The Story of Value Creation at Daiseki Message from the Vice President

Unifying the Daiseki Group to expand
existing businesses and take on new businessdevelopment challenges to achieve the longterm management plan,“Vision 2030”
Representative Director

Vice President and Executive Officer

Expanding Daiseki’s fields on thetailwind of environmental needs
I nJ u n e2 0 1 8 ,w ee s t a b l i s h e do u rl o n g - t e r mbusinessplanatDaiseki,“Vision2030.”
Byworkingtoexpandourexistingrecyclingbusinessandd e v e l o pn e wb u s i n e s s e s ,w ea i mt ot r i p l eo u rconsolidatednetsalesandconsolidatedoperatingprofitandcapturea30%shareoftheindustry.AtDaisekiweareproudtobeapioneeringrecycling
companyinJapan,andourgoalistofurtherexpandandbecometheNo.1recyclingcompanyinAsiaby
FY2031.
Forourexistingbusinesses,weareadvancingour
p l a n s t o o p e n a H i r o s h i m a W o r k s , a s w e l l a s
locationsinthesouthernKantoandTohokuregions.
Theplanaimstoreducetheenvironmentalburdenandcostoflong-distancetransportationwhile
simultaneouslyexpandingmarketshare.Inthe
Chugokuregion,constructionisunderwaytobringYasuo ItotheHiroshimaWorksintooperationinMarch2024,
a n d w e a r e i n t h e p r o c e s s o f f i n d i n g s u i t a b l elocationsfortheothertwobases.
Regardingtechnologydevelopment,wewillfocus
onexpandingthenumberofrecyclableitemsin
additiontoliquids,soil,andmetalswhichwealready
handle,aswellasimprovingtherecyclingrate,and
developingnewtechnologiesthatcancontributeto
therealizationofacirculareconomysociety.Daiseki
h a s a n n o u n c e d i t s p u r p o s e o f b e i n g“ a nenvironment-creatingcompanycontributingto
societythroughtheenvironment”
by“makingthebestuseoflimitedresources.”Ourmissionisto
contributetomanufacturinginJapan,acountrywithfewresources,throughourrecyclingtechnologythatconvertswasteintoresources.Inordertodoso,itis
essentialtohavecoordinationthroughouttheGroup.
Wehavealreadyinitiatedcollaborationonsales
betweenDaisekiandDaisekiEco.Solution,andwewouldliketopromotepersonnelexchangeand
informationsharingtoprovideone-stopsolutions.
RegardingdevelopmentoutsideJapan,weare
conductingresearchonthelegalsystemsand
businessinfrastructurewithafocusonSoutheast
Asia.Thewasteissuesfacedbyemergingcountriesduetotheirrapidindustrializationarebecoming
moreserious.Theenvironmentalregulationsinsuch
emergingnationsarenotasstrictasinJapan,sotheservicestheyrequirearequitedifferent.Therefore,
wearegatheringandexaminingawiderangeof
informationtobuildabusinessmodelthattargets
emergingcountries.Inthefuturewehopetoutilize
Daiseki’senvironmentaltechnologyonaglobalscale.

Strengthening M&A and alliances to tackle new
business areas that may become core businesses
Regardingnewbusinesses,wehavesetagoalof
launchingthreebusinesseswithsalesofaround15
billionyenthatcouldbecomecoreDaisekibusinesses

15in t he f u t ur e . W e ha v e r e c ei v e d pr op o s al s f or
innovative ideas through our new business idea
competitions which were held three times for allemployees. We are considering these ideas as wemove forward with commercialization.
We are also promoting M&A, which will contributeto expanded market share and strengthened
technological capabilities. Our basic policy is to join
forces with companies who have a high degree ofcompatibility with our recycling business and whowill generate synergistic effects. In March 2023,Daiseki Eco. Solution announced an M&A with
Sugimoto Trading Company Co., Ltd. By incorporating
their technical services for the transportation andprocessing of general and industrial waste and thecollection and recycling of used paper, we will
expand the solutions we can provide to ourcustomers.
For alliances, we signed an agreement with
Gamagori City to promote the circular economy. For
example, we are considering initiatives such as
recycling waste oil generated in Gamagori City into
recycled heavy oil for use in the city. Waste
treatment and effective utilization is a common issue
faced by local governments, and we at Daiseki hopeto establish a framework for business to be usedthroughout the rest of Japan. Additionally, we would
like to propose a system for recycling resources byforming alliances with manufacturing industry
companies, which are our customers.

Working to achieve Vision 2030, ourfoundation for ESG management
Five years have passed since we announced
Vision 2030, and I believe we are making steadyprogress in building up the required numbers andlaying the groundwork for growth.
Compared to our goals of achieving 150 billion yen
in net sales, 25 billion yen in operating profit, and15.0% ROE on a consolidated basis by FY2031, in thefiscal year ended February 28, 2023, we achieved
58.5 billion yen in net sales, 12.7 billion yen in
operating profit, and an 11.3% ROE. This marks a19% increase in net sales, a 45% increase inoperating profit, and an increase in ROE from 9.9% to11.3% in the five years from the fiscal year ended
February 28, 2018 to the fiscal year ended February
28, 2023. We came close to achieving our target ofincreasing our Japan market share to 30% by
FY2031, reaching a share of 25.2% in the fiscal year
ended February 28, 2023.
We hold human resources and group governanceas key for creating the groundwork for generating
growth. Regarding human resources, we conduct
training including compliance study sessions which
are attended monthly by all employees, training per
job level when employees are promote d, a nd
management training for executive candidates. In
addition, to improve employee engagement, we
conduct evaluator training to ensure that managers
evaluate their subordinates correctly and fairly,
engagement surveys to ascertain company issues
and employee dissatisfaction and concerns, as wellas the Workplace Environment Improvement Project
which collects opinions from all employees on how
to create a comfortable workplace and responds tothis feedback in an organized manner. Regarding
Group governance, Daiseki dispatches one director
each to Daiseki MCR and System Kikou tostrengthen the management of Group companies
and cooperation within the Group.
Over the past five years, one of the social changes
we have seen is the rise of ESG management,
caused by the Japanese government’s declarationof achieving carbon neutrality by 2050. Our
company has been an early advocate ofenvironmental business, and ESG management isessential for us to achieve sustainable growth andenhance our corporate value.
In terms of environment, we are working to build
business models that contribute to the circulareconomy. Thus far, our business has primarily beenthat of cascade recycling, in which the quality of theproduct is lower than that of the raw material. Goingforward, by collaborating with other companies, we
aim to transition to material recycling which
provides higher quality recycled products. Looking
ahead to the future, we hope to have a corebusiness that can contribute both to the circular
economy and carbon neutrality.
From a societal aspect, strengthening humanresources is an issue, as previously mentioned.
Achieving Vision 2030 will require the imaginationand drive of each and every employee as we takeon challenges in uncharted waters. To this end, weare developing systems that can maximize theperformance of employees.
In terms of corporate governance, we haveappointed an external director with corporate
management experience in order to realize highlevel ESG management. The future of Daiseki will beforged by our directors’assertive management andaccountability. I look forward to working withemployees as a unified Group as we strive toward
the achievement of Vision 2030.

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