoto Elex Co., Ltd., an affiliated company of DKS,
manufactures resin-curing silver paste for HJT solar cells. Thissilver paste is used in the cell, which is the smallest unit thatmakes up a solar module, for busbar electrodes that carrycollected electricity and finger electrodes that collectgenerated electricity. In cooperation with material
manufacturers, we have achieved high conductivity and low
volume resistivity of silver paste from both the conductive
powder “silver powder” and “resin/organic synthesis,” andour market share is currently number 1 in the world for HJT
solar cells. Aiming to further expand market share, we have
expanded the light-receiving area on the cell to increase

conversion efficiency, and we have provided good fine line
printability and high adhesiveness to solder and silicon
semiconductors. We are proceeding with development
aimed at improving user productivity and reducing usage andcosts.
We will continue to achieve higher quality silver paste andfocus on developing unrivaled products. In addition, as Chinais the main market, by establishing a factory plant in China,
we will improve customer satisfaction in terms of delivery andcost for solar cell manufacturers in China, and prepare asystem that can meet the demand for solar power generation
around the world.

Contributing to user productivity improvement

Contributing to improved user productivity through the excellent material
properties of resin-curing silver paste and optimized printing conditions
1st generation

Finger electrodeBusbar electrode

Finger electrode

Requires double printings offinger electrodes to obtain thedesired properties

2nd generation
Improved paste properties canprovide the required
performance with a single finger
electrode printing.

Finger electrode usbar electrode strength has
Bbeen improved, making the
reduction of line width possible.

3rd generation urther improvement of paste
F
properties enables the thinningof finger electrodes.

 usbar electrode strength isB
also improved, and the silver
paste can be reduced with ahollow pattern.

Finger electrodeBusbar electrode

Reduction of paste
consumption by 30%
or moreBusbar electrode

DKS REPORT 2022

29

What Sort of Value Will DKS Create?

Research and Development
Material Issues• R&D framework aligned with UniTop strategies• Developing products that contributeto the environment• Promoting an intellectual property
strategy

DKS’ technological strength is that we have the ability to customize thefunction and performance of products in line with customer requirements as
we make proposals based on the ideal product combination, and technology
is an important intellectual capital that supports our management strategies
for sustainable growth. We are refining our technologies in pursuit of theconcept, “chemistry provides a solution.”

The Strengths and Advantages of DKS’ R&D
As a leading industrial chemical manufacturer, it is ourmanagement philosophy to continue to be a prominentcompany that responds to the expanding chemical
requirements of industries. To realize that philosophy, we arefocusing on the research and development of high-valueadded products, with a particular focus on products with IT
and electronic applications, and the development of new

applications for battery cell materials and cellulose nanofibers.
We have diverse and wide-ranging technologies, and wehave the expertise to know how to combine technologies tocreate functionality and differentiation, which leads to ouruniqueness. We continue to blend technologies withadvantages to make combinations that provide the functions
and performance that our customers need.

Establishment of R&D Framework Aligned with Uni-Top Strategies
In 2021, we established the MOT Planning Department toaddress profit management for DKS technologies as we aim forbusiness that leverages technology.
The Advisory Committee within the R&D Headquarters is anorganization made up of specialists in research andmanufacturing. Optimal allocation of research resources andshortened R&D timeframes will contribute to generating profit
by maximizing ROI from our R&D.
The R&D staff performs their work with a customer-centricfocus while fostering partnerships with inspiring/inspired
partners.
These efforts will add value to our customers’ products andlead to sales of Uni-Top products.

Conceptual diagram of customer-specific marketing
and R&D
Customer-specific marketing
activities

R&D

Advisory
Committee

Creation of new technologies

Intellectual
property

Customer’s success

Development of Environmentally Friendly Products
As measures to solve social issues, DKS strives to develop technologies and deliver products that meet environmental needs.
Needs & challenges
Global warming
prevention

Energy andresource saving
Contributing to a
recycling-oriented
society

Values we deliver

Our product lineup

Technologies

Binder for lithium-ion batteries

Cellulose modification, battery evaluation

Gel electrolyte polymers

Polymer function designing, battery evaluation

Conductive paste for solar cells

Organic-inorganic hybridization

Limiting ozone destruction (global
warming)

Solvent alternative cleaning agents

Precision cleaning agents evaluation

Reducing the steps in manufacturing
processes (energy-saving)

Solvent-free UV-curable materials

UV/EB curing, alkylene oxide addition

Extending the useful life of products

Sealing materials for circuit boards

Potting, urethanization

Delivering products with low
environmental impacts by using
renewable raw materials

Cellulose nanofiber

Cellulose modification

Sucrose fatty acid esters

Sucrose esterification

Polylactic acid (corn derived) resin modifier

Polymer function designing

Reactive surfactants for waterborne coatings

Emulsion polymerization, interface / surface
control

Waterborne polyurethane resin

Urethanization, emulsification / dispersion

Solvent-free UV-curable materials

UV/EB curing, Alkylene oxide addition

Low aquatic toxicity, easily biodegradable
surfactants

Alkylene oxide function designing

Oil spill treatment agentsInterface / surface control, emulsification /dispersion

Reducing CO2, promoting green energy

Delivering highly biodegradable
products, solving the problem of plastic
waste
Limiting health effects, air pollution, andthe like by lowering VOCs*

Protecting water environment, reducing
water pollution* Volatile organic compounds (VOC): A general name for organic compounds that evaporate in air. Volatile organic compounds include toluene, xylene, and ethyl acetate.

30

DKS REPORT 2022

Customer-Oriented R&D Strategies
At DKS, we are establishing research centers for eachcustomer. In order to identify needs more quickly andaccurately, our research centers assign head researchers suitedfor each inspiring/inspired partners customer and set research
themes. In order to expedite R&D, we form cross-departmental
teams as needed, conduct flexible and efficient organizational
management according to schedules, and incorporate theknowledge of outside experts to capture changes intechnology and materials through open innovation, bothwithin and outside the Company.
Under our medium-term management plan, which targets
an R&D expenses-to-sales ratio of 5.0% for the fiscal year
ending March 31, 2025, we will continue to engage in R&D
spending focused on key projects.

Promoting DX in R&D
We have the expertise to know how to combine diverse andwide-ranging technologies to create functionality anddifferentiation, which leads to uniqueness and predominanceat DKS. We also view the intuition and experience of ourresearchers as important intellectual property, and we arebuilding a system to incorporate these into MI (Materials

Informatics) which integrates DX and AI. Our goal is to makeefficient research possible for every member of the researchteam by teaching AI all kinds of data, including research
papers, so that employees can use AI to input parameters anda computer can suggest the necessary data.

Promoting an Intellectual Property Strategy
In consideration of future business development, weaggressively pursue prompt applications for and acquisition of
IP rights based on our R&D results. Recently, we haveenhanced our information search function and focused on

improving the quality of our patents. In response to theglobalization of our business, we will continue with our policyof ensuring the acquisition of rights in important markets inJapan and overseas.

R&D Investments
R&D Costs

Research Personnel

Number of Patents Held (Group)(Million of yen)

(Persons)(Patents)

3,000

2,000

2,765

2,748

2,821

2,946

250
200

2,307
4.1

(%)
9

4.6

4.5

4.8

4.7

1,000

6

3

0

0

3/2018 3/2019 3/2020 3/2021 3/2022

100
180

196

208

219

215

150

60

100

40

50

20

0

43

45
47

43
53

45
31

33

58

40

0

3/2018 3/2019 3/2020 3/2021 3/2022

 R&D costs (left axis)
R&D expenses-to-sales ratio (right axis)
The target for R&D expenses-to-sales ratio is5.0% but it was 4.7% for FY2021.

80

3/2018 3/2019 3/2020 3/2021 3/2022

 Japan    Outside JapanThe decrease in research personnel in FY2021 isdue to the decrease in temporary employees.

ColumnPolylactic acid resin modifier “TRIBIO” won the 72nd Industrial Technology Award from the Osaka Industrial Research
Association
In recent years, marine and soil pollution caused by microplastics and other substances has become a serious problem worldwide.
Polylactic acid is attracting attention as an environmentally friendly material as it is highly biodegradable and manufactured from renewable
plant-derived raw materials. However, the difficulty of maintaining transparency and heat resistance in the final product has hindered its
widespread use. DKS created the “TRIBIO” series of polylactic acid resin modifiers to solve these problems, and was awarded the 72nd
Industrial Technology Award sponsored by the Osaka Industry Research Association. This award is given to engineers who have madesignificant contributions to industrial research, invention, and the advancement and improvement of field technology. We will continue todevelop environmentally friendly products with an awareness of the SDGs.

DKS REPORT 2022

31

What Sort of Value Will DKS Create?

Quality Management
In order to meet the needs of customers and society and earn their trust, it
is essential to improve the quality of the products and services we provide.
At DKS, we consider quality from the four perspectives of “design anddevelopment,” “production,” “sales,” and “customer service,” and we areworking to improve quality in cooperation with our customers and suppliers.

Material issues• Thorough quality assurance system• Promoting occupational safety andhealthFor details on quality and safety management, please visit our website (in Japanese only). https://www.dks-web.co.jp/sustainability/ecology/

Quality Assurance/Quality Policy
As a chemical partner conveying the essence of highfunctionality for the future, we will provide customers withsafer, higher-quality products that maximally contribute to thedevelopment of their business. To realize this, we engage inquality control using the PDCA cycle based on our
fundamental quality assurance and quality policy in an effort
to improve quality and customer satisfaction.

Fundamental Quality Assurance
1. W
 e establish quality-related management standards for each departmentthat cover the entire process, from product planning to customer service
through design and development, manufacturing and sales. Through theappropriate operation of such standards, we strive to provide high-quality
products that are safe and reliable, maintain and improve product quality,and provide quality assurance for our customers.
2. To effectively bring about quality assurance functions throughout the entire
Company, we establish, operate, and maintain a quality management
system and promote initiatives for on-going improvements.
3. All our employees must observe this basic concept of quality assurance
and carry out tasks in accordance with the Quality Assurance Management
Regulations.

DKS Quality Policy

DKS Quality Assurance System
DKS promotes quality assurance activities by eachdepartment in charge of the process of product design anddevelopment, manufacturing, sales, and service. With thepresident as the highest quality assurance officer, theenvironment, safety, and quality assurance staff areresponsible for raising quality assurance issues, formulating
and recommending solutions, and overseeing the quality
management system in order to ensure quality assurance.
The QA Department General Manager oversees quality
assurance in general and establishes and strengthens aquality assurance system through comprehensive
coordination between other departments, and the Quality
Assurance (PL) Meetings set the direction of quality assurance
and quality control activities.
In line with diversifying customer demands and heightened
requirements for product quality from a social perspective,
we remain committed to working to ensure product safety
and quality, as well as trying to prevent quality-related issues
before they arise.

Quality Control System
DKS uses ISO 9001 as the basic tool of our quality
management system to maintain and improve quality, andprovide products and services that comply with customer
requirements and laws and regulations by rotating the PDCA
cycle. Furthermore, through careful daily activities (production
management, corrective actions for nonconformities such ascomplaints and abnormalities, confirmation of effectiveness,change management, audits, education and training, etc.)
and continuous review and improvement of the management
system, we are working to improve customer satisfaction. In
April 2019, we reconstructed the customer complaint
database and visualized progress throughout the Company,
including cause investigations, recurrence prevention
measures, and reports to customers. By analyzing the causes
and thoroughly preventing recurrence, in fiscal 2021, we

32

DKS REPORT 2022

reduced the number of complaints to 40% of fiscal 2017.

Numberof complaints (compared to FY2017)
クレーム件数の推移
(%)
120
100

100

109

80

72

60

64

40

40

20
0
(FY)

2017

2018

2019

2020

2021

QC System Diagram

President

Sales Headquarters

Life Sciences Business
Headquarters

R&D Headquarters

Production Headquarters
Yokkaichi Branch
Ohgata Branch• Shiga Branch•Procurement
Department

Sales Promotion
Department

PlantsSales departments

Production
departments

R&D departments

Customers•Quality Control
Sections
Quality inspection(raw materials, products)
Certificate of analysis
issuance

Customer Support
Department
Support Group
Delivery Group

Quality Assurance
Department
Quality management(supervision)
Regulatory management
RC promotion activities

Product Quality Review Meeting

Product Safety Mechanism (chemical substance management from design development)
At each stage of product development, from research andexploration to prototyping and mass production, DKS
conducts surveys of laws and regulations as well as
evaluations of environmental impact, and carries out designand development with the utmost consideration for productsafety. In addition, by introducing a chemical substancemanagement system, we conduct GHS1 classification, checklaws and regulations, create multilingual SDS2 and labels,

investigate substances contained in items such as our
products, and are promoting the appropriate communicationof information about our products.
1. Globally Harmonized System (GHS) of Classification and Labeling of Chemicals
2. Safety Data Sheet (SDS): A sheet containing information on the properties andhandling of chemicals when transferring or providing them to other business
operators

Product Safety Mechanism
Customers & Local Communities

Search & Investigation

Design & Development

Research & Preproduction

Required Quality

Securing of Product Safety
Process Review

Planning

Commercial Production (Product Sales)

Product Design

Process Safety and Disaster Prevention

Commercial Production Review

Stable Supply

Occupational/Process Safety & Disaster Prevention

Technical Service• Investigation of technologicalinformation• Realization of quality• Production technology review• Quality control• Investigation of laws and regulations• Safety confirmation• Product evaluation (safety/packaging)• Response to improvement requests• Environmental impact assessment• Compliance with applicable laws andregulations• Provision of product information• Environmental impact assessment• Environmental conservation• Investigation of conformity withapplicable laws and regulations• Investigation of raw materials• Securing of raw materials• Preparation of SDSs, labels, andtechnical documents• Regulatory compliance• Securing of distribution safety

Provision of Product and Technical Information
Our products are utilized in a variety of industrial fields, andwe provide product and technical information tailored to thecharacteristics of each product and service. An SDS provides
information on items such as hazards to ensure safe handlingof the product. For products exported to the US, EU, andAsian countries, we are promoting compliance with the laws
and regulations of each country, issuance of SDS incompliance with GHS, and the display of product labels. We
are also sequentially revising SDS and labeling in line withrevisions to the Chemical Substances Control Law, theIndustrial Safety and Health Act, and the Poisonous andDeleterious Substances Control Act. In addition, we areproviding information on chemical substances in products by
utilizing chemSHERPA (a common scheme for communicating
information on chemical substances in products that can beused throughout the supply chain).
When introducing our products, we strive to maintain close
communication with our customers through daily businessnegotiations, and provide information through productpamphlets and technical documents.

DKS REPORT 2022

33

What Sort of Value Will DKS Create?

Quality Management

Occupational Safety Initiatives
Continuous improvement through occupationalsafety and a health management system
DKS recognizes that ensuring the safety and health of ourworkers is the foundation of our business activities, and wehave established policies in the “Environmental Conservation,
Health and Safety Management Regulations.” Since August
2018, we have been working to acquire Occupational Safety
and Health Management System (OSHMS) certification, andfollowing the Yokkaichi Branch and the Ohgata Branch, theShiga Branch acquired JIS Q 45100 certification in December
2021. In order to further improve the level of occupationalsafety and health, we will continue to revise the OSHMS
manual and related regulations, as well as create and revise
manuals on health management.

XX
Industrial
Accident Frequency Rate (AFR)

1.07
0.81

0.80

0.90
0.88

0.60

0.68

0.40
0.20
0
(Year)

0.94
0.86
0.64

In 2021, the DKS Group continued to have lost workday
injuries from the previous year, so the occupational accident
frequency rate (lost time) remained almost unchanged. In
addition to taking appropriate corrective action, we
implemented thorough recurrence prevention measures. In
2022, we will further strengthen safety activities, including risk
assessment, with the aim of achieving zero occupational
accidents (lost time).

XX
Industrial
Accident Severity Rate (ASR)(Frequency rate)
1.20
1.00

Industrial Accident Frequency Rate (AFR) andIndustrial Accident Severity Rate (ASR) (January2021-December 2021)

0.93
0.81

0.62

(Severity rate)
1.00

0.09

0.80
0.77

0.59

0.40
0.02

0.20
0.00
0.00

2017

DKS Group

0.00
0.00

0

2018

DKS

2019

2020

2021

Chemical Industry*F requency rate = Accidents resulting in lost work time / Total working hours x 1,000,000
Numerical value indicating the frequency of victims per 1,000,000 working hours

0.07

0.06

0.60

(Year)

2017

DKS Group

0.00
0.00

2018

DKS

0.05
0.03

0.01
0.01

2019

2020

2021

* Severity rate = Working days lost / total working hours x 1,000
Numerical value indicating the severity of accidents per 1,000 working hours

A hands-on training device was installed at the safety
training center opened in February 2017 at the Yokkaichi
Branch Kasumi Plant to increase sensitivity to abnormalities
and dangers. In addition, we have introduced a simulated
mini-plant, which can actually be operated, so that
employees can understand the basic principles ofequipment and processes. Using these facilities, 54
employees got hands-on safety training in fiscal 2021.
In the future, we will continue to conduct training toconvey the importance of safety knowledge and stable
operations, and to raise individual safety awareness.

P lease refer to our website for “Initiatives for Sustainable Growth – Securing Safety and Disaster Prevention” for FY2021.
https://www.dks-web.co.jp/english/ir/report/index.html

DKS REPORT 2022

0.00
0.00

Chemical Industry

Implement hands‑on safety education

34

0.02

Food Hygiene Management Initiatives
Manufacturing TENCHUKASOU in an HACCPcertified plant in JapanHACCP is an international food hygiene control method
developed in the United States in the 1960s to ensure thesafety of space food. Currently, many countries are making
HACCP mandatory. The Food Sanitation Act was revised inJapan, and from June 2021, hygiene management in line with
HACCP has become mandatory. By complying with HACCP,
businesses will be able to manage the most important
processes to eliminate and reduce hazards in all processes
from the arrival of raw materials to product shipment, and will
be able to improve safety.

Biococoon Laboratories, Inc.

The Tanagura Plant of Biococoon Laboratories, Inc. is JFS-B
certified, a food safety standard, and also HACCP-certified.
At the same plant, we produce the raw material for the healthfood TENCHUKASOU, which is produced in Japan. In
particular, we thoroughly managed the sterilization process,which is an important item in HACCP.
The Shiga Branch, which manufactures products such as
sucrose fatty acid esters (SE), has also acquired HACCP
certification.

The Shiga Branch, which manufactures
products such as sucrose fatty acid esters (SE)State of quality control

Initiatives Towards a Management System Equivalent to Pharmaceuticals
Strengths of being a GMP-certified plant
Ikeda Yakusou Co., Ltd. performs consignment work such as
the powdering of items such as health foods and chemical
products. Since products that come into direct contact withthe human body, such as personal care products, are often
required to be managed in the same manner as
pharmaceuticals, the company has established a quality
assurance system based on GMP certification*. In particular,
the “extraction area,” “first spray drying area,” and the“pulverization area” have acquired GMP certification, andboth manufacturing and quality are managed in accordancewith GMP certification in the same way as pharmaceuticals. In
addition, all production areas are equipped with the latest air
conditioning equipment that maintains thorough temperatureand humidity control and a clean environment. By equipping
each major piece of equipment with a cleaning-in-place (CIP)
function to ensure thorough and safe cleaning, we haveestablished a cleaning system to prevent contamination.
Being a GMP-certified plant has been a major advantage,
which led to an increase in demand.
In addition, in the Life Sciences business, we are aiming toobtain GMP certification for a plant to be constructed in
Okayama Prefecture, and we are planning to manufacture

pharmaceutical formulations as well as healthcare products,
etc., which are being researched and developed by the DKSGroup.
* GMP certification: GMP is an abbreviation for Good Manufacturing
Practice, a manufacturing process control standard that ensures that
products are manufactured safely and that a certain level of quality is
maintained in all manufacturing processes. GMP certification is done bya third party organization that objectively evaluates the implementation
status of manufacturing and quality control in accordance withguidelines.

Ikeda Yakusou GMP certified plant
Ikeda Yakusou’s GMP-certified plant

DKS REPORT 2022

35

What Sort of Value Will DKS Create?

Human Resource Management
Human capital is the most important asset for DKS, and we aim to maintaintalented human resources and diversity based on the idea of valuing people.
We recognize the growth of employees to be the driving force for thedevelopment of the Company, leading to a wide range of enhancements incorporate value.

Material issues• Diversity• Boosting human resource
capabilities• Health and Productivity
Management initiatives

Promoting Diversity, Human Resource Development and Education
Human Resource Development and Education
At DKS, we develop human resources who can contribute toour business and customers. The three pillars of our humanresource development and education programs are in-houseon-the-job training, external education to learn skills andabilities, and support for self-development.
In recent years, we have conducted a fundamental reviewof the training of new employees, and have implemented
new methods with a view to making them ready to work
immediately after joining the Company. In addition, we havebeen working on company-wide digital transformation (DX)for corporate reform that will revolutionize the way weconduct our business and operations, and we are developing
human resources through our “DX Human Resource
Development Program” to accelerate DX throughout theCompany. By fiscal 2021, approximately 60% of ouremployees have received DX human resource developmenttraining.
Human resource training is established in other areas aswell, including by bolstering our support for employees
aiming to improve their own abilities, be it through theacquisition of qualifications, or correspondence learning(employees finishing courses with distinction have all fees
covered by DKS).
Annual hours of attendance in educational programs at
hierarchical training courses (FY2021 Results)
Number ofattendees

Hours ofattendance

Courses for employees inmanagerial positions

187 attendees

972 hours

Courses for employees in
non-managerial positions

46 attendees

2,145 hours

DX human resource development training (FY2021 Results)

New employees

Number ofattendees
30 attendees

Hours ofattendance
3,375 hours

Selected employees

60 attendees

6,750 hours

Self-development (FY2021 Results)
G-Certified*Financial assistance for correspondence learning

8 attendees
40 cases*G-Certificate: A certification exam sponsored by the Japan Deep Learning
Association. The exam is designed to determine whether a person has basic
knowledge of deep learning and the ability and knowledge to determine andimplement an appropriate policy for its use.

Company performance. We are creating environments inwhich we can maximize the abilities of diverse employees,
and enable them to take an active part in our Company.
■ Promotion of Women’s Participation and Advancement
In addition to work friendly environments that allow female
employees to remain at work for many years, we are
maintaining employment environments that enable women
to develop their careers.
We have implemented measures aimed at having 10.0% ormore of managerial positions occupied by female employees.
As of March 31, 2022, this figure was 9.1%.
Since fiscal 2019, we have created an environment
conducive to the active participation of women at our
manufacturing sites, and female employees are taking
advantage of their diverse skills in various workplaces in the
manufacturing sites, such as the administrative departments,
Quality Control Section, and Production Section. In March
2022, the Shiga Plant obtained certification from Shiga
Prefecture as a “Company Promoting Women’s Active
Participation.”■ Employment of People with Disabilities
DKS has been working to assign people with disabilities toworkplaces that leverage their individual personalities andstrengths, and they are currently working as valuable assets inworkplace such as our Personnel Department, General Affairs &Legal Department, and Digital Strategy Department. In
February 2022, the DKS Challenge Center was created as a
specialized task force for the employment of people withdisabilities. We have centralized the management andoperation of the employment of people with disabilities,
which was previously conducted separately at each businesssite, to address comprehensive issues related to this purpose.
The employment rate of people with disabilities at DKS at theend of fiscal 2021 was 2.57%, and we have achieved a highretention rate by creating an environment that maximizes theaptitude and abilities of each individual.
Number of employed persons with disabilities and theirretention rate
障がい者雇用数／定着率(persons)
25
20

Initiatives to Promote Diversity
Having set up an Employee Participation and Advancement
Promotion Committee chaired by a senior management
member, we are aiming to become a human resource groupcapable of successfully contributing to improvements in

DKS REPORT 2022

21

77.3
17

15

85.0
17

80
60

10

40

5

20

0
(FY)

36

(%)
100

95.5

0

2019

2020

Number of employed persons with disabilities

2021
Retention rate

■ Retiree Reemployment System
In reemploying retired applicants as Senior Challenge Staff,
DKS conducts monozukuri (manufacturing) by handing down
senior employees’ techniques and skills that make the best useof the experience they have accumulated over many years.
Senior Challenge Staff Employment
FY

Number of
retirees

Number ofreemployments

improve the work-life balance of our employees.
Total overtime hours for the year remained around 150 hours,
and in fiscal 2021 was 151.1 hours per employee. As one of thepriority measures of “FELIZ 115,” we are also working to reformthe personnel system to transform our corporate culture to one
that reliably rewards those who contribute to the business.

Reemployment
rate

2019

4

4

100.0%

2020

15

10

66.7%

2021

8

6

75.0%

FY
2019
2020

Promote Work-Style Reform

2021

To support the balance between work and home life, we
introduced a telecommuting system in fiscal 2019 and a
flextime system in fiscal 2020. DKS is always aiming to

AnnualTelecommuting Rate
Overtime(Utilization Rate of
Hours
Telecommuting System)*
151.0 hours
0.6% (20.3%)
per person
147.9 hours
14.8% (59.7%)
per person
151.1 hours
14.0% (62.9%)
per person

Rate of Annual
Paid Leaves
Actually Taken
73.2%
66.1%
67.4%

* Telecommuting Rate = total telecommuting days ÷ total work days × total telecommuting
workers × 100
Utilization Rate of Telecommuting System = system users ÷ total employees × 100

Health and Productivity Management
DKS has a proactive corporate culture toward employee
health management, as evidenced by the fact that in 1919,
the year after its founding, DKS began implementing healthcheckups on all employees. Underlying this is our corporate
philosophy that people are our assets and must be nurtured
and treasured. In 2017, DKS announced its Healthy Company

Declaration and began Health and Productivity Management
initiatives. One of the goals of our medium-term
management plan “FELIZ 115” is the improvement of
employee happiness, and we are working to maintain andimprove the health of our employees, which is essential toachieving this goal.

Healthy Company Declaration: Regarding its employees as Company assets, DKS will strive to maintain and improve their health.
YAMAJI Naoki, President COO, DKS Co. Ltd.
Prevent disease and mental health issues by health management

Work and live in a safe and healthy environment• Formulate measures to prevent lifestyle-related diseases• Formulate health management targets• Develop internal company communication• Improve the workplace environmentPlan• Gather results of health checks, management ascertains status of
Actionmental health• Share health checkup results data in-house• Release both internally and externally an assessment by external
institutions• Explore routes for improvement based on an assessment by external
institutions• Explore next health management targets based on health checkup results andsecondary data
• Verify the effect on productivity and corporate value

Do
Check

• Regular health checkups, special health checkups, specific healthguidance• Mental care: internal and external EAP, stress checks• In-house education: e-learning, group training, etc.
• Improve conditions of the Company premises and housing: maintenanceof amenities; implement measures to prevent passive smoking, etc.
• Look into absenteeism, presenteeism, and work engagement• Hold events involving athletic activities• Inspect workplaces; monitor working environments, etc.
• Interview after health checkup and summarize results• Implement workplace improvement activities after stress checks• Request third-party assessment by external institutions: DBJ
Health Management rating, White 500 (certified health andproductivity management organizations)• Conduct cross-analysis relating to productivity

Concept of Health and Productivity Management
Health and Productivity Management (“Kenko Keiei”) Initiatives
We aim to bolster the Company’s productivity, and thus its corporate value, by maintaining and improving the health of our employees.
This initiative is reported to meetings attended by officers in charge to obtain approval for plans formulated based on these results.
Health and Productivity Management (“Kenko Keiei”) is a registered trademark of the NPO Kenkokeiei.

Efforts in Health and Productivity Management
We believe that efforts to maintain and improve the health of
our employees will enhance our corporate value in the future.
From a managerial perspective, DKS is striving to maintainand improve the health of its employees under its Healthy

Company Declaration. We have clearly stated specific healthy
actions for employees in our Employee Healthy Action
Guidelines, and have established a Health and Productivity
Management Promotion Committee to promote healthacross the Company.

DKS REPORT 2022

37

What Sort of Value Will DKS Create?

Human Resource Management■ Efforts to Establish Exercise Habits
We are working to establish exercise habits by using an app
that registers the number of steps taken on a daily basis. We
hold company-wide walk-a-thons regularly and motivate
employees by establishing rankings for each individual andteams per office. In addition, we have created a system toincrease the amount of physical activity during the workday by
setting a time for radio calisthenics before work and DKS
Calisthenics (a DKS original) at 3:00 p.m. as a preventive
measure against outbreaks of illnesses among able-bodied
employees. As part of efforts to improve not only exercise
habits but also eating habits, we encourage the use of healthguidance to employees who meet the criteria for metabolic
syndrome or pre-metabolic syndrome and provide support tohelp them make improvements (measures to prevent serious
illnesses among those at high risk). In addition, we holdphysical fitness seminars for older employees to help themcreate an environment in which they can continue to exercise.
As a result of these efforts, the percentage of employees aged
40 and over with exercising habits increased from 13.6% in
fiscal 2016 to 24.4% in fiscal
2021, and accordingly, thepercentage of employees aged
40 and over maintaining anappropriate weight improved
from 69.0% in fiscal 2016 to
72.1% in fiscal 2021.
Practicing DKS Calisthenics■ DKS Trim Waist Award
After distributing DKS original measuring tape to all
employees and educating them about abdominal
circumference, we have employees self-report changes intheir abdominal measurements over time and give out Trim
Waist Awards. In addition to DKS Calisthenics, which
incorporates movements focused on reducing belly fat, we
also support walk-a-thons, No Snacking Day, and Teetotal
Day to raise awareness of the need to reduce abdominal
circumference.
■ Enjoy Eating Project
Our cafeterias are free for our employees and offer a wellbalanced healthy menu. We also provide nutritional guidance
through a health app. By taking photos of their meals andregistering them in the app, employees can receive
nutritional guidance from the AI. Points are awarded for eachmeal registered, which can be redeemed for health-related
products. The app was used by 70.0% of employees in fiscal
2021, and is being used to help them manage their health.
■ Mental Health Measures
As a mental health measure, DKS has introduced an external
Employee Assistance Program (EAP), which provides
employees with counseling for their concerns via e-mail,video call, telephone, and in-person. Around-the-clock
counseling is available to employees and their relatives up to

Strategy Map
Results of health investments
Indicators regarding thestatus of healthinvestment policy efforts

Indicators related tochanges in awarenessand behavior of
employees, etc.

Health app

Utilization rate ofhealth app

Decrease thenumber of people
with lifestyle-related
illnesses

Health educatione-learning

Increase attendance
rate of healtheducation classes

Quit Smoking
Project

Number ofparticipants in the
Quit Smoking
Project

Health investments

Enhancementof regular
health checkups
Healthmanagement
systemInternal andexternal EAP
Walk-a-thons

Enhancement of
non-statutory
healthcheckups, etc.

38

Reduction ofpresenteeism

Increase rate of
exercise habits

Increase
participation rate ofwalk-a-thons

Reduction ofabsenteeism
Maintain 100%
secondary healthcheckup rate

Maintain 100%
secondary checkup
encouragement rate

In-houserecreational events

Increase
participation rate ofin-houserecreational events

Improve workplace
relationship metrics

Mental healtheducation

Increase attendance
rate of mental
health education
classes

Maintain low
number of
employees onmental health leave

DKS REPORT 2022

Management issues tobe solved throughhealth and productivity
management

Social value

Health guidancefrom professionals

Corporate
culturePhilosophy ofHealth andProductivity
Management

Decrease rate ofsmoking

Final health-related
target indicators

Increase employee
happiness andfurther improve
productivity

Achieving a
happy, active
post-retirement
life

Corporate value
Sustainablegrowth throughhappiness-based
management

Improvement ofwork engagement

the second degree of kinship, and is available in Japanese as
well as English, Chinese, Korean, and Portuguese. In fiscal
2021, our counseling service was used in 262 cases. In
addition, the participation rate of employees in hierarchicalmental health training, which is conducted at milestones suchas promotions, was 100% in fiscal 2021, and the participation
rate of mental health education for all employees was 87.9%
in the same period.

Health and Productivity Management Targets

Status of three targets (KPIs and results) for sustainable corporate growth through the implementation of happiness-based
management
Targets for FY2024

FY2019FY2020

FY2021

1

Reduction of absenteeism

Maintain at 2.0%
or below

1.6%

0.8%

0.9%

Reduction of presenteeism2

Maintain at 2.0%
or below

2.5%

1.3%

1.0%

Achieve a normalized
score of 51 or more

49.8

50.8

50.9

Improvement of work engagement3
1. 2. Measured using DKS’ own formula.
3. Scoring by stress checks
Please see the glossary on p.70-71 for details on terminology.

Health Management Targets

Status of four targets (KPIs and results) regarding employee health issues
Targets for FY2024

FY2019FY2020

FY2021Prevention of health issues among healthy
employees:
Percentage of employees who exceeded
abdominal girth standards

25.0%

30.7%

31.6%

29.2%

Prevention of aggravation among high-risk
employees:
Percentage of employees 40 years or older at risk
for or experiencing metabolic syndrome

22.0%

26.6%

28.9%

24.7%

Prevention and early detection of employee
mental health issues:
Ratio of leave taken by employees with mental
health issues

Maintain at 0.20%
or below

0.16%

0.00%

0.15%

Creation of environment leading to quitting
smoking:
Percentage of employees who smoke

11.4%

21.5%

20.1%

20.5%

Third-Party Review of Health and Productivity
Management
In recognition of its efforts, DKS was selected by the Ministryof Economy, Trade and Industry (METI) and the Tokyo Stock
Exchange (TSE) for the third consecutive year as a “Health &Productivity Stock.” For the fifth consecutive year, DKS andsubsidiaries Gembu Co., Ltd., Dai-ichi Kenkou Co., Ltd., Daiichi Ceramo Co., Ltd., Kyoto Elex Co., Ltd., and for the third
consecutive year, Ikeda Yakusou Co., Ltd. were certified as
White 500 Organizations. We also acquired the highest healthmanagement rating from the Development Bank of Japan
Inc. (DBJ) for the fifth consecutive year. On March 9, 2022,
Yokkaichi Chemical Co., Ltd. was certified for the second
consecutive year as a “Corporation with Excellent HealthManagement” by the Nippon Kenko Kaigi (Japan HealthCouncil), a system designed by the Ministry of Economy,
Trade and Industry to recognize large corporations, small andmedium-sized companies, and other corporations thatpractice particularly excellent health management based on
initiatives that meet local health issues and health promotion
efforts promoted by the Nippon Kenko Kaigi.
Going forward, assessments of Company efforts throughthe eyes of external organizations will continue to lead tofurther enhancements in corporate value.
•Efforts in Health and Productivity Management(In Japanese only)
https://www.dks-web.co.jp/sustainability/employee/health/index.html•Yokkaichi Chemical’s Efforts in Health and Productivity Management(In Japanese only)
https://yg-chem.co.jp/company/health-management/

DKS REPORT 2022

39

What Sort of Value Will DKS Create?

Consideration for the Environment
The Company states its environmental and safety philosophy as“contributing to the sustainable development and realization of happysocieties by considering human health, safety and environmental
preservation throughout the lifecycle of each product, from development to
scrapping,” and promotes responsible care activities.

Material issues• Responding to decarbonization andreducing environmental burdens• Contributing to a recycling‑oriented
society• Appropriate management ofchemical substances

For details on the responsible care activities and promotion system, see our website (in Japanese only). https://www.dks-web.co.jp/sustainability/ecology/

Environmental Conservation Efforts
Long-Term Environmental Vision

GX Strategy Targets

Greenhouse gases
in fiscal 2030

Reduce by

30%(compared tofiscal 2013)

Rate of final
waste disposal
in fiscal 2030

Zero emissions

In March 2021, the Company devised green transformation(GX) strategies for moving toward carbon neutrality in 2030
and out to 2050. Starting in fiscal 2021, we have been shifting
to a forecasting and analysis approach that is informed bythese strategies. As we strengthen our current initiatives, wewill also expand our targets to initiatives that take thesustainability of broader society into consideration.
Our main initiatives in fiscal 2021 were improving theefficiency of production processes, adopting energy-saving
equipment, energy usage visualization, and effectively
utilizing waste. At the Shiga Branch, we improved theefficiency of production processes by adopting highefficiency steam drain traps and collecting heat exhaust fromprocesses. At the Yokkaichi Branch, we promoted energysaving by identifying inefficiencies via energy usage
visualization. At the Ohgata Branch, we strived to reduce
waste and identified waste that can be recycled as useful
resources via business matching with other industries.

DKS REPORT 2022

CO2 reductions in the supply chain

Environmentally friendly products

Carbon neutral
Biodiversity

2021

Reduction of GHG emissions

Reducing emissions ofenvironmentally impactful
substances
Zero emissions

Energy saving
Waste reduction

Contribution to businesses

0.1% or less

Initiatives Based on GX Strategy

40

2030
Improvement of corporate value

In order to protect lifestyles and increase safety and comfort,
DKS contributes to the realization of a sustainable society
based on the idea that “chemistry provides a solution.”
As we look to achieve carbon neutrality by the year 2050,
we will reduce the Scope 1 and Scope 2 greenhouse gas
emissions of the entire DKS Group in Japan by 30% by fiscal
2030, compared to fiscal 2013. In regard to the rate of final
waste disposal, we will aim for zero emissions (0.1% or less)over the entire DKS Group in Japan by fiscal 2030.

Progress with Environmental Targets
For our GX strategy targets (fiscal 2030), we set numerictargets based on the long-term environmental vision. For our
medium-term environmental targets (fiscal 2024), we reviewed
the progress of our GX strategy in May 2022. We changed thegreenhouse gas emissions and energy consumption per unit
from an evaluation compared to the previous fiscal year to an
evaluation compared to reference years.
Our results for fiscal 2021 are indicated in the table on
page 41. In fiscal 2021, our production increased by 10.8%
year on year, which led to increased greenhouse gas
emissions, but the promotion of energy-saving improved our
results by 0.7 points year on year, achieving a 6.7% reduction
compared to fiscal 2013. Energy consumption per unit
dramatically decreased by 9.1%, thanks to our GX initiatives.
The rate of final waste disposal dropped 3.4% year on year,
but we were unable to meet our target rate of final disposal
because the amount of waste decreased by 9.6% year on
year. We will continue to promote improvements to our rateof final disposal as we strive to reduce final disposal with afocus on the recycling of sludge.
For details on our environmental data, see p. 79−80.
For details on our TCFD efforts, see p. 42−43.

Changes in Greenhouse Gas Emissions

Changes in Final Disposal Amount and Final Disposal Rate

(Yokkaichi, Ohgata, Shiga, administrative departments, domestic subsidiaries, derived from non-energy)(Yokkaichi, Ohgata, Shiga, Kyoto, domestic subsidiaries)

温室効果ガス排出量

最終処分量・最終処分率の推移

(kt)

(t)

60

1,600
53.6

53.8

52.6

48.9

48.5

(%)
6.0

5.5
5.0

4.8
1,200

40

1,145

4.2
1,044

4.4

4.5

741

3.0

972

800

767

20
400

0

1.5

0

2017

2018

2019

2020

2021

0

2017

(FY)

2018

2019

Final disposal amount (left axis)  
Notes: 1. Administrative departments include fuel of company-owned vehicles.
2. Subsidiary companies include Yokkaichi Chemical Co., Ltd., Kyoto Elex Co.,
Ltd., Daiichi Ceramo Co., Ltd., and as of FY2019, Ikeda Yakusou Co., Ltd.

Environmental Targets and Fiscal 2021 Results

Medium-term
environmental
targets (FY2024)

GX strategy
targets(FY2030)

FY2013

3% reduction

12% reduction

30% reduction

FY20201% reduction

4% reduction

10% reduction

Generated waste amount
per unit
FY20201% reduction

4% reduction

10% reduction

Energy consumption per unit2*Based on the standards of the
Act on the Rational Use of Energy

Final disposal rate (right axis)

Evaluation A: Significant result B: Result in line with the target C: Target unachieved D: Underperformed by a wide margin

FY2021 targets

Greenhouse gas
emissions1(FY)

Notes: 1. The final disposal rate is the ratio of the final disposal amount to thegenerated waste amount.
2. Subsidiary companies include Yokkaichi Chemical Co., Ltd., Kyoto Elex Co.,
Ltd., Daiichi Ceramo Co., Ltd., and as of FY2019, Ikeda Yakusou Co., Ltd.

Reference years

Target parameter

2021

2020

Target scope

FY2021 results

Evaluation

Group

6.7% reduction

B

Individual

8.4% reduction

A

Group

9.1% reduction

A

Group

18.4% reduction

A*To amount produced

Rate of final waste
disposal3
Target parameter

Reduction ofenvironmental impact
substance emissions−

0.1% or less

0.1% or less

0.1% or less

Individual

0.1%

B

−

3.8% or less

0.5% or less

0.1% or less

Group

4.4%

D

Management items
SOx emissions
NOx emissions
Dust emissions
Water discharge
COD emissions

Proper management ofchemical substances

FY2021 targets

FY2021 results
Down 15.2% YoY

EvaluationA

Down 24.0% YoY

A

Down 70.7% YoY

A

Down 0.8% YoY

B

Up 64.7% YoY

DDown 54.0% YoY

AReduce emissions of PRTR
Regulation-designated substances

Improve green
procurement ratio for
paper and stationery

64.8% (improved by
5.8 points YoY)

B

Improve green procurement ratio
for paper and stationery

Achieve zeroenvironment-related
accidents

Zero accidents

B

Achieve zero environment-related
accidents

Comply with
No legal/regulatoryenvironmental laws andviolations
regulations

B

Comply with environmental laws
and regulations

Promoting ourenvironmental
management system

B

Promoting our environmental
management system

Reduce emissions ofenvironmental
pollutants into the air
Reduce emissions ofenvironmental
pollutants into water

PRTR Regulation
Reduce emissions of-designated substances PRTR Regulationemissions
designated substances

Promotion of green procurement

Elimination of disasters/accidents

Environmental management system

Maintained

FY2022 targets
Reduce emissions ofenvironmental pollutants in the air
Reduce emissions ofenvironmental pollutants in water

1. Derived from energy use in the production and administrative departments
2. Based on the calculation method from the periodical report stipulated by the Act on the Rational Use of Energy
3. The ratio of the final disposal amount to the generated waste amount
Please see environmental data (p. 79–80) for details on energy, waste products, environmental impact substances, and chemicals subject to the PRTR regulation.

DKS REPORT 2022

41

What Sort of Value Will DKS Create?

TCFD Efforts
In March 2022, DKS pledged its commitment to the Task Force on Climate
Related Financial Disclosures (TCFD), based on a recognition of how important
the risks and opportunities of climate change are to our business. We will
promote the disclosure of information regarding the impact that climate change
has on the business activities of the Company, and aim to achieve a sustainable
society by striving to realize a decarbonized society throughout the entire
supply chain.

1

Material issue• Responding to decarbonization andreducing environmental impact
For details on the disclosure of
information related to climate change, see
our company website (in Japanese only).
https://www.dks-web.
co.jp/sustainability/
ecology/pdf/climate_change2022.pdf

At DKS, we have a Sustainability Committee that debates and makes decisions on important issues such

Governance as medium- to long-term targets for reducing greenhouse gas (GHG) emissions, and a system forensuring appropriate reporting to the Board of Directors and supervision by the Board of Directors. In
order to ensure that the Sustainability Committee appropriately evaluates and manages our businessrisks and opportunities related to climate change and promotes administration, the committee is madeup of the Executive General Managers of the Sales Headquarters, Production Headquarters, R&D
Headquarters, and Public & Investor Relations Department, and headed by the Executive General
Manager of the Administrative Headquarters, who receives instructions from the Administrative
Supervisor. The executive officers in charge submit findings and make progress reports at least once a
year at Board of Directors meetings, and review strategies, targets, and plans accordingly.

Strategy3

Risk
Risk Management Control Committee meetings attended by representatives of subsidiaries and eachManagement department, and headed by an executive officer in charge of risk management.

4

Indices andTargets

In regard to overall risk management at DKS, we systematically promote activities by periodically holding

TargetReducing the Scope 1 andScope 2 greenhouse gas
emissions of the entire
DKS Group in Japan by
30% by fiscal 2030,
compared to fiscal 2013

42

Because the impact of climate change is highly likely to become apparent in the medium- to long-term,
we are working on deepening our understanding of the major risks and opportunities related to climatechange, which are expected to financially impact our business in the medium- to long-term. In regard to
the evaluation of climate change risks and opportunities, we have referred to the climate change
scenarios of the International Energy Agency (IEA) and Intergovernmental Panel on Climate Change(IPCC) to identify the risks and opportunities that will affect our entire business. While improving ourunderstanding of the expected risks and opportunities from a medium- to long-term perspective, we willplan and execute strategies across a timeline.

2

DKS REPORT 2022

We have defined our long-term goals, including consolidated net sales of ¥135 billion and the reductionof greenhouse gas emissions, in a new management plan for the year 2030, called “SMART 2030
(tentative title).” The process for achieving our long-term goals involves creating a medium-term
environmental plan for the years up to fiscal 2024 based on the “FELIX 115” medium-term management
plan, and working to save energy, reduce greenhouse gas emissions, and reduce waste. We have also
formulated long-term green transformation (GX) strategies that aim to achieve carbon neutrality by theyear 2050, and are promoting efforts for decarbonization. In the future, we will work to identify the Scope
3 greenhouse gas emissions of our supply chain, quickly disclose this information, and strive to reduce ouremissions.

Scenario Analysis
Presuppositions
Climate change scenarios
Reference scenarios
Timelines for analysis

Less than 2 ˚C scenario, 4 ˚C scenario
IEA World Energy Outlook, IPCC RCP scenarios
2030, 2050

We categorize risks and opportunities related to climate change as transition risks, physical risks, transition opportunities, andphysical opportunities, and have created a scenario matrix upon considering the level of occurrence and impact of each risk andopportunity.

Impact Evaluation Based on Scenario Analysis
Based on a scenario analysis, we have conducted an evaluation of the impact to our supply chain of scenarios with high importance.
Category ofclimate change
impactTransition

Transition

Transition

PhysicalPositioning invalue chain

Impact on demandfor products andservices

Impact on demandfor products andservices

Impact on
procurement

Direct impacts on
business operation

Scenario

Timeline

Changes todemand toward
decarbonization

Increased costs
due to carbon
pricing

Increased taxes
with a carbon tax
on raw materials

2030 to2050

Sales and profit may
greatly decline if
demand for
petrochemical
derived products
declines

Business with a highratio of petrochemical
derived materials may
gradually decline

2030 to2050

Emission credit trading
may increase as ameasure for reducing
GHG emissions andlead to higher
transaction prices

Operating income in
2030 may decreaseby several percentage
points2030 to2050

The procurement
price of materials may
increase due to acarbon tax onmaterials derived
from petrochemicals

The profitability ofbusinesses which
focus on materials
derived frompetrochemicals may
gradually decline

Increased damage
to company sites
2050
due to intensifying
natural disasters

Business site disasters(mainly flooding)caused by abnormal
weather may cause
business operations
to stop

Efforts after Scenario Analysis
Upon conducting a scenario analysis, we reaffirmed that it ispossible to reduce impact on our supply chains byappropriately responding to climate change risks.
Our products and technologies give us an opportunity to
expand our business by identifying new market needs forclimate change countermeasures. We will meet market needs
Market needs

Energy and resource saving

Impact on the
Company

Details

May cause damage toapproximately 10% of
our total plant assets
in JapanCountermeasures takenby the Company•

 onsider switching to nonC
petrochemical derived
materials and renewablematerials to transition to lowcarbon products• romote the expansion ofP
the Life Sciences business,
which focuses on natural
materials•

 romote the acquisition ofP
appropriate emission credits
ahead of a future where
demand for emission credits
will expand•

 ave decarbonization andH
the transition to nonpetrochemical materials leadto new business opportunities
for developing products andexpanding sales•

 se hazard maps to identify
Upossible flood damage andconsider measures for
mitigating flood damage anddispersing manufacturing
sites if there is thought to bea high chance of business
operations being stopped

by promoting research and development for contributing tosociety’s efforts for climate change countermeasures andmitigating the progression of climate change related risks,such as with products that contribute to energy-saving by
shortening manufacturing processes and products that
contribute to the realization of clean energy for preventing
global warming.

Value provided

DKS technologies and products

Saving energy by shortening manufacturing
processes

Solvent-free UV-curable materials

Preventing product deterioration

Polyurethane resin sealants for electric
insulation

Achieving clean energy

Binder for lithium-ion batteries, gel electrolyte
polymers, conductive paste for solar cells

Reducing greenhouse gas emissions

Alternative cleaning agents avoiding ethaneand chlorofluorocarbon solvents

Preventing global warming

DKS REPORT 2022

43

What Sort of Value Will DKS Create?

Contributing to a
Collaborative Society
The population concentration in cities and regional depopulation are majorsocial problems for Japan. In order to solve these problems, we work topromote regional revitalization through our business and promote businessin alignment with the philosophy of the SDGs together with all stakeholders
in our supply chain.

Material issue• Regional revitalization• Co-prosperity with the supply chain

Efforts for Regional Revitalization
Efforts for Sericulture Innovation
Biococoon Laboratories Inc., one of our Group companies,
advocates Sericulture Innovation that adds the perspective ofchemistry to traditional sericulture. This initiative aims to achievea healthy long-lived society by developing together with our
primary industry operators and local governments. It aims toutilize sericulture resources such as mulberry trees, silk, cocoons,silkworms, and pupae to achieve regional revitalization via
farmers, whose numbers have been declining*. Furthermore, the100-million mulberry tree planting campaign aims to create ahealthy long-lived society by generating a cycle of reducing CO2
by planting trees, effectively utilizing abandoned fields and ricepaddies, creating regional employment opportunities forseniors, securing stable incomes, and establishing a supply
chain for I. Japonica-Bombyx Fungus. The Company will also

reduce medical costs by preventing dementia and aging frailty,
and expand into promising applications for cutting-edge fields
in the pharmaceuticals, foods, and cosmetics industries.
In August 2021, the Company signed a comprehensive
partnership agreement with Yabu City of Hyogo Prefecture towork on regional revitalization for the goal of contributing to
the SDGs through Sericulture Innovation. The agreement aims
to create abundant value via the utilization of physicalresources and the mutual interaction of human and intellectual
resources, and promotes the development of regional industry,
sericulture business including the cultivation of mulberry trees,
and research into cognitive functions and dementia.
* Number of sericultural households in Japan decreased from 3,280 households in theyear 2000 to 61 households in 2021
Source: The Dainippon Silk Foundation

Sericulture Innovation and Expected Effects
Description of activity
Cultivate mulberry trees
to feed silkworms

Cultivate silkworms
Cocoons are
utilized forvariouspurposes• Create regional employment(income)• Effectively utilize abandoned
fields and rice paddies• Create regional employment(income)• Passing down ancientJapanese sericulture
techniques

Expected effects• Create sense of purpose for senior
generation• Reduce medical costs by preventing
dementia and frailty• Vitalize regional community• Revitalize the sericulture industry• Reduce medical costs by preventing
dementia and aging frailty• Reduce CO2• Create sense of purpose for senior
generation• Adopt for cutting-edge fields in the pharmaceuticals, foods, and cosmetics
industries

Silk• Utilize in silk products

Pupae• Utilize as raw material for I. Japonica-Bombyx Fungus manufactured and sold by DKS* Sericulture Innovation is a registered trademark of Biococoon Laboratories Inc.

Regional Revitalization via Sericulture Innovation
ReduceCO2

Cultivate mulberry trees

Reducemedicalcosts
Prevent dementia
Maintain healthCreateregional
employment

Source of income

Cultivate silkworms
Link with research
institutions, local
governments, andcorporations

Effectively utilize
abandoned fields
and rice paddies
Pupae

Use cocoons (silk) for pharmaceuticals,
foods, and cosmetics, etc.

SecureCultivate raw
raw
material for I.
materials Japonica-Bombyx
Fungus44

DKS REPORT 2022

Effectively utilize thecomponents of mulberry

Sudachin, Achieving Effective Utilization of Sudachi
Peel, a Local Specialty of Tokushima Prefecture

Sudachin Certified by Shikoku as a Health Support
Food

The increase in lifestyle diseases greatly affects health spans
and it is important to prevent or treat them at an early stage.
Research in Tokushima Prefecture has demonstrated that thesudachitin, which is contained in the peel extract of sudachi (acitrus fruit), can help against diabetes and obesity. Our Group
company Ikeda Yakusou Co., Ltd. has developed a powder
called Sudachin extracted from sudachi peel. We haveexpectations for Sudachin as a regional specialty that cancontribute to extending health spans via the utilization ofregional resources.

Sudachi is a citrus fruit cultivated in Tokushima Prefecture,
which is used as the raw material for juices and sauces, but
the majority of sudachi peel is discarded as industrial waste
after juice extraction. Ikeda Yakusou aims to effectively utilize
sudachi peel to promote the development and production/
sales of sudachi peel related products such as sudachi peel
extract and sudachi oil.
In September 2021, Sudachin, a sudachi peel extract from
Ikeda Yakusou, was certified by the “Healthy Four*” healthsupport food accreditation system of the Shikoku region. This
enables the company to claim the existence of scientificgrounds regarding the safety and functionality of food on its
packaging. The next step for improving brand recognition isto submit an application to certify Sudachin as a food withfunctional claims to the Consumer Affairs Agency.
* “Healthy Four” health support food accreditation system of Shikoku region: A uniquefood claim system aiming to develop the food industry in Shikoku region, which
certifies foods manufactured in Shikoku or foods containing functional materials
manufactured in Shikoku.

Co-Prosperity with the Supply Chain
As part of efforts to replace petrochemical materials withrenewable resources, DKS reviews natural materials such as
plants and microorganisms and transforms them into highly
functional materials to meet customer needs.
Furthermore, we promote corporate activities together withall stakeholders in our supply chain to address the problem offood waste, such as our efforts for effectively utilizing theresidue left over after extracting the juice of sudachi. We also
promote appropriate supply chain management via ourtrusted relationships cultivated over long years with ourdealers and inspiring/inspired partners. In October 2021, we
announced our “Building Partnerships Declaration.” We will
aim to build new partnerships by promoting cooperation andco-prosperity with businesses working to create value and ourpartners in the supply chain.

The Company states the following individual actions in thisdeclaration:■ Contributing to efforts for regional revitalization
We aim to grow together with the region by contributing
to efforts for regional revitalization.
■ Assisting Health and Productivity Management
We will implement Health and Productivity Management andassist awareness building/enlightenment activities and the
Health and Productivity Management of our business partners.

Column

DKS Enters Comprehensive Partnership Agreement with Shiga University, Aiming to Utilize Data
Science in Business Promotion and Value Creation
In the “FELIZ 115” medium-term management plan, DKS actively promotes various efforts for
DX. In May 2022, the Company entered a comprehensive partnership agreement with Shiga
University, which forms the largest education and research site in Japan in the field of data
science. Shiga University pioneers efforts for contributing to the resolution of social issues via
the utilization of Big Data.
By entering a partnership with Shiga University, DKS aims to utilize data science to promoteindustry-academia collaboration. We will accelerate the realization of business promotion andvalue creation by cultivating young researchers into data science human resources andsolving problems via joint research that utilizes Big Data.
DX Efforts (See p.46)

DKS Enters Comprehensive Partnership
Agreement with Shiga University
Left: TAKEMURA Akimichi, Dean at Shiga University;
Right: YAMAJI Naoki, President and COO of DKS

DKS REPORT 2022

45

Value Creation Innovation

Organizational Resilience
DX Efforts
Material issues esponding to the digitization of societyRDigitizing information offerings

Digital Transformation (DX) at DKS
DX at DKS aims to increase added value, improve work
efficiency, and eliminate inefficiencies. In order to realize
these ideas, we are implementing reforms for client
contribution, business contribution, and data-driven
management, and promoting the creation of the foundation
for achieving our next medium-term management plan, withthe tentative title of “SMART 2030.”

Cultivating DX Human Resources
The Company provides a training system to enable all
employees to achieve basic digital literacy and join digitalplatforms. The introductory course is for all managers, andteaches basic knowledge on digital technologies and howorganizations operate in the age of VUCA. The basic course
teaches the basics of programming, such as RPA, databases,
and Python. We will aim for a more effective systemdevelopment in the future by having the option to utilize thisknowledge to perform in-house development in addition tovendor outsourcing.
Training DX
Human Resources
Advanced
OutsideTraining
Advanced course*G-Certified human resources(8 employees)

Basic course(15 times; 174 selected new employees)
Introductory course(3 times; all 251 managers)*Total recipients as of fiscal 2021

Company-Wide DX Project
The goal of the seven projects outlined in the “FELIZ 115”
medium-term management plan (see p.19) is to reform thevalue chain and build a foundation to improve profit via
increased productivity. In order to achieve this via digitaltechnologies, we will launch a company-wide DX project topromote efforts based on three themes: (1) Digitization ofwork, (2) Digital monitoring of work progress, and (3) Building
digital data for intra-organizational activities. Many of therecipients of DX training will participate in this project and will
be in charge of developing the DKS Integrated WorkManagement System, which will also function as anopportunity to put this knowledge into practice.

46

DKS REPORT 2022

Positioning of DX Project
REACT1000
plan

FELIZ 115
plan

Previous
medium-term
management plan

Current
medium-term
management plan

PeriodApril 2015 toMarch 2020

PeriodApril 2020 toMarch 2025

ResultTarget(Consolidated)DX
project
Period2022 to 2025

SMART
2030
(tentative title)
Next medium-term
management plan
PeriodApril 2025 toMarch 2030

Target

Goals
Digitize the
FELIZ value chain¥135.0 billion

Build the businessfoundation for
SMART 2030 (tentative title)¥18.0 billion



Net Sales¥61.4 billion¥85.0 billion

Operating
Income¥4.1 billion¥10.0 billion

Maximize utilization of in-house
DX human
resources



10.0%

6.4 %

ROE

Value chain of
REACT1000
Conventional values,
business models,and processes(passive business)or higher

Goals

Value chain reform
Build an agile value chain withexcellent productivity andprofitability, that has no inefficiencies, burdens, or inconsistencies (the FELIZ value chain)

Basic Concept of DX Project
1. DX from management perspective: Reform the corporate culture from the perspectives of the customer,
profit, and overall optimization(1) Build and digitize a value chain in line with the essence of afine chemical manufacturer(2) Digitize solutions to the problems faced by the Company(3) Promote DX from the five perspectives* that management
wants to focus on*Perspectives of the customer, finance, work processes, human resource cultivation andreform, and SDGs

(4) Clarify and promote the financial statement improvement
effect of the themes to promote(5) M inimum required investment (effective utilization of
in-house human resources)
Transform into the Most Valuable Solution Provider

2. Priority of activities: Prioritize the efforts for transforming the corporate culture
Priority 1 DX for solving company-wide issues:

Promote intra-organizational activities as a companywide project consisting of members of relevant
departments

Priority 2 DX for solving unique issues faced by each Headquarters:

Promote in each Headquarters

Priority 3 DX for solving unique issues faced by each department:

Promote in each department

DX Certification
In April 2022, the Information-Technology Promotion Agency(IPA) examined and selected the Company as a DX-readybusiness certified by the Ministry of Economy, Trade andIndustry. This recognized our efforts to adopt DX in ourmanagement foundation, including preventive maintenanceof manufacturing equipment via DX, DX training for all

employees, and the establishment of the MI Promotion
Department in the R&D Headquarters. We will continue toutilize digital technologies in order to achieve the priority
measures for realizing the medium-term management plan.

Digitizing the Transmission of Information
As part of our efforts to digitize our sales activities, we havelaunched the DKS Online e-commerce website (https://www.
dks-web.co.jp/product/onlineshop/). As a dedicated online
shop for corporations and education and research institutes,
the website will create opportunities for interacting withcustomers in a wider variety of fields than before.
Furthermore, as part of our new Life Sciences business, weare deploying a dedicated e-commerce website (https://tenchukasou.jp/), promotion activities on social media, andWeb marketing.

TENCHUKASOU | 100 YEARS OF LIFE (In Japanese only)
https://tenchukasou.jp/
DKS Online (In Japanese only)
https://www.dks-web.co.jp/product/onlineshop/

TENCHUKASOU

Cybersecurity Measures and Digital Roadmap
The changes to work and business brought about bydigitalization create relationships with the many stakeholders
that make up our value chain. The COVID-19 pandemic has
also brought major changes to working styles, which led to
the rapid popularization of work at home and remote work.
That is why we need measures that take into accountsituations that cannot be addressed with conventional
information security. We are promoting reviews of ourcountermeasures for various cybersecurity risks, cybersecurity

training for our employees, and the measures that we shouldtake if a major incident occurs (incident response measures
including data recovery, access log analysis, and thenotification of relevant parties).
We promote digitization based on a digital roadmap that
depicts the future digital foundation of DKS in the year 2030,
including both “offensive” business reforms via DX and“defensive” cybersecurity measures.

SMART 2030 (tentative title) digital roadmap
Digital foundation in 2030
2022
Previous
work styles

2023

2024

2025

2026

Management
information site

2029

2030

Digitization of work styles(DKS Integrated Work Management System)

Data utilization platform(DKS data platform)

System security risk management
Information security
measures

2028

Digital value chain

Company-wide DX project

FELIZ 115
To 2025
Database

2027

SMART 2030 (tentative title)
To 2030
Digital ESG(from DX to GX and ESG)
Data utilization(machine learning andoptimization problems)Security management

Business security risk management

DKS REPORT 2022

47

Value Creation Innovation

Organizational Resilience

Risk Management
Material issues
Further deepening of corporate governanceRisk Management System
Recognizing that conducting proper risk management is an
important management issue, we established the Risk
Management Control Committee, chaired by the responsible
executive officer and composed of representatives of related
departments and Group companies, and are methodicallymoving forward with activities by regularly holding committee
meetings.
The purpose of the committee is to appropriately manage
and implement responses to risk that could hinder achieving
business objectives by running through the PDCA cycle, abasic risk management process (risk assessment, risk
response, monitoring, and review).
In addition, we are working to maintain and strengthen thecrisis management system so that when there is an
emergency, we can promptly communicate information onrisks, including to domestic and overseas Group companies,
ascertain conditions, and appropriately respond. To deal withpotential risks and/or risks that have already manifested
themselves, we formulated Risk Management Procedures,
Product Liability (PL) Prevention and Management
Procedures, and Information Security Rules. We manage

envisioned risks, such as natural disasters, pandemics,
damage from terrorist attacks and deterioration in safety,
leaks and environmental pollution, accidents that cause
damage to facilities and equipment or result in physical harm,
harm to society from problems such as product liability,
security, and information management related to intellectual
property, etc., by creating a list of these risks as actualreference examples and linking them to main in-house rules.
In fiscal 2021, based on revised risk management criteria,
we identified and analyzed risks, selected ones based on an
evaluation, and ranked their importance using a table basedon degree of impact and frequency. For selected risks, theresponsible party develops a response proposal, regularly
checks, evaluates, and monitors the status of the response,
and works to keep the risk within the tolerable range.
In addition, we worked to not only develop a business
continuity plan in the case of an earthquake, an item thatGroup companies have not yet created, but also strengthenrisk management. We also continue to conduct drills forearthquakes using a safety confirmation system.

Basic Process for Risk Management

48

DKS REPORT 2022

Risk assessment
Identification of risks

Analyzation of risks

Evaluation of risks

Respond to risks

Monitoring & review

Communication & discussion

Ascertain the status of the organization

Crisis Management
Having positioned implementing countermeasures tocorporate risk as a priority issue, we set Risk Management
Procedures to respond to potential risks and/or risks thathave already manifested themselves. We created basic
policies and a Risk Management Manual as supplementarymaterial for conducting Risk Management Control
Committee activities and managing corporate risks, andoperate the system as stipulated in the Risk Management
Procedures.
In the Risk Management Manual, we establish risk
management levels and stipulate that the responsible person

Risk Management Levelfor the particular risk level is tasked with implementing risk
management. Furthermore, for risks that impact lives andbusiness, we are implementing and strengthening
appropriate responses. There has been an upward trend in
the frequency of earthquakes, water damage due to torrential
rains, long heat waves, and natural disasters accompanying
abnormal weather, such as massive snowstorms. To respondto the impact of these on business, we can promptly
implement measures depending on the risk level by quickly
sharing information with related parties using relevant tools.

Responsible Party

Level I

Understanding risk possibilities
under normal operation

Level II

Risks to be coped with within
plants, branches, offices andGroup companies

Level III

Risks to be coped with within
departments (including Group
companies)

Level IV

Risks to be coped with
Company-wide

Level V

Unexpected risks

Plant general managers,
central branch managers,
branch and office managers, group company
presidents
Headquarters executive
general managers, plant
general managers, groupcompany presidents
Head of Crisis Management Task Force (establishment of Crisis
Management Task Force)

Case

Natural disasters, terrorist attacks, civil
unrest, environmental problems, accidents, information management
Earthquakes (seismic intensity of 5 ormore), environmental problems, accidents, nearby fires, typhoons, torrential
rains, floods
Damage from natural disaster, environmental problems, disease outbreak,product problems
Expansion of Level II or Level III incident

Response to the COVID-19
To prevent the spread of COVID-19, we recommend
employees work from home, commute during non-peaktimes, and use our online meeting system. In addition tothese company-wide measures, we are strengthening
responses depending on the state of infections in theparticular region. We also prevent the spread of infections bycreating a manual in case a person becomes infected or has
been in close contact with an infected person, smoothly
identifying people who have been in close contact with aninfected person, and restricting movement. As of now (June2022), we have not had an outbreak, and there has been no
impact on business continuity.

Plastic partitions installed in conference rooms

Taking temperatures and disinfecting at entrance to Ohgata Branch

DKS REPORT 2022

49

Value Creation Innovation

Organizational Resilience

Corporate GovernanceMaterial issues
Further deepening of corporate governanceDeepening DKS’ Corporate Governance and its Distinguishing Features
DKS engages in business based on our Company
Credo“contributing to the nation and society throughindustry,” along with our three Company Mottoes—"Quality
First,” “Cost Reduction” and “R&D Efforts”—which embody
the spirit of our founders. Our basic concept on corporate
governance is to establish a management foundation able toearn and maintain the trust of society, as well as to conducttransparent and fair corporate activities that are rooted incorporate social responsibility (CSR). Consequently, we
pursue higher governance as management policy andposition it as one of our most important tasks.

Further Deepening of Corporate GovernanceYear Month

Details

2015

May

Appointment of independent outside director: 1 person in total
Establishment of new provisions for putting Board of Directors
resolutions in writing
Establishment of an Outside Officers Committee

2017

June

Appointment of independent outside directors: 2 people in total

2018

June
May

Disclosure of shareholder meeting materials over the Internet
Online exercising of voting rights made available
Partial disclosure of English-version of the notice of convocationof general meeting of shareholders
Adoption of an online voting platform for institutional investors
Establishment of an Advisory Board
Appointment of independent outside directors: 3 people in total(3 of 8 directors are independent outside directors)
Increase in the number of directors by two, appointment of four
independent outside directors (one of the four is a woman), anddisclosure of English-translation of the full summary of financial
results

2014

June

2020

June
May

2021

June

2022

June

Outline of Structure

Company

OutsideGeneral Meeting of Shareholders
Appoint/Dismiss

ReportBoard of Directors
Directors: 10 people
Company (6)Audit

Percentage of female
directors
As of June 2022: 10%

Select/Dismiss
Supervise

Cooperate

Audit & Supervisory Board
Auditor: 4 people

Cooperate

Outside (4)Appoint/Dismiss

Appoint/Dismiss

Advisory board

Company (2)Outside (2)Company (3)Outside (6)Auditor assistantAccounting auditor

Decide on resolutions
regarding appointments/
dismissals
Judge on accounting
audit appropriateness

ReportCooperate

Audit
ReportCEOInternal Audit Department

Audit

Management Committee
Deliberate important matters
Guide/Supervise

Check for illegal
activities

Propose/Report important matters

General Affairs &Legal Department

ReportReportCompliance Control Committee

RC (Environment, Safety & Quality)
Promotion Conference

Risk Management Control Committee

Security Export Control Committee

Sustainability Committee
Senior executive officer: 1 person
Executive officers: 11 people(Business execution)

Report,etc.

Policies, planningand guidance

Audit

Respective business execution departments/Group companies

50

DKS REPORT 2022

Report,etc.

Policies, planningand guidanceOrganizational composition and roles
Board of Directors
To strengthen the management system, we added two
directors to the Board of Directors in June 2022. The Board of
Directors currently consists of ten directors, four of whom areoutside directors. As a rule, the Board of Directors, which ischaired by the Chairman CEO, meets once a month anddecides such issues as matters important for the Group.
Management Committee
The Management Committee, which is chaired by the
President COO, is comprised of six internal directors, two fulltime Audit & Supervisory Board members, one senior
executive officer, and four executive officers, and generally
meets twice a month. The committee reviews and considers
items which need approval prior to the Board of Directors(primarily accounts, finance, and performance-related
matters), as well as important resolutions and reports basedon the Official Regulations of Administrative Authority andthe Official Regulations of Accounting and Finance. The
committee also undertakes coordination and management
for the whole company. In principle, matters brought before
the Board of Directors are first given careful review by theManagement Committee, which endeavors to check theircompliance with laws, regulations, and the Articles ofIncorporation, in order to facilitate rational decision making.
Advisory Board
The Company voluntarily established an Advisory Board as asupplementary body with the goal of improving the fairness,
objectivity, and transparency of the decision-making processof the Board of Directors. The Advisory Board is comprised of
the Chairman CEO, President COO, and outside officers, anda majority of the Board’s members are independent officers.
An independent outside director serves as chair. By
establishing an Advisory Board, we are encouraging outside
officers to gain an understanding of the industry and ensuring
opportunities for them to participate and provide advice. In
fiscal 2021, the Advisory Board met three times. To contributeto extensive deliberations by the Board of Directors, eachdirector in charge provided an explanation of the details andissues related to R&D and sales activities, which promotes anunderstanding of the unique aspects of the industry. As forthe next management structure plans, there was an
explanation of ideas about promoting young employees anddiverse composition of officers.

Expected Skill Matrix
To undertake proper decision making and management
supervision at a higher level, the Company appoints directors
and Audit & Supervisory Board members taking into
consideration the balance of such factors as business-related
extensive experience, performance, and expertise.
For outside directors and outside Audit & Supervisory
Board members, multiple candidates with extensive
experience with management, advanced expertise, andbroad knowledge and experience are appointed.
For Audit & Supervisory Board members, at least one who
has experience in the finance or accounting departments orpossesses equivalent experience is selected.
The following is a matrix of what we expect of our officers
on the fields of skills and expertise. Up to three for each
officer is listed, but not all the skills and specialized
knowledge possessed by each officer is given.

Fields that directors and Audit & Supervisory Board members are expected to particularly contribute toName of officer
Chairman CEO
President COO
Senior Managing
Director
Managing Director
Director
Director
Outside Director
Outside Director
Outside Director
Outside Director
Audit & Supervisory
Board Member
Audit & Supervisory
Board Member
Outside Audit &Supervisory Board
MemberOutside Audit &Supervisory Board
MemberCorporate
management

Accounting andfinance

SAKAMOTO Takashi
YAMAJI Naoki

OKAMOTO Osami

KAWAMURA Ichiji
SHIMIZU Shinji
AOKI Sunao
TANIGUCHI Tsutomu
OKUYAMA Kikuo
HASHIMOTO Katsumi
NAKANO HideyoPersonnel andIR andResearch
Legal affairs andlabor management
corporate value technology, IT,
risk
Human resource
creationand production
management
development


























FUJIOKA Toshinori



ONISHI Hideaki







TAKAHASHI Toshitada











NAKA Hideya












Businessstrategy andmarketing








DKS REPORT 2022

51

Value Creation Innovation

Organizational Resilience

Reasons for Selection of Outside Directors
Name

Reasons for selection and expected roles of contribution

TANIGUCHI
TsutomuMr. Taniguchi has extensive experience and advanced, specialized knowledge from serving in key positions at
the Labor Standards Inspection Office. Based on his five years of professional experience serving as an outside
director of the Company, he has appropriately fulfilled his role in overseeing business execution by actively
providing his opinions on working conditions and occupational safety and health, among other subjects. The
Company deems that, going forward, Mr. Taniguchi will continue offering appropriate supervision and valuableadvice.

OKUYAMA Kikuo

Mr. Okuyama has extensive knowledge and experience particularly in the field of nanotechnology from his
many years involved in research at university. After taking up the position of outside director of the Company,
he has played an appropriate role in overseeing business execution as an outside director by actively
providing his opinions on the Company’s R&D and Life Science fields, among other subjects. The Company
deems that, going forward, he will do his utmost to realize industry-academia-government collaboration andcontinue to contribute to sustainable growth and greater corporate value.

HASHIMOTO
KatsumiMr. Hashimoto has extensive experience and advanced, specialized knowledge of finance and accounting fromhis many years as a certified public accountant. After taking up the position of outside Audit & Supervisory
Board member of the Company, he has played an appropriate role in strengthening the management supervision function and further evolution of the governance system. Having actively expressed his opinions regarding
matters such as the management strategy at Board of Directors meetings based on his broad knowledge andexperience, the Company deems that, he will make useful proposals related to overall management from a
broad perspective.

NAKANO Hideyo

Ms. Nakano has experience as a member of management of an investor and public relations support
company, whose purpose was to develop investments, and from her many years involved in investment
operations at an asset management company. In particular, she possesses specialized knowledge related toinvestor and public relations activities from a global market perspective. The Company deems that, she cancontribute to sustainable growth and greater corporate value of the Company by making uses of her extensive
experience and high expertise.

Overall Efficacy of the Board of Directors
Every year, all officers (directors and Audit & Supervisory
Board Members) carry out self-evaluations based on aquestionnaire prepared by the Office of the Board of
Directors (Secretary Department). The Office of the Board of
Directors tallies these questionnaire results, which are
analyzed and evaluated by outside officers and full-time Audit& Supervisory Board Members. For fiscal 2021, officers
completed a questionnaire on twelve topics, including timespent deliberating matters requiring deliberation, theprovision of information, and content of comments. Based on
this evaluation, the Board of Directors is judged to have been
generally effective in fiscal 2021.

Main deliberations at the FY2021 Board of Directors meeting
Medium-Term Management Plan “FELIZ 115”
Growth Strategy (R&D, new businesses, and capital
expenditures)• Business Base Strategy (personnel system strategy, digitalstrategy, risk management, and sustainability management)••Time spent on deliberations by the Board of Directors andnumber of proposals(proposals)(minutes)

120

240

Evaluating initiatives to solve previous fiscal year’s
issuesAlthough there were improvements in “provided material andexplanations” and “provision of information during thedeliberation process,” there is room for further
improvements. The evaluation was also that it is stillnecessary to make improvements to “reflecting advice andreporting the reflection.”90

FY2021 improvement issues and FY2022 initiatives

30

Issues for fiscal 2021 were “improving the provision ofmaterial” and “improving the quality of discussions.” In
response, material will be provided earlier and efforts will bemade to prepare material from a customer and management
perspective.

52

104
25

DKS REPORT 2022

80
7
45

89
12
42

91
17
43

60
93

96

35
28

89
17
43
122

101

31

180

45
108

36

120

60

27

0

0

3/20183/20193/20203/2021

Deliberated Matters   Reported Matters   Operation  
Average deliberation time

3/2022

Officer Remuneration
Remuneration decision process
The basic policy regarding director and Audit & Supervisory Board Member remuneration involves a) appropriate compensation for
execution of duties, b) remuneration that encourages actions to improve business performance and maximize corporate value, andc) remuneration that deepens value-sharing with shareholders. The following are the KPIs used to determine each type of
remuneration and their weight in the amount of remuneration.

Composition of remunerationa. Fixed remuneration: amount set based on the size of the role of each officer and position and paid monthly.
b. Performance-linked remuneration: monthly amount paid based on a once-a-year evaluation of the Company’s performance forthe previous fiscal year and twice-a-year evaluation of the department the Director is incharge of.
c. Stock remuneration: Restricted shares are granted based on the size of the role of each officer and position.

Items

Percentage

Chairman President Directors

a. Fixed
remuneration––b. Performancelinked
remuneration

Department’s
performance
evaluation

If the fixed remuneration rate is 100%, theamount of remuneration is set between-15% and +15% depending on the degree
that targets for a fiscal year were achieved.
If the fixed remuneration rate is 100%, theamount of remuneration is set between -13%
and +13% depending on the degree that
improvements were made to net sales andincome compared to the previous fiscal year.
If the fixed remuneration rate is 100%, theamount of stock remuneration for one fiscal
year is set at approximately 7%–13% of
fixed remuneration for each position.

Company’s
performance
evaluationc. Stock
remuneration–

Audit &
OutsideSupervisory
Directors Board members











–

–



–

–







–

–











Composition of remuneration
Fixed
remuneration

100%

Department’s
performance
evaluation-15%

Company’s
performance
evaluation

-13%

Stock
remuneration
Total
remuneration

15%
13%

7%

13%

79%

141%

Fixed remuneration  Decline  Increase  

Fixed amount  

Variable amountKPI
The Company has set growth, profitability, and safety as key metrics for evaluating the Company’s performance, and metrics
for performance-linked compensation are consolidated net sales, consolidated ordinary income, and operating cash flow.

DKS REPORT 2022

53

Value Creation Innovation

Organizational Resilience

Remuneration amount
Total remuneration by type (Millions of yen)
Fixed

Performancelinked

Stock-based

Number ofapplicable officers(persons)

239

197

20

21

6

Audit & Supervisory Board Member(excluding outside Audit &Supervisory Board Member)

43

39

–

3

3

Outside Directors

34

31

–

3

4

Outside Audit & Supervisory Board
Members

11

10

–

1

3

Total

329

279

20

29

16

Officer position

Total remuneration(Millions of yen)

Director (excluding outside directors)

Note. Remuneration was also paid to one internal director, one outside director, and one internal Audit & Supervisory Board member who resigned when their term expired as of the endof the 157th Ordinary General Meeting of Shareholders held on June 25, 2021.

Succession Plan
The succession plan for officers such as the CEO wasformulated by the CEO. Succession planning for the CEO is
the most important matter for the survival of the Company,
thus it is critical to identify actual and potential capabilities ofmanagement. Therefore, the succession plan is the exclusive
responsibility of the CEO, who is familiar with all aspects of
the Company. The CEO proposes successor candidates, andthe Board of Directors, including four independent outside

directors, decides on the successor after fully deliberating theissue.
DKS believes it is desirable to hear the opinions of outside
officers regarding the qualities and aptitude of successors,
thus our successor training committee and our Advisory
Board, which include outside officers as members, provide
opportunities to appropriately incorporate the advice andparticipation of outside officers.

Cross Shareholdings
The Company holds the shares of customers and financial
institutions for various purposes, including strengthening therelationship between the two entities. In addition to
conducting a verification of holding the shares from a
medium- to long-term perspective based on such factors as
risk and return, we continue to review whether to hold theshares (appropriateness of holding the shares) taking into
comprehensive consideration factors such as the purpose forholding the shares, rationality, and amount invested. As forcross shareholdings as of March 31, 2022, it was judged
appropriate to continue holding the shares based on the
Board of Directors’ verification of holding the shares.

Number of shares and balance sheet amount
Number of issues
Total amount appearing onbalance sheet

Joining the U.N. Global Compact and Contributing to a Sustainable Society
As a smart chemical partner that solves people’s various
issues, the Company confronts numerous social issues,
including responding to climate change, respecting diversity
and human rights, strengthening governance, andimplementing energy-related initiatives. Through our supportof the U.N. Global Compact, we are contributing to therealization of a sustainable society by adhering to the ten
principles in the four fields of human rights, labor,
environment, and corruption prevention.

54

DKS REPORT 2022

24
¥3,208 million

Value Creation Innovation

Message from an Outside Director
Utilizing my Expertise to Contributeto the Sustainable Growth of DKS
and Improved Corporate Value
NAKANO Hideyo
Outside Director
Career summary
After working as Senior Portfolio Manager andHead of Private Investment at Cititrust and Banking
Corporation and Director and Head of Investment
Division at FuNNeX Asset Management Inc.,
established Trias Corporation as CEO. External
Director of OUTSOURCING Inc. and HOCHIKICORPORATION.
Involved in investment work at asset managementcompanies for many years, and as the head of acompany that provides IR and PR assistance for thegoal of developing long-term investment, hasexpert knowledge regarding IR and PR activities
from a global perspective.

Role as Outside Director
I have been in charge of asset management at financial
institutions for a long time, with a focus on those overseas,
and currently support the IR activities of multiple listedcompanies in Japan. From this standpoint, I consider the actof objectively viewing a company from the point-of-view ofthe stakeholders to be an important value to have, as thecommitment toward its legal compliance and governance isextremely important for each company.
When seen from an outside perspective, DKS is a company
that has a wide range of technical elements which makes it
difficult to recognize what its strengths are. I myself am inprogress of slowly deepening my understanding of DKS byvisiting work sites and receiving opportunities to listen to thevoices of employees working on the front lines of the business.
In terms of business scale, I believe that it is difficult for achemicals manufacturer in Japan to compete with global
manufacturers. For DKS to survive in the chemicals industry,
I am convinced that, more than anything else, the Company
must continue to achieve the creation of value that customers
will choose, in addition to pursuing expertise.

Growing Human Resources via “FELIZ 115”
In regard to the “FELIZ 115” medium-term management
plan, I believe that the Company is steadily moving forwardwith what must be done to achieve the Uni-Top strategy,
which focuses on unique products that do not pursue scale.
I am particularly pleased to see those in their 20s and 30s at
the Company are starting to become aware that they arebuilding the business foundation for the next generation.
DKS is also enthusiastic about efforts for Health andProductivity Management, and as I understand it, this is not
only for outside evaluations, but the employees themselves
understand the importance of promoting these initiatives.
I believe that such human resources autonomy will become astrength of the next generation at DKS.

Effectiveness of Governance at DKS
As an outside director, in order to ensure the effectiveness ofgovernance, we must engage in constructive discussion at
Board of Director meetings based on an appropriate
understanding of the business promoted by those on theexecutive side. That is why I plan to proactively participate in
the Management Committees and Board of Directors
meetings at Group companies.
Although I have only participated in a few Board of
Directors meetings at DKS so far, I have the impression that
all the directors including auditors are engaged in free andopen discussion, and communication is excellent. However,despite the wide range of opinions brought up, I think that
we need to take a closer look at whether those opinions are
actually contributing to enhancing the functions of the Boardof Directors.
I believe that it is important for outside directors tounderstand and love the business while expressing objective
opinions at an appropriate distance from those on theexecutive side. I hope that I can contribute to building abetter governance system and achieving sustainable growthfor DKS, while improving the corporate value of theCompany.

DKS REPORT 2022

55

Value Creation Innovation

Dialogue with Shareholders and Investors
To have constructive dialogues with shareholders, the Company considers it
important to properly communicate information, a precondition for such dialogue.
With the Public & Investor Relations Department playing a central role, we not
only properly disclose necessary corporate information in a time manner, but also
value venues where we can communicate with a broad range of related parties.

Material issues
Initiatives to strengthen corporate
branding

Frequent questions from stakeholders

Q Could you give us an overview of the medium-term

management plan and your progress during the second year?

A In April 2020, we launched our five-year management
plan, “FELIZ 115.” Focused on the social environment of2030, it is a framework for transforming DKS into a company
that will survive for the next 100 years. Our Company Credo,“contributing to the nation and society through industry” iseverlasting. This medium-term management plan ispositioned in order to chart a course to raising corporate
value and reaching consolidated net sales of ¥100 billion. Our
general review of the second year of the plan is as follows.
(1) We dramatically improved the profitability of “ACTUAL”
businesses (existing businesses) and reinforced thefoundation that supports profits.
(2) It is now possible to increase production to matchcustomer demand on account of the state of operation
at all plants in the Yokkaichi Branch Kasumi Plant.
(3) We announced our full entry into the Life Sciencesbusiness (introduction of new brand TENCHUKASOU
and launch of our own EC website) and won Shikoku
Health Support Food (Healthy Four) system approval for
Ikeda Yakusou Co., Ltd.'s Sudachin (tablet type).
(4) We established a Sustainability Committee,
strengthened climate change-related initiatives, andannounced support for TCFD recommendations.
(5) We were selected as a Health & Productivity Stock forthe third consecutive year and designated one of theWhite 500 for the fifth consecutive year.
* Please see our website for details on our medium-term
management plan (in Japanese only).
https://www.dks-web.co.jp/ir/strategy/

Q Could you explain the fall in the stock price?
A The decline was probably because there was no

improvement in the operation rates for the No. 3 and No. 4
Plants of the Kasumi Plant, located in Mie Prefecture.
Although efforts were made to improve profitability of the
Surfactants business, earnings were weighed down by therise in the prices of raw materials and energy. In responseto this, we will develop products to increase operation
rates, continue to improve profitability, secure a reliablesupply of raw materials, and quickly pass on price changes.
On the other hand, on February 22, 2022, we raised theper share dividend ¥10 and expect to pay an annual
dividend of ¥80 per share. We also announced theacquisition of treasury shares on June 24, 2022.

Q Could you tell us about the expansion of the Life
Sciences business?

A First, we must quickly increase sales. To do that, we will

enhance corporate recognition through aggressive
advertising activities (ads and publicity) for the health foodproducts, I. Japonica-Bombyx Fungus and Sudachin. It isalso important that we acquire evidence to obtain “foods
with functional claims” certification. Possessing a quality
advantage due to the safety of and peace of mind provided
by Japanese products, we aim to increase sales bydifferentiating our products from those of other companies.
Further details of the two products discussed above canbe found on the following webpages (in Japanese only).
I. Japonica-Bombyx Fungus
https://www.dks-web.co.jp/product/cordyceps/index.html
Sudachin https://www.ikeda-yakusou.co.jp/shop.html* Please see the Life Sciences section on p. 57

Constructive Dialogue with Shareholders
We reinforced the Public & Investor Relations Department
and created a personnel system that increases the efficiency
and trust of investor relation activities. For not only financial
information but also non-financial information, such as
management strategies, issues, risks and opportunities, andgovernance, we are trying to communicate information thatoffers high value added to shareholders. Based on the policyof “disclosing information regarding safety, environment, andsociety in addition to that of the Company’s management
policies and new products through a variety of means,”
indicated in the Declaration of Action by Officers andEmployees, we strive to communicate information by holding
briefings for institutional and individual shareholders.

Dialogue with Institutional Investors and Analysts
Every year, we hold briefing sessions and small-groupmeetings with institutional investors covering the full-year
and first-half periods, in June and December respectively. In
fiscal 2021, we thoroughly implemented COVID-19 preventive

56

DKS REPORT 2022

measures and held our own Web meeting. Despite greaterawareness of restrictions on movement for various reasons,
including the announcement of a state of emergency in someareas and semi-state of emergency in other areas, eighty
people, which is greater than the number of for the previous
year, took part in the meeting.
In addition, we held our first briefing session for retailinvestors. Despite the small number of attendees due to poor
weather, we recieved numerous questions from those who
attended.

Dialogue with Individual Shareholders andInvestors
We held our 158th Ordinary General Meeting of Shareholders
and management briefing at the RIHGA Royal Hotel Kyoto on
Friday, June 24, 2022. Subsequently, on Tuesday, July 5, we
held another management briefing in Tokyo. Despite thecoronavirus pandemic, there were more attendees than theprevious year and participants provided us candid input.

Value Creation Innovation

Life Sciences Sidebar
Life Sciences business launched to solve social issues
TENCHUKASOU but also DKS. Therefore, weare raising recognition of both by fostering
the brand image of health food made by achemical manufacturer with a history of 113
years in Kyoto.

QuestionLife Sciences business launched tosolve social issues
DKS launched business in 1909 after
developing a cocoon unwinding agent thatremoves blemishes from cocoons, the raw
material for silk thread. We subsequently
withdrew from the home product business in1973 and transformed ourselves into a B-to-B
business specializing in industrial chemicals.
Why are we launching a life sciences business
now? The impetus for launching the business
was the addition of Biococoon Laboratories
Inc., to the Group in 2018 which discovered a
new useful component “Naturido” frommedical fungus grown on domestic silkworms.
Naturido is a new useful component that is
expected to contribute to longer healthy lives
for people at a time of a hundred-year lifespans. We launched the new B-to-C businesswith the commercialization of I. Japonica
Bombyx Fungus, which embodies our hopes,
as the new brand TENCHUKASOU.

Question
What is the concept behind thebranding?

TAKAHARA Eiji
Executive Officer
Executive General Manager,
Life Sciences Department

The brand book created tofacilitate communicationof the Life Sciences business isalso used for raising brandrecognition for the Company.

The name, logo, and brand color of
TENCHUKASOU was decided upon when we
updated the previous product by doubling
the volume of Naturido and making it into atablet that is easy to take. The packaging was
also renewed at the same time. The nameTENCHUKASOU includes various meanings.
The Kanji characters used when writing the

product name in Japanese include “sky” and“bugs,” which are elements in the Kanjicharacter for “silkworm.” The product namealso includes the Kanji character for “flower,”which represents our hope that the lives ofpeople blossom like flowers starting withmiddle age. In addition, because the Kanjicharacter for sky has the meaning of “top,”
the name includes the worldview of
becoming the market leader.
This is the first time in fifty years that theCompany launched a B-to-C business, and itis necessary to conduct corporate branding
to properly inform people about not only

Cocoon tearoom

Launch event for TENCHUKASOUQuestion
Can you provide details regarding
the introduction of
TENCHUKASOU?

The branding for DKS is based on the
keywords “from Kyoto” and “the essence of
Kyoto.” One such effort was creating a“cocoon tearoom” made from Japanese silk.
In the tearoom, visitors can enjoy mulberry
tea and tea made from I. Japonica-Bombyx
Fungus, and let their minds contemplate thehistory of the Company, which started withchemistry technology related to silkworms.
While maintaining the traditional parts, weare taking on the challenge of new
endeavors. A wonderful aspect ofKyoto-based companies is that they are
grounded in the ancient flow of time, and we
expressed the character of this type ofcompany into the package design. While wefirst introduced TENCHUKASOU, we havealso developed products in collaboration
with Kyoto-based companies and artisans,which include Kyo ame (candy drops made in
Kyoto) and craft coffee. At the March launch
event for TENCHUKASOU, we invited
numerous parties, including members of themedia and press and guests with connections
to Kyoto. This became an opportunity to link
it to our B-to-C strategy, too.

Collaborative products with TENCHUKASOU

Initiatives to Strengthen Corporate Branding
In the medium-term management plan “FELIZ 115,” weinclude the target of generating ¥10.0 billion in annual sales
for the Life Sciences business. One element of the strategy toachieve this target is to strengthen corporate branding, andwe are aiming to further raise the corporate value andrecognition of the Company.
As for concrete initiatives, we are communicating
information through radio and social media and operating
limited-time stores at department stores, such as JR Kyoto

Isetan, to raise recognition of the Company among thegeneral population. In addition to original products
developed in cooperation with famous Kyoto-based
companies, we are moving forward with the development ofother products, including general food products, soft drinks,
and alcoholic beverages, by leveraging the Group’s unique
technology and materials.

DKS REPORT 2022

57

Value Creation Innovation

Board of Directors, Audit & Supervisory Board, and Executive
Board of Directors (as of July 1, 2022)
SAKAMOTO
Takashi

YAMAJI
Naoki

OKAMOTO
Osami

Chairman CEO

President COO

Senior Managing Director
R&D Supervisor

Number of shares held:
36,650 shares

Number of shares held:
7,742 shares

Number of shares held:
9,155 shares

Career summary

April
1970	Joined The Fuji Bank, Limited (current Mizuho Bank, Ltd.)
February 1991	Manager of Madrid Branch of Fuji Bank
May
1994	Manager of Nihonbashi Branch of Fuji Bank
December 1999	Managing Director of Fuji Asset Management Co., Ltd.
June
2001	Joined DKS Co. Ltd.
June
2001	Director
April2004	Executive General Manager in charge of Corporate Planning
Headquarters
June
2004	Managing DirectorJune2007	Senior Managing DirectorJune2011	Representative Vice President
June2013	Chairman and Executive Director
June2015	Concurrently President
April
2022	Chairman and Executive Director (current)

Career summary

Career summary

April
April

May
April
October
April

April
April

April
April
June
April
April
April
April

1991	Joined DKS Co. Ltd.
2013	General Manager in charge of Planning Department, Yokkaichi
Reorganization Division, Production Control Headquarters
2014	General Manager of COO Office2015	Executive General Manager of Plastic Materials Business Division,
Business Headquarters
2016	Concurrently in charge of Tokyo Headquarters
2017	Executive General Manager in charge of Corporate Planning
Headquarters
2017	Director and in charge of Personnel & General Affairs Headquarters
2018	Concurrently in charge of Production Control Headquarters
2020	Managing Director
Administrative Supervisor
2021	R&D Supervisor
2022 President COO (current)

April
April

April
April
April
June
April
April

TANIGUCHI
Tsutomu

OKUYAMA
Kikuo

Director (outside)

Director (outside)

Number of shares held:
890 shares

Number of shares held:
111 shares

Career summary
October
April
April
April
April
April
April
June
June

1978	Labor Standard Inspector of Labor Ministry
2002	Chief of the Sonobe Labor Standards Inspection Office, Kyoto
Labor Bureau, Ministry of Health, Labour and Welfare (former
Labor Department)
2004	Senior Officer for Personnel Planning, General Affairs Division
2006	Chief of the Kyoto-minami Labor Standards Inspection Office2008	Director of the General Affairs Division2010	Chief of the Kyoto-shimo Labor Standards Inspection Office2012	Chief of the Kyoto-kami Labor Standards Inspection Office2014	Executive Director of Kyoto Labor Standards Association2017	Registered as Labor and Social Security Attorney (Kyoto Labor andSocial Security Attorney’s Association)
Chief of Tsutomu Taniguchi Labor and Social Security
Attorney’s Office (current)
Director of DKS Co. Ltd. (current)

Career summary
October
April
April
June
June
June

1990	Professor, Department of Chemical Engineering, Cluster 3, Facultyof Engineering of Hiroshima University
2001	Professor, Department of Chemical Engineering, Graduate Schoolof Engineering of Hiroshima University
2013	Professor Emeritus, Chemical Engineering of Hiroshima University(current)
Special Appointment Professor of Hiroshima University
2017	Managing Director of Hosokawa Powder Technology Foundation
2021	Director of DKS Co. Ltd. (current)
2022	Auditor of Hosokawa Powder Technology Foundation (current)

1989	Joined DKS Co. Ltd.
2006	General Manager of Sales Department, Plastic Additive Materials
Business Division2007	
General Manager of East Sales Department, Surfactants Business Division2008	
General Manager of Planning Office, Functional Chemicals Business Division2010	Director of Yokkaichi Chemical Co., Ltd.
2013	General Manager of Yokkaichi Reorganization Department,
Production Control Headquarters
2014	General Manager in charge of Management Planning Office,Corporate Planning Headquarters
2016	Deputy Executive General Manager in charge of Corporate
Planning Headquarters
2017	Executive General Manager of Plastic Materials Business Division,
Business Headquarters
Concurrently in charge of Tokyo Headquarters
2017	Director
2020	Managing Director
Sales Supervisor
2022	Senior Managing Director (current)
R&D Supervisor (current)

HASHIMOTO
KatsumiDirector (outside)

Number of shares held:
182 shares

Career summary
April
October
March
May
July
June
July
November

June
June
June

1981	Joined Osaka Regional Taxation Bureau
1984	Joined Asahi Accounting, LLC. (currently KPMG AZSA LLC)
1987	Registered as a certified public accountant
2007	Representative Partner of Asahi Accounting, LLC. (currently KPMG
AZSA LLC)
2010	Director of Kyoto Office of KPMG AZSA LLC
2019	Left KPMG AZSA
2019	Established Hashimoto Accounting Office as a Representative(current)
2019	Outside Audit & Supervisory Board Member of Bankers Holding (current)
2020	Audit & Supervisory Board Member of DKS Co. Ltd.
2021	External Audit & Supervisory Board Member of Pacific Porter, Inc(current)
2022 Director of DKS Co. Ltd. (current)

Audit & Supervisory Board (as of July 1, 2022)
ONISHI
Hideaki

TAKAHASHI
Toshitada

Audit & Supervisory Board
MemberAudit & Supervisory Board
MemberAudit & Supervisory Board
Member (outside)

Number of shares held:
13,849 shares

Number of shares held:
13,597 shares

Number of shares held:
182 shares

Career summary

Career summary

July

October

April
October

October
June
April
June
June
April
June

58

FUJIOKA
Toshinori

1980	Joined DKS Co. Ltd.
2000	General Manager in charge of General Business Promotion Office,Procurement & Logistics Headquarters
2001	General Manager in charge of Sales Promotion Office, Sales
Headquarters
2005	General Manager of East Supervision Department, Sales
Supervision Headquarters
2007	Executive General Manager in charge of Personnel & General
Affairs Headquarters
2010	President and Representative Director of Kyoto Elex Co., Ltd.
2011	Executive General Manager in charge of Procurement & Logistics
Headquarters and President of Osaka Branch2014	Director
2016	Executive General Manager of RHEOCRYSTA Business Division(Business Headquarters)
2018	Audit & Supervisory Board Member (current)

DKS REPORT 2022

April
April

March
April
April
June
June
April
June
June

1982	Joined DKS Co. Ltd.
2001	General Manager of Plastic Materials R&D Department, Plastic
Materials Business Division
2005	General Manager of Synthesis R&D Supervision Department,
Technological Development Headquarters
2006	General Manager of Plastic Additive Materials R&D Department,
Technological Development Headquarters
2008	Deputy General Manager of Plastic Materials R&D Department,
Plastic Materials Business Division2009	General Manager of Plastic Materials Laboratory, Plastic Materials
Business Division2011	Executive General Manager in charge of R&D Headquarters
2014	Director
2017	Managing Director
2020	Advisor
2021	Audit & Supervisory Board Member (current)

Career summary

April
1982	Joined The Fuji Bank, Limited (current Mizuho Bank, Ltd.)May
2004	Manager of Urawa Branch of Mizuho Corporate Bank, Ltd.
November 2005	Manager of Maebashi Branch of Mizuho Corporate Bank
April
2008	Manager of Shinagawa Branch of Mizuho Corporate Bank
April
2010	Chief Auditor, Business Audit Department of Mizuho Corporate
Bank
January 2011	Joined UC CARD Co., Ltd.
February 2011	Managing Executive Officer of UC CARD Co. Ltd.
April
2020	Director, Managing Executive Officer of UC CARD Co. Ltd.
June
2020	Audit & Supervisory Board Member of DKS Co. Ltd. (current)
Director, Audit & Supervisory Board Member of ITmedia Inc.
(current)

Officers

KAWAMURA
IchijiManaging Director
Sales Supervisor in Charge ofTokyo Headquarters

April
1985	Joined The Fuji Bank, Limited (current Mizuho Bank, Ltd.)
August1995	Senior Assistant to Director of London Branch
November 2001	General Manager of Yokohama Branch
April
2002	Assistant Branch Manager, Yokohama-chuo Branch of Mizuho Bank
May
2004	
Assistant Branch Manager, Seoul Branch of Mizuho Corporate Bank, Ltd.
July
2008	Deputy General Manager of Sales Department 6
April
2011	General Manager, International Corporate Sales Department
July
2013	General Manager, International Corporate Sales Department ofMizuho Bank
April
2016	Joined DKS Co. Ltd.
Deputy Executive General Manager in charge of Personnel &General Affairs Headquarters
April
2017	Executive General Manager in charge of Personnel & General
Affairs Headquarters
April
2018 Executive General Manager in charge of Production Control Headquarters
June
2018	Director
April2020	Production Supervisor
April
2021	Administrative Supervisor
April2022	Managing Director (current)
Sales Supervisor (current)
Concurrently in charge of Tokyo Headquarters (current)

NAKANO
Hideyo

April
April

1992	Joined DKS Co. Ltd
2014	General Manager of Personnel & General Affairs Department,
Personnel & General Affairs Division
April
2016	General Manager of Shuang Yi Li (Tianjin) New Energy Co., Ltd.
April
2018	Board Director of Shuang Yi Li (Tianjin) New Energy Co., Ltd.
June
2019	General Manager of Financial Division, Financial Headquarter
April
2020	Executive Officer
		 Executive General Manager in charge of Production Headquarters
April
2022	Administrative Supervisor (current)June2022	Director (current)

Career summary

April1972	Joined Mitsubishi Heavy Industries, Ltd.
June
2000	Director of Takasago Laboratory, Technology Department
June2003	Director
January 2005	General Manager, Technology Department
June2005	Representative Executive Officer
December 2005	Visiting Professor of Tsinghua University in China (current)
April2006	Representative Managing Executive Officer of Mitsubishi Heavy
Industries, Ltd.
April
2009	Executive Vice President and Executive OfficerJune2011	Vice Chief Director of Mitsubishi Research Institute, Inc.
April
2014	Special Advisor of Mitsubishi Heavy Industries, Ltd.
June
2014	Director of DKS Co. Ltd. (current)
September 2018	Advisory professor of Tsinghua University in China (current)June2022	Production Supervisor of DKS Co. Ltd. (current)

Executive Officers (as of July 1, 2022)
Executive General Manager, Sales Headquarters

Executive Officer

SAKAMOTO Mami

Executive General Manager, Public & Investor Relations Department

Executive Officer

TAKAHARA Eiji

Executive General Manager, Life Sciences Business Headquarters

Executive Officer

MORISHIMA Kazuto

Executive General Manager, Administrative Headquarters

Executive Officer

SHUDO Takuya

Supervisor of Administration/Group Companies, Sales Headquarters

Executive Officer

HASHIMOTO Masayuki Executive General Manager, R&D Headquarters

Executive Officer

MORI Yoshiyuki

Executive General Manager, Production Headquarters

Executive Officer

OWAN Jiro

General Manager, Yokkaichi Plant, Production Headquarters

NAKA
HideyaExecutive Officer

WATANABE Kisou

General Manager, Ohgata Plant, Production Headquarters

Audit & Supervisory Board
Member (outside)

Executive Officer

KUZE Takuya

General Manager, Shiga Plant, Production Headquarters

Executive Officer

KATAYAMA Toshihiko

President and CEO, Kyoto Elex Co., Ltd.

Executive Officer

SHIMIZU Koji

Vice Chairman, Chin Yee Chemical Industries Co., Ltd.

Career summary

March
March
July
July

Career summary

MISAWA Hideto

Number of shares held:—

OctoberJanuary

Number of shares held:
1,681 shares

Number of shares held:
1,907 shares

Senior Executive Officer

Director (outside)

NovemberDirector
Production Supervisor

Director
Administrative Supervisor

Number of shares held:
4,237 shares

Career summary

AOKI
Sunao

SHIMIZU
Shinji1991	Vice President of Cititrust and Banking Corporation
1993	Senior Portfolio Manager and Head of Private Investment
2000	Director and Head of Investment Division of FuNNeX AssetManagement Inc.
2004	CEO of Trias Corporation (current)
2020	External Director of OUTSOURCING Inc. (current)
2021	External Director of HOCHIKI CORPORATION (current)
2022	Director of DKS Co. Ltd. (current)

Number of shares held:
182 shares

Career summary

April1978	Joined The Bank of Kyoto, Ltd.
June
2001	Manager of Tanabe Branch of Bank of Kyoto
June2003	Manager of Fushimi Branch of Bank of Kyoto
June2005	Manager of Corporate Financial Department of Bank of Kyoto
June2007	Executive Officer of Bank of Kyoto
		Executive General Manager, Hanshin Sales Headquarters,
Sales Administrative DivisionDecember 2010	Chair of Nagoya Branch Opening Committee of Bank of Kyoto
April
2011	General Manager of Nagoya Branch of Bank of Kyoto
June2013	Managing Executive Officer of Bank of Kyoto
June2015	General Manager of Tokyo Branch of Bank of Kyoto
December 2015	General Manager of Tokyo Sales Department of Bank of Kyoto
June2019	President and CEO, Kyoto Credit Assurance Service Co., Ltd.
June
2020	Audit & Supervisory Board Member of DKS Co. Ltd. (current)June2022	Advisor of Kyoto Credit Assurance Service Co., Ltd. (current)

DKS REPORT 2022

59

Initiatives by BusinessBusiness Activities Report1

Surfactants

2

Segment Outline
Since the Company’s founding in 1909, the Surfactants segment has provided core technologies that havesupported DKS for more than 100 years. DKS surfactants provide high added value in a wide variety offields and applications, including soap and detergents, IT and electronics, rubber and plastics, paints
3and coloring materials, and energy through their emulsifying, dispersing, solubilizing, penetrating,wetting, foaming and defoaming, and surface modifying functions. In recent years, we have also
 IT and electronics materials
been promoting the development of products that are compatible with the globally increasing
 Soaps and detergents
consideration for the environment. We currently develop and manufacture these products
 Paints and coloring materials
with petrochemicals and oils/fats as key raw materials primarily at the Yokkaichi Branch (theChitose and Kasumi Plants), the Shiga Branch, and Yokkaichi Chemical Co., Ltd.

 Review of and issues related to FY2021

 Main products and uses

During the fiscal year ended March 31, 2022, net sales in thissegment were generally firm.
In Japan, sales of both products for rubber and plastic
applications and products for civil engineering and construction
applications fell, but those for IT and electronics material
applications, and paints and coloring material applications were
firm. Sales of products for soap and detergent applications grewsignificantly. Overseas, sales of products for textile applications andrubber and plastic applications were firm. Going forward, we will
strengthen our Uni-Top strategy and continue to focus on delivering
customized products that meet customers demand.
Issues facing this segment are as follows:
1. Declining earnings and lower relative value for DKS’ products
due to intensifying market competition in soaps and detergent
applications
2. Delays in developing markets for environmentally friendly
products

The typical function of surfactants is to clean (i.e., dirt

 Connection between material issues and ES

This segment is leveraged by the Company’s many years ofexperience and accumulated technologies. The industrial fields inwhich the growth of reactive surfactants can be expected in theyears to come include the paints and coatings field as well asadhesives. On the other hand, there are various competitors inthis business, such as domestic manufacturers of detergents andemulsifying and dispersing agents. However, our abundant lineup
of products has enabled us to introduce optimal products thatmeet customer needs, while we are able to conceive high-value
added products through our unique development approach.
Going beyond simply providing materials, we work closely withcustomers to find solutions to their problems.

To develop products for a more environmentally conscious world,
we have been working in recent years to research and develop
highly biodegradable, environmentally friendly products that do
not cause water pollution.
Having developed a reactive surfactant that not only functions
as a surfactant but also offers such other subsequent benefits asimproving water resistance, the Company is focusing on
expanding the market for this product, which is based onJapanese technology.
Material issues (p.10) are connected to ES in the following ways:• Strengthening relationships with inspiring/inspired partners andtargeting sales expansion for IT and electronics material
applications (7. tackling NEXT and DREAM businesses)• Building a sales framework and strengthening sales forenvironmentally friendly paints and coloring material
applications (4. consideration for the environment)

Net Sales

Operating Income

 DKS’ strengths+7.3%(Millions of yen)
25,00020,000+41.3%(Millions of yen)

2,476

2,500
21,416

21,83818,97017,303

18,5642,000

15,0001,500

10,000

1,000

5,000

500

0

2,171
1,558

1,752
1,312

0

3/201860

removal), which is represented in soap, a well-known item.
Surfactants act on the surface of substances that do not mix, suchas oil and water, and demonstrate emulsifying and dispersing
properties to remove dirt. Recently, however, the functions that
the Company’s customers require from surfactants have evolved
beyond simply cleaning to more sophisticated and uniqueapplications that reflect advances in the particular industry. The
surfactant synthesis, analysis, and evaluation technologies that wehave developed over our more than 110-year history has enabled
the Company to provide performance and functions tailored tocustomer needs through our diverse product lines andcombinations of these products.

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3/2022

1

Amenity Materials

2

Segment Outline
The Amenity Materials segment provides materials and peripheral application technologies necessary
for a comfortable living environment. The Company provides materials suitable to the products ofcustomers in a wide range of industries including foods, pharmaceuticals, personal care (cosmetics),
3
energy, toiletries, fisheries/livestock, textiles, pulp/paper, civil engineering, agrochemicals, andagro-materials. In particular, products made from naturally derived raw materials, such as sucrose, Personal care (cosmetics)
fatty acids, and pulp, are delivered to our way of life as safe and reliable materials.
 FoodIn addition to core-technology surfactants, DKS manufactures products made from natural Energy
raw materials, including sugar and pulp, at the Ohgata and Shiga Branches.

 Review of and issues related to FY2021

 Main products and uses

During the fiscal year ended March 31, 2022, net sales in thissegment grew significantly.
In Japan, although sales of cellulose polymers (CMC) for foodapplications were weak, those for pharmaceutical applications
were firm, and those for energy and environmental applications
grew significantly. Furthermore, despite weak sales of sucrose fatty
acid esters for personal care (cosmetics) applications, those forfood applications were strong. Overseas, sales of SEs for personalcare (cosmetics) applications were firm, and those for foodapplications grew significantly.
Issues facing this business are as follows:
1. Expanding sales channels in the CNF business
2. Further developing energy applications
3. Expanding into the field of high-value-added SEs

This segment targets industrial fields that place an emphasis on safety,
such as food, personal care products, and pharmaceuticals, all ofwhich are end products that are placed in the mouth, come into
contact with skin, or stimulate the five senses.
Recently, we established technologies to produce a new material
called cellulose nanofiber (CNF) by finely dividing naturally derived
cellulose fibers using nanotechnology. On account of its
characteristic viscosity and emulsifying, dispersing, and stabilizing
properties, CNF is a noteworthy material that can be used invarious ways, such as personal care and general industrial
applications.
In recent years, we have been expanding into the field of energy,
and our proprietary technologies include methods for
manufacturing and testing water-soluble polymers for conductive
pastes in lithium-ion batteries.

 DKS’ strengths
With more than 70 years of experience in cellulose polymers (CMC)
using pulp, and more than 50 years of experience in sucrose fatty
acid esters (SE) using sugar, the Company has a long history inproduct development and is developing markets based on the basic
and applied technologies accumulated to date. Among these, SEs
have the distinguishing characteristic that they are an edible
surfactant, and DKS is one of only a handful of companies worldwide
producing them. SEs are used as an emulsifier for oil/fat and cream
and as a texture modifier, for example, in cookies and snack foods.

Net Sales

Judging from demographic trends, indications are that major
Japanese market growth looks unlikely. However, while
maintaining our current customer base, we will strive to securestable sales and profitability in Japan. As growth fields, we will
also continue to unlock new customers and aim to improve
lifestyle comfort by expanding sales and providing highly
functional products centered on, for example, food and personalcare applications in markets overseas.
Material issues (p.10) are connected to ES in the following ways:• Making social contributions utilizing RSPO certification(5. contribution to a co-production society)• Actively contributing to carbon neutrality through naturally
derived raw materials (4. consideration for the environment)• Developing solution business for the battery field (7. tacklingNEXT and DREAM businesses)
Operating Income+14.3%(Millions of yen)
10,0008,000

 Connection between material issues and ES

700
7,502

8,031

7,994

8,092
7,081

+679.4%(Millions of yen)

600

638

500

6,000

400

4,000

300

566
465
281

200

2,000

100

0

72

0

3/20183/20193/20203/2021

3/20223/20183/20193/20203/2021

3/2022

DKS REPORT 2022

61

Initiatives by BusinessBusiness Activities Report

1

Polyurethane Materials

2

Segment Outline
The segment provides polyurethane materials and industrial materials, including paints, adhesives, civilengineering and construction materials, and electric insulation materials. The Company possesses
technologies used to manufacture high-elasticity urethane rubber and urethane elastomers as well as
3soft/rigid urethane foams. Leveraging these technologies, we supply various high-functional
polyurethane products, such as cushioning, thermal insulation, and molding and coating materials.
 IT and electronics materials
Rock hardening agents used for mountain tunnel projects such as roads and railways are an Civil engineering
essential product for upgrading infrastructure. The primary raw material for this segment is
 Automotive industrial
petrochemical raw materials, and the products are primarily manufactured at the Yokkaichi
Branch (Chitose and Kasumi Plants).

 Review of and issues related to FY2021

 Main products and uses

During the fiscal year ended March 31, 2022, net sales in thissegment grew significantly.
Sales of civil engineering chemicals for public works were firm
while those of environmentally friendly synthetic lubricantsrelated to CFC regulations grew significantly because of therecovery in automobile-related fields. Sales of functional
polyurethanes for applications such as construction were weak,
but those of functional polyurethanes for IT and electronics
material applications were firm.
Issues in this business segment are as follows:
1. Improving the operation rate of No.3 Plant of the Kasumi Plant
2. Delays in new development
3. Strengthening relationships with inspiring/inspired partners

No.3 Plant, which manufactures functional polyurethane resin,commenced operations in December 2019. Against thisbackdrop, we will redouble our initiatives with our inspiring/inspired partners. In addition, our rock hardening agents fortunnel construction have a broad array of uses that include publicroads and railways while boasting a high market share based on
their safety and performance. We are also striving to promote
new development of IT and electronics material applications forthe electrification of mobility components prompted by the
spread of EVs.

 DKS’ strengths
The Company’s urethane materials are used mainly in paints,
adhesives, civil engineering and construction, and electric insulationmaterials, with the overriding priority of ensuring people’s safety
through applications mainly for transportation equipment, civilengineering projects and electronic materials. With the recent
diversification of electric appliances and the incorporation of IT in
automobiles, electronic components are being used underincreasingly severe conditions. Meanwhile, the need for lightweight,
compact and integrated electronic components has increased, while
components now need to be protected from physical and chemical
effects to maintain strength and ensure durability. Lightweight, strong
urethane resin plays a key role in this area. The Company’s electric
insulation materials, which feature a superior balance of insulation,
heat-resistant, and flame-retardant properties, have a wide range ofuses, from home appliance to transportation equipment components,
to meet the exacting needs of customers.

+10.8%(Millions of yen)
9,115(Millions of yen)
200

9,026

8,000

8,470
7,484

8,294

100

6,000

0

4,000

-100

2,000

-200

100

3/2018

DKS REPORT 2022

3/20193/20203/2021

3/2022

55

41

-235

-300

0

62

Sales growth for rock hardening agents is expected due to theprogress of construction on the Linear Chuo Shinkansen Line.
Additionally, by further deepening initiatives with inspiring/inspired partners, we will pursue development and expanded
sales of products for IT and electronics materials manufactured atNo.3 Plant.
At the same time, we will accelerate activities for meeting thefinal fiscal year targets of the medium-term management plan
ending in March 2025.
Material issues (p.10) are connected to ES in the following ways:• Selling rock hardening agents for the Linear Chuo ShinkansenLine (4. consideration for the environment)• Expanding the use of urethan materials in vehicles that areincorporating a larger number of electrical components due to theintroduction of green vehicles and EVs (4. consideration for theenvironment)

Operating Income or Loss

Net Sales

10,000 Connection between material issues and ES

3/20183/20193/2020-282

3/2021

3/20221Functional Materials

2

Segment Outline
The Functional Materials segment provides technologies and materials contributing to advanced performance,
including resins used in daily necessities, as well as IT and electronics materials often used in personal
computers, smartphones, and home applications. For example, the segment’s products include plastic flame3
retardants, antistatic agents that control static electricity, lubricants, anticlouding agents, antioxidants, andradiation-curable monomers and oligomers that use radcure (UV- or EB-curing) technology. The
 IT and electronics materials
waterborne polyurethanes that we have been developing since 1973 are used in wood and plastic
 Flame retardants for plastics
paints, metal and paper coating agents, film and wood adhesives, and paper/fiber binding.
 Film materials
These products are manufactured at the Yokkaichi Branch (the Chitose and Kasumi
Plants) and the Ohgata Branch.

 Review of and issues related to FY2021

 Main products and uses

During the fiscal year ended March 31, 2022, net sales in thissegment were generally weak.
In Japan, sales of waterborne polyurethane resin for textile
applications and IT and electronics material applications were
firm, but sales of radcure resin materials for IT and electronics
material applications fell sharply. Overseas, sales of both flame
retardants for rubber and plastics and radcure resin materials for
IT and electronics material applications rose significantly. The DKS
brominated flame retardant’s raw material is sourced from a
global bromine production site, and because the raw material
price can fluctuate based on bromine market conditions, it isimportant for DKS to maintain proper controls on product prices.
Issues facing this business are as follows:
1. Expediting the recovery of capital invested on No.4 Plant of
the Kasumi Plant
2. Expanding earnings of the waterborne polyurethane resin business
3. Increasing and strengthening the supply capacity of theflame retardants business

While many urethane resins are based on organic solvents, DKS is
also researching and developing waterborne polyurethanes, inwhich the polyurethanes are dispersed in water, largely in reaction
to rapidly growing demand for safer water systems as society
places increased importance on environmental concerns. In
addition to being safe for the environment and people, we believethese products are likely to see increased demand thanks to theirability to allow high-performance finishing in a variety of
applications, including paper and metal processing, as well as film
processability. Given the global trend away from organic solvents,
this is a product group on which we are focusing our energies. This
market has strong growth potential and is one in which we candemonstrate our strengths both in Japan and overseas.
Competitors include material companies that handle electronics
materials and overseas flame retardant companies, but we aim toincrease our market shares by utilizing our technology andproposal capabilities.

 DKS’ strengths
The technology used in radiation-curable monomers andoligomers is called “radcure technology,” in which a resin
composition such as paint is instantaneously dried and cured byirradiating it with ultraviolet light (UV) or an electron beam (EB).
Radcure technology is widely used in several applications acrossa variety of fields to conserve resources and energy and to reduce
environmental impact. Applications include the clear paint used inbuilding materials and furniture; anti-corrosive paint for metals;
resist materials for semiconductors, dry films and LCDs; andcoating agents for mobile phones, optical fibers, plastics, andpaper. Brominated flame retardants are more stable and highly
flame resistant than phosphorous- or inorganic-based flame
retardants when dealing with materials such as rubber and plastics.

Additionally, by further deepening initiatives with inspiring/inspired partners, we will pursue development and expanded
sales of IT and electronics materials manufactured at the No.4
Plant of the Kasumi Plant. At the same time, we will accelerate
activities for meeting the final fiscal year targets of the mediumterm management plan ending in March 2025.
Material issues (p.10) are connected to ES in the following ways:• Expanding sales of products for IT and electronics materials
and securing profit (7. tackling NEXT and DREAM businesses)• Accelerating next-generation product development withinspiring/inspired partners (7. tackling NEXT and DREAMbusinesses)• Expanding sales of biodegradable polymers (4. consideration
for the environment)

Net Sales

Operating Income–5.5%(Millions of yen)
25,000–53.8%(Millions of yen)
3,000

20,84820,00015,000 Connection between material issues and ES

14,07021,077

2,832

2,000

16,239

2,933

2,404

19,928
1,926

1,355

10,000

1,000

5,000
0

0

3/20183/20193/20203/2021

3/20223/20183/20193/20203/2021

3/2022

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63

Initiatives by BusinessBusiness Activities Report

1Electronic Device Materials

2

Segment Outline
As the information society continues to advance, as evidenced by the rapid spread of the Internet andsmartphones, the Electronic Device Materials segment is focused on developing and supplying ionconductive polymers, ionic liquids, ceramic materials and lithium-ion battery materials, as well as
3
conductive pastes for solar cells.
We intend to further develop our innovative technologies in each area of operation, while also
 Solar cells
promoting R&D in line with the trends of the times. Mainstay products in the Electronic Device
 Displays
Materials segment are produced at subsidiary companies, Kyoto Elex Co., Ltd. (Kyoto) and Lithium ion battery cells
Dai-ichi Ceramo Co., Ltd. (Shiga).

 Review of and issues related to FY2021

 Main products and uses

During the fiscal year ended March 31, 2022, net sales in thissegment increased significantly overall.
While sales of ionic liquids for display applications were weak,sales of conductive pastes for solar cells rose significantly.
Issues facing this segment are as follows:
1. Improving profitability of products for ceramic materials applications
2. Aggressively expanding conductive pastes to solar cell market
3. Concerns for risks such as stricter environmental regulations,
lockdowns due to COVID-19 in China, aggressive pricing by
local Chinese manufacturers, and raw material supply
shortages

The lithium-ion batteries (LiB) used in electric vehicles generally
employ lithium phosphate as an electrolyte and an organic
solvent as an electrolytic solution. However, because there is arisk of organic solvents igniting, manufacturers have been careful
to incorporate safety measures, including adding in flame
retardants. We are developing ionic liquids that are liquid at 100
and below and have no vapor pressure, and thus are
nonflammable. Because they are highly safe and have high ion
conductivity, we are developing electrolyte applications forlithium-ion batteries and capacitors.
These kinds of liquids are also attracting attention as next
generation materials in the energy device field and as green
solvents that have less of an environmental impact. As described,
this segment plays a role in creating a safe, pleasant life for all.

 DKS’ strengths
As for compound technologies that combine high viscosity andspecial conditions, our advanced know-how is a strength thatmakes it possible to supply materials that meet the demands ofcustomers. Conductive pastes, which are primarily made fromprecious metals, also include non-organic fillers and soluble
binders. They provide functionality to electronic devices andcomponents used in items such as solar cells, automobiles, andsmartphones. In addition, materials for ceramic and metal
powder injection molding are used to produce small and difficultto-process complex three-dimensional ceramics and metal parts.
They often are used in smartphones and other electronic devices,precision components for items such as watches and medical
devices, and automotive and optical communication
components. As for lithium-ion batteries, another of our strengths isthat we are able to handle all stages from material research anddevelopment to the manufacturing of prototype lithium batteries.

Net Sales Connection between material issues and ES
DKS is focused on advancing business activity at subsidiarycompanies using its innovative technologies. The Company’s
surface chemistry, which is its core technology, is used in the
mixing techniques of resins and ceramic powders or organic
materials and metal powders.
Furthermore, we have established a subsidiary in China, acountry expected to see growth in its solar cell market, andlaunched sales of products to solar cell manufacturers in the
country. While the growing technological capabilities of countries
in Asia, including China, are a threat, growth is possible by offering
our proprietary technologies, R&D capabilities, and solid quality.
Material issues (p.10) are connected to ES in the following ways:• Expanding business in China, which boasts a solar cell market(4. consideration for the environment)• Accelerating next-generation product development withinspiring/inspired partners (7. tackling NEXT and DREAMbusinesses)
Operating Income+27.0%(Millions of yen)
8,000

7,316

6,000
4,850

4,199

800

715

600

5,758

4,000

+66.2%(Millions of yen)

4,744

430

400

2,000

200

0

0

335
215
74

3/201864

DKS REPORT 2022

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3/20223/20183/20193/20203/2021

3/2022

1Life Sciences

1

Segment Outline
With our full-scale entry into the Life Sciences business in September 2018, DKS acquired two companies,
Biococoon Laboratories, Inc. and Ikeda Yakusou Co., Ltd., as wholly owned subsidiaries. Advancing researchand product development with a focus on natural raw materials, extraction and high concentration
technologies from natural products, and mass production technology, this segment supplies health food2
products that include I. Japonica-Bombyx Fungus and Sudachin (a peel extract powder made fromsudachi, a citrus fruit). The company Biococoon Laboratories is promoting the quantification of a new TENCHUKASOU
substance that it is hoped will have an effect on dementia and the laboratory is proceeding with the(I. Japonica-Bombyx Fungus)
search for high production conditions. Having established extraction and high concentration
 Sudachintechnologies from natural products, Ikeda Yakusou is also working to stabilize product quality anddeliver products to customers with the priority being safety and reliability.

 Review of and issues related to FY2021

 Main products and uses

During the fiscal year ended March 31, 2022, net sales in thissegment rose ¥41 million (9.6%) year on year to ¥476 million.
In addition to the contract manufacturing business for products
such as pharmaceutical raw materials and health foods based on
concentrating and powdering extracts from natural materials, theI. Japonica-Bombyx Fungus business was firm.
Issues facing this business are as follows:
1. Establish the B-to-C business and quickly generate earnings
2. Expand new contract manufacturing business

I. Japonica-Bombyx Fungus developed by Biococoon
Laboratories, a venture company from Iwate University, is a healthfood that has the potential to help address the rise in dementia
patients, a social issue taking hold in Japan.
Developed by making effective use of the peeled skins ofsudachi, which is a representative and previously untapped
regional resource of Tokushima Prefecture, the peel extract
Sudachin arose through industry-government-academia
collaboration with Tokushima University and Tokushima
Prefecture. Preparations are underway to submit applications for
I. Japonica-Bombyx Fungus and Sudachin as “foods withfunctional claims.” Additionally, we are proceeding with
development of general-use food products, carbonatedbeverages, and alcoholic products using TENCHUKASOU (I.
Japonica-Bombyx Fungus) and Sudachin.

 DKS’ strengths
In December 2019, a new manufacturing plant for I. JaponicaBombyx Fungus, was completed at Biococoon Laboratories inthe town of Tanagura, Fukushima Prefecture. Having acquired
HACCP certification, we have further enhanced our quality
control systems to manufacture and provide consumers with safeand reliable health food products.
Ikeda Yakusou manufactures and provides safe and reliable
products. The company also undertakes contract manufacturingbusiness for products related to drug substances, cosmetics andchemical products foods based on high-quality powdering
technologies. Also, able to handle chemical products, Ikeda
Yakusou can provide products with various levels of performanceand functions that match customers’ requests.
The tablet Sudachin, made with citrus sudachi peel extract
powder, was certified as a Shikoku Health Support Food(commonly referred to as “Health Four”).
We will acquire more evidence and develop highly-reliable“food with functional claims” (preparing to submit applications).

Net Sales

Currently, the department is taking steps to obtain “foods withfunctional claims” certification for Naturido, discovered from I.
Japonica-Bombyx Fungus, and Sudachin, a substance extracted
from the peels of sudachi (citrus fruit) with benefits against
diabetes and obesity.
Material issues (p.10) are connected to ES in the following ways:• Promoting SDGs by revitalizing local communities throughsericulture (Sericulture Innovation) (5. contribution to a
co-production society)• Developing health foods and general-use food products (andlater, pharmaceutical products) using TENCHUKASOU, Naturido,
and Sudachin (7. tackling NEXT and DREAM businesses)• Establishing and promoting of B-to-C business that will be thecore of new businesses (DREAM) (7. tackling NEXT and DREAMbusinesses)

Operating Loss
+9.6%

(Millions of yen)
500
427

400

435

476

(Millions of yen)
0

-200

300
200

 Connection between material issues and ES

-203

239
-400

-370

100
0

-421

-600

3/20193/20203/2021

3/2022-543

3/20193/20203/2021

3/2022

DKS REPORT 2022

65

Data Section

Proprietary Technologies of DKS
Technical Road Map: Proprietary Technologies
Electric
equipment

Precisionequipment

Transportationequipment

Chemicals

Cosmetics

Electric
equipment

Chemicals
Glycidylation

Transportationequipment

Battery evaluation/assembly

Ionic liquid

Potting

Polymer function
designing
UV/EB curing

Organic-inorganic
hybridization

Wet dispersion

Polymer modification

Emulsion polymerization
Polymerizable emulsifierEmulsification/dispersion
Urethane for civilengineering

Glass

Polymer synthesis

Food application
evaluation

Interface/surface control

Isocyanate blocking

Alkylene oxide
function designing

Cellulose
modification

Precision cleaning
agents evaluation

Flame retardation
Urethanization

TextileAlkylene oxide
addition

Bromination

Electric
equipment

Sucroseesterification

Surfactants
Chemicals

Fisheries/
agriculture andforestry

Nano-dispersion

Phenolderivatization

Construction

Cellulose
nanofiberization

TextileSynthesis,
blending,
evaluation,
analysis andapplication
technologies

Hard surface
treatment

Food
products
Extraction& drying
Fungiculture

Precisionequipment

Machines
Steel

Technologies are multiplied to produce new technologies
Basic Technologies
Interface/surface control technology

Urethanization technology

1. To make the surface smooth and even

Cellulose modification technology

A variety of applications can be achieved with surfactants, for example,
emulsification, dispersion, solubilization, wetting/penetration, surface/interface tension control, foaming/defoaming and surface
modification. The primary applications of surfactants are emulsificationand dispersion for mixing together substances that normally do not
mix together. For example, although water and oils will separate after
being mixed, adding a surfactant as an intermediate between waterand oils enables the creation of stable emulsion. When washing dishes
to which oil residue has adhered, the surfactant is first absorbed into
the oil residue, where it reduces the interface tension between the oiland dishwashing liquid. Next, it enters between the oil residue anddishware via wetting/penetration. Finally, oil residue is separated fromthe dishware through physical force such as washing by hand. The
residue is adsorbed into the micelles formed by the surfactant andthen dispersed throughout the liquid, which prevents re-adherence ofthe residue. Moreover, improving the wettability of paint and adding
various functionality (e.g., leveling,1 water/oil repellent, antifouling,
lubricity) can be included as types of technology for surface
modification and interface control. For example, fluoropolymers arewidely used in water- and oil-repellent agents for textiles. Our
Company is working to develop PFOA (perfluorooctanoic acid)-freefluoropolymers through the synthesis of various surfactants and theuse of application technology. This makes it possible to respond toneeds for surface/interface control, which had been difficult to achieveusing conventional surfactants.
See p.60

Alkylene oxide addition technology

This technology adds ethylene oxide (EO) and propylene oxide (PO) to
raw materials of higher alcohols derived from natural sources such as
coconut oil or palm oil, as well as phenols and amines.

Alkylene oxide functional design technology

Through the addition of alkylene oxide (AO), in addition to EO and PO
sequencing such as random polymerization and block polymerization,
this technology enables desired control for the number of addedmoles. This makes it possible to freely design a surfactant
composition, which satisfies the required performance.

66

DKS REPORT 2022

This technology synthesizes a urethane resin that is a polymer
compound possessing urethane bonds in the main framework of themolecular structure. Through diverse combinations of the raw
materials polyisocyanate and polyol, it is possible to change the typeand length of the structural chain and to change the structure of bothends, thus creating a variety of physical properties. This makes it
possible to create substances such as elastic urethane rubber andurethane elastomer, as well as soft/hard urethane foam in conjunction
with foaming reaction. By utilizing these properties, these substances
can be used in products such as cushioning, thermal insulation,
molding and coating materials. In addition, waterborne urethane resin
can be obtained by emulsifying urethane resin. Our Company’s
products can be broadly divided into nonreactive and reactive.
Nonreactive waterborne urethane resin is an emulsion product ofurethane resin. Reactive waterborne urethane resin is produced byusing a blocking agent to protect the terminal isocyanate groups
generated by the reaction between polyisocyanate and polyol andemulsification. Reactive waterborne urethane resin is composed of thetwo basic structures of a soft segment and a hard segment, and it
undergoes quasi-crystallization during the resin molding process.
Consequently, it combines flexibility, toughness and elasticity andpossesses superior solvent resistance and adhesion. Because thematerial combines safety and high functionality, it is used in a wide
range of processes such as film, metal, paper and textile.
This technology synthesizes anionic water-soluble polymers withcellulose as the main raw material. The CMC (sodium carboxymethyl
cellulose) synthesized via this technology can be used in various
applications by changing the length of the molecular chain and by theaddition of quantities of the carboxymethyl group. CMC is easily
dissolved in either cold or hot water and becomes a viscous liquid thatis colorless and transparent. It has an extensive record of use as athickening stabilizer in general, and other uses include as a binding
agent for fish feed and pesticides. CMC is also known for functioning
as a high-performance dispersion stabilizer. It is applied to products
seeking an even higher level of functionality, for example, as a binder
for lithium-ion battery cathode paste.

Sucrose esterification technology

This technology is used to obtain sucrose fatty acid esters (SEs), a nonionic surfactant where natural sucrose is part of the hydrophilic groupand higher fatty acids such as stearic acid and oleic acid are part of thelipophilic group. The high safety of SEs is recognized by internationalorganizations (Joint FAO/WHO Expert Committee on Food Additives),
and SEs are approved as a food additive in Japan since 1959. In
addition to food products, SEs are used in a wide range of products
such as pharmaceuticals and personal care products. Examples include
emulsifiers, viscosity modifiers, anti-aging agents for starches andtexture modifiers. Synthesis methods of SEs can be broadly divided
into an esterification reaction method that uses fatty acid chlorides
and fatty acid anhydrides, a transesterification method with lower
alcohol esters of fatty acids and an enzyme method using enzymes
such as lipase as the catalyst.

Cellulose nanofiberization technology

This technology is used to create the new material cellulose nanofibers(CNFs) by chemically or physically treating the naturally derived
cellulose fibers to reduce the fiber width to a nano meter size.
Our Company’s CNFs are exceptional for their extremely fine fiber
width on the single nano level. This fineness is achieved via chemical
modification processing. Furthermore, by utilizing its exceptional

characteristics such as viscosity behavior, emulsification and dispersion
stability effect, our CNFs can be used in products such as cosmetics
and general industrial products.

Emulsion polymerization technology

This technology conducts polymerization2 by using surfactants toemulsify in water the monomers that do not dissolve in water. This
enables synthesis of high molecular weight polymers that cannot be
obtained via bulk polymerization or solution polymerization.
Furthermore, because the polymer system is surrounded by water, it iseasy to remove polymerization heat and perform stable temperature
management. A polymerizable surfactant is a type of surfactant thatpossesses a radical polymerizable group3. It is used as an emulsifier foremulsion polymerization. Through copolymerization with monomers
during the process of the emulsion polymerization, it improves themechanical stability, chemical stability, freezing/thawing stability andfoaming property of polymer dispersion, and improves the water
resistance of the polymer film.
2. A reaction in which two or more molecular compounds having a simple structure are
combined to form another compound having a large molecular weight. A molecularcompound before polymerization is called a monomer.
3. The production of vinyl polymer is an important reaction and refers to addition polymerizationin which the growth chain is a radical (free group).

Application Technologies
Nano-dispersion technology

This technology stably mixes immiscible substances to bring out thediverse power inherent in materials. This technology is expected tosupport dispersants that enable dispersion in the nano range, various
dispersion methods, and applicability to a wide range of materials
such as inorganic powder, organic powder and oil. Nano materials canbe broadly divided into carbon materials (e.g., fullerene,4 nano tubes,
nano fibers, graphene5), metals (e.g., gold, silver, copper) and metaloxides (e.g., silica, titania, zirconia), all of which possess diverse
characteristics. This technology disperses these nano materials into
mediums such as water, organic solvents and resins. However, as theparticle size of substances is reduced to nano size, the impact of the
Van der Waals force6 becomes stronger, resulting in problems such as
particles being prone to agglomeration and a decrease intransparency. Interface control is required to prevent agglomeration.
Function/usage Electronic and electric equipment (touch panels for
smartphones and tablet PCs), cosmetics (sunscreen),
eyeglass frames, etc.
4. Carbon atom cluster
5. Hexagonal lattice carbon allotropes
6. Attractive and repulsive forces acting between molecules

Radiation curing technology

This technology instantly dries and cures coatings and paints ofradiation-curable resin compounds by irradiating them with ultraviolet(UV) rays or electron beams (EBs). The technology is also calledradcure (UV/EB curing). Radcure technology is used in a wide range ofdiverse fields due to its ability to conserve resources and energy andreduce environmental load. This technology is utilized in our urethane
oligomer, and its uses include clear coatings for construction materials
and furnishings; anti-rust coatings for metal; resistance materials suchas semiconductors, dry film and LCD displays; coatings for items suchas mobile phones, optical fibers, plastics and paper; printing ink;
plate-making materials; and adhesives. Our Company’s monomers are
made from the raw material alcohol using EO precision-addition
technology. We offer a full lineup of products with added functionality(e.g., high hardness, low viscosity, low curling).
Function/usage Adhesives, paints and coatings, printings and markings

Flame retardation technology

This technology adds/disperses compounds containing flameretardant elements such as bromine, phosphorus, nitrogen, boron,

silicon and/or antimony to/in polymer materials to make them flameretardant by a chemical reaction and bonding resulting from it.
Recently, out of consideration for the environment, attention is being
placed on the use of inorganic compounds such as hydrated metalcompounds (Mg hydroxide, Al hydroxide) and nano-composites7(MMT8, CNT9). Flame retardants are broadly divided into halogenatedand halogen-free products that are based on phosphorus or inorganic
substances. Halogenated flame retardants have superior flameretarding efficiency and therefore are most widely used as flame
retardants for plastics. Our Company’s products are brominated flame
retardants that give sufficient flame retardancy with a small amount ofuse. Moreover, the products interfere little with the superior propertiesof plastic, namely, heat resistance, heat stability, UV stability,
workability, mechanical strength and electrical properties. The
products are capable of satisfying requirements for the flame retardingof plastics, which are increasingly diverse and have increasingly
advanced functions.
Function/usage Electronic and electric equipment, OA equipment,
construction products, automotive products, railway
cars, textile, paper, aircraft, marine vessels, etc.
7. A general term for composite materials in which one material is atomized to a size of 1-100
nm and then kneaded into another material and diffused.
8. Montmorillonite
9. Carbon nanotubes

Ionic liquid

Generally, ionic liquid is an ion pair compound that remains in a liquidstate at/below 100ºC. It has no vapor pressure and is nonflammable.
Because ionic liquid has high safety and ion conductivity, it is used inelectrolyte applications such as lithium-ion batteries and capacitors.10
Ionic liquid also is attracting attention as a next-generation material in
the energy device field and as a green solvent that reduces
environmental impact. Ionic liquid is a salt composed only of ions(anions, cations). It dissolves a variety of organic and inorganic
compounds and can conduct ions.
Function/usage Reactive solvents, extraction solvents; as electrolytes,
dye-sensitized solar cells, lithium-ion batteries, electricbilayer capacitors and actuators; lubricants, dispersantsand antistatic agents, etc.
10. An electronic component that stores and emits electricity (electric charge), also called acondenser. In addition, there are some electric double layer capacitors that have an order ofmagnitude larger capacitance than conventional capacitors.

Special Technology
Glycidylation technology

This technology belongs to Yokkaichi Chemical Co, Ltd. Via synthesis
technology using glycidyl ether, which is a bifunctional aliphatic
epoxy compound possessing a flexible framework in the center ofthe molecule, the technology generates compounds with improved
flexibility, toughness and water resistance of cured materials.
Function/usage Electronic materials

DKS REPORT 2022

67

Data Section

Fundamental Knowledge of Surfactants
Generally, an “interface” refers to the border area between two materials of different states of solid, liquid or gas.
A surface active agent, or surfactant, is a term for a chemical that exhibits functions and improves the performanceof these interfaces.

Basic Structure of Surfactants
the solution through a phenomenon called “adsorption.” If
the surfactant concentration is increased, the surfactants form
molecular aggregates or micelles (spheres) when they reachwhat is called “critical micelle concentration” (see illustrations“c” and “d” below). Once micelles have formed, if you add
non-water-soluble oil to the solution, the oil can be encircled(solubilized) by the micelles so that from the outside, it looks
like the oil has dissolved in the water.

Functions of surfactants by reducing surface tension

Surfactant solutions

Fine powder

Oil / water

Fine powder

Hydrophilic
group

Water

Water
Hydrophobicgroup

Emulsion

Emulsiona Extremely thin solutionb Thin solution
a Extremely thin solutionb Thin solution

Disperses

Hydrophilic
Dispersion
group

Dispersion
Makes foam

Makes foam

Air

Air

Disperses

Emulsiﬁes

Surface (interface) tension reduced

Oil / water

Add surfactants

Water

Water

Emulsiﬁes

Add surfactants

Oil

Oil

Surface (interface) tension reduced

Surfactants have a unique chemical structure that has bothhydrophilic and hydrophobic properties. Using this structure,surfactants can achieve a variety of effects such as
emulsification, dispersion, foaming, and adsorption by
weakening surface tension or forming molecular aggregatesor micelles (spheres). When surfactants are dissolved in waterand the result is a low-concentration solution, their molecules
can easily gather and assemble on the interface (surface) ofHydrophobic
group

Foams

c
micelled Higherc Critical micelle Criticald Higher
Foams
concentration solution
concentration solution
concentration solution
concentration solution

Surfactant Types
Surfactants have four main structural types based on thefunctions they are molecularly designed to achieve. Of thesefour types, three are ionic surfactants that transform into
electrolytic dissociation ions (atoms or groups of atoms
bearing an electrical charge) when dissolved in water, and theremaining type is nonionic surfactants, which do not form
Types of surfactants

68

ions. The three ionic surfactants are further subdivided basedon the type of ion they form when dissolved in water: anionic(or negative ion) surfactants, cationic (or positive ion)surfactants, and amphoteric (containing both positive andnegative ions) surfactants.

Characteristics

Main applications

Anionic surfactants• Superb emulsifying and dispersing properties• Good foaming• Not susceptible to temperature

Laundry detergent / Shampoo / Body wash

Cationic surfactants• Absorbed by textiles, etc.
• Antistatic effect• Sterilizing effectHair conditioner / Fabric softener / Disinfectant

Amphoteric surfactants• Non-irritative to the skin
• Superb solubility in water• High compatibility with other surfactants

Body wash / Dishwashing liquid / Shampoo

Nonionic surfactants• Balance of hydrophilic and hydrophobic properties
easily adjustable• Superb emulsifying and solubilizing properties• Low foaming• Susceptible to temperature

Laundry detergent / Emulsifier and solubilizer /Dispersant / Metal processing oil

DKS REPORT 2022

Main Actions and Applications
Function

Actions and effects

Applications

Emulsifying,dispersing

Mixes
incompatible
substances

Mixes water and oil and makes an emulsion.
Makes a uniform dispersion with fine powders
floating on the water surface.

Ice cream, margarine,
paints, inks

Moistening,permeating

Makes wetting
and permeationeasierSpreads agrochemicals thin and uniform on the leaf
surfaces.
Evenly disperses dyestuff and finishing agents on
textiles and leathers.

Pesticide spraying,permeation ofdyestuff and finishing
agents on textiles

Making,removing foam

Makes and/or
removes foamTakes in air bubbles in water and stabilizes.
Prevents foaming.

Foam concrete, light
gypsum boards

Cleaning

Removes dirt

Moistens the surface between the fabric and the dirt,
then penetrates this interface and strips away thedirt. It also emulsifies and disperses the dirt in orderto remove it.

Householddetergents, bathsoaps, machinery andmetal cleaning agents

Softening,smoothing

Softens andsmooths

Creates soft fabric with gentle feel on the skin.
Improves the smoothness of yarns in the spinning
and/or knitting process.

Textile finishing
agents, metal
processing oils

Antistatic

Prevents static
electricity

Prevents static electricity generation by making thesurfaces smooth. Makes static electricity easier toescape by forming a water-absorptive coating on thesurface.

Antistatic anddustproofing
treatment forsynthetic fibers andplastic products

Rustproofing

Prevents rust

Adheres to the metal surface and forms a coat toprevent oxygen (air) and water from contacting themetal and causing rust.

Metal surface
treatment

Leveling, fixing

Prevents unevendying, enhances
dye fastness

Makes the dyestuff gradually be absorbed by the
textiles and brings about uniform dyeing.

Textile processing

Sterilizing

Removes bacteria

Negatively charged bacteria is absorbed bypositively changed surfactant which destroys thebacteria cell membranes and sterilizes.

Hand sanitizer

Environmental Impact of Surfactants
Most domestic wastewater that contains surfactants iscollected and treated at public sewage treatment plants andreleased to the environment, although some may be released
directly to rivers, oceans, or land.
Because surfactants are biodegradable, even if released
into the environment they eventually degrade to carbon

dioxide and water by bacteria. To preserve the naturalenvironment, products with high biodegradability are being
developed and proactively used in Japan.

DKS REPORT 2022

69

Data Section

Glossary
Terminology

Description

Absenteeism

A situation in which, due to mental or physical distress, an employee is frequently absent from workor misses work without notice.

Antistatic agent

A compound to prevent the electrification of synthetic fibers and plastics caused by static electricity,
for which a surfactant is mainly used. It is applied to the surface of target materials by spraying andlets static electricity escape.

BCP

An abbreviation for Business Continuity Plan through which, in the event of a disaster or other crisis,companies do not allow critical operations to go offline. Even if business activities are unavoidablyinterrupted, important functions can be restarted within the targeted recovery time, and strategic
preparations for continuing business are carried out in advance to minimize the risks involved ininterrupted operations.

Carbon neutrality

Balancing greenhouse gas (GHG) emissions and absorption. The Japanese government has
pledged to aim for carbon neutrality by reducing greenhouse gas emissions to net-zero by 2050.

Cash conversion cycle

A term referring to the number of days, from inventory sourcing to sales, that it takes to recover cash.

Cellulose nanofibers

Very thin nano-sized fibers prepared by detangling cellulose, which makes up the cell walls ofplants. The width of the fibers is about 10 nm (nano = one billionth). They are made from woodderived pulp, and when used in plastics and rubbers, they enhance the strength of these materials
while reducing thermal expansion/contraction.

CNF

70

An abbreviation for cellulose nanofibers.
*See “cellulose nanofibers.”

Cocoon unwinding agent

An agent to spin silk yarn from silkworm cocoons.

COD emissions

COD is an abbreviation for Chemical Oxygen Demand. The value indicates the oxygen volume
needed for oxidizing underwater objects and is one of the major indicators used for water quality.

Conductive paste

Paste that conducts electrical current and is used in solar cell panels.

Digital transformation (DX)A response by companies to drastic changes in the business environment by transforming theirproducts, services, and business models through the use of data and digital technologies, based on
the needs of customers and society. The objective is to rethink work tasks, organizations, processes,
and corporate culture and climate in order to secure a competitive advantage.

DuPont model

Also called the DuPont System; a method to analyze return on equity (ROE) by breaking it down tothree categories using the indices below. The name refers to its use by the chemical company
DuPont for financial analysis.
ROE (current net income / capital stock) = Financial leverage × Asset rotation ratio × Sales profit ratio

Energy consumption per unit

A figure for expressing energy efficiency. It refers to the overall volume of energy consumption, suchas electrical power and fuel, needed to produce a given unit or amount of goods. Generally, it isused as an indicator showing the progress of energy saving measures.

Fair Trade

A trade practice that makes on-going purchases of raw materials and products at fair prices indeveloping countries and aims to improve the lifestyles and independence of producers andlaborers who are in a disadvantaged position in developing countries.

GMP

An abbreviation of Good Manufacturing Practice, which is a set of rules and a system that cover allprocesses from stocking raw materials, to manufacturing and shipping, and ensure consistentquality and safe manufacturing of pharmaceutical products, food products, and the like.

Green transformation (GX)

The concept of transforming the global environment by converting to non-greenhouse gas (GHG)
emitting green energy, such as renewable energy.

HACCP

An abbreviation for Hazard Analysis Critical Control Point, which is a hygiene approach for ensuring
the safety of food products.

Inspiring/Inspired Partners

Specific business partners of DKS who intuit the needs of end users, collaboratively inspire new
approaches, and provide each other with a spark.

Material issues

A term that refers to how essential something is. Originally, it referred to the general rule ofimportance in the accounting field for items that could have major effects on financial affairs. Recently,
important issues in CSR activities are also identified as “material issues,” and many companies areusing this approach when conducting CSR activities and reporting the results in integrated reports.

MI

An abbreviation for Materials Informatics, which is a method for using massive volumes of materials
data and AI (deep learning) for the analysis and design of chemical structures and compositions
expected to perform well.

DKS REPORT 2022

Terminology

Description

MOT

An abbreviation for Management of Technology, which refers to understanding the company’s
technological capabilities, connecting R&D results to each product/business, and finding economic
value in technology itself.

Naturido

A new and useful ingredient discovered by Biococoon Laboratories, Inc. from medical fungus grownon the pupae of domestic silkworms obtained using sericulture technology.

Organizational Resilience

The capacity, and initiatives related thereto, for adapting to changes in the business environment
and for handling natural disasters.

PPM

An abbreviation for Product Portfolio Management, which is a method for determining investment
and allocation of management resources by plotting businesses and products on a graph whoseaxes are market growth rate and market share.

Presenteeism

The act or state of employees coming to the office and continuing work despite dealing with some
type of disease, disease symptoms, or mental/physical distress.

ResistA protective film, or a substance used to create a protective film, against physical or chemical
processing, mainly in industrial applications.

Responsible Care (RC)
activities

Voluntary control activities by the companies in the chemical industry that promote the safe
handling of materials in every step of the process from manufacturing to distribution, consumption
and disposal. First proposed by the Chemistry Industry Association of Canada in 1985. The Japan
Responsible Care Council was founded in 1995.

Rock hardening agents

Agents used to prevent structural collapse during tunnel construction for bullet trains,expressways, and the like.

ROIC

An abbreviation for Return on Invested Capital, which allows for confirming the extent to whichfunds (invested capital) used for business activities efficiently lead to profit for the company.

RPA

An abbreviation for Robotic Process Automation, which is technology for automating routine tasks
people perform on computers.

RSPO

An abbreviation for Roundtable on Sustainable Palm Oil. Founded in 2004, a group of sevenorganizations, including the WWF, responding to the global increase in voices calling for sustainablepalm oil that takes environmental impacts into account.

SDGs

SDGs is an abbreviation for the Sustainable Development Goals, which are international targets
adopted by world leaders at a summit held at the United Nations in September 2015. The 17
SDGs contain 169 targets for achievement by 2030.

SDS

An abbreviation for Safety Data Sheets. The same materials previously were called Material Safety
Data Sheets (MSDS), however, since April 2012, all have been designated as SDS as used in the
United Nations’ Globally Harmonized System of Classification and Labelling of Chemicals (GHS).

Sharing Economy

A new economic trend and form of service referring to consumers providing or sharing vehicles,
residences, furniture, clothes, and other things, as well as spaces and skills, to people who need them.

Sucrose fatty acid ester

A nonionic surfactant produced from natural sucrose and fatty acids. It is also known as sugar ester (SE).

TCFD

Task Force on Climate-related Financial Disclosures. This was established by the Financial Stability
Board (FSB) at the request of the G20 to consider how to handle climate-related information
disclosure and the responses of financial institutions.

Uni-Top

DKS’ business strategy, which is to “provide unique products that do not pursue scale.”VOC

An abbreviation for Volatile Organic Compounds. VOC is a general term for organic compounds
that are volatile and exist in a gaseous form in the air, and the term encompasses a wide variety ofcompounds such as toluene, xylene and ethyl acetate.

WACC

A popular method for calculating cost of capital that weights and averages the cost of borrowing
and the cost of procuring stock.

Waterborne polyurethane

Polyurethane resin is an overall term for polymer compounds possessing urethane bonds.
Industrially, they result from a polyaddition reaction between polyisocyanates and polyols, andwaterborne polyurethane resin results from the emulsification of this polyurethane resin.

Work engagement

A term that refers to a positive and fulfilling mental state that one has toward one’s work.

DKS REPORT 2022

71

Data Section

Domestic/Overseas Network
Domestic Network

Ohgata Branch
Location: 230 Saigata, Ohgata-ku, Joetsu,
Niigata 949-3116, Japan
Area: 87,732 m2
Main products: CMC, waterborne
polyurethane resins, professional detergents,
polyvinylpyrrolidone

Headquarters/Laboratory

Biococoon Laboratories, Inc.

Gembu Co., Ltd.
Kyoto Elex Co., Ltd.
Tokyo Headquarters
Dai-ichi Kenkou Co., Ltd.

Ikeda Yakusou Co., Ltd.
Nagoya Office
KyushuOfficeK&D Fine Chemical Corporation

Osaka BranchDai-ichi CeramoCo., Ltd.

Yokkaichi Chemical Co., Ltd.

Shiga Branch
Location: 427 Gokasho Hiyoshi-cho,Higashi-ohmi, Shiga 529-1403, Japan
Area: 106,813 m2
Main products: Surfactants, sucrose fatty acid
esters, food additive formulations, acrylic
polymers, professional detergents

Yokkaichi Branch Chitose Plant

Yokkaichi Branch Kasumi Plant

Location: 7 Chitose-cho, Yokkaichi, Mie
510-0051, Japan
Area: 17,355 m2
Main products: Functional chemical products

Location: 1-23-5 Kasumi, Yokkaichi, Mie
510-0011, Japan
Area: 101,138 m2
Main products: Functional chemical products,
urethane-related chemicals, plastic additives

Subsidiary and Affiliated Companies (Japan)
Company name72

Location

Business activities

Ownership

2-1 Miyahigashi-cho, Yokkaichi, Mie 510-0843, Japan
Phone +81-59-345-1161 Fax +81-59-345-1159

Production and sales of surfactants

100%

Gembu Co., Ltd.

5 Ogawara-cho, Kisshoin, Minami-ku, Kyoto 601-8391, Japan
Phone: +81-75-323-5740 Fax: +81-50-3153-1621

Sales of detergents, finishing agents and equipment for
professional laundry
Sales of industrial/professional-use deodorants

100%

Kyoto Elex Co., Ltd.

1 Ogawara-cho, Kisshoin, Minami-ku, Kyoto 601-8391, Japan
Phone +81-75-326-2883 Fax +81-75-326-2884

Production and sales of electronic materials

50.0%

Dai-ichi Ceramo Co., Ltd.

432 Gokasho Hiyoshi-cho, Higashiomi, Shiga 529-1403, Japan
Phone +81-748-48-5377 Fax +81-748-48-5322

Production and sales of feedstock for powder injection
molding

100%

Dai-ichi Kenkou Co., Ltd.

8th Floor, Yaesuguchi Daiei Building, 1-3-1 Kyobashi, Chuo-ku,
Tokyo 104-0031, Japan
Phone +81-3-3275-0583 Fax +81-3-3275-0604

Production and sales of agents for civil engineering andconstruction

100%

Biococoon Laboratories, Inc.

4-3-5 Ueda, Morioka, Iwate 020-8551, Japan
Phone +81-19-613-5564 Fax +81-19-613-5570

R&D regarding drugs and health care ingredients
Production of foods and health care products

100%

Ikeda Yakusou Co., Ltd.

1808-1 Nakazu, Shuzu, Ikeda-cho, Miyoshi, Tokushima 778-0020,
Japan
Phone +81-883-72-5320 Fax +81-883-72-5005

Production of drug substances and ingredients for healthfood
Production and sales of life sciences products, such as
drugs and quasi-drugs

100%

K&D Fine Chemical Corporation

1 Niihamacho, Chuo-ku, Chiba, Chiba 260-0826, Japan
Phone +81-43-262-2039 Fax +81-43-262-4396

Production and sales of surfactants

50.0%

Yokkaichi Chemical Co., Ltd.

DKS REPORT 2022

Overseas

Sisterna B.V.
DKS (Shanghai) International
Trading Co., Ltd.

KYOTO ELEX (Suzhou) Co.,Ltd.

DDFR Corporation Ltd.
Chin Yee Chemical
Industries Co., Ltd.

Chin Yee Chemical Technologies(Wuxi) Co., Ltd.

P.T. Dai-ichi Kimia Raya

Operation Bases (World)
Business activities

Ownership

Chin Yee Chemical Industries Co., Ltd.

Company name11F, Lidye Commercial Building, 22 Nanking West Road, Taipei, Taiwan
Phone +886-2-2556-9353 Fax +886-2-2558-6833

Location

Production and sales of surfactants
and plastic/electronic materials

50.0%

Sisterna B.V.

Belder 30A 4704 RK Roosendaal, The Netherlands
Phone:+31-165-524730

Application development and salesof sucrose fatty acid esters

94.9%

P.T. Dai-ichi Kimia Raya

Jl. Maligi II Lot. G-2 Kawasan Industri KIIC, Karawang Barat 41361, Jawa Barat,
Indonesia
Phone:+62-21-8904574 Fax:+62-21-8904576

Production and sales of textile
agents, paper processing agents,
plastic additives and sucrose fatty
acid esters

91.53%

DKS (Shanghai) International Trading
Co., Ltd.

Room #1104, New Town Center Building, 83 Loushanguan Road., Shanghai,
P.R. China
Phone +86-21-6236-8080 Fax +86-21-6236-8700

Trading100.0%

Chin Yee Chemical Technologies(Wuxi) Co., Ltd.

Plot 88-C, Wuxi National High & New Tech Industrial Development Zone,
214028, Wuxi, Jiangsu, P.R. China
Phone +86-510-8520-0156 Fax +86-510-8520-4878

Production and sales of plastic
materials

50.0%

DDFR Corporation Ltd.

25th Floor, One Capital Place, 18 Luard Road, Wanchai, Hong Kong
Phone:+852-2827-7761 Fax:+852-2824-1502

Sales of plastic additives, e.g., flame
retardants

50.0%

KYOTO ELEX (Suzhou) Co., Ltd.

1F, No.6 Building, New-Tech. Industrial Park, No.98 Hengshan Road,
Suzhou New District, Jiangsu, China
Phone:+86-512-6871-2900 Fax 86-512-6871-2901

Production and sales of electronicmaterials

44.75%

DKS REPORT 2022

73

Data Section

Financial and Nonfinancial 11-Year Summary
FY2011FY2012FY2013

FY201456,24918,7797,220
8,634
10,228
11,386

51,843
19,486
6,825
8,466
9,666
7,398

54,614
20,3597,141
9,564
10,6806,868

55,597
21,573
6,856
9,442
11,216
6,508

8,296(14.7)
2,033
1,742
165
2,312
2,252
2,273
2,309
(2,869)298
0
16,94951,357
15,7007,323(14.1)
1,754
1,544
797
3,664
2,003
2,340
2,477
(3,548)298
018,20055,416
18,7128,103(14.8)
2,477
2,374
1,336
1,512
2,104
2,506
3,553
(1,793)298
019,886
57,57020,6808,743(15.7)
2,944
2,717
1,782
3,948
2,153
2,439
2,322
(3,229)474
026,15664,42021,322

Net Assets
Cash Dividend

3.87
377.7735.00

18.68
404.3935.00

31.32
440.0035.00

38.69
472.4045.00

Major Indices
R&D Expenses to Sales Ratio (%)
Operating Margin (%)
Return on Equity (%)
Equity Ratio (%)
Net D/E Ratio (times)
Dividend Payout Ratio (%)
Total Return Ratio (%)
Year-End Stock Price (yen)2
PER (times)
PBR (times)
Dividend Yield (%)

4.0
3.6
1.0
31.4
0.60
180.8
180.9
246
63.6
0.7
2.9

4.5
3.4
4.8
31.1
0.66
37.5
37.5
250
13.4
0.6
2.8

4.6
4.5
7.4
32.6
0.58
22.4
22.4
322
10.3
0.7
2.2

4.4
5.3
8.2
38.7
0.36
23.3
26.7
387
10.0
0.8
2.3

995
533
173
14.8

979
526
172
14.8

969
514
170
16.0

944
508
163
15.9

10

10

8

11

7

11

8

9

66.7

62.7

63.7

61.0

No. of Patents Held (outside Japan) (patents)3−636 (237)

668 (246)735 (297)

Generated Waste Amount (tons)
CO2 Emissions (consolidated) (thousands of tons)4

13,39549.8

14,421
51.9

12,72452.0

13,876
51.3

Financial Data (Millions of yen)
Net Sales
Surfactants
Amenity Materials
Polyurethane Materials
Functional Materials
Electronic Device Materials
Life Sciences

Overseas Sales(relative to net sales ratio %)Operating Income
Ordinary Income
Profit Attributable to Owners of Parent
Capital Expenditures
Depreciation
R&D Expenses
Net Cash Provided by (Used in) Operating Activities
Net Cash Provided by (Used in) Investing Activities
Cash Dividends Paid
Amount of Treasury Shares Acquired
Net Assets
Total Assets
Interest-Bearing Debt1
Per-Share Data (yen)2
Net Profit

Nonfinancial Data
No. of Employees (consolidated) (persons)No. of Employees (non-consolidated) (persons)No. of Employees Outside Japan (persons)Ratio of Female Employees to Total Employees(non-consolidated) (%)
No. of Employees Who Utilized the Child-Care
Leave System (non-consolidated) (persons)No. of Employees Who Utilized the Child-CarePart-Time Work System (non-consolidated) (persons)Annual Paid Leave Rate
(non-consolidated + assigned employees) (%)

1. Lease liabilities not included in interest-bearing debt.
2. Per share information and period-end share price data have been retroactively adjusted to reflect the consolidation of five shares into one share implemented on October 1, 2018.
3. The collation method was amended to a legal effective date basis from FY2016.
4. The carbon dioxide emission calculation method was revised in FY2018 and applied retroactively from FY2016.

74

DKS REPORT 2022

FY2015

FY2016FY2017FY2018FY2019FY2020

FY202152,782
20,7797,208
8,934
11,2594,600

52,254
19,793
6,986
9,093
12,517
3,862

56,955
21,416
7,502
9,115
14,0704,850

9,131(17.3)
3,439
3,200
2,198
8,485
2,087
2,380
4,197
(7,687)528
026,74566,05723,2288,794(16.8)
3,944
3,773
2,489
3,786
2,335
2,393
3,750
(3,336)608
1,000
28,044
69,046
24,594

9,929(17.4)
5,053
4,725
3,351
2,467
2,473
2,307
5,017
(1,130)710
131,96073,97623,86359,574
21,838
8,031
9,026
16,239
4,199
239
10,139(17.0)
4,341
4,175
2,581
5,802
2,555
2,765
3,236
(5,694)711
033,59175,906
23,46661,456
18,9707,994
8,470
20,8484,744
427
10,350(16.8)
4,154
3,524
2,014
6,138
2,724
2,748
3,766
(5,842)711
034,26581,73629,94659,14017,303
7,081
7,484
21,077
5,758
435
10,135(17.1)
4,485
4,314
2,563
4,617
3,263
2,821
4,955
(3,804)712
037,40485,03328,52962,672
18,564
8,092
8,294
19,9287,316
476
14,076(22.5)
4,626
4,192
2,492
1,925
3,430
2,946
5,520
(2,700)814
040,38386,46927,76341.64
485.0550.00

47.40
529.9460.00

66.06
594.1570.00

254.11
3,082.83
70.00

198.17
3,114.97
70.00

251.97
3,405.28
70.00

244.81
3,610.31
80.00

4.5
6.5
8.7
38.8
0.52
24.0
24.1
328
7.9
0.7
3.1

4.6
7.5
9.5
38.9
0.54
25.3
64.6
427
9.0
0.8
2.8

4.1
8.9
11.8
40.8
0.39
21.2
21.2
875
13.2
1.5
1.6

4.6
7.3
8.4
41.3
0.48
27.5
27.6
3,480
13.7
1.1
2.0

4.5
6.8
6.4
38.8
0.57
35.3
35.4
3,750
18.9
1.2
1.9

4.8
7.6
7.7
40.7
0.45
27.8
27.8
3,680
14.6
1.1
1.9

4.7
7.4
7.0
42.5
0.38
32.7
32.7
2,759
11.3
0.8
2.9

982
495
219
17.0

967
486
199
17.5

976
497
213
17.5

985
512
170
17.8

1,032
531
177
18.8

1,061
560
178
18.9

1,096
571
197
20.3

9

6

12

7

3

7

13

10

13

10

10

12

10

8

64.5

62.4

67.4

68.5

73.2

66.1

67.4

763 (316)855 (378)924 (427)

961 (453)

1,012 (479)

1,056 (514)

1,005 (483)

13,191
50.9

17,364
51.7

20,77953.6

21,65852.6

19,60553.8

18,431
48.9

16,66248.5

DKS REPORT 2022

75

Data Section

Consolidated Financial Statements
Consolidated Balance Sheets
Assets(Millions of yen)

FY2020

FY2021

Current assets

FY2020

FY2021

Current liabilities

Cash and deposits

11,595

12,224

Notes and accounts payable—trade

9,404

10,204

Notes and accounts receivable—trade15,413

14,959423

429

Electronically recorded monetaryclaims—operating

1,453

1,532

Electronically recorded
obligations—operating
Short-term borrowings

6,698

6,711

Merchandise and finished goods

8,928

11,582

Lease liabilities

598

558

22

21

Accrued expenses

302

348

4,297

3,905

Income taxes payable

700

576

Work in process
Raw materials and supplies
Prepaid expenses
Other
Allowance for doubtful accounts
Total current assets

278

317

2,022

1,996

(13)

(4)

43,99746,534Non-current assets

Accrued business office taxes

41

41

Provision for bonuses

753

816

Provision for waste disposal costs

375

−

Other
Total current liabilities

2,773

2,040

22,071

21,726

Non-current liabilities

Property, plant and equipment

30,08630,486

Corporate bonds

6,000

6,000

Accumulated depreciation(16,027)(16,944)

Long-term borrowings

15,831

15,051

Buildings and structures, net

14,05913,541

Lease liabilities

2,978

2,551

Buildings and structures

Machinery, equipment and vehicles

36,47037,426

Deferred tax liabilities

305

318

Accumulated depreciation(30,643)(31,870)

Retirement benefit liability

116

107

Machinery, equipment andvehicles, net

5,827

5,555

Asset retirement obligations

73

74

3,990

4,144

(3,354)(3,413)

635

730

Land

9,273

9,638

Leased assets

4,645

4,804

Accumulated depreciation(1,442)(2,004)

Leased assets, net

3,203

2,800

Construction in progress

1,318

Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net

Total property, plant and equipment

34,317251255

25,55624,359Total liabilities

47,62846,086

1,091

Net assets

FY2020

FY202133,358

Shareholders’ equity

8,895

8,895

Goodwill

Other
Total non-current liabilities

Capital stock

Intangible fixed assets

363

213

Capital surplus

7,267

7,278

18,733

20,498Others470

405

Retained earnings

Total intangible fixed assets

833

618

Treasury shares(1,040)(1,021)

Total shareholders’ equity

33,85635,650

Valuation difference on availablefor-sale securities

484

181

Foreign currency translation
adjustment

24

507

Remeasurements of defined benefit
plans

282

427

Investments and other assets

Accumulated other comprehensive
income

4,372

4,004

Long-term loans receivable18

16

Long-term prepaid expenses

140

231

Deferred tax assets

195

172

Net defined benefit assets

841

1,228

Other

323

310

Allowance for doubtful accounts

(6)

(6)

Total accumulated othercomprehensive income

791

1,116

Total investments and other assets

5,884

5,958

Non-controlling interests

2,756

3,616

41,03539,935

Total net assets

37,40440,38385,03386,469Total liabilities and net assets

85,03386,469Investment securities

Total non-current assets
Total assets

76

Liabilities

DKS REPORT 2022

Consolidated Statements of Income
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Selling expenses
General and administrative expenses
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity method
Foreign exchange gains
Rent income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Corporate bond interest
Inactive facility expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Profit on the reversal of the allowance for expenses for waste disposal costs
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Loss on disposal of non-current assets
Loss on valuation of investment securities
Impairment losses
Provision for waste disposal costs
Total extraordinary losses
Profit before income taxes
Income taxes—current
Income taxes—deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent(Millions of yen)

FY2020

FY202159,14043,961
15,17962,672
46,954
15,7184,130
6,563
10,693
4,485

4,173
6,918
11,092
4,626

3
77
57
7
36
64
246

7
85
55
55
35
79
319

202
37
−
177
418
4,314

188
37
365
162
753
4,192

−
408
408

194
−
194

146
−
431
385
963
3,759
1,090
(79)
1,010
2,749
185
2,563

173
34
−
−
207
4,179
1,087
52
1,139
3,039
546
2,492

FY2020

FY2021

2,749

3,039

1,021
34
56

(303)
768
142

2

50

1,115
3,864
3,655
209

658
3,697
2,824
872

Consolidated Statements of Comprehensive Income
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted for using equity
methodTotal other comprehensive income
Comprehensive income
Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests(Millions of yen)

DKS REPORT 2022

77

Data Section

Consolidated Financial Statements

Consolidated Statements of Cash Flows(Millions of yen)

FY2020

FY2021

3,759
3,263
196
1
(81)
202
37
(57)
146
−
431
(408)
560
(770)
(1,557)
(247)
385
168
6,030
137
(240)
(972)
4,955

4,179
3,430
150
(9)
(93)
188
37
(55)
173
34
−
−
519
(2,016)
744
(417)
(385)
213
6,693
181
(227)
(1,127)
5,520

(117)
263
(4,398)
(502)
1
1,027
19
(98)
(3,804)(69)
68(2,661)
(2)
1
−
−
(36)
(2,700)(75)
5,908(7,266)
2,918
(477)
−
(712)
(40)
−
255
(0)
1,405
10,126
11,531673
4,890(6,595)
−
(571)
(0)
(712)
(40)
20
(2,336)135
619
11,531
12,151

Cash flows from operating activities
Profit before income taxes
Depreciation
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Interest expenses
Corporate bond interest
Share of loss (profit) of entities accounted for using equity method
Loss (gain) on disposal of property, plant and equipment
Loss (gain) on valuation of investment securities
Impairment losses
Loss (gain) on sale of investment securities
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in retirement benefit liability
Increase (decrease) in provision for waste disposal costs
Other
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Purchase of investment securities
Collection of loans receivable
Proceeds from sales of investment securities
Proceeds from subsidy income
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Revenue from sale and leaseback
Repayments of lease liabilities
Purchase of treasury shares
Cash dividends paid
Dividends paid to non-controlling interests
Proceeds from share issuance to non-controlling shareholders
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

78

DKS REPORT 2022

Data Section

Environmental Data
Evolution of Environmental Impact
Changes in Energy Consumption

Changes in Greenhouse Gas Emissions(Yokkaichi, Ohgata, Shiga, administrative departments, domestic subsidiaries)(Yokkaichi, Ohgata, Shiga, administrative departments, domestic subsidiaries, derived from non-energy)
温室効果ガス排出量

エネルギー使用量(1,000 t)(1,000 KL)
40

120
94.1

92.7

30

100.5

26.2

100.0

26.6

25.9

53.6

91.6

52.6

53.8

2018

2019

90

48.9

48.5

2020

2021

40

24.6

24.6

60

20

60

10

30

20

0

0

2017

2018

2019

2020

2021

0

2017

(FY)

(FY)

 Energy consumption (left axis)
Index of energy consumption per unit (right axis)
Notes: 1. The index of energy consumption per unit is calculated for DKS non-consolidated,based on the periodical report stipulated by the Act on the Rational Use of Energy.
FY2020 performance, which is the benchmark in the GX Strategy Targets (FY2030) andMedium-Term Environmental Targets (FY2024) is set at 100.
2. Subsidiary companies include Yokkaichi Chemical Co., Ltd., Kyoto Elex Co., Ltd., Daiichi Ceramo Co., Ltd., and as of FY2019, Ikeda Yakusou Co., Ltd.

Notes: 1. The administrative departments includes fuel for Company-owned vehicles.
2. Subsidiary companies include Yokkaichi Chemical Co., Ltd., Kyoto Elex Co., Ltd., Daiichi Ceramo Co., Ltd., and as of FY2019, Ikeda Yakusou Co., Ltd.

Changes in Generated Waste Amount, External Recycling
Amount and External Recycling Rate

Changes in Final Disposal Amount and Final Disposal Rate
(Yokkaichi, Ohgata, Shiga, Kyoto, domestic subsidiaries)(Yokkaichi,
Ohgata, Shiga, Kyoto, domestic subsidiaries)
廃棄物発生量、外部リサイクル量、外部リサイクル化率の推移

最終処分量・最終処分率の推移

(%)

(t)

99.0

100

1,600

91.1
90.5
90.0
88.9
21,658
20,77919,591 19,605
19,063
18,431
17,423
16,788 16,662

80(t)
30,00096.9

24,00091.8

18,000

96.7

97.8

94.9

40

6,000

20
0

2018

2019

2020

2021

4.8
1,200

1,145

5.0
4.2

1,044

4.5

767

741

3.0

400

1.5

0

0

2017

(FY)

 Generated waste amount (left axis)
 External recycling amount (left axis)
External recycling rate (DKS
DKS Group) (right axis)

4.4

972

800

12,000

0

6.0

5.5

60

14,986

2017

(%)

2018

2019

2020

2021

(FY)

 Final disposal amount (left axis)
Final disposal rate (right axis)

Note: Subsidiary companies include Yokkaichi Chemical Co., Ltd., Kyoto Elex Co., Ltd., Dai-ichi
Ceramo Co., Ltd., and as of FY2019, Ikeda Yakusou Co., Ltd.

Notes: 1. The final disposal rate is the ratio of the final disposal amount to the generated waste
amount.
2. Subsidiary companies include Yokkaichi Chemical Co., Ltd., Kyoto Elex Co., Ltd., Daiichi Ceramo Co., Ltd., and as of FY2019, Ikeda Yakusou Co., Ltd.

Changes in SOx, NOx and Dust Emissions

Changes in Water Discharge and COD Emission Amounts(Yokkaichi, Ohgata, Shiga)(Yokkaichi, Ohgata, Shiga, Yokkaichi Chemical Co. Ltd.)

SOｘ排出量、NOx排出量、ばいじん排出量の推移

排水量、COD排出量の推移

(t)

(t)

(1,000 m3 )

(t)

30

3.0

5,000

50
4,424

4,000
20.7

20

2.0
1.4

0.8

0.7

0.6

0.8

0.8

0.5

2018

2019

1.0

0.6

2020

3,469
34.0

2,000

2021

0
(FY)

 NOx emissions (left axis)
 SOx emissions (right axis)    Dust emissions (right axis)

40
30

27.3
19.1

20.7

20
10

1,000

0.2

0

2017

3,000
26.3

11.7

0.8

3,952
3,496

15.4

13.9
10.3

10

4,177

0

0

2017

2018

2019

2020

2021

(FY)

 Water discharge (left axis)    COD emissions (right axis)

Note: Yokkaichi Chemical Co. Ltd. possesses no facilities that generate SOx, NOx or dust.

DKS REPORT 2022

79

Data Section

Environmental Data / Compliance Awareness Survey Results

Evolution of Environmental Impact
Changes in Emissions of PRTR Regulation-DesignatedSubstances (atmospheric emissions)

Changes in Emissions of PRTR Regulation-DesignatedSubstances (aquatic emissions)(DKS, Yokkaichi Chemical Co. Ltd.)(DKS, Yokkaichi Chemical Co. Ltd.)PRTR制度対象化学物質排出量の推移

（t）

(t)
80

0.8

74.5
60.4

60

60.6

0.6

0.55

0.59

0.57

47.8
40

0.4

34.0

20

0.45

0.44

2020

2021

0.2

0

0

2017

2018

2019

2020

2021

2017

(FY)

Note: The numerical values show the total amount for DKS and Yokkaichi Chemical Co. Ltd.
For the emission and transfer amount of notification substances under the PRTR Regulation
in FY2021 (among all notification coverage substances, those of which the emission ortransfer amount was 0.01 tons or more), please visit our website.
https://www.dks-web.co.jp/english/ir/report/index.html

2018

2019

(FY)

Note: The numerical values show the total amount for DKS and Yokkaichi Chemical Co. Ltd.
For the emission and transfer amount of notification substances under the PRTR Regulation
in FY2021 (among all notification coverage substances, those of which the emission ortransfer amount was 0.01 tons or more), please visit our website.
https://www.dks-web.co.jp/english/ir/report/index.html

Environment Accounting
Investments and Costs of Environmental Protection
Activities

Economic Effects Generated by Environmental Protection
MeasuresMain activities

Investment(Millions of yen)

Costs
(Millions of yen)

Pollution prevention, air pollution control,
water pollution prevention

34.8

265.0

Global environment preservation, energy
saving

4.4

77.1

Resource recycling, resource saving,waste treatment/disposal

0.4

480.0

Lowering the environmental impact inUpstream/
downstream cost containers/packaging

0.0

3.4

Category

Costs within theplant premises

Administrativecost

ISO acquisition/maintenance, greening of
branch premises

1.1

36.6

R&D cost

Environmentally responsive R&D

0.0

601.1

Social activity
cost

Providing support grants for environmental protection to environmental
preservation groups or local communities

0.2

1.2

Environmental
damage cost

0.0

0.0

Total

41.0

1,464.4

Category

Main activities

Gain on sale of valuables

Gain on sale of metal scrap, waste oil andwaste alkali, etc.

3.3

Cost savings through energy
conservation

Electricity and fuel savings

9.2

Cost savings through resource
conservation

Savings from the reduction of water and waste

11.4
23.9

Total

Compliance Awareness Survey Results
These results indicate responses regarding areas in which further compliance awareness activities are desired.
Target audience: DKS Group employees
2020

FY2020
14%

4%

14%

25%

42%

2021

1%

FY2021
15.5%

3.4% 10.4%

27.8%

41.6%

1.2%

0.1%

 Information management/intellectual property rights    Anti-monopoly act/Subcontract act
 Environmental protection    Harassment    Workplace environment/working from home    Other    Unanswered80

DKS REPORT 2022

Economic
effects (Millionsof yen)Data Section

Corporate Data

(As of March 31, 2022)

Corporate NameDKS Co. Ltd.

Foundation

April 1909

Incorporation

August 1918

Paid-in Capital

8,895 million yen

Number of
Employees

571 (consolidated: 1,096)

Total Number of
Shares Outstanding

10,684,321 shares

Share Unit Number

100 shares

Number of
Shareholders

4,515

Stock Listing

Tokyo Stock Exchange

Securities Code

4461

General Meeting of
Shareholders

Every year in late June

Shareholder Registry
Mizuho Trust & Banking Co., Ltd.
Administrator

Headquarters /Laboratory

5 Ogawara-cho, Kisshoin, Minami-ku, Kyoto 601-8391, Japan
Phone: +81-75-323-5911 Fax: +81-75-326-7356

Main Branch

55 Nishishichijo Higashikubo-cho, Shimogyo-ku,
Kyoto 600-8873, JapanTokyo
Headquarters

8th Floor, Yaesuguchi Daiei Building, 1-3-1 Kyobashi,
Chuo-ku, Tokyo 104-0031, Japan
Phone: +81-3-3275-0561 Fax: +81-3-3275-0599

Osaka Branch

2nd Floor, Osaka Asahi Seimei Building, 4-2-16 Koraibashi, Chuoku, Osaka 541-0043, Japan
Phone: +81-6-6229-1717 Fax: +81-6-6229-1793

Nagoya Office

11th Floor Dai Nagoya Building, 3-28-12 Meieki, Nakamura-ku,
Nagoya 450-6411, Japan
Phone: +81-52-856-5561 Fax: +81-50-3156-3585

Kyushu Office

4th Floor, Hakata Ekimae Daiichi Building, 1-2-3 Hakata-eki Minami,
Hakata-ku, Fukuoka 812-0016, Japan
Phone: +81-92-472-6353 Fax: +81-92-472-4989

Please refer to our website for the list of major shareholders and the distribution of shareholders (in Japanese only).

https://www.dks-web.co.jp/ir/library/library04.html

On Publishing the DKS Report 2022
This issue marks the seventh time that the DKS Group has
published its integrated annual report since the initial report in
fiscal 2016. We regard this as an important means ofcommunication of the value creation of DKS to our stakeholders.
Its purpose is to present growth strategies from the present to
the future in an easy-to-understand manner from a medium- tolong-term perspective.
I took over the baton from Chairman CEO Sakamoto, and was
appointed President COO in April. While cherishing theachievements and thoughts of the former president, I intend topush forward the development of the Company’s business.
Looking back on the second year of the medium-term
management plan “FELIZ 115,” we were able to achieve ourqualitative goals of reviewing our business portfolio andchanging our profit structure. On the other hand, earnings are
currently deteriorating due to soaring raw material,
transportation, and energy costs against the backdrop of
geopolitical risks. There is an urgent need to pass on the price toproducts. We will strive to correct profitability, improve plant
operating rates, reduce expenses, and aim for this term’s targets.
In terms of ESG management goals, we are conscious of nonfinancial value creation such as responding to climate change anddecarbonization, Health and Productivity Management, andstrengthening governance. We will diversify our executives andexplore new ways of being a business that is not bound by
existing frameworks.
In the fiscal 2022 edition, we focused on giving consistency tosubsequent content based on the management policy andbusiness strategy sent via the President’s message, andspecifically expressing material issues unique to DKS. As the
person responsible for issuing this report, I certify that thecontents of this report are true and appropriate. Going forward,
we will strive to further improve
our Company’s disclosure andtransparency. I would be gratefulto hear your frank andconstructive feedback.

October 2022
President COO

YAMAJI Naoki

Editor’s Note
The Company’s integrated annual report is now in its seventh issue and this year marks the third year of our medium-term management plan FELIZ 115.
With the spread of the COVID-19 and the prolonging of the problem in Ukraine, we went through a lot of trial and error to figure out how
to explain the story of the value creation of DKS to stakeholders under the Uni-Top strategy, which is regarded for its uniqueness without
pursuing scale. In order to tackle social issues related to the environment, such as rising raw material prices worldwide and global warming,
we also rethought the identification of important risks, opportunities, and material issues in order toensure value creation. We announced our support for the TCFD recommendations for the first time thisyear, and we clarified our strategies and goals related to climate change.
We also sought to cooperate with the production company to improve the report’s appearance andstructure, showcasing the content in a more enhanced way. It is our hope that this integrated report willserve to deepen dialogue with our stakeholders.
We would like to take this opportunity to express our gratitude to all parties concerned for theircooperation in the editing of this report. We also welcome frank opinions from readers as we prepare
for the next fiscal year’s publication.
Public & Investor Relations Department

DKS REPORT 2022

81

DKS Co. Ltd.
5 Ogawara-cho, Kisshoin, Minami-ku, Kyoto 601-8391, Japan
TEL: +81-75-323-5911 FAX: +81-75-326-7356
https://www.dks-web.co.jp/english
Published: December 2022
Printed in Japan