Cover photo: View of Osaka Castle and surrounding area (City of Osaka)

INTEGRATEDREPORT
2023

Yotai Refractories Co., Ltd.
8-1 Nishikinaka-machi, Kaizuka-shi, Osaka Prefecture 597-0093
TEL : +81-72-430-2100

URL : https://www.yotai.co.jp/en/

CONTENTS
01 Corporate Philosophy
02 How Yotai Creates Value
02
04
06
08
10

History
Yotai Today
The Value Creation Process
Strengths and Competitiveness
Financial and Non-financial Highlights

12 Initiatives to Enhance Corporate Value
12 Message from the President
16 First Medium-term Management Plan Progress
20 Business Strategy
		Sales Department
		Plant Department
		
R&D Department
		Engineering Division		Administrative Department
		
Information System Department

31 Yotai’s DX Strategy

32 Initiatives Supporting Improved Corporate Value

Create the Future with
Our Refractories
As a top manufacturer of refractory bricks, YOTAI REFRACTORIES CO., LTD.,
contributes to backbone industries in Japan and worldwide through business centeredon “heat and the environment.”

Corporate
Philosophy

Aiming to be a faithful company that contributes to society
by creating new technologies and products

32 ESG Management at Yotai		
Environment		Social		
Governance

44 Compliance		 Risk Management
45 Directors and Officers
46 External Director’s Message

Vision

A company that continues to improve its corporate
value in a sustainable manner in harmony with society
Maintain profitability and promote ESG management

48 Data and Corporate Information
48 Financial Review (Consolidated)
50 Key Financial and Non-financial Data
52 Company Profile

Code of
Conduct

1. Compliance with laws and regulations
2. Ensuring environmental conservation
3. Establishment of safety and health4. Best quality
5. Lowest cost
6. Appropriate delivery time

Solar power generation system at the Kaizuka Plant(Operational Feb. 2022)

Editing Policy
YOTAI REFRACTORIES CO. LTD. has published this Integrated Report to serve as a starting
point for constructive dialogue by conveying information regarding the Company’s businesslines and initiatives to enhance corporate value in an accessible manner to investors,
shareholders and all other stakeholders. This report was edited with reference to several
guidelines, including the “Integrated Reporting Framework” from IFRS Foundation, andthe Japan Ministry of Economy, Trade and Industry’s “Guidance for Integrated Corporate
Disclosure and Company-Investor Dialogue for Collaborative Value Creation.” Ultimately, thehope is that this report will provide readers with a deeper understanding of Yotai.

Solar power generation system at the Mizunami Plant(Operational Nov. 2022)

Reporting Period and Companies
Reporting Period: April 1, 2022 to March 31, 2023
Reporting Companies: YOTAI REFRACTORIES CO., LTD. and Group companies

Solar power generation system at the Yoshinaga Plant(No. 1 Branch: Operational Aug. 2023; No. 2 Branch: Operational Jun. 2021)

Wing of Kaizuka Plant where Kaizuka City mascot“Tsugesan” was designed

Integrated report 2023

01

How Yotai Creates ValueHow Yotai Creates Value

History

Initiatives to Enhance Corporate Value

Initiatives Supporting Improved
Corporate Value

2022

Continuous support of the advancement of heavy industries asJapan’s overall top manufacturer of refractories

Moved to Prime Market of Tokyo Stock Exchange (Apr.)
Acquired business of Shibata Ceramic Raw Materials Co., Ltd.,
began operations as the Toki Factory of the Mizunami Plant (Oct.)

From its origins as Acid Phial Manufacturing Company in 1882, Yotai has engaged in the manufacture of highquality refractories, growing in tandem with backbone industries in Japan and worldwide. More recently,
Yotai has strived to enhance its own competitiveness further, including through acquisition of raw material
manufacturing businesses from other companies and strengthening its own engineering business. Yotai is also
actively committed to the research and development of next-generation refractories with low environmental
impact, as it continues to grow flexibly and sustainably in step with changing times and requirements.

2013

1936

1937

(currently, third branchof the Yoshinaga Plant)

1987

Yoshinaga Plant Business Office

1993

Technical Research Laboratory
established

1938

Joint venture company “YINGKOU NEWYOTAI REFRACTORY CO., LTD.”established in China (made a wholly
owned subsidiary in 2005)

Advanced Materials
Laboratory and
Kaizuka Plant relocatedCompany name changed
to “Yotai”

1985

Hinase Plant Business Office

1992

1962

Established Okayama Clay Plant built Mitsuishi Plant buit Yoshinaga Plant built(currently, second branchof the Yoshinaga Plant)

Shares designated forlisting on 1st Section of
Osaka Stock Exchange

Yotai
Refractories
Co., Ltd.
1951

Shares listed on 1st Sectionof Tokyo Stock Exchange

2004
1997

Osaka Yogyo
Fire Brick Co., Ltd.

Data and Corporate Information

Merger with
Osaka Yogyo Co., Ltd.

Sales

Hinase Plant built

1961

Partial contribution

EstablishedMizunami Plant built

1980
MergerRefractories businessEngineering business

Tokai Refractory
Engineering Co., Ltd.
Acid Phial
Manufacturing
Company

Osaka Yogyo
Co., Ltd.

1882

1894

1907

EstablishedCompany
namechangeKaizuka Plant
built

1995

Osaka Yogyo
Cement Co., Ltd.

02

Integrated report 2023

Lehmann Shock2011

Great East Japan Earthquake

2020

Novel coronavirus pandemic

Sumitomo Osaka
Cement Co., Ltd.

Osaka Cement
Co., Ltd.

1926

1963

1994

EstablishedCompany name change

Established from merger with Sumitomo Cement Co., Ltd.

1955-

1987-

2010-

Establishment of Osaka Yogyo Fire Brick Co., Ltd.

Start of mass production of high-quality refractories

Yotai Reborn

Aiming for sustainable growth

Yotai’s predecessor, Osaka Yogyo Fire Brick Co., Ltd., wasestablished to meet growing demand for fireproof bricks
accompanying the rise of Japan’s steel industry. Throughestablishment of new plants, steps were taken to expand production
capacity and develop a structure for the stable supply of products.

During Japan’s period of advanced economic growth, growth among
steel producers fueled demand for the mass production of high-quality,
low-priced refractories. Thanks to technology development and patents
it obtained, our Company contributed to Japan’s economic growth withthe production of refractories across a host of application areas.

In 1987, under the corporate name YOTAI REFRACTORIES CO., LTD., we moved
to restructure our rock-solid business foundation. Pushed by a changing social
milieu, we expanded the production of refractories for electronic parts in answer toa rapid increase in semiconductor demand. Yotai has also made active strides inintroducing energy-saving and alternative energy technologies since 2000.

A raft of industries, the steelmaking and cement industries chiefly
among them, are facing mounting pressure to achieve carbon
neutrality. By providing products with low environmental impact andengineering technologies, Yotai is supporting its customers’
businesses while aiming for sustainable growth for itself and society.

1980

2010

1940
Social changes
and issues

2008Great Hanshin-Awaji Earthquake

1936History of Yotai* No separate category for Engineering
Division sales prior to 1996.

Pre-World War II, wartime, postwar

1950

1960
Period of advanced economic growth

1970

1990

2000

Arrival of computerization and information society

2020

2030

Sustainability, ESG era

Integrated report 2023

03How Yotai Creates Value

Yotai Today

How Yotai Creates Value

Initiatives to Enhance Corporate Value

Realizing sound growth through manufacture of high-quality
refractories and related construction

Net sales
Fiscal 2023 Performance

Through the manufacture of high-quality refractories and related construction, Yotai is continuing to evolvein step with the times under a sustainable low-cost structure. In fiscal 2023, ended March 31, 2023, Yotai
achieved record-setting sales and profits, particularly in its engineering business. This outcome reflected
progress in strengthening the development and stable supply of new products offering low environmental
impact, aggressive sales activities, and human resource recruitment and training.

Refractories

Initiatives Supporting Improved
Corporate Value¥28,250

Data and Corporate Information

ROE

Operatingprofit9.7%¥4,012
millionmillionEngineering

Manufacturing a diverse array of refractories answering needs across a range of industries

Addressing all refractory construction with sincerity and extensive track record for over half a century

Refractories are critical to high-temperature treatments such as melting and baking, two steps in the manufacturing processes forsteel, cement and copper. At Yotai, we manufacture a diverse array of high-quality refractories able to meet the varying specifications
and quality standards of each industry. We also produce refractories for the growth fields of environmental systems and electronicparts. With a multi-product, small-lot production system, Yotai carefully addresses the needs of a range of industries.

Because refractories are constantly subjected to high temperatures, they experience damage over time. Product life can vary
widely, from a few weeks to about one year in the steel industry, for example, to roughly two to ten years in the nonferrous industry.
Expertise concerning maintenance is thus similarly varied. Yotai’s Engineering Division has an extensive track record in design
spanning more than half a century, earning customers’ definitive trust with sophisticated design and construction work that foresees
needs based on industrial furnace operating conditions through to post-construction maintenance service.

Types of Refractories

Segment performance

What is engineering?

Segment performance

Refractory bricks

In fiscal 2023, ended March 31, 2023,
performance in the refractories business waslifted by the continuation of increased demand
from steel makers, along with increased orders
from cement, environmental systems and othersectors, resulting in sales and earnings growth.

Steel factory/ladle construction

In fiscal 2023, ended March 31, 2023, performancein the engineering business saw record sales andprofit posted for the segment. Performance was lifted
mainly by aggressive sales activities that leveraged
Yotai strengths in material and construction
integration, coupled with progress in recruitment andtraining of human resources in technology services,which led to orders for large-scale and new projects.

The term “Refractory bricks” refers to refractories thatcome in a variety of shapes, most notably blocks orplates. Refractory bricks are most commonly used in
the field of electronic parts, a growth industry.
Yotai is top class in terms of production volume forrefractory bricks in Japan.

The repair and upkeep of refractories for ladles (vessels
used to transport and pour molten metal when casting)must occur on a schedule of just several days. Since
this typically involves multiple facilities and equipment,
construction operations happen almost daily.

Segment net sales(Millions of yen)

23,972Monolithic refractories

23,10722,260“Monolithic refractories” refers to powder- and clay-typerefractories. Powder-type products are mixed withwater and poured or sprayed in place onsite. Clay-type
products are pressed or patted in place for use.

Monolithic refractories are constructed using devices
appropriate for various types of industrial furnaces
and materials. With recent adoption of the dry-spraymethod, offering much easier construction, we arepushing for even greater work efficiency.

19,089Image:	“H2 Monolithic Plant” production facility for monolithic
refractories at the Hinase Plant (Operational Aug. 2023)’19.3

As calls to achieve carbon neutrality mount,
Yotai is moving aggressively to manufactureand expand sales of low carbon-emitting
monolithic refractories, non-sinteredrefractories and energy-saving refractories.

’20.3

’21.3

’22.3

Yotai employs the line chase construction method forrotary kilns used in the manufacture of cement in aneffort to improve both work efficiency and construction
precision.

’23.3

Segment profit(Millions of yen)

5,142
4,394

4,465

’20.3

’21.3

4,735

3,902

’19.3

’22.3

’23.3

Segment profit(Millions of yen)

5,857

Refractory products sintered at 1700˚Cwith 100% hydrogen fuel

4,910

4,787

4,932

Principal industries for sales

DesignSteel

Nonferrous

CementGlass

Environmental systems

Electronic parts

’19.3

’20.3

’21.3

634

Principal services

3,609

Integrated report 2023

(Millions of yen)

Adoption of mechanical construction method

Initiatives to reduce environmental impact

04

Segment net sales

Construction of monolithic refractories

21,176

’22.3

’23.3

Furnace construction

699

716

’21.3

’22.3

771

591

Overseas supervisory
services

’19.3

’20.3

’23.3

Integrated report 2023

05

How Yotai Creates ValueHow Yotai Creates ValueThe Value Creation Process

Initiatives to Enhance Corporate Value

Initiatives Supporting Improved
Corporate Value

Exist in harmony with society and continue tosustainably enhance value through businessactivities built on the motto, “Sincere and agile
customer service.”

VisionCorporate Philosophy (Purpose)

Aiming to be a faithful company
that contributes to society by creating
new technologies and products

Source of Value Creation
Utilizable Capital
Financial Capital

Our Business Environment
Maturity of the refractory market
Rapid development of technology
Demographic change
Contributing to a sustainable society
Responding to climate change issue
Enhancing information security
Strengthening corporate governanceMateriality (Key Issues to Be Addressed)
High Quality

S: Social• Reliably stable supply of high-quality products• Constant provision of high-quality technical service• Retention of technological capabilities foradapting to environmental change• Human resource development and utilization• Promotion of health and productivity management• Social contribution-based regional revitalization

E: Environment

G: Governance• Reduction of GHG emissions• Switch to renewable energy• Effective utilization of mineral resources• Governance enhancement• Dialogue with investors and proper
information disclosure• Tighter BCP for responding to crises

Independent, Not Partof Any Particular Group

Business Activities

Manufacturing CapitalBusiness structure not easily
affected by trends in any
specific field

SalesIntellectual Capital(1) R&D expenses: ¥225 million(2) Patent rights: 15

Wide-ranging
response capabilities
R&D

Social Capital(1) Partner companies: Approx. 200 companies(2) Robust product lineup: Approx. 50,000 items(3) Expansive client network: Over 300 companies(4) Highly cost-conscious, open corporate culture
with skill-based delegation of jobs

Sincere andagile customer
service

Other than the following are as of March 31, 2023
* First half of 2023- Includes production plans and external orders

06

Integrated report 2023

Customers• Stable supply of refractories• Improved industrial furnace longevity
and operating cost reductions• Reductions in GHG emissions

Manufacturing• Job creation• Contribution to ocean and air
preservation

Technical
serviceIndustry-leading levelof profitability

Generation of Products, Services (Output)
Material andconstruction integration
Response capabilities to fully
undertake everything fromdesign to construction andmaintenance

Net Sales by Industry (Pct. of sales, non-consolidated)
Ceramic
industry 1.6%

Others 2.4%

Chemistry/
4.9%
Lime

Employees• Skill improvement andself-actualization• Realization of diverse working styles

Shareholders

Electronic
5.0%
parts

Steel 44.0%

Glass 4.4%
Nonferrous 7.8%

• Improved medium- to long-term
shareholder value and shareholder
returns• Highly transparent information
disclosure

Environmental
15.5%
systemCement 14.4%

Environmental Capital(1) Volume of key materials used: 103,305MT(2) Water usage: 73,295m3(3) Energy usage: 478,029GJ

Value to be created

Community

Thorough Cost
Management

Human Capital(1) No. of employees: 578(2) Personnel system• Utilization of new personnel evaluation system
adopted in April 2022
• Promotion of diversity (Employees from China,
India, Vietnam, Brazil, and others)

A company that continues
to improve its corporate value
in a sustainable mannerin harmony with society

Yotai Strengths(1) Net assets: ¥31,065 million(2) Equity ratio: 78.4%(1) Distinctive production equipment• Hinase Plant: 3,000T press, tunnel kiln, basic
castable refractory plant• Yoshinaga Plant: 1,500T press and castableline• Kaizuka Plant: Shuttle kiln
• Mizunami Plant: 850T press(2) Annual production capacity*• Refractory bricks 72,720t• Monolithic refractories 41,592t

Data and Corporate Information

Mechanisms Supporting Value Creation
Disclosure ofclimate-related data based Human capital-related strategy
on TCFD declaration

DX strategy

Corporate
governanceRisk management
Integrated report 2023

07How Yotai Creates ValueHow Yotai Creates Value

Strengths and CompetitivenessInitiatives to Enhance Corporate Value

Initiatives Supporting Improved
Corporate Value

Independent from any particular corporate group

Yotai Strengths

Business structure not easily effected by any particular field ide-ranging response capabilities
W

Fine-tuning quality and structure for the stable supply of
products with the motto “Sincere and agile customer service”

Thorough cost management

Industry-leading profitability

To win out against harsh competition as an independent refractory manufacturer, Yotai has grown by
expanding its business dealings to a variety of industries. Yotai has gained a strong reputation as a company
known for achieving low costs and faithfully delivering on schedule, no matter the customer. Going forward,
Yotai remains committed to strengthening a sustainable business structure that supports stable operationsat production sites across a wide range of fields.
CompetitivenessMaterial and construction integration

 esponse capabilities to fully undertake everything from design toRconstruction and maintenanceCompetitiveness

1

Ability to meet customer demands with sincerity and speed

Data and Corporate Information2

Diligent structure enhancement supporting
sustainable growth

To respond to the wide-ranging needs of its customers, Yotai has pursued an optimal production framework that included

In business activities, Yotai works to enhance structure in ways that allow the rapid reflection of issues, concerns and potential

increasing internal production and the improvement of engineering technology. The commitment to “meet customer demands

needs in products and services thanks to close ties between its sales, manufacturing, technical service and R&D departments.

with sincerity and speed” is integral to Yotai’s corporate culture, and we hone our technological and production capabilities,

In recent years, this has culminated in the development of products with low environmental impact compatible with demands

and our cost competitiveness, at each of our work sites.

for carbon neutrality, and the adoption of technologies enabling more efficient construction, among other successes. These
outcomes, in turn, are leading to improved competitiveness.

Partnerships with Customers
in an Array of Industries

Low-cost, Prompt Delivery
Production Framework

Yotai Business Activities
Select initiatives for strengthening structure in fiscal 2023

Sales

No. of customers

Over

300 companies

Size of product lineup

Approx.

50,000 items

114,312t(Refractory bricks + monolithic refractories)

Yotai has a customer base of more than 300
companies. Depending on customer specifications
and needs, orders can be made from the smallest
lot possible – a single product – a responsivenessYotai has used to build up robust partnerships.

Four unique plants serve as production sites, witheach involved in extensive cost-reduction activities
and efficiency enhancements. An industry leader in
adopting robotics in the production process, Yotai
strives for greater automation and reduced labor.

Proposing Solutions to Customer Issues
Through Technical Sales Workforce

Securing Ample Stockpile Space to
Minimize Raw Material Procurement Risk

Technical sales workforce (incl. technical sales workforce/mid-career hires)
3/25
1/15

Integrated report 2023

Sincere andagile customer
service

Improved productivity, greater rationalization and
Manufacturing efficiency from adoption of large-scale presses,
othersManufacturing

Technical
serviceTechnical service workforce retention and training

R&D

Highly competitive new products and stronger
development structure for new products with low
environmental impact

Technical
service

Generation of products, services (Output)
Ceramic
industry 1.6%

5/15

Others 2.4%

Chemistry/
4.9%
Lime
’22.3

’23.3

Electronic
5.0%
parts

’24.3 (Goal)

Yotai is striving to grow its technical sales workforce, capableof assessing customer concerns and issues to offer highly
detailed service. The aggressive expansion of new highvalue added products is another policy going forward as
Yotai takes steps to enhance human resource capabilities bydeveloping a training system for its technical sales workforce.

08

R&D

Sales base upgrade and expansion(People)

0/3
’21.3

Sales

Annual production capacity

Mineral resources are the main raw material forrefractories. One feature of the industry is its reliance on
imports from China for the bulk of procurement. To standprepared for geopolitical risk, at Yotai we have secured
sufficient space to stockpile eight months-worth of coreraw materials within the grounds of our production sites.

Glass 4.4%

Net Sales
by Industry(Pct. of sales,
non-consolidated)

Steel 44.0%

Contribute to

Lower
Stableoperation
operations
costs

Nonferrous 7.8%
Cement 14.4%

Environmental
15.5%
systemat production sites across a wide
range of fields

Integrated report 2023

09How Yotai Creates ValueHow Yotai Creates Value

Financial and Non-financial Highlights

Net Sales (millions of yen)

Financial Highlights
For the fiscal year ended March 31, 2023, theCompany reported a new record high for net
sales, lifted mainly by robust demand from steel
manufacturers, a mainstay business sector. Net
sales per employee remained at a high levelcompared to the industry average, becoming asource of Yotai competitiveness.
Financial Review

p.48

Key Financial Data

p.50

Operating Profit (millions of yen) /Operating Profit Margin (%)

Non-financial Highlights
28,25025,912
23,554’21.3

Initiatives to Enhance Corporate Value

’22.3

’23.3

R&D Expenses (millions of yen)

Yotai is engaged in aggressive capital investment
to respond to climate change and to meetgrowing energy conservation and carbon
neutrality demands. Maintaining a good balancein the age composition of its workforce is another
Yotai strength, with continued efforts underway tobuild workplaces where all employees find it easy
to work.
Initiatives Targeting Climate Change

p.33

Human capital-related strategy

p.36

Environmental and Society-related Data

p.50

GHG Emissions (t-CO2e)

4,012

188

15.8%

Refractory Production Volume (t)112,503

113,403

’22.3

’23.3

99,190’21.3

Energy Usage (GJ)

509,188

482,076

48,37546,282167
2,921

Data and Corporate Information

Scope1
Scope2225
4,089

Initiatives Supporting Improved
Corporate Value

478,029

45,16013,25913,73333,02334,641

32,608

’21.3

’22.3

’23.3

12,552

14.2%

12.4%

’21.3

’22.3

’23.3

’21.3

Dividend per Share (yen) /Payout Ratio (%)’23.3

Net Sales per Employee (millions of yen)

42.7

No. of Employees (consolidated) /Pct. Female Employees (consolidated, %)’23.3

Employee Age Composition(non-consolidated/As of March 31, 2023)

37.9

2.0%

578

564

537

13.6%

13.1%

50-59

13.5%

30.5%

30.4%

’22.3

60 and older

42.0
34.3

’21.3

49.5

47.1

45

43

’22.3

21.6%

Under 30

21.8%

17
40-49

20.1%

’21.3

26.7%

’22.3

’23.3

’21.3

’22.3
Yotai

10

Integrated report 2023

’23.3

’21.3

’22.3

30-39

27.9%

’23.3

Average for 4 industry peers

Integrated report 2023

11

Initiatives to Enhance Corporate Value

Message from the President

Contributing toindustry development
through the stablesupply of refractories

How Yotai Creates Value

Initiatives to Enhance
Corporate Value

Data and Corporate Information

Raise financial and non-financial value, become a company that continues to sustainably improve its value
Invest in people, products and information to
respond to changes in the environment

Maintain profitability
A company that responds tochanges in the environmentand continues to provide
a stable supply of high-quality
refractories and services

A company that
continues to improveits corporate value
in a sustainable
manner in harmony
with society

Mitsuo Taguchi
President

Promote ESG management
A company that incorporates
ESG into its management
and is capable of appropriate
business operations anddecision-making froma long-term perspective

Strengthen management base andrespond to business opportunities and risks

and fuel, particularly against the backdrop of problems

Early achievement of First Medium-termManagement Plan numerical targets

Record-high net sales and profit for theengineering business

Under the First Medium-term Management Plan, our sights

One success in fiscal 2023 was record-high net sales

working tirelessly to firmly take stock our successes andStockpiling raw materials to hedge against
geopolitical risks and strengthening thedomestic production system

are set on “Becoming a company that continues to improveand segment profit reported for the engineering business.

issues to date, while moving to further build up our business

Refractories are used in a wide array of industries, and are

its corporate value in a sustainable manner in harmony with

As customer capital investment recovers together withperformance.

viewed as high-demand items supporting heavy industry insociety.” In realizing this, we are working to maintain ourcontraction of the coronavirus pandemic, we captured a

For the refractory business, with signs of a turnaround

Japan. Nevertheless, the entire refractory industry shares aearning capacity while continuing to stably supply high-number of new projects by bolstering our sales activities.

in social and economic activity evident, robust performancecommon issue—high reliance on China for raw materials.

quality refractories and services. By investing funds gained inThanks to progress made in leveraging the capabilities ofis projected in fields such as steel, nonferrous, environmental

As Japan’s top volume producer of refractories, Yotai views

the people, products and information vital to responding totechnical service personnel hired from the start of the First

systems and electronic parts. Among these, pressure is

the stable supply of high-quality refractories, regardless of

future business environment changes, our aim is to develop

Medium-term Management Plan in April 2021, Yotai was

mounting for steel manufacturers, Yotai’s principal businessrising geopolitical risks, as its social mission, and is making

a foundation for achieving sustainable growth.

able to smoothly execute on new large-scale projects won.

partners, to address carbon neutrality. Accordingly, stable

strides in strengthening its stable production system inOverall, there is a real sense that our project responsedemand is anticipated from the standpoint of the industry

Japan. As part of this effort, Yotai has changed the layout ofcapacity is definitely stronger now.

having to deliver “green” steel.

its Mizunami and Yoshinaga plants to secure space for raw

In terms of business performance for fiscal 2023, ended
March 31, 2023, the second year of the First Medium-between Russia and Ukraine, coupled with volatility in thecurrency exchange markets. For these reasons, we are

While the engineering business, on the one hand,

In the engineering business, too, we have received

to ¥28,250 million. Operating profit was down 1.9% tois experiencing vigorous demand, labor shortages areorders for large-scale projects, and expect demand to

supply of its principal raw materials. Further, in October¥4,012 million, while ordinary profit was up 0.5% to ¥4,134

also leading to opportunity losses. Earlier in my career,remain firm. Leveraging our strength in integrated materials

2022, we acquired the manufacturing business for refractory

million. With signs of an economic turnaround visible as theI spent nearly a decade working as General Manager

and construction, we are working to set Yotai apart by

raw materials of Shibata Ceramic Raw Materials Co., Ltd.,world emerges from the slump caused by the coronavirusof the Engineering Division. I was convinced that it was

highlighting the total merit this offers for management andlaunching those operations now as the Toki Factory of thepandemic, revenue increased on firm demand for products

possible to spur business growth by taking steps tocontrol with respect to quality, process and safety. At the

Mizunami Plant. We have also started engaging in evaluation

for steel manufacturers, one of Yotai’s core business clients.

augment our workforce. Since the start of the First Medium-same time, responding to the so-called “2024 Problem” intesting for recyclable raw material-based production. FromOn the other hand, with respect to profit, operating profit

term Management Plan, we have shifted to aggressive

Japan’s construction industry is the greatest issue facingthese steps, Yotai is now able to internally produce a portion

was lower as sales price revisions, cost reductions and otherrecruitment, steadily enhancing Yotai’s fundamental

the engineering business. Japan’s construction industry isof its raw materials, while also working to diversify the raw

steps failed to fully absorb the impact of high prices for raw

strength by bolstering our training system, which includes

seeing the normalization of long working hours due to labormaterials themselves. In addition, we are taking steps tomaterials and fuel triggered mainly by the situation in Ukraine

the preparation of a training manual. This all contributed

shortages brought on by a combination of societal aging andboost production of cordierite and mullite, raw materials forand the yen’s depreciation. Ordinary profit was higher, largely

to expansion in business performance for the fiscal year

a decline in the working-age population. At the same time,kiln furniture used in sintering positive electrode materials

atop proceeds from sales of shares held.

ended March 31, 2023. Meanwhile, we anticipate that thethe Work Style Reform Related Law is set to come into fullused in lithium-ion batteries, ahead of anticipated growth in

The business environment was definitely an adverse

engineering business, which is uniquely resilient with respect

force in April 2024, and will place caps on overtime work.

demand. At Yotai, we believe that ensuring stable supplies

one, marked by rising geopolitical risks as well as significant

to currency exchange markets, will lead to greater stability in

Along with continuing to recruit and train personnel, we will

to customers is our No. 1 priority. With geopolitical risksbusiness performance.

minimize risks associated with delays in construction progress

today on the rise, we feel that strengthening our domestic

due to a lack of skilled laborers by communicating closely

production system is also garnering greater trust from ourwith customers in a bid to tackle construction work as quickly

business partners.

term Management Plan, net sales rose 9.0% year on year

volatility in raw material and fuel prices and currency
markets. Nevertheless, thanks to the extraordinary effort ofour employees, among other factors, business performanceessentially surpassed initial numerical targets. This enabled

12

Initiatives Supporting Improved
Corporate Value

Robust demand for the refractory and engineeringbusinesses also projected for fiscal 2024

Yotai to hit its goals for the final year of the medium-term

The business environment surrounding Yotai faces a host ofplan a full year ahead of schedule.

uncertainties, among them soaring prices for raw materials

Integrated report 2023

material storage, where it now stockpiles an over eight-monthas possible, with “Safety First” as fundamental to everything.

Integrated report 2023

13

Initiatives to Enhance Corporate Value

Message from the President

How Yotai Creates Value

Initiatives to Enhance
Corporate Value

Initiatives Supporting Improved
Corporate Value

Data and Corporate Information*	Read the article from the front page of the July 23, 2023 edition of the Nikkan Kogyo Shimbun regarding joint research between Narita Co., Ltd., Narita
Techno Co., Ltd. and Yotai.
 rticle from the front page of the July 27, 2023 editionAof the Nikkan Kogyo Shimbun: “Using hydrogen gas
for ceramics firing - Narita Co., Ltd. finds alternatives tofossil fuel” (Japanese only)

Fund allocation for sustainable growth andcarbon neutrality

With respect to shareholder returns, under theand reform its corporate governance structure—the foundation

In addition, a large number of small and medium-First Medium-term Management Plan, we set a target

supporting swift and decisive management decision-making in

sized enterprises are facing succession problems that put

consolidated payout ratio of 30%, coupled with a policy of

response to business environment changes.

their continued existence at a crossroads. As previously

The refractory industry is maturing. To achieve sustainable

flexibly repurchasing our own shares, to enact capital policies

growth, we are promoting DX through AI, IoT and ICT

responsive to changes in the operating environment.

utilization, and need to further hone the efficiency of bothStrengthening human and intellectual
capital for sustainable growth

our highly productive facilities and operations, two Yotai
strengths. Concerns regarding sustainability are also rising,

Previously, Yotai has taken a number of actions,

mentioned, Yotai acquired a manufacturing business forincluding roll out of an executive officer system,

refractory raw materials from Shibata Ceramic Raw Materials

establishment of a Nomination and Compensation AdvisoryCo., Ltd. We believe that through collaborations of thisCommittee, and the introduction of a remuneration systemkind, we are further reinforcing our business base, thereby

offering transfer-restricted shares. Recently, Yotai offeredenabling Yotai to raise its industry profile.

making contribution to SDGs and carbon neutrality a must.

Given that one area for investment under the First Medium-a resolution to transition to a “Company with Audit andYotai is not part of the corporate group of any large

To address these issues, at Yotai we are actively investing interm Management Plan is “people,” we are moving toSupervisory Committee” governance model, which wassteel manufacturer, giving it a high degree of management

people, products and information. During the first three years

strengthen human capital, recognizing human resource

approved by the General Meeting of Shareholders in June

freedom; it also has an enterprise scale that allows forof the First Medium-term Management Plan, we projected

retention, training and utilization as extremely important

2023. With external directors comprising more than half ofswift decision-making. Capitalizing on these features,a total of ¥5.0 billion in investment, including ¥1.4 billion inissues for Yotai’s corporate existence. In addition to theits membership, the Audit and Supervisory Committee iswhile seeking on the one hand to further extend businessrenovation investment, ¥2.3 billion in strategic investment,

launch from April 2022 of operation of a new personnel

responsible for auditing and monitoring the appropriatenessperformance, we are strengthening our business base¥0.4 billion in IT investment, and ¥0.9 billion in other areas,

system based on sustainable growth-style remunerationand propriety of business execution. This will lead to eventhrough collaboration with other Japanese companies inwhich includes M&A activity. In the past two years, we

system, we are introducing e-learning related to DX andgreater management transparency as we aim to build astriving to deliver sustainable growth.

carried out ¥650 million in renovation investment, ¥970

management for those in the general employment pool.

structure that more accurately meets the expectations of ourmillion in strategic investment, ¥80 million in IT investment,

Additionally, we are conducting surveys to research theforeign and domestic stakeholders.

and ¥100 million in other areas, including M&A. Particularly in

actual state of career advancement for women at Yotai, using

fiscal 2023, ended March 31, 2023, we successively carried

AI-OCR and RPA to reduce working hours to create more

out, among others, the adoption of large presses and high-welcoming workplaces, and moving to boost motivation

Raising our industry profile through collaboration
with small- and medium-sized peer companies

efficiency presses at our principal plants to build a low-costby improving benefits, including by raising base pay, andYotai was established in 1936 with the goal of stably

Management Plan from April 2024. Under the First Medium-production system; installed solar power generation systems

increasing employee shareholding association incentives,supplying high-quality refractories vital to steel and cement

term Management Plan, we sought to create a base forin a bid to achieve carbon neutrality; partially adopted

among other steps. The number of young employees

production, and to assist in modernizing the field in Japan.

achieving growth through investments in people, products

electrical power from renewable energy sources; andinternally from the millennial generation or Gen Z has risen

From there, Yotai expanded transactions with customers

and information. Leveraging the base cultivated in doing

introduced battery-powered lifts and EVs.

in recent years. With consciousness with respect to work

across a wide range of sectors, including nonferrous andso, under the Second Medium-term Management Plan, we

styles and work itself changing, we are responding flexibly toenvironmental systems. Even looking back on the time sincehope to embody a dramatic vision as an all-new Yotai. In

differences in both generation and values.

its founding, Yotai has grown against a backdrop of heavy

refractories, our principal business, we will contribute to theindustry advancement in Japan. In short, Yotai itself would

creation of bases for technology and production by spurring

management structure by transitioning to a cloud-based

intellectual capital. Ahead of the creation of new high-not exist without the Japanese economy. In continuing to

the advancement of production technology and maintaining

solution for information systems.

value-added products to lead growth, we are augmenting

stably supply quality refractories, we remain committed tosupply stability. Similarly, in the engineering business, we are

personnel with high-level specialized skills that “givesupporting the advancement of heavy industry in Japan.

anticipating stable growth, and will add to the advancement

Yotai is aiming by fiscal 2030 to reduce its own greenhouse

shape to ideas” by boosting and training personnel at the

Although the Japanese economy continues to mature, anof backbone industries through construction technologies

gas emissions (Scope 1+2) by 30% compared to fiscal

Technical Research Laboratory and the Advanced Materials

emerging trend in recent years is seeing a return of thethat optimally preserve refractory performance. While our2014 levels. While achieving this end will require significant

Laboratory. In conjunction, we are promoting research

manufacturing industry to the country. By strengthening

primary emphasis will remain the domestic market, it isinvestment in areas such as energy conversion and CO2themes related to refractories that contribute to reductions

dealings with enterprises of this kind and raising market

essential that we also advance into rapidly growing overseas

absorption, since the wave of technological innovation can bein greenhouse gas emissions, the creation of recyclable raw

share, we believe that even greater growth is possible.

markets from a medium to long-term perspective. The

expected to outpace current predictions, it is also critical tomaterials, and the promotion of the switch to non-fossil fuels

retreat of the coronavirus pandemic has again made travelingensure that the personnel, facilities and funds needed are also

in the manufacturing process, among other areas.

overseas possible. Yotai is disseminating information for

Furthermore, Yotai’s new mission-critical system(known as “Mikumo”) began full-scale operations from
October 2023. We are also striving to strengthen our risk

In terms of initiatives addressing carbon neutrality,

in place. On this front, we are giving top priority to adopting

At the same time, we are taking steps to bolster our

Image for the Second Medium-term Management
Plan and what Yotai’s existence means
With the end of the First Medium-term Management Planapproaching, Yotai will launch its Second Medium-term

advancing into fields where it has advantages overseas.

have definite investment merit, and are also moving toEnhancing corporate governance structure supporting
swift and decisive management decision-making

utilize recycled fuel. Similarly, with future energy conversion

In April 2022, Yotai opted to list on the Prime Market following

them through business activities for developing a sustainable

on the horizon, we conducted ceramics firing tests (MAXa review of its market classification on the Tokyo Stocksociety. As always, we at Yotai stand united in our aim to1600˚C) using 100% hydrogen gas.* We are also actively

Exchange. The Prime Market faces a much greater level of

improve corporate value, with a shared sense of urgency andinvestigating areas accompanying infrastructure readinessscrutiny than ever before from shareholders, investors andprofessional awareness among senior management and all

and technological innovation, such the anticipated future use

other stakeholders. For this reason, to earn stakeholder trust inother employees alike. For our many stakeholders, we ask forof ammonia and hydrogen, CO2 absorption and methanation.

its business activities, Yotai takes ongoing steps to strengthen

your continued understanding and kind support of our efforts.

solar power generation systems, which are expected to14

 rticle from the page 15 of the November 1, 2023
A
edition of the Nikkan Kogyo Shimbun: “Sintering
refractories with hydrogen fuel – Yotai achieves basic
technology needed” (Japanese only)

Integrated report 2023

In a changing society, we recognize that the meaning of
Yotai’s existence lies in confronting SDGs and contributing toIntegrated report 2023

15

Initiatives to Enhance Corporate ValueHow Yotai Creates ValueFirst Medium-term Management Plan Progress

Initiatives to Enhance
Corporate Value

Initiatives Supporting Improved
Corporate Value

Data and Corporate Information

Steady enactment of each measure of the plan, for a baseline
surpassing numerical targets
In the push to clarify its target vision of “Becoming a company that continues to improve its corporate value
in a sustainable manner in harmony with society,” Yotai formulated its First Medium-term Management Plan.
In striving to be a company capable to responding to both environmental changes and social demands, we
set about creating structures needed.

The First Medium-term Management Plan Basic Policy

Strengthen fund allocation for investment, shareholder returns

Promoted from fiscal 2022, ended March 31, 2022, to the end of March 2024, the First Medium-term Management Plan

We are planning for a total of ¥5.0 billion in investment under the current medium-term management plan. For shareholder

is positioned as a time to create structures for realizing Yotai’s vision. While maintaining both high profitability and financial

returns, we set a target consolidated payout ratio of 30%; this figure was 30.5% for the fiscal year ended March 31, 2023.

soundness, we are concentrating investment in people, products and information as we make strides in building the

Additionally, to enable implementation of capital policies in response to changes in the operating environment, we are also

management base to support sustainable growth. Specifically, we are implementing measures in two directions: “maintainplanning to flexibly repurchase own shares going forward.

profitability” and “promoting ESG management.”

Cumulative for the 3-year period

Maintain profitability

Promote ESG management

1

2

3

4

Expand sales by improving thequality of products and services

Strengthen low-cost andstable supply system

Develop new sources of revenue

Build a management framework
through the promotion of ESG

Products

Raw material procurement

Development system

Environment (E)Develop differentiated products that surpass
other companies

Strengthen raw material and energy
procurement capabilities

Strengthen the next-generation productdevelopment system by restructuring the
R&D system

Develop manufacturing processes that emit
less carbon dioxide
Capital investment in energy conservationand decarbonization

Technical sales
Strengthen technical service framework

Customer service
Careful response to customers by expanding
sales bases

Investment¥5.0 billion

External cooperation

Aggressive investment in rationalization
facilities
Optimal personnel allocation
Promotion of DX

New product development based ontechnology exchange with customers

Improve employee dynamism, organizational
vitality and productivity through promotion ofhealth and productivity management

Mar. 2022 ActualMar. 2023 ActualMar. 2024 Target

Streamlining, efficiency investment¥0.33 billion¥0.65 billion¥0.31 billion

Adoption of strategic equipment
Decarbonization investment
BCP investment¥0.52 billion¥0.97 billion¥1.12 billion

Information system investment¥60 million¥80 million¥0.27 billion¥0.1 billion—

 &A investment and investment notM
included above
Strengthen shareholder returns(Target consolidated payout ratio of 30%)

Governance (G)

—
30.4%

30.5%

32.7%
(Planned)¥1.5 billion¥1.5 billion¥1.5 billion(Planned)

Shareholder returns

Governance system reform and enhancementof effectivenessRobust information disclosure and dialogue withstakeholders

Highlights from Year 2 of the Medium-term Management Plan

Strategic investment¥2.3 billion
IT investment¥0.4 billion
Other investment¥0.9 billion

Social (S)Rationalization and Efficiency

Details

Renovation investment¥1.4 billion

Flexible repurchase of own shares

Performance trends

Progress in steady enactment of priority measures, baseline trends exceeding
numerical targets

P. 48: Financial Review

Progress on investment in people, products and information also largely as planned
People: Augment personnel of technical sales, strengthen training system, adopt new evaluation system
Products: Adoption of large presses, solar power generation systems and other equipment with highly
effective investment
Information: Adoption of new mission-critical system and promotion of AI-OCR and RPA utilization

 . 39 Schedule and progress for investment inPpeople, products, information and other areas

Conduct inventory stockpiling from a BCP perspective to hedge against geopolitical risks

P. 22: Business strategy Plant Department

Acquisition of business from Shibata Ceramic Raw Materials Co., Ltd., withlaunch of those operations as the Toki Factory of the Mizunami Plant. Also started
engaging in evaluation testing for recyclable raw material-based production.

P. 25: Business strategy Plant Department
Mizunami Plant
P. 26: Business strategy R&D Department

In the fiscal year ended March 31, 2023, all targets, including net sales, operating profit, and ROE, were achieved ahead ofschedule. Steps are underway to build up performance even further in fiscal 2024, the final year of the plan.
FY2021 Actual

FY2022 Actual

FY2023 Actual

FY2024 Estimate

Net sales (Millions of yen)

23,55425,912

28,25029,000Operating profit (Millions of yen)

2,921

4,089

4,012

4,100

ROE

6.6%

10.0%

9.7%

—

Position of First Medium-term Management Plan in medium- to long-term strategy(Sales and Profit)

First Medium-term Management Plan (FY2022-FY2024)

Second Medium-term Management Plan (FY2025-FY2027)

Period for creating the structure for realizing vision as a company

Period of accelerated growth by reaping benefits from investment

Today

Gain revenue from stable growth fields and core growth fields
Invest in people, products and information
Build foundations to support sustainable growth
Study measures to achieve carbon neutrality

16

Integrated report 2023

Development fields

Stable growth fields
Core growth fields
Earn revenue from stable and core growth fields, as well as
development fields
Continued investment in people, products and information,and further strengthening of management baseSpecify the direction of measures for achieving carbon neutrality

Integrated report 2023

17

Initiatives to Enhance Corporate Value

Initiatives to Enhance
Corporate ValueHow Yotai Creates ValueFirst Medium-term Management Plan Progress

Initiatives Supporting Improved
Corporate Value

Data and Corporate Information

Key successes of the First Medium-term Management Plan in FY2023
In fiscal 2023, the second year of the medium-term management plan, we marked a steady stream ofsuccesses from every angle in building up Yotai’s management base. These included improving product andservice quality, bolstering our low-cost, stable supply system, creation of a new development framework for
cultivating new revenue streams, and ESG promotion.

Major
Successes (1)Expand sales by improving the quality of products and services

Major
Successes (3)Develop new sources or revenue

In answer to calls for carbon neutrality, Yotai is working to develop products with low environmental impact. Yotai has also

Yotai conducted structural reforms to raise its R&D capabilities for highly competitive new products. To accelerate R&D andworked diligently to recruit technical service personnel and strengthen training systems ahead of future sales expansion.

respond quickly to customer demands, we took various steps to level up, including augmenting personnel at the TechnicalResearch Laboratory and the Advanced Materials Laboratory, coupled with the adoption of high-performance systems.

Products

Technical sales

Development and expanded sales of
low-carbon monolithic refractories
Silicon-carbide EPC series(Explosion-resistant castable refractories)
Chromia-based EPC series(Explosion-resistant castable refractories)
Dry-blown EPC castable refractories(Explosion-resistant, dry-blown castable refractories)

Recruitment of mid-career hires toboost technological capabilities
Personnel of technical sales(incl. personnel of technical sales/mid-career hires)

3/25

Development and expanded sales ofrefractories for a recycling-oriented society
S-KK1(Alkaline monolithic refractories made from seashells)

Development and expanded sales ofenergy-saving monolithic refractories
CFC-LTC-ML and CFC-DGLTC-ML(Low thermo-conductive alkali salt-resistant castable refractories)

Major
Successes (2)Success in uncoving new areas byupgrading and expanding sales
structure in the Hokkaido region
Strengthen response to backbone
construction in the Kansai region
through workforce enhancement at theEngineering Division’s Kaizuka branch

5/15

1/15

Development and expanded sales of
low-carbon non-sintered refractories
CORUNA-FX/CORUNA-FX2(Aluminum-resistant non-sintered bricks)

Customer service

’22.3

’23.3

’24.3
TargetTirelessly execute on new and largescale projects through steady progressin training technical service personnel

Improved productivity with adoption of large presses andhigh-efficiency presses at each plant
Hinase: 3,000T (operating from Apr. 2022)
1,000T (operating from Sept. 2023)
Yoshinaga: 1,500T (operating from Aug. 2022)
Kaizuka:	1,500T automated (operating from June
2023)
1,000T (Set to operate from Feb. 2024)
Mizunami:	850T high-efficiency (operating from Sept.
2022)

Quality improvement and promotion ofenergy conservationT unnel kiln visualization at the Kaizuka Plant to promote
firing temperature control and energy conservation(2)

On the governance enhancement front, in June 2023, Yotai transitioned to a “Company with Audit and Supervisory Committee” governanceRationalization and efficiency
Improved productivity(1)

Build a management framework through the promotion of ESG

structure, and moved to augment its internal audit system by increasing the number of expert staff in the Internal Audit Office.
E (Environment)
Solar power generation systeminstallation

Raw material procurement

Operation of new mission-critical system“Mikumo”In operation since Oct. 2023; also strengthened
information security

Advanced AI-OCR and RPA utilization,
continued to reduce working hours
F iscal 2024 will see expanded scope of application in
the Accounting Dept. and start of Labor Dept. utilization

Working hour reduction trends-1,888 hours-2,432 hours
Mar. 21-2,900 hours
Mar. 22Mar. 23
Mar. 24(Planned)

Integrated report 2023

P romotion of R&D themes such as high-performance refractories, materials for kiln
furniture used in sintering high-performance electronic parts, manufacture of composite
powders, and manufacture of recyclable raw materials

Along with promoting a raft of carbon-reduction initiatives, Yotai advanced measures targeting work styles and digital transformation (DX).

productivity efficiency.

18

Progress on new R&D themes

Major
Successes (4)activities in the manufacturing process, we adopted large and high-efficiency presses in a bid to improve quality and enhanceIn October 2022, Yotai acquired the manufacturingbusiness for refractory raw materials of Shibata
Ceramic Raw Materials Co., Ltd., launching those
operations now as the Toki Factory of the Mizunami
Plant. We have also started engaging in evaluation
testing for recyclable raw material-based production.

Development of monolithic refractories and non-sintered bricks
Silicon-carbide EPC series (silicon-carbide explosion-resistant castable refractories)
Chromia-based EPC series (chromia-infused explosion-resistant castable refractories)
Dry-blown EPC castable refractories (explosion-resistant, dry-blown castable refractories)
CORUNA-FX/CORUNA-FX2 (aluminum-resistant non-sintered bricks)

 doption of high-temperature X-ray scattering system (right photo (1))
AAdoption of expansion-under-load measurement system (right photo (2))

changing its plant layout. In terms of initiatives for boosting rationalization and efficiency, along with ongoing cost reduction

Toki Factory, Mizunami Plant

Initiatives toward carbon neutrality

Introduction of high-performance systems

To mitigate China-related risk in raw material procurement, Yotai has stockpiled roughly 8 months-worth of raw materials byT o mitigate China-related risk, we changed the layoutsof the Mizunami and Yoshinaga plants, securing
the storage space necessary to stockpile roughly 8months-worth of our principal raw materials.

Accelerated R&D and rapid technological response to clients
Technical Research Laboratory Added 1 person
Advanced Materials Laboratory Added 1 person
Plans call for adding at least 2 more personnel in fiscal 2024

 uild up of fundamental technology for replacing massive volume of fossil fuel consumed
Bin the manufacturing process with non-fossil fuelStrengthen low-cost and stable supply system

Raw material stockpiling

Augment workforce for research, development and technical service

Technology development for eventual switch to non-fossil fuel

0/3
’21.3

Development systemInstallation of 660kW-class system at
Mizunami Plant in FY2023
Planned installation of 775kW-class system
at Hinase Plant from FY2024 to FY2025

Adoption of battery-powered lifts
F Y2023 …43% EV rate
FY2024 …Projected 50% EV rateBy FY2030 … Target EV rate of 100%

Adoption of EVs
 s of Mar. 31, 2023 – 2 vehicles
AInstallation of charging stations at Head
Office and Hinase Plant

Information disclosure based on
TCFD declaration
 isclosure in June 2022 of climateD
related information based on basic policy
on sustainability, materiality and TCFD
declaration

S (Social)
Human rights
Ongoing compliance education implementation

Diversity
 onduct survey to assess actual situation in promoting careerCadvancement for women

Creation of welcoming workplacesP romote work style reform; extensive working hour management
via adoption of attendance management system
Launch from April 2022 of operation of new personnel evaluation
system based on sustainable growth-style remuneration system
Conduct engagement survey to prompt workplace reform;
planned implementation of improvement measures as neededImproved benefits for employees (higher base pay, morevacation days, greater shareholding association incentives)
Enactment of e-learning for the general employment pool (699
different lectures on DX, management and other topics)

Promotion of health and productivity management
Initiatives underway to gain recognition as a health andproductivity management enterprise in 2024

Toward sustainable growth ore aggressive recruitment of new employeesMIncrease initial salary of newly graduated employees

G (Governance)
Transition to a “Company with
Audit and Supervisory Committee”
governance model in June 2023
Strengthen internal audit system byincreasing expert staff in Internal Audit
OfficeRoad to strengthening corporate governance2020 Adoption of executive officer system
2021 Effectiveness evaluation of Board of Directors
Establishment of Nomination and Compensation
Advisory Committee
Introduction of remuneration system offeringtransfer-restricted shares
Response to June 2021 Revised Corporate
Governance CodeAppointment of one female external director
2023 Transition to “Company with Audit andSupervisory Committee”
Full compliance with June 2021 Revised
Corporate Governance CodeIntegrated report 2023

19

Initiatives to Enhance Corporate Value

Sales
Department

Business Strategy

How Yotai Creates Value

Initiatives to Enhance
Corporate Value

Initiatives Supporting Improved
Corporate Value

Data and Corporate Information

Backed by knowledge of a broad range of industries, rather than exclusive
focus on a single industry, as a strength, the Sales Department plays a keyrole in linking customers and Yotai departments together. Closely monitoring
trends in customer industries and the refractory sector leads to definitive
orders and sales expansion.

Steady progress in strengthening sales capabilities centered on personnel
retention and training; sales activities utilizing drones also highly rated

Yorisada Matsumoto
Director; General Manager,
Tokyo Branch

Sales Department characteristics and roles

Initiatives to answer needs for reduced environmental impact

In addition to steel, Yotai has captured high market share in many industries, boastingtransactions with customers across sectors ranging from nonferrous and cement toenvironmental systems and electronic parts. The business environment surrounding therefractory industry is constantly changing, while customer issues and needs are becoming morediverse and sophisticated. Beyond the need to address automation and labor-saving in furnace
construction due to labor shortages, the number of customers interested in diversifying thesources of their raw material procurement from the standpoint of mitigating geopolitical risk isalso increasing. The Sales Department accurately grasps customer issues and needs, taking
steps together to find solutions.
A major strength of Yotai’s Sales Department is its knowledge of a wide range of industries,
rather than exclusive focus on a single sector. Refractories are products that link directly tostable operations in customer production activities. Starting from proposing the best materials
for the operating conditions, and occasionally even providing prototypes, advancing persistentsales activities that reflect meticulous improvements based on use conditions, all while earning
customer trust, is critical. Another important Sales Department function is correctly conveying
customer needs and requirements to the Plant Department, R&D Department and other areas.
Strengthening sales capabilities is indispensable to Yotai’s sustainable growth, which
is why human resource development is a focus of the Sales Department. In addition to richinsight regarding trends in customer industries and the refractory sector, the department works
to train human resources who can identify solutions to customer issues from a technologicalperspective.

Most of Yotai’s customers are under pressure to address efforts to reduce their environmental
footprint, centered mainly on achieving reductions in greenhouse gas (GHG) emissions. In
the environmental systems field, for example, there is a move afoot to search for new energy
recycling approaches that will contribute to further reductions in impact. There is a possibility
that the main approach currently in play, thermal recycling—a method whereby heat energy fromthe incineration of waste is recovered and utilized—will give way to approaches like chemical
recycling, in which chemicals and fuel are produced from waste. Plant manufacturers are
moving ahead with examining the technological reliability of these methods using experimental
furnaces on site, and Yotai is conducting sales activities to have its refractories adopted for use
in these efforts. If the full-scale introduction of these experimental furnaces as part of garbage
incineration facilities happens in the future, there is a higher possibility that Yotai can become thepreferred choice in orders for related refractories. What kind of refractories contribute to solving
customer issues? While soliciting feedback on this concept in-house, we seek to convert what
we learn into products.

Fiscal 2023 Results
In terms of strengthening sales capabilities, we recruited two mid-career hires in fiscal 2023. The
ability of these recruits to articulate things like Yotai’s market position, future potential and target
vision, as well as the merits of its openness in-house, all led to their hire. Their training continues
via OJT after recruitment. Gaining entry to the worksites of a diverse array of customers enables
the department to grasp trends and needs from a wide range of industries, which it seeks toquickly turn into valuable assets.
Among sales activities, those utilizing drones have won particularly strong praise from
customers. Since 2021, Yotai has adopted the use of drones to inspect inside industrial
furnaces. The use of drones in this way makes it possible to accurately confirm furnace
internal conditions without the need for footholds. This, in turn, is expected to allow for shorter
inspection times and reduce foothold-related expenses.
The Sales Department is also continuing to tackle the introduction of new digital tools.
In fiscal 2023, it joined forces with the Engineering Division to adopt a remote support device
system on a trial basis. The setup involves using a wearable camera to remotely assesscustomer conditions on the ground, and is being considered for use to cope with future
reductions in manpower and for human resource development.

20

Integrated report 2023

Future outlook
Because the manufacturing sector in Japan is continuing to mature, overseas expansion
is critical to Yotai’s sustainable growth. In parallel with research ahead of establishing sales
bases overseas, Yotai is currently planning to conduct surveys that will bring into view greater
diversity among suppliers for raw material procurement. This move is also expected to diversify
procurement sources that exhibit high dependence on China.
In responding to high prices for raw materials, while we have made progress in revisingsome prices, trends in both customers industries and the refractory sector remain shroudedin uncertainty. In addition to soaring logistics costs and high prices for fuel and raw materials,
we are also monitoring the so-called “2024 Problem,” which will see regulatory caps placed on
overtime work in the construction and logistics industries in Japan. Accordingly, we will clearlycommunicate with customers regarding issues like construction times, delivery times and basecosts as we adjust to these changes.

Achievements in the second year of the Medium-term Management Plan

Future outlook and targets

	Steady progress on mid-career hire recruitment andtraining to enhance sales capabilities
	High marks for industrial furnace inspection and accurate
verification of condition using drones	Adoption on a trial basis of remote support devices andother IT tools	Full-scale research activities ahead of overseas baseestablishment to bring greater diversity in sources for raw
material procurement into view	Continuing efforts to address soaring prices for fuel andlogistics, as well as the “2024 Problem” (construction/
logistics industries)

Integrated report 2023

21

Initiatives to Enhance Corporate Value

Plant
Department
Hinase Plant
Yoshinaga Plant
Kaizuka Plant
Mizunami Plant

Director; Plant Manager,
Hinase Plant

Business Strategy

Largest class of refractory brick production capacity in Japan
Began operating a 3,000T press to improve brick-forming efficiency

Yoshinaga
Plant

Data and Corporate Information

Definitively answering ever-changing needs with strengths in highvalue-added monolithic refractory products in the environmental field

Strengths of the Yoshinaga Plant

The Hinase Plant first began operating in 1938, and has the longest history as a Yotai production
site. The plant has two tunnel kilns for alkaline bricks, and boasts the largest class of production
capacity for refractory bricks in Japan. The site is also involved in the production of large claymade and high alumina-made bricks used primarily by glass manufacturers.

This plant has a number of manual presses and lots of skilled labor. We are also building a structure that cancope with high-value-added small-lot, multi-product refractory orders. A strength for the plant is monolithic
refractories for environmental systems, which are found within industrial furnaces and in which a significant
number of monolithic refractories are used.

Fiscal 2023 Results

Fiscal 2023 Results

Future outlook
To strengthen the cost competitiveness of products for steel manufacturers, a key Yotai client, we are increasing the productionlines for alkaline monolithic refractories. Full-scale operation of a dual production-line system has taken place since September
2023. Since becoming a two-line system, stage replacement work, including the switch out of raw materials, has declined,
while facility efficiency has improved. Going forward, we are concentrating the production of alkaline monolithic refractories atthe Hinase Plant, with improved production efficiency leading to lower costs and greater cost competitiveness.
Raw materials for refractories have high dependency on China. Supplying refractories in response to client needs,
however, requires stable procurement of raw materials. Accordingly, during the fiscal year under review, we stockpiled our raw
material inventories, delivering a structure capable of responding even to sudden changes. Relatedly, we plan to build a newwarehouse for raw materials sometime in fiscal 2024. In addition, we are moving to diversify procurement sources to hedge
against geopolitical risks.
In light of strides by steel manufacturers in changing blast furnaces over to electric furnaces as part of decarbonization
efforts, we are seeking to augment production capacity for magnesia-carbon refractory bricks for electric furnaces.

Achievements in the second year of the Medium-term Management Plan

Future outlook and targets	Improved production efficiency from full-scale operation of
3,000T press
	Systematic promotion of BCP measures	Switch to LEDs for over 95% of lighting	Improved production efficiency and competitiveness fromdual-production line system for alkaline monolithic refractories
	Augmented production capacity for products for electric
furnaces	Adoption of 775kW-class large solar power generation
systemIntegrated report 2023

Initiatives Supporting Improved
Corporate Value

Strengths of the Hinase Plant

A major feature of the 3,000T press introduced last year is the ability to form bricks automaticallyor manually. High brick-forming pressure is making it possible to stably form large products,
while the ability to choose manual or automatic formation depending on the number of products ordered is improving forming
efficiency. Together with an automated formation-dedicated 2,500T press for mass production, this is contributing to improved
operational efficiency for the entire plant.
In terms of BCP measures, in fiscal 2023 we completed the installation of drainage pump for use as a measure in
response to storm surge caused by typhoons or concentrated torrential rains. We are also breaking down and renovating
obsolete facilities and structures, and completed a new building wing in May 2023. We intend to spend roughly ¥0.1 billion in
updating electricity reception and transmission equipment by the end of fiscal 2024.
Where initiatives for carbon neutrality are concerned, we switched to LEDs for over 95% of lighting for the entire plant,with plans to have all lighting provided by LEDs sometime in fiscal 2024. We also completed adoption of EVs, and are moving
ahead with plans to convert all forklifts over to electric.

22

Initiatives to Enhance
Corporate ValueAt Yotai’s four production bases, we leverage the distinct characteristics andstrengths of each to stably and efficiently manufacture high-quality refractories
to meet customers’ multifaceted and diverse needs.
Together with cost reductions at each base through rationalization and othermeans, we are responding to carbon neutrality and promoting BCP measuresin line with site location and facilities.

HinasePlant

Tadashi Taniguchi

How Yotai Creates Value

Koji Matsumoto
Executive Officer,

Plant Manager, Yoshinaga Plant
For the 1,500T press in operation since August 2022, to extend the useful life of refractories we did a
comparison with our previous 630T press, manufactured high-quality refractories containing fewer gaps,
and are currently verifying customer usage conditions on site and collecting evaluation data. Looking ahead, we hope to expand sales ofhigh-quality refractories based on evaluation data. Furthermore, the adoption of an automated 1,500T press will enable even shorter times
for formation work. Along with boosting productivity, this will lead to an improved work environment in several ways, including by reducing thelabor burden and work noise.
In terms of initiatives for carbon neutrality, we are adopting both solar power generation systems and electric vehicles (EVs). At the Second
Branch of the Yoshinaga Plant, the main production site for monolithic refractories, we have taken steps to transition all vehicles at the site to EVs.
As for BCP measures, in tandem with continuing a variety of drills and similar efforts in collaboration with the local fire department, webuilt a new disaster-ready warehouse and stockpile food, water and other essentials, with the aim of being a plant that can function for thesake of employees and community members in the event of a disaster.
Furthermore, through partnership between the Hinase and Yoshinaga plants, we promote social contribution activities in the Okayama
district. At a new office building to commemorate the 60th anniversary of the plant’s founding, we have installed AED equipment in the
security station that is accessible to the local community. To make for a more welcoming work environment, we have also installed barrier-freeequipment and incorporated elements of universal design.

Future outlook
In the field of environmental systems, trends point to the replacement of traditional gasifying and direct melting furnaces with stoker furnaces,
just as municipality-run garbage treatment businesses spread wider geographically and treatment facilities grow more concentrated. The
Yoshinaga Plant supplies high-quality refractories for gasifying and direct melting furnaces and stoker furnaces alike. However, given the
projected switch to stoker furnaces going forward, plant makers are pushing ahead with the development of new furnace types offering evenhigher performance and efficiency. Furnace changes, in turn, will trigger commensurate changes in desired refractory performance. To ensurethat the Yoshinaga Plant can meet these changing needs, we are allotting development technicians within the plant, and conducting rapid
technology development in collaboration with the Technical Research Laboratory.
Personnel retention and training are emerging as pressing issues. To address these, in addition to continuing to aggressively recruit
local graduates, we are working to reform the mindset of onsite employees and deepen inter-employee communication, as we steadily
promote improved employee autonomy and initiative, and raise skill levels. Looking forward, labor and management will continue to cement
relationships of trust in faithfully conducting fundamental plant operations.

Achievements in the second year of the Medium-term Management Plan	Operational start of 1,500T press	Adoption of solar power generation systems and EVs
	Locally embedded plant operations

Future outlook and targets	Rapid technology development via collaboration with theTechnical Research Laboratory
	Personnel training and employee mindset reform

Integrated report 2023

23

Initiatives to Enhance Corporate ValueHow Yotai Creates ValueBusiness Strategy

Initiatives to Enhance
Corporate Value

Initiatives Supporting Improved
Corporate Value

Data and Corporate Information

Plant
Department
Hinase Plant
Yoshinaga Plant
Kaizuka Plant
Mizunami Plant

Kaizuka
Plant

Naoyuki Nishimura
Executive Officer,
Plant Manager, Kaizuka Plant

Focus on improved quality and production efficiency, with aclose eye on changing trends in the electronic parts field

Build the optimal production line for the intended production lot, and further enhance
the flexible, multi-product, small-lot production system that is a Yotai strength

Strengths of the Kaizuka Plant

Strengths of the Mizunami Plant

At the Kaizuka Plant, Yotai manufactures refractories used primarily in sintering electronic parts.
Roughly half of the products from this plant are sent overseas. In answer to both technologicalinnovation in the industry and cost competitiveness globally, we are introducing new facilities
and actively upgrading existing ones.

At this plant, an efficient production system for the small-lot, multi-product manufacture of refractory
bricks and monolithic refractories alike is a key strength. For OEM products—a Yotai earnings source—
the Mizunami Plant functions as a delivery and gathering hub, helping to reduce logistics costs.

Fiscal 2023 Results

Electronic parts and semiconductor-related fields are areas of anticipated medium and long-term
market expansion. Compared to the other three plants, the Kaizuka Plant is smaller in scale,making improved production system efficiency critical to firmly connecting growing demand to orders received. In June 2023,
we installed a robot to a 1,500T press, a move that completely automated everything, including post-formation palletizing(stacking of bricks on pallets). To achieve even greater production efficiency, plans call for introducing a new high-speed 1,000T
automated press.
Elsewhere, in January 2023, we carried out tunnel kiln visualization (DX). Here, through construction for collecting andanalyzing data on the internal condition of each tunnel kiln, including furnace pressure and oxygen concentration, work formerly
performed by highly skilled laborers to adjust combustion conditions within the furnace based on experience is done withgreater precision. In doing so, we aim to improve product quality and reduce fuel consumption.
In initiatives toward carbon neutrality, a 750kW-class solar power generation system has been online since February
2023, providing 33% of the electrical power the plant uses. In conjunction here with changes in the plant’s contract planwith its power company, we are promoting the use of carbon-free electricity derived from renewable energy, with the aim ofachieving effectively zero carbon emissions from electric power usage.
Regarding the securement of raw materials, we embarked on construction of a new warehouse. With the completion of a
new warehouse in December 2023, Yotai can secure roughly a full year’s worth of inventory.

Future outlook
Regarding the inspection process for kiln furniture used in sintering electronic parts, we will use greater DX to reduceinconsistency in work performed by humans and introduce automated lines for sorting work, with sights set on lifting treatment
volume.
The electronic parts and semiconductor industries are undoubtedly set to expand further. Moreover, given the rapid paceof technological change, vigorous capital investments are taking place at related manufacturers. Similarly, at the Kaizuka Plant
we are matching this speed by collaborating with the R&D Department to develop new products. Many customers in theelectronic parts field are enterprises that are advancing business globally. This means that the Kaizuka Plant’s products mustalso be competitive overseas. In addition to revising plant layout and promoting improved production efficiency through more
automation, we are seeking to both enhance our response capabilities through introduction of a new material line and improve
quality.

24

Mizunami
Plant

Fiscal 2023 Results

Kinya Yamamoto

Thanks to the operation of a 850T press introduced in 2022, the plant achieved a roughly four-fold
Executive Officer,
Plant Manager, Mizunami Plant
improvement in efficiency compared to a manual press. The system in place allows relatively largelot products, such as general and simply shaped products, to be produced by the 850T press rather
than by hand, with products in even smaller lots relegated to the manual press. This division of work is requiring fewer laborers for
production lines overall, while also enabling the development of an efficient production system responsive to lot size. Going forward,
we will take steps to uphold greater mass production and the creation of products with high added value. Since the formation ofrefractories for electronic parts, a field where future expansion in demand is anticipated, has also become possible, we will conduct
tests for establishing a production system.
Furthermore, with needs on the rise for refractories for sintering raw materials for EV batteries, Yotai products are winning praiseand garnering inquiries from repeat large customers. Accordingly, we are exploring options for lifting up our supply capacity.
Initiatives targeting energy conservation, decarbonization and moving toward carbon neutrality are also continuing to gain
momentum. In addition to raising the proportion of recycled oil used in tunnel kilns to roughly 30%, we made improvements to drying
furnaces to reduce heat energy loss. We also achieved a nearly 25% reduction in the volume of electricity purchased thanks to solar
power generation system adoption.
Equipment from Shibata Ceramic Raw Materials Co., Ltd., acquired through a business transfer in October 2022, is now
operating as the Toki Factory of the Mizunami Plant. At this same site, it is also possible to manufacture cordierite and mullite raw
materials for sintering positive electrode materials used in lithium-ion batteries. Leveraging these characteristics, we will strengthen thecreation of a flexible production system.

Future outlook
Concerning initiatives for achieving greater operational efficiency and automation, as part of efforts to further improve manual press
productivity in fiscal 2024, we will install a 300T press that should improve forming efficiency by nearly double. We also hope toautomate sorting processes going forward. Specifically, we will introduce an automated sorting system for general products and largelot products in simple shapes, resulting in a framework with a process requiring a single operator instead of the three currently needed.
As a decarbonization initiative, we will explore options for switching from heavy oil and recycled oil for tunnel kiln fuel to gas fuel,which emits far less carbon.
With respect to BCP, we will prioritize countermeasures for dealing with landslides, floods and other natural disasters to stay
prepared for the risk of an operational shutdown. We will also investigate responses to risks posed by fires and blackouts caused bylightning strikes.

Achievements in the second year of the Medium-term Management Plan

Future outlook and targets

Achievements in the second year of the Medium-term Management Plan

Future outlook and targets

	More efficient production system for front-end and back-end processes
	Promotion of use of carbon-free electricity derived from renewable sources fromsolar power generation system operation and electric power plan changes
	Stockpiling of raw material inventories; securement of new procurement
partners, research and cultivation of new procurement partners to reduce costs	Improve production efficiency in preparation for increased
electronic parts demand, continue initiatives to ensure
quality	Build a new warehouse to stockpile even more inventory	Consider a new material line in collaboration with theAdvanced Materials Laboratory	Achieved roughly four times greater efficiency throughoperation of an 850T press	Addressed large-lot orders for refractories used in sintering raw
materials for EV batteries	Continued initiatives targeting energy conservation,
decarbonization and carbon neutrality	Adoption of automated systems for sorting processes	Greater facility efficiency at the Toki Factory, establishmentof a mass production framework	Strengthen BCP measures targeting landslides, flooding,lighting strikes and other events

Integrated report 2023

Integrated report 2023

25

Initiatives to Enhance Corporate Value

R&D
Department

How Yotai Creates ValueBusiness Strategy

The R&D Department is responsible for R&D operations and technicalservice operations. On a daily basis, department technicians are
involved in business negotiations with customers and dispatched toperform actual furnace inspections, assessing needs while focusing
on the development of high-value-added products.

Focus on product reform and development that contributes to areas like energy savingsand fuel switchover, and accelerate R&D through tie-ups with other companies
Trends in customer needs and technology development
Because Yotai products are used under a wide variety of conditions, technicians in the R&D
Department directly verify usage under actual furnace conditions, allowing them to grasp
customer needs and conduct R&D into possible upgrades and new products.
We are pushing ahead with the commercial development of monolithic refractories,
which we anticipate will offer simpler construction and shorter construction times compared to
Kazunari Imai
refractory bricks. To this end, we are bolstering our lineup of products with improved resistanceExecutive Officer;
post use to cracking and peeling, or shattering at high temperatures. In monolithic refractories
General Manager,
Quality Assurance Department,
for steel, Yotai’s primary client base, taking cost performance into account, we are developing
Advanced Materials Laboratory,
products using recycled raw materials. As an example, in the City of Bizen, home to Yotai’sTechnical Research Laboratory
Hinase Plant and famed for its oysters, we have entered a cooperative agreement with local
Hinase Fisheries Association to explore research into using discarded oyster shells as raw material for refractories.
In refractories for electronic parts, an area where future expansion in demand is expected, we are developing highporosity, high-strength setters (kiln furniture materials) as products that can contribute to energy savings in our customers’
business activities. Using setters with these characteristics allows for an increase in the volume of products that can be
sintered at one time, thereby saving energy.
We also continue to develop non-sintered refractories as part of initiatives for reducing Yotai greenhouse gas (GHG)
emissions. Among steel manufacturers, some customers have announced intentions to replace traditional sintered magnesia
chrome-made products with non-sintered versions made from magnesia carbon, offering superior durability and fewer carbon
emissions. We are pursuing development to ensure Yotai can meet this demand.

Initiatives for switching to non-fossil fuels and next-generation fuels
We are also advancing research and development for switching away from fossil fuels in favor of non-fossil fuels and nextgeneration fuels when manufacturing refractories. Based on joint research with a business partner, in July 2023 we developed
a test high-temperature furnace burning at 1,700oC using 100% hydrogen gas. Future plans call for sintering Yotai products inthis test furnace and evaluating performance.

Future outlook
In addition to collaboration with other companies and regional communities, examples of development pursued throughindustry-academia partnerships are also emerging. We remain committed going forward to pursuing the same kinds of joint
research.
In personnel retention and training, our efforts are centered on gaining the human resources vital to development of
products that will become future pillars for Yotai, along with recruitment and training of personnel who can do technical sales.
Given the rapid changes that occur in markets such as kiln furniture for sintering positive electrode materials for lithium-ion
batteries, we are training specialized personnel who can respond in kind.

26

Achievements in the second year of the Medium-term Management Plan

Future outlook and targets

	Promotion of R&D for monolithic, energy-saving and nonsintered refractories
	Joint development of high-temperature test furnace usinghydrogen as fuel	5 patents filed (incl. 2 under evaluation)	Acceleration of R&D from tie-ups with external companies
and industry-academia partnerships
	Personnel retention and training, including those able torespond to specialized fields

Integrated report 2023

Engineering
Division

Initiatives to Enhance
Corporate Value

Initiatives Supporting Improved
Corporate Value

Data and Corporate Information

The Engineering Division is involved in every step of industrial furnace
development, from design to construction and maintenance, using
refractories manufactured at Yotai plants. Backed by its strength inintegrated materials and construction, Yotai is answering wide-ranging
customer needs across all types of industrial furnace.

Contributing to sales and profits backed by strength in integrated materials and construction
Promoting human resource development, passing on of technology and greater DX ahead of
medium- to long-term growth
Strengths of the Engineering Division
The Engineering Division is the unit largely responsible for concept of “integrated materials andconstruction,” fully integrating everything from industrial furnace design through to construction
and maintenance. Along with engineering technology honed over decades, the division counts
its network of over 40 partner companies as a strength, making meticulous responses to its
customers possible. Customers give high marks to Yotai’s sophisticated construction technology
and proven track record, with the division also winning new orders for environmental systems
and large-scale upgrade projects in recent years.

Motokatsu Kume
Executive Officer
General Manager,
Engineering Division

Fiscal 2023 Results
In fiscal 2023, the Engineering Division reported record sales and ordinary profit. This outcome was the result of several factors,
among them an aggressive drive in collaboration with the Sales Department to gain orders, and its robust responsiveness to
new construction projects and upgrade and maintenance construction for large-scale backbone facilities. To address vigorous
order gains, the division worked through the Sales Department to meticulously adjust schedules, and worked tirelessly todeepen relationships with partner companies.
In recruitment activities, the division made strides in cooperation with Administrative and Plant departments, focusing on
OJT on the training side in a bid to get personnel up to speed quickly.

Future outlook
Japan’s construction industry, of which Yotai is a part, is facing a serious labor shortage brought on by societal aging, andmust also urgently confront the so-called “2024 Problem.” For its part, the Engineering Division is working to retain and train
personnel, promote the passing on of Yotai technology, and achieve more efficient operations through DX and other means inaligning toward sustainable growth.
In personnel retention and training, the division will continue to promote wide-ranging recruitment activities and careful
training, underpinned by collaboration with the Head Office and production plants.
Regarding the passing on of Yotai technology, the division is continuing to push ahead with the development ofeducational tools and an educational training system, all from a base of engineering expertise amassed over decades in theform of construction blueprints and technical calculation software.
On the DX front, the division began offering on a trial basis support for onsite supervisors through remote support devices.
Looking ahead, expanding and enhancing back-office personnel responsible for remote support is also becoming more urgent.
Meanwhile, the division will also take steps to more effectively utilize 3D-CAD and line chase machinery used for rotary kilns
expanded last year.

Achievements in the second year of the Medium-term Management Plan	Achieved record business segment sales and profits	Strengthened collaboration with partner companies

Future outlook and targets	Personnel retention with sights on “work style reform” inApril 2024
	Achieving educational tools and systems for humanresource development and passing on Yotai technology

Integrated report 2023

27

Initiatives to Enhance Corporate Value

Administrative
Department

Business Strategy

How Yotai Creates Value

Initiatives to Enhance
Corporate Value

Initiatives Supporting Improved
Corporate Value

Data and Corporate Information

The formulation of Yotai’s First Medium-term Management Plan made it possible to address
issues based on a medium- to long-term perspective. In fiscal 2023, the second year of
the plan, along with strategic investment for sustainable growth, we made progress inbolstering our organizational structure for ESG promotion, including establishing various
subcommittees under the Sustainability Committee. Striving to be a partner in supporting
the development of customers across various industries, the Administrative Department will
advance both cross-departmental collaboration and personnel retention and training efforts.

Steady advancement of strategic investment and organizational
structure enhancement
Role of Head Office General Affairs Department

Shinichiro Takebayashi
Managing Director,
General Manager,
General Affairs Department,
Head Office

Collaboration between departments and divisions in charge of sales, production plants,
engineering and R&D is crucial to the efficient production and stable delivery of Yotai’s over
50,000 types of multi-product, small-lot refractories. While holding a bird’s-eye view of the entire
Company, the role of the Head Office General Affairs Department is to innovate systems, create
mechanisms and allot funds companywide to support each department and division in operatingsmoothly. This, in turn, underpins improvement in corporate value for Yotai. In implementing
the First Medium-term Management Plan, aside from preparing for adoption of “Mikumo,” themission-critical system that will become the core of DX promotion, actions included pursuing
greater operational efficiency through RPA and AI-OCR utilization, creating more welcoming
workplaces, and embarking on system development for appropriate personnel evaluation.

Fiscal 2023 Results
Enhancing foundations via strategic investment
The drafting of medium-term management plans makes it possible to conduct business operations and decision-making
from a longer-term perspective, and to steadily enact strategic investment that goes beyond simple investment in updates
or renovation. Specifically, we adopted large and high-efficiency presses at each plant for greater production system
rationalization and efficiency, introduced high-performance analytic systems to enhance R&D capabilities, and adopted bothsolar power generation systems and EVs as part of decarbonization efforts. In the back office, along with operation of the“Mikumo” mission-critical system, we utilized “kintone” groupware and business card management software to strengthen ourcustomer response capabilities, and introduced a workhour management system and a raft of IT tools to improve operational
efficiency and support work style reform.
Better visualization of management-level thinking
In addition to medium-term management plan formulation, the publication of “Integrated Report 2022” enabled better
visualization of both the direction in which Yotai is headed and management-level thinking. This move is making it easier topicture future employee treatment and knowledge of operations that should be learned, thus raising the sense of security
employees feel. And while the main purpose of the Integrated Report is information disclosure for shareholders and investors,
there is a real sense that publication has had a ripple effect reaching employees as well.
Build a management framework through the promotion of ESG
Under the First Medium-term Management Plan, one of the basic strategies is management foundation development throughESG promotion, for which measures are steadily being enacted.
E: In the area of “Environment,” we launched an Environment Subcommittee, and began debating specific measures for
reducing greenhouse gas (GHG) emissions at the CNV (Carbon Neutral Vision) Council under this structure. As long-term
measures, we are building up basic technology for replacing fossil fuels with non-fossil alternatives, as well as exposing
the merits and demerits of the switch to non-fossil fuels, among other moves.
Regarding climate-related information disclosure, we implemented a scenario analysis process within the fiscal 2023
securities report, identified climate-related risks and opportunities, specified priority risks and opportunities, establishedscenarios and evaluated their business impact, and disclosed the drafting of countermeasures. We also disclosed theprocess by which risks and opportunities are managed, climate-related indicators and targets, and progress status. We
are also making progress in preparing for disclosure of Scope3 data in the fiscal 2024 securities report.
S:	In the “Society” field, we launched a Human Capital Subcommittee, and defined both “3 Pillars of the Yotai Personnel
Strategy” and “The Five Desired Human Resource Portraits.” At present, we are examining the effectiveness of each

28

Integrated report 2023

measure, and exploring options for even more effective human resource development measures.
Concerning career advancement for women, we launched the Female Career Advancement Project as asuborganization under the Human Capital Subcommittee, aligning issues and drafting action plans based on the results ofsurvey research.
In creating welcoming workplaces, we conducted an engagement survey designed to spur workplace improvement.
While there were some slight differences in temperament between business offices, the results were favorable overall. Asa point for improvement, there was a request, especially among younger employees, to improve the fairness of personnel
evaluations. One factor here may be that not enough time has elapsed since the personnel evaluation system based ona sustainable growth-style remuneration system began operating in April 2022. However, with an eye to seeking mutual
understanding through sustained communication, as the notion of fair evaluation gains traction, we believe that related
numbers will gradually improve.
G:	With respect to “Governance,” in June 2023, we received approval at the General Meeting of Shareholders to transition toa “Company with Audit and Supervisory Committee”-based governance structure. This move will improve managementtransparency and prompt faster decision-making.
Additionally, we augmented personnel inside the Internal Audit Office and otherwise took steps to reinforce ourinternal audit system. In line with operation of our “Mikumo” mission-critical system in October 2023, we carefully monitor
operational task content and flow and expose risks, including making problem points and issues more apparent bysoliciting feedback from frontline employees. We will also strengthen risk responsiveness by improving the in-house status
of internal audit operations.

Future outlook
While on the one hand, the direction in which Yotai is headed and management-level thinking are becoming more visible, there
is room for improvement in ensuring that both the rationale behind the medium-term management plan and specific initiatives
gain further traction among employees. If there is a real sense that efforts to address the work of each employee are directlytied to improved business performance and to raising Yotai’s reputation among clients and society at large, this, we believe,
will enable employees to tackle their daily tasks with even higher levels of motivation. The First Medium-term Management
Plan was drafted as a management-led plan. However, with the Second Medium-term Management Plan set to start from April
2024, we would like to strengthen the involvement of our employees in plan formulation and enable each employee to takemore initiative in implementing the plan.
Furthermore, we recognize that expectations around making capital policies clearer are growing. Under the First Mediumterm Management Plan, we championed a policy of aggressive investment in people, products and information to usher insustainable growth, articulating a target consolidated payout ratio of 30%. At the same time, we fielded numerous requests
from shareholders and investors for disclosure of more precise capital policies. Accordingly, we will continue to explore
options regarding what Yotai’s stance should be with respect to capital policies, taking input into account notably from a newly
appointed external director with expert knowledge of finance and accounting, as well as external experts.

Achievements in the second year of the Medium-term Management Plan	Strengthened organizational structure for ESG promotion, including
establishment of subcommittees under the Sustainability Committee	Greater visibility of management-level thinking from publication of
the integrated report	Transitioned to a “Company with Audit and Supervisory Committee”
governance structure and strengthened internal audit system

Future outlook and targets
	Formulate Second Medium-term Management Plan
	Consider more precise capital policies
	Stable operation and further evolution of “Mikumo”
mission-critical system

Integrated report 2023

29

Initiatives to Enhance Corporate Value

Information
System
Department

How Yotai Creates ValueBusiness Strategy

Thanks to the incorporation of “DX strategy” under the First Medium-termManagement Plan, we pursued various initiatives aimed at digitalization.
As part of the project for transitioning to the “Mikumo” mission-criticalsystem, among other outcomes, more revitalized communication began
to emerge among employees thanks to log utilization.

Initiatives to Enhance
Corporate Value

Initiatives Supporting Improved
Corporate Value

Yotai’s DX Strategy
With Yotai’s DX strategy, the goals are to spur innovation in sales styles to gain new clients, and to extend
management through greater supply chain and value chain sophistication. One concrete DX strategy
initiative advanced currently is the full-scale operation and version upgrade of “Mikumo,” Yotai’s new
mission-critical system.

About DX at Yotai

Progress on the second project from operation of the “Mikumo”
mission-critical system – achieving “client-originated DX”
What is DX at Yotai?
DX at Yotai involves sparking innovation by leveraging digital technology to respond to businessenvironment changes. Being cognizant of the ways in which digital technology should be used inbusiness promotion, as well as the kinds of technology to select and apply to which operational tasks,
are important points for DX at Yotai.

Yasuhiro Inoue

When it comes to DX promotion, client-originated concepts are essential, even while holding fast
to the importance of boosting productivity and the value of pursuing profit as an enterprise rooted
in manufacturing. The role of the Information System Department is to database customer-related
information gathered in the course of normal business activities, along with industry trends, statistical
data and other publicly available information to share in-house. This information is then linked to areas such as Yotai orders, shipments
and other supply chain management data, and quality control in manufacturing. Driving this work are ideas from the management
team and individual directors and employees regarding the kind of value that Yotai can provide to its customers. If, in leveraging thisinformation, we can promote strategic sales activities that expand orders, achieve shorter production lead times and greater efficiency,
and promote both product improvements and new product development, then DX at Yotai will have been fully realized.

Progress on the “Mikumo” mission-critical system operation project
In October 2023, we completed the transition to and launched the full-scale operation of “Mikumo,” Yotai’s new mission-critical system.
In addition to project management and other necessary functions, the goal of the transition is to promote cloud environment utilization
and a shift to paperless operations. As a new initiative, with respect to UAT,* we recorded in groupware and worked to better visualize
all logs, including improvement requests, employee requests, and error reports, and reflected these as much as possible in system
improvements. As a result, employee motivation regarding system improvement is also rising. Along with employees having their own
conversations on additional system improvements after viewing these logs, evidence has emerged that they are becoming more awareof points for improvement. The right approach to DX will differ for every enterprise. For Yotai, there is a sense that utilizing our compiled
data to change operational flow and the flow of goods may be an important first step in its own DX journey.
Today, we are pressing ahead with a version upgrade project as the second phase of “Mikumo,” moving to implement items toaddress that were pushed back at the initial operational launch of the system.
*	User Acceptance Test: Refers to tests conducted by clients/end users to determine whether a software product operates in line with client conditions and expectations, or toconfirm if user needs are being properly met.

Future outlook
By incorporating DX strategy into the First Medium-term Management Plan, DX and information system-related agenda items wereraised at the Management Meeting and meetings of the Board of Directors. Under the Second Medium-term Management Plan,scheduled to start in fiscal 2025, we are aiming for systemization and digitalization that can contribute to sustainable growth for Yotai.
In pursuit of the right DX for Yotai, we will work diligently to attract DX personnel, as well as convert regular employees to thosespecializing in DX.

Achievements in the second year of the Medium-term Management Plan	DX strategy promotion under First Medium-termManagement Plan	New mission-critical system “Mikumo”
	Log recording, utilization under UAT

Integrated report 2023

Specific measures
Mission-critical system innovation
Digitalization via cutting-edge ICT

Leveraging digital technology, spark innovation by
responding to business environment changes

Innovation via information foundation development anddata utilization

What can DX make possible?
Sales style innovation to gain new clientsManagement expansion from increased supply chain, value
chain sophistication

Development of welcoming workplaces for employees
through IT devices and IT systems

Diagram of DX promotion structure
President

DX based on client-originated concepts

General Manager,
Head Office General Affairs
Department Information System
Group

30

Data and Corporate Information

Future outlook and targets
	Promotion of second project from operation of “Mikumo”
	Systemization and digitalization contributing sustainable growth	Securement of DX personnel, conversion of employees to DX
personnel

Managing Director; General Manager,
Head Office General Affairs Department(Responsible for promotion)

Corporate Planning Office

All departments

Information System Group

Promotion of operational reform

Rollout to each plant andsales branch carried out throughoffice management organization

Responsible for secretariat
and IT-related tasks

About the “Mikumo” mission-critical system
In October 2023, we initiated the full-scale operation of “Mikumo,” the new mission-critical system serving as our companywide
network, with the main purpose of promoting improved operational efficiency across Yotai. Today, while verifying the operational
status of Mikumo, we are embarking in parallel on a project for reaching the next version of this system. Meaning “Future-oriented
cloud system,” the name was decided by in-house submissions, and comes from a combination of the Japanese words for“future” (mi) and “cloud” (kumo). With the development of a cloud-based system, our aim is to realize more stable system
operations, while also enhancing our responsiveness to information security and BCP measures.

Thought process behind DX promotion and Mikumo operation
Business environment change happens at light speed, while SDGs andpopulation decline are inescapable realities that must be confronted. Internally,
Yotai has proud traditions in the development, manufacture and sale ofproducts—the core work of the manufacturing industry—as well as frontline
capabilities. At the same time, operational expertise has tended to rely on
individual employees. This experience, knowledge and information are a trove ofinvaluable assets for Yotai. Converting these to digital information will enable thedevelopment of new products and services, Q (quality), C (cost) and D (delivery)
optimization in manufacturing, and improved levels of client satisfaction.

What kind of innovation will DX bring?
Amass digital information
spanning development,
production and sales,
centered on Mikumo

Expert analysis of digital
information and better
visualization for units incharge of operations

Utilizing digital informationin daily tasks, achieve
faster decision-making andbetter onsite operational
efficiency

Rather than bottle up digital
information in-house, take steps
to share it with customers,
suppliers and other relevant
partners for co-creation

Integrated report 2023

31

Initiatives Supporting Improved Corporate ValueHow Yotai Creates Value

ESG Management at Yotai — Environment

In August 2023, along with clarifying its endorsement of thedeclaration from the Task Force on Climate-related Financial
Disclosure (TCFD), Yotai opted to join the TCFD Consortium.
Subsequently, Yotai declared a reduction in greenhouse gas(GHG) emissions as one of the important issues it is prioritizing.
Today, Yotai is using its endorsement of the TCFD declaration andparticipation in the TCFD Consortium as opportunities to further
advance initiatives and explore options for more robust disclosure.

Governance

Basic policy on sustainability
As its corporate philosophy, the Yotai Group “aims to be a faithful company that creates new technologies and products in
response to the demands of revolutionary times, enhances customer satisfaction and contributes to society, using our unique
technology and passing on the history and experience in long-standing refractory manufacturing technologies to the next
generation.” Together with striving to resolve social issues by putting this philosophy into practice, Yotai will push ahead going
forward with initiatives for delivering its own sustainable growth.

Materiality (Important issues)
High quality

S: Social• Reliably stable supply of high-quality products• Constant provision of high-quality technical service• Retention of technological capabilities for adapting
to environmental change• Human resource development and utilization• Promotion of health and productivity management• Social contribution-based regional revitalization

Corporate
Philosophy• Reduction of GHG emissions• Switch to renewable energy• Effective utilization of mineral resources
p.33 Environment

p.36 Social

G: Governance• Governance enhancement• Dialogue with investors and proper information
disclosure• Tighter BCP for responding to crises

Process 2: Selection of priority
issuesProcess 3: Specification ofimportant issues

32

Integrated report 2023

1. Management system
Yotai has installed a Sustainability Committee, chaired by the
President, as a body to promote climate- and human capitalrelated initiatives. Under guidance from the chair, the Sustainability
Promotion Division formulates action plans, while subcommittees
addressing the environment and human capital outline anddevise annual activities in areas such as information gathering,risk conceptualization, countermeasure planning and in-house
education in promoting concrete activities.
Following deliberation and review by the Sustainability
Committee, these plans are reported to and deliberated twice
yearly by the Full-time Directors Meeting, and reported once
annually to the Board of Directors. The Board of Directors is
responsible for setting goals with respect to sustainability-related
initiatives and monitoring the status of progress each year.

Identify issues with reference to social concerns, the business environment and items
requested by stakeholders

Select priority issues for Yotai

Specify important issues through final resolution and approval by the Board of Directors following
preliminary deliberations by the Sustainability Committee and the Full-time Directors Meetings

Sustainability promotion structure
Board of Directors
ReportInstruct/Approve

Full-time Directors Meeting
ReportSustainability
Committee

InstructCompany President(Chair, Sustainability Committee)
ReportInstruct

InstructSustainability Committee members
Instruct

ReportSustainability Promotion Division
ReportOverall
Environment field
Human capital field
Secretariat

Instruct

Subcommittee Environment Subcommittee

Human Capital Subcommittee

2. Role of managers in risk and opportunity evaluation and management
While serving as chair of the Full-time Directors Meeting, the President also bears ultimate responsibility for management
decision-making pertaining to sustainability. Details deliberated by the Full-time Directors Meeting and discussed by the
Sustainability Committee are finally reported to the Board of Directors.
The membership of the Sustainability Committee consists of directors, executive officers and select business officeheads appointed by the President. The committee formulates basic policies for sustainability management, and along with
implementing and checking on sustainability-related matters in the medium-term management plan, carries out initiatives
pertaining to sustainability issues.
Sustainability meetings
Meeting name

Chair

Meeting
frequency

Main topic

Sustainability Committee

Company President

Study of climate-related risks and opportunities
Study of human capital-related risks and opportunities

Twice yearly

CNV (Carbon Neutral Vision) Committee

Company President

Study of methods for reducing Scope1/2 GHG emissions

Monthly

Cost Down Meeting

Company President

Study of adoption of renewable energy systems
Study of adoption of eco-friendly production systems

Monthly

Plant Meeting

Plant Group managers

Horizontal advancement of new system for adoption(renewable energy systems/eco-friendly production systems)
among production plants

Four times
yearlyMaterials Meeting

Company President

Effective utilization of mineral resources
Study of methods for measuring Scope 3 GHG emissions

Six times
yearlyDevelopment Meeting

Company President

Study of technologies for reducing GHG emissions(development of monolithic refractories/non-sintered bricks)

Monthly

HR Strategy Meeting

Director in charge

Specification of human capital-related risks andopportunities; study of appropriate measures

Six times
yearlyCareer Advancement for Women Meeting

Director in charge

Formulation of action plans; plan proposal to management
and progress management

Four times
yearlyp.40 Corporate governance (Governance)

Processes for specifying materiality
Process 1: Issue identification

Data and Corporate Information

TCFD declaration-based climate-related disclosure

Guided by requirements stated in the
Corporate Governance Code, Yotai has
defined a basic policy on sustainability
that further promotes initiatives inthis area, coupled with establishmentof a Sustainability Committee as acrosscutting organization functioning
companywide. Additionally, Yotai
has specified important issues toprioritize in addressing companywide(materiality), promoting businessactivities through these that will enable
sustainable growth.

E: Environment

Initiatives Supporting Improved
Corporate Value

Environment

ESG management at Yotai

p.16 First Medium-term Management Plan Progress

Initiatives to Enhance Corporate Value

Integrated report 2023

33

Initiatives Supporting Improved Corporate ValueHow Yotai Creates Value

ESG Management at Yotai — Environment

Initiatives to Enhance Corporate Value

Initiatives Supporting Improved
Corporate Value

Data and Corporate Information

Climate-related strategy

3. Results of scenario analysis

1. Recognition of organizationally sorted short-, medium- and long-term climate change risks and opportunities
In terms of how climate change will impact Yotai, we have analyzed scenarios imagined over short-term (1 to 3 years), medium-term(through 2030) and long-term (after 2030) time horizons. Risks posed by climate change are divided into risk associated with transitioning
to a low-carbon society (transition risk) and physical impact (physical risk). We have also devised scenarios in which the average global
temperature stays under 2˚C compared to pre-Industrial Revolution levels, including 1.5˚C and 2˚C scenarios, and those in which
temperatures rise to or above 4˚C. We then clearly identified those risks and opportunities thought to carry the highest level of impact.

Established scenarios

Selection of anticipatedrisks and opportunities
caused by climate change

Specification of categories ofpreviously identified risks andopportunities thought to have thelargest impact on Yotai

3. Scenario creation and business
impact evaluation

4. Countermeasureformulation

Devise scenarios for an under 2˚C and 4˚C risein temperatures, and analyze the presumed
impact of each scenario. Compile the results ofanalyses of the important risks and opportunities
identified previously into a logic tree format andevaluate the quantitative impact on business.

Formulate measuresfor Yotai to take in eachscenario to counter or
respond to the previously
evaluated impacts.

2. Likely impact of climate-related risks and opportunities on organization’s businesses, strategies and financial planning
A rating of risk importance revealed 20 risk and opportunity items. Of these, six listed in the chart below are considered to be of “major”
importance.
Chart of potential risks and opportunities, financial impact (quantitative analysis), response measures and timelines for items rated as “major” risk importanceBroadcategory

Type

Policy/regulation

Transition risks– Modest impact, – No impact)
Timeline

Molded products have drying and firing processes that use fuel oil, LNG and electricity.
Molded products are classified as either fired or unfired products; fired products have a
Major firing process that consumes a substantial amount of energy. Various policies currently
being explored for adoption to combat climate change, including carbon taxes and higher
energy conservation standards, will require significant additional costs.

	Investments in energy conservation,
switch to renewable energy and switch tocarbon-free energy	Per-unit reductions in fuel and electricity
	Installation of storage batteries

Long
term

The international community is moving forward rapidly with initiatives to drive
decarbonization. Failure to meet ensuing social demands could run the risk of lower sales
GHG emission
Conversely, if more stringent targets are established in response to these demands, thistargets/policies in
could require more countermeasures than those for currently established targets at theeach country
Major
below 2˚C standard. This, in turn, will entail expenses for new countermeasures. Yotai is
Stronger emission
establishing GHG reduction targets for fiscal 2031, and pushing ahead with introduction
reporting obligationsof solar power and other renewable energy. While reductions in future energy costs fromthe installation of such facilities will emerge, financial risk will rise during facility adoption.

	Investments in energy conservation,
switch to renewable energy and switch tocarbon-free energy	Per-unit reductions in fuel and electricity
	Installation of storage batteries

Long
term

Changes inenergy mix

Growth in fuel prices is directly linked to increases in manufacturing costs, a direct
expense. However, there is concern that manufacturing costs could rise if the levy on
renewable energy power generation based on the electricity feed-in tariff increases instep with the widespread uptake of renewable energy going forward.

Physical risks

Acute

Raw materials for refractories are sourced mainly from China. China has also pledged
to become carbon neutral in 2060, with domestic environmental regulations in China
Major
predicted to intensify going forward. High raw material prices that result from a decreasein supply volume are viewed as an ongoing risk.

Greater frequency
Costs are likely to increase from hindered operations and increased restoration costs
and seriousness ofabnormal weather Major predicted from damage to manufacturing bases and supply chain disruptions caused bypatterns (torrential
more frequent large-scale typhoons, torrential rains and other weather.
rains, flooding, etc.)

Products andservices

Environmental
regulations in eachcountry

Major

Potential risk/opportunity

Opportunities

Market– Major impact,

Degree of impact
Response measure

Carbon tax/
carbon price

34

Importance
rating(Financial impact:

Changes in
consumerpreferences

Integrated report 2023

Given strengths in the manufacture and sale of refractories for electric furnaces, thereplacement of blast furnace products with low carbon, recyclable steel materials,
Major coupled with anticipated growth in the scale of demand for such materials in the future,
could lead to opportunities to expand product sales. Low-carbon refractory bricks, unfired
bricks and monolithic refractories will contribute significantly to the scale of this market.

Under
2˚C

4˚C

	Switch to renewable energy	Further per-unit reductions in fuel andelectricity

Long
term

	Discovery of new sources for purchase of
raw materials	Domestic production	While currently focused on China, seek
stable procurement at appropriate prices
via multiple purchase points, including
outside of China
	Raw material recycling

Long
term

	Production site dispersal in response to
BCP

Long
term

	Expanded sales of refractories for electric
furnaces

Mediumterm

Carbon-neutral society

mitigation (External scenario reference: RCP2.6, SDS/NZE2050)(2) Scenario with significant physical risk (4˚C scenario)“

Society enormously impacted by climate change” – scenario requiring physical

From the study of results of analysis of in-house scenarios, by devising countermeasures,Transition risk

2. Specification of important risks
and opportunities

Smaller category

Carbon-neutral society” - scenario in which regulations, particularly governing

adaptation to combat fierce natural threats (External scenario reference: RCP8.5, STEPS)

1. Identification of risks
and opportunities

Risk/opportunity category“

greenhouse gases, grow stricter, and social systems transition to climate changesuch as investment in energy conservation, energy-saving conversions and expanded

Harshest society
Combination of andSociety enormously
impacted byclimate change

Low-risk society

sales of refractories for electric furnaces, this will heighten the resilience of Yotai
businesses with respect to future risks. For the harshest social scenario, a combination of
scenariosand, risk can be reduced by amalgamating countermeasures separately

Small

Scenario analysis process(1) Scenario with significant transition risk (below 2˚C scenario)

Large

Environment

Large

Physical risks

devised for each scenario.

Climate-related risk management
1. Process for sorting and evaluating climate-relatedrisks and opportunities
The Sustainability Committee studies climate-related risks
and opportunities and, following deliberations by the Full-time
Directors Meetings, reports its findings to the Board of Directors.
After receiving reports on climate-related risks and opportunities,
the Board of Directors ultimately specifies and evaluatescompanywide climate-related risks, exploring options with close
attention to the regulatory environment. Standards for deciding
the relative importance of climate-related risks in comparison toother risks follow below.
(a) Identify risks and opportunities believed to impact materiality as
defined by Yotai(b) Evaluate importance of measures/countermeasures from degree of
impact of identified risks and opportunities on stakeholders(c) Study from quantitative and qualitative perspectives, confirm
importance relative to climate-related risks

2. P rocess for managing climate-related risks and opportunities
Based on risks and opportunities deliberated by the Sustainability
Committee and the Full-time Directors Meeting, Yotai specifies andevaluates risks and opportunities embedded at the business activity
level for each of its four production plants in Japan (Hinase, Yoshinaga,
Kaizuka and Mizunami). Findings are reported to the Board of Directors
for further discussion and resolutions. Discussion concerning theevaluation of risks and opportunities takes place within the Sustainability
Promotion Division, which evaluates from the standpoints of “stakeholder
needs and social trends” and “importance to Yotai’s own businesses.”
Following deliberations by the Sustainability Committee and the Fulltime Directors Meeting, findings are reported to the Board of Directors.
With respect to risks and opportunities identified, the Sustainability
Promotion Division formulates action plans which are reviewed andscreened by the Sustainability Committee. Action plans approved by
the Board of Directors are enacted at each business site. The Board of
Directors is responsible for setting goals with respect to climate changerelated initiatives and monitoring the status of progress each year.

Climate-related indicators and targets
Indicators for evaluating climate-related risks and opportunities
Yotai has defined GHG emissions Scope 1/2 and the percentage of electricity usage in business activities accounted for by renewable energy as two
indicators for managing climate-related risks and opportunities.
Disclosure of Scope1, Scope2 GHG emissions
Total t-CO2 conversion of Companywide Scope1 +2 GHG emissions for FY2014 to FY2022 and targets for FY2030 (Japan business sites only; incl. 5.5 gas)

Scope1, Scope2 GHG emissions（t-CO2e）52,25654,03853,491

55,46851,98953,311
46,282

48,37530% reduction
versus FY2014

45,16036,579FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2030TargetIntegrated report 2023

35

Initiatives Supporting Improved Corporate Value

ESG Management at Yotai — Social

How Yotai Creates Value

Initiatives to Enhance Corporate Value

Initiatives Supporting Improved
Corporate Value

Data and Corporate Information

SocialHuman capital-related strategy
Yotai’s vision is “Becoming a company that continues to improve its corporate value in a sustainable manner in harmony with society.” Alongwith respect for the fundamental human rights of all employees, and prefaced on energetic environments where they find it easy to work,
Yotai is positioning its personnel strategy as a mechanism supporting value creation. As the declaration of “human resource development andutilization” as part of materiality suggests, Yotai’s most important form of capital is its human resources; making improvements in corporate
value is impossible without employee growth. This is why Yotai believes it important for employees and companies to grow together.

3 Pillars of the Yotai Personnel Strategy
Take on challenges

Individual autonomy and independence

Respond to growing technological sophistication

Each employee takes on challenges without fear of
failure, viewing difficult situations as opportunities for
growth.

The environment companies face is constantly
changing. Whether in new product development, facility
upgrade and improvement, response to decarbonization
or DX promotion, address these changes while fervently
believing in one’s own potential.

Viewing employee expertise as a source of added value,
address materiality as expressed in “Reliably stable supplyof high-quality products,” “Constant provision of highquality technical service” and “Retention of technologicalcapabilities for adapting to environmental change.”

Basic HR development policy
Yotai strives for human resource development capable of realizing the three pillars of its personnel strategy – “Take onchallenges,” “Individual autonomy and independence” and “Respond to growing technological sophistication.”

The Five Desired Human Resource Portraitsa.	Human resources able to adapt to business environment changes by gaining sophisticated technological capabilities necessary for
new product development, facility upgrade and improvement, responding to decarbonization and DX promotion; those who can turnideas into realityb.	Human resources who can act proactively and are self-directed in building a career, and those with a desire for growth and a strong
sense of self-efficacyc.	Human resources who are problem-solvers able to execute with passion without falling to adversityd.	Human resources with high-level communication skills who can move proactivelye.	Human resources capable of being self-starters, ready to take on the challenges of value creation and reform with spirit

Initiatives for human resource development (including plans)
Recruitment
Amid increasingly fierce competition to attract personnel due to labor
shortages caused by falling birth rates and societal aging, Yotai aims to be theenterprise of choice for human resources. To this end, the Company equallyprovides opportunities to talented human resources who are right for Yotai,
recruiting those outstanding individuals possessing high-level knowledge, alongwith a strong desire to tackle challenges and who are capable of independent,
autonomous action. Meanwhile, Yotai works throughout the year to recruit new
graduates, mid-career hires and global hires to secure professional humanresources with the expert skills to make new product development, facility
upgrade and improvement, responding to decarbonization and DX promotion
possible.
Allocation
Yotai human resource allocation is designed to place the right resources in theright place, taking into account individual skills and aptitude, as well as future
career paths. For outstanding technical skill and clerical positions, Yotai seeks
to create both opportunities for further advancement and a worthwhile rangeof duties, introducing a system allowing employees to convert back into thegeneral employment pool.
Retention
Each year, Yotai conducts its “Employee Engagement Survey” as an approach
to raising its retention rate. Based on the results, we promote improvements
in organizational capacity to heighten engagement and advance corporate
culture changes. Among others, this has led to more robust social welfare
offerings, the introduction of diverse and flexible work styles, work-life balancepromotion, and a fairer personnel evaluation system.
Developmenta. Occupational level-based training seminars
Throughout the year, Yotai conducts training seminars designed to supplement
the management capacities and skills required for each occupational level, as well
as specialized trainings for acquiring knowledge critical to business execution.

36

Integrated report 2023

b. In-house study sessions
In a bid to boost skills, veteran employees serve as lecturers for study sessions
across an array of fields, ranging from specialized knowledge pertaining torefractories and related construction, to safety, quality and DX. All employees
are invited to take part in the sessions, regardless of their home department.
c. e-learning (online training seminars)
Yotai introduced e-learning from fiscal 2022. Going forward, Yotai will enhance
the lineup of courses available based on employee feedback, with an eye
to further fueling the desire to learn among employees and helping them toupskill.
Evaluation system
Since April 2022, Yotai has operated a talent management system following
the adoption of new personnel remuneration evaluation and goal management
systems. Aimed at key and general employment pool occupations, this systemseeks to promote fairer evaluations as well as goal achievement throughdialogue between supervisors and subordinates.
For technical skill occupations, Yotai plans to revise its merit-based
remuneration system from April 2024.
Promotion of diversity and inclusion
To optimally showcase the respective skills of diverse human resources, Yotai
positions diversity and inclusion as a priority management measure. In addition
to offering a wide range of opportunities for advancement to diverse personnel
ready to take on challenges, Yotai seeks to create environments that sparkvalue creation. Through the recruitment of new graduates, mid-career andglobal hires, and post-retirement rehires, Yotai is welcoming a variety of humanresources, each with ways to advance while highlighting their own individual
personality and strengths. Yotai is also actively working to promote both therecruitment of new female graduates into the general employment pool and theappointment of female managers. The sharing and mutual acknowledgementof viewpoints between personnel with diverse values and outlooks, regardlessof sex, nationality or work history, will lead to personal growth and further

advancement for Yotai.
The Human Capital Subcommittee, under the Sustainability Committee, hasestablished a “Career Advancement for Women Meeting” in which the female
external director also participates. By compiling key topics, and through theformulation and execution of action plans, Yotai is striving to create work
environments in which women can advance and thrive.

Health and productivity management
At Yotai, we firmly believe that the best way to ensure a sound enterprise isthrough the physical and mental wellbeing of every employee. To this end, wevigorously conduct employee health promotion activities. Industrial physicians
are appointed or in place at every business site, with whom employees haveface-to-face meetings once a month. Among other benefits, this enables
early discovery of physical and mental health issues, and an opportunity
for the physician to provide guidance for maintaining health. Accordingly,
we are building the foundations needed to aim for health and productivity
management certification (large enterprise category) by Japan’s Ministry of
Economy, Trade and Industry in the fiscal year ending March 31, 2024.
Establishment of safety and healthWith “Putting safety first above all else” as our motto, the Yotai President
himself establishes hazard avoidance standards to prevent workplace
accidents and injuries, coupled with the promotion of comprehensively planned
prevention measures. These include accountability structure clarificationand the devising of mechanisms to encourage autonomous action. At eachbusiness site, plants have health and safety patrols. Additionally, throughmutual patrols instituted between four plants and the convening of safety
and health committees, Yotai is ensuring employee safety and health, andencouraging the formation of comfortable work environments.
Personal statement system
Once each year, key and general employment pool employees have theopportunity to personally raise issues pertaining to their work duties, ways toimprove treatment and any concerns directly with the President. This system
also allows the President himself to gain an understanding of an employee’s
grasp of skills, as well as problem points and issues in the workplace. The
President and employees hold periodic get-togethers to find solutions to
issues raised by the personal statements, working actively to nurture theircommunication.
Work style reforma. DX utilization
Yotai is reducing staffing needs and striving to shorten overtime work hours bytaking advantage of AI-OCR and RPA to automatically deal with simple tasks
across all departments and division.
b. Region-locked employee and job transfers
For key and general employment pool occupations, Yotai is studying the
adoption of region-locked system for employees in general employment pooloccupations who are unable to transfer outside of the region due to personal
circumstances. In parallel, we are making progress in exploring a systemthat allows outstanding human resources involved in clerical occupations totransfer their job into the region-locked general employment pool, preventing
the outflow of talent while also contributing to more women in managerial
occupations.
c. Telecommuting
As a freer approach to work that avoids actual commutes or being at an
office, Yotai is studying adoption of a telecommuting system for the Sales
Department, General Affairs and other back-office departments and divisions.
d. Reward system for continuous years of service
For all employees, Yotai grants commemorative prizes and special holidays
for years of continuous service at 10-, 20-, 30- and 40-year milestones. This
creates opportunities for employees to refresh themselves physically andmentally by using the time off and prizes for family vacations, hobbies andother pursuits.
e. Promotion of annual paid leave (annual leave) use
Annual leave can be taken in full-day, half-day and quarter-day increments,
providing an environment that makes taking annual leave easy.

Provision of challenging opportunities
a. Cost Reduction Meeting
Here, proposals can be submitted and budgetary support gained to improve
facilities around themes such as enhanced productivity and quality.
b. Kaizen proposal system
To assist in improvements around themes such as enhanced productivity andwork efficiency, Yotai has established a “Kaizen (corporate improvement)”
proposal system designed to encourage employees to propose improvements
beneficial to the work they perform.
Scholarship fund for gaining qualifications
This system serves not only to retain individuals with official qualifications
necessary for corporate management, but promotes self-awareness andencourages employees to upskill by gaining official and private-sector
qualifications such as Energy Manager (heat, energy), Pollution Prevention
Manager (Type I, Type II), and Occupational Safety and Health Manager (Type I).

Human capital-related indicators and targets
The Yotai Group employs the following indicators regarding the three pillars of its personnel strategy. Targets and achievement
for the respective indicators are found below.
FY2026 Targets
Indicators
Annual leave utilization rate
Saving work-time labor using AI-OCR,
RPA
Total time held for e-learning courses(back-office depts.)
No. of workplace accident incidents(off-time + worktime)“Three Pillars” categories
Individual autonomy and independence
Take on challenges
Individual autonomy and independence
Respond to growing technologicalsophistication
Individual autonomy and independence
Take on challenges

Targets

Actual results (FY2023)

Aim for 76% or higher.

72%

Aim for a cumulative reduction in work hours of 10,000 hours
between April 2023 and March 2027.

Cumulative reduction of 4,320 hours
from April 2021 to Mar. 2023

Aim for annual time taken for e-learning courses of 10 hours
or more per person.
Aim for fewer than 7 incidents (0 off-time, 7 worktime) peryear.

18 hours companywide from Feb.
2023 to Mar. 2023 (2 months)
11 incidents (0 off-time, 11 worktime)

FY2030 targets
Indicators“Three Pillars” categories

Targets

Actual results (FY2023)

Appointment of female managers

Take on challenges

At least 10% of all managers, or at least 10 individuals

2 people as of March 31, 2023

Appointment of non-Japanese managers

Take on challenges

At least 10% of all managers, or at least 10 individuals

2 people as of March 31, 2023

Take on challenges

Of mid-career hires, at least 10% or at least 10 individuals appointed
to manager as a target for FY2023 to FY2030

1 person from Apr. 2022 to Mar. 31,
2023

Appointment of mid-career hires as
managers

Integrated report 2023

37

Initiatives Supporting Improved Corporate ValueHow Yotai Creates Value

ESG Management at Yotai — Social

Initiatives to Enhance Corporate Value

Initiatives Supporting Improved
Corporate Value

Data and Corporate Information

SocialNEW

Female career advancement project

As one plank in promoting diversity and inclusion, in September 2023, Yotai launched a project designed to promote theadvancement of female employees. Owned by the President, with the female external director serving as advisor, this projectcompiled relevant issues and formulates an action plan. This diligent effort to create work environments where women canflourish is leading to personal growth and Yotai’s own advancement.

Female career advancement project - “Sunrise Project”
Background and objective
With the coming into force of the “Act on the Promotion of Women’s Active Engagement in Professional Life” in April 2016,
enterprises of a specific size or larger were required to formulate, submit and publicly announce action plans, including
numerical targets, for female career advancement. Due to rising labor shortages caused by falling birthrates and societal aging,alongside growth in the number of working women, a transformation in consciousness among women toward an emphasis on
careers is gaining momentum. Yotai also set sights on cultivating a corporate culture enabling the retention and advancementof women, improving the management consciousness and skills of female employees themselves, and improving recruitment
rates for female graduates and the number of women in management. These efforts culminated in the launch of this project.
The name of the project, “Sunrise Project,” was decided by internal submissions.
Project overview (planned for Sep. 2023 to Apr. 2024)
From September 2023 to April 2024, Yotai is holding regular monthly meetings. Drafts are devised by the project and labor
leaders, and discussed by the project members. Feedback from female employees in technical skill positions is taken up bylabor leaders at each production plant for submission and debate at the meetings. Our aim is to formulate an action plan for
submission to the relevant labor bureau in April 2024.
Having an organizational structure and systems in place for female employees who want to continue working, and creatinga framework for human resource development that proactively grants growth opportunities, are essential for increasing both
the recruitment rate for new female graduates and the percentage of women in management. In drafting the Second Mediumterm Management Plan (running from fiscal 2025 to fiscal 2027), we will incorporate targets for the career advancement of
women, with the entire Company working together to achieve them.
Example themes from the project

Sep. 2023

Oct.

Nov.

Dec.

Jan. 2024

Feb.

Mar.

Schedule and progress for investment in people, products, information and other areas...Preparation time window
Fiscal 2022
Fiscal 2023
Fiscal 2024
SecondSecondSecondFirst halfFirst halfFirst half
half
half
half

Recruitment

Training

Management

Aggressive career human resource recruitment

Progress largely as planned

Adoption of scouting-style recruitment approaches

Progress largely as planned

Personnel evaluation system revision and implementation

Enacted from Apr. 2022

Skill improvement programs creation and implementation

Preparation begun from FY2023

Working hour management system utilization

Progress largely as planned

Personnel information consolidation and utilization

Enactment from FY2023

Promotion of health and productivity management

Ongoing preparation

Installation of presses 1,500 tons and over

Progress largely as planned

Adoption of organization analysis systems

Progress largely as planned

Adoption of property evaluation equipment

Progress largely as planned

Study introduction of surface modification equipment forelectronic part productsContinued consideration

Adoption of industrial furnace inspection drones

Progress largely as planned

Installation of solar panels

Progress largely as planned

Adoption of electric vehicles and electric forklift trucks

Progress largely as planned

Products
Adoption of large highpressure presses
Equipment for new productdevelopment
Diversification of industrial
furnace inspection methods
GHG emission reduction

Information

Apr.

DX promotion

Issue identification

Improve business efficiency through the use of advanced
ICT, such as RPA and AI-OCR
Improve customer response capabilities via introduction ofsales support systems
Work style reform through working hour management system
adoption
Promotion of talent management through personnel
management system adoption
Organizational capacity improvement through systemizationof manual work in the Engineering Division
Improve operational efficiency and productivity via missioncritical system renovation (Mikumo)

Countermeasure drafting
Action plan formulation and submission

Promotion status

PeopleProject kickoff
Shared targets
Analysis of survey research...Start of operations

Progress largely as planned
Progress largely as planned
Progress largely as planned
Progress largely as planned
Continued consideration
Operational Oct. 2023

Other areas
M&A investment in related fields

Continued consideration

Results and analysis of “Consciousness Survey on Female Career Advancement 2023”
At the kickoff meeting for the project in September 2023, wereported a summary and results of the “Consciousness Survey on
Female Career Advancement 2023” conducted in July the same
year. The survey was distributed to 67 female employees in Yotai’s
general employment pool, and those in clerical and technicalskill occupations, with an effective response rate of 77.6%. The
2023 survey asked if respondents felt any issues with respect
to engagement and retention of female employees. The mostcommon finding was more than 20% responding that “there areno (or few) female role models within the Company” (20.7%).
External Director Shinobu Akiyoshi is also participating in
the project, and will advance effective measures and initiatives
for cultivating an organizational culture enabling women with theambition to do so to thrive.

38

Integrated report 2023

Initiatives for SDGs

Project members from sites across Japan took part in the Sunrise Project online
meeting. External Director Shinobu Akiyoshi (right step, second from top) also
took part.

Donations to the City of Bizen’s “Town-PeopleJobs Revitalization Fund Utilization Project”

Support for emergency assistance toearthquake victims in Turkey

Signing of support agreement with Hinase
Fisheries Association

In partnership with the City of Bizen (Okayama Prefecture,
Japan), home to the Hinase and Yoshinaga plants, aim forcontinued business activities in coexistence with the region¥1 million in donations following the February 2023
earthquake in Turkey

Signed support agreement involving preparation of sites
for growing eelgrass, often referred to as a “blue carbon
ecosystem,” which creates abundant fishing grounds(Photo: Sowing eelgrass seeds)

Integrated report 2023

39

Initiatives Supporting Improved Corporate ValueHow Yotai Creates Value

ESG Management at Yotai — Corporate GovernanceInitiatives to Enhance Corporate Value

Initiatives Supporting Improved
Corporate Value

Data and Corporate Information

Governance
Development of an efficacious, fair and highly transparent corporate governance structure

Initiatives for a more robust governance structure

Overview of Yotai’s governance structure

Effectiveness evaluation of the Board of Directors
Each year, Yotai conducts an analysis and evaluation of theoverall effectiveness of the Board of Directors. In fiscal 2023,
analysis and evaluation of the Board’s overall effectiveness was
based on the results of signed questionnaires submitted by all
Directors and Corporate Auditors. In addition to the reportingof evaluation results to the Board of Directors, Yotai confirmed
both the status of improvements versus the previous year’s
evaluation and future issues to address. As a result, the Boardof Directors was evaluated as having retained its effectiveness.
As an issue to address going forward, Yotai also confirmed theneed to further enhance the reporting and discussion by the
Board of Directors of certain matters, most notably pertaining
to sustainability. Based on the results of the effectivenessevaluation and various input from each Director and Corporate
Auditor, Yotai will take steps to further enhance the functionalityof the Board of Directors going forward.

Rationale for adoption of current structure
Following a resolution approved at the 125th Ordinary General
Meeting of Shareholders on June 22, 2023, Yotai transitioned
from a Board of Corporate Auditors to a “Company with Audit
and Supervisory Committee”-based governance structure. Byenhancing the supervisory function of the Board of Directors andotherwise strengthening corporate governance, this transition
seeks to further improve management transparency while also
making faster decision-making possible. Principal bodies at
Yotai related to corporate governance are highlighted below.
Directors and Board of Directors
Yotai has eight Directors, three of whom serve as External
Directors. The Board convenes regularly each month, withspecial meetings held as necessary. The Board of Directors is
charged with deciding important management-related matters,
along with monitoring business execution.
Audit and Supervisory Committee
The Audit and Supervisory Committee is comprised of four
Directors who serve as its members. Three of these Audit andSupervisory Committee members are External Directors. Alongwith exchanging and shaping opinions with respect to audits
through monthly Audit and Supervisory Committee meetings, we
strive to ensure robust audit and supervisory functions, including
through attendance of the full-time Audit and Supervisory
Committee member at the Full-time Directors Meeting and otherimportant gatherings. Furthermore, in a bid to collaborate on
audits by the accounting auditor and internal audits, the Audit
and Supervisory Committee exchanges opinions regularly withthe accounting auditor and the Internal Audit Office in striving toenhance audit and supervisory functions. Audit and Supervisory
Committee member and External Director Yusuke Otsuka, as acertified public accountant and tax accountant, has considerable
insight related to finance and accounting.

Nomination and Compensation Advisory Committee
The Nomination and Compensation Advisory Committee isestablished as an advisory body to the Board of Directors.
Independent External Directors comprise more than half of its
membership, with the committee itself responsible for ensuring
the fairness, transparency and objectivity of procedures
pertaining to the nomination and compensation of Directors.
Full-time Directors Meeting
The Full-time Directors Meeting is held regularly each month,and serves as a venue for deliberating management plans andrelated business execution from a variety of angles.
Executive officer system
Yotai introduced an employment-style executive officer systemfrom July 2020. In addition to laying the groundwork for shifting
to a structure that puts an emphasis on monitoring functions
within the Board of Directors, the adoption of an executive
officer system seeks to enhance business execution functions.

Corporate governance structure, including internal control system overview
General Meeting of Shareholders
Elect / Dismiss

Accounting auditor(Auditing company)

Collaborate

Elect / Dismiss

Directors who are members of the Audit
and Supervisory Committee
4 persons (3 External Directors)

Elect / Dismiss

Directors(non-Audit and Supervisory Committee members)
4 personsAudit /
Monitor

Audit and Supervisory
Committee

officers. The theme of another seminar for all Directors andauditors provided an overview of the “Company with Audit andSupervisory Committee”-based governance structure.

Constructive dialogue with stakeholders
Yotai recognizes dialogue with shareholders as essential tosustainable growth and improving its corporate value over the
medium to long term. To this end, the Head Office General
Affairs Department serves as a point of contact for fielding
requests from shareholders and all other stakeholders. In
particular, certain Directors and other officers are assigned
to answer requests for individual meetings and telephoneinterviews with shareholders and institutional investors.
IR and SR activity results
Results briefing for institutional investors 1 time
IR and SR individual meetings 30 times
Major themes and points of interest from conversations
Outcome of exercise of voting rights at the General Meetingof Shareholders, business summaries, capital policies,
shareholder returns, ESG-related issues
Status of implementation of feedback to the management
team and Board of Directors on shareholder opinions andconcerns learned from conversations
As appropriate, the Board of Directors offers feedback onquestions from participants in result briefings and details
from individual conversations.
Matters taken up in light of conversations and subsequent feedback
Yotai carried out a cancellation of its own shares in April 2023.
Extensive effort is made to prevent the authorized leak ofinsider information in conversations with Yotai shareholders.
Response for achieving capital cost- and share priceconscious management
Along with ample analysis and evaluation of current status by
the Board of Directors and exploration of policies and targets, allguided by an accurate grasp of capital cost and capital profitability,
plans call for disclosing such information as quickly as possible.

Director and Corporate Auditor training
Yotai is continuing to provide Directors (excluding those serving
as Audit and Supervisory Committee members) and Directors
serving as Audit and Supervisory Committee members with
opportunities to acquire the knowledge necessary to fulfill
their respective roles and duties. Our basic policy is to offer
necessary support in this area, including assuming responsibility
for any related expenses. For External Directors, Yotai creates
opportunities, as needed, to conduct plant inspections andotherwise deepen their understanding of business operations.
Newly appointed Directors, meanwhile, take part in seminars
sponsored by external bodies to further understanding of theirrespective roles and duties.
In fiscal 2023, outside organizations held themed
seminars on responses pertaining to cross-shareholdings andinsider trading aimed at all Directors, auditors and executive
Enhancements and changes in corporate governance
2019

Board of Directors

2020

2021

2022

Transition to “Company with
Audit and Supervisory Committee”-based governance structure

Changes in institutional design
Select / Dismiss
Collaborate

ReportReportPresident

Report / Advise

Nomination andCompensation
Advisory Committee

Board of Directors
Figure in ( ) is number of External
Directors

5 (1)

6 (2)

6 (2, 1 woman)

Audit

Internal Audit Office(1 person)

Full-time Directors Meeting

Audit

Audit

Director and other officer
compensation

Other

All business divisions, subsidiaries

Instruct / Monitor

Adoption of remuneration system
offering transfer-restricted shares
Introduction of Executive Officer system

Executive Officers 6 persons

ReportIntegrated report 2023

8 (3, 1 woman)

Establishment of Nomination andCompensation Advisory Committee

Voluntary committee

40

2023

June 2018 revised CG CodeFull compliance

Compliance with June 2021
revised CG Code

Revised CG CodeFull compliance

Board of Directors effectivenessevaluation enactment

Integrated report 2023

41

ESG Management at Yotai — Corporate GovernanceInitiatives Supporting Improved Corporate ValueHow Yotai Creates Value

Initiatives to Enhance Corporate Value

Initiatives Supporting Improved
Corporate Value

Data and Corporate Information

GovernanceInternal control systems and risk management structureInternal/
external
Independent
officer

Composition of Board of Directors, skill matrix
Rank and responsibilities within Yotai

AuditsIT
Management Technology/ Sales Personnel/ Finance/ Legal/risk (operations/ ESG systems
R&D
Labor accounting management accounting)Board of Directors meeting
attendance(FY2023)

Directors (excluding those
who are Audit and Supervisory
Committee members)

Sex

Mitsuo Taguchi Internal

Board of Directors: Attended 14/14 times
Nomination and Compensation Advisory
Committee: Attended 4/4 times

Shinichiro Takebayashi InternalPresident
Chair, Nomination and Compensation Advisory Committee
Managing Director; General Manager, Head Office
MaleGeneral Affairs Department

Tadashi Taniguchi Internal

Male Director; Manager, Hinase Plant

Board of Directors: Attended 14/14
times

Yorisada Matsumoto Internal

Male Director; General Manager, Tokyo Branch

Board of Directors: Attended 10/10
times

Directors who aremembers of the Audit andSupervisory Committee

Name

Skill

Takashi Umezawa Internal

Male Audit and Supervisory Committee member (full-time)

Shinobu Akiyoshi External

FemaleBoard of Directors: Attended 12/14
times
Board of Directors: Attended 14/14 times
Nomination and Compensation Advisory
Committee: Attended 4/4 times

Katsuhiko Omoto External
Yusuke Otsuka External

Male

Board of Directors: Attended 14/14
times

Audit and Supervisory Committee member (external)
Nomination and Compensation Advisory Committee
Audit and Supervisory Committee member (external)
MaleNomination and Compensation Advisory Committee
Audit and Supervisory Committee member (external)
MaleNomination and Compensation Advisory Committee——

The above chart is not an exhaustive account of all skills, experience, capabilities, other knowledge or accomplishments possessed by the individual Directors listed.

Compensation for Directors and officers
At the 125th Ordinary General Meeting of Shareholders on June 22,2023, Yotai transitioned to a “Company with Audit and Supervisory
Committee”-based governance structure. In the wake of this move, Yotaiis determining policies related to Director compensation, specifically themonetary amount and calculation methodology.

Basic policy
For the remuneration of Yotai Directors (excluding Directors serving as
Audit and Supervisory Committee members), the Company has opted fora remuneration system linked to shareholder profits, allowing it to function
amply as an incentive for sustained improvement in corporate value.
When making decisions regarding the remuneration of individual Directors(excluding Directors serving as Audit and Supervisory Committee
members), the basic policy is to set such at a standard appropriate in lightof the Director’s specific duties and responsibilities. Specifically, Director
remuneration consists of basic compensation as fixed remuneration,
performance-based compensation, and non-monetary remuneration.
Policy (including policy with respect to determining timing and terms for granting ofcompensation) determining the amount of individual compensation
with respect to basic compensation (monetary remuneration)
The basic compensation of Yotai Directors (excluding Directors serving
as Audit and Supervisory Committee members) is decided based on a
fixed monthly remuneration and comprehensive consideration of otherfactors such as rank, assigned duties, number of years in the position,
performance in each business term, and balance with respect toemployee salaries.

Policy (including policy with respect to determining timing and terms for grantingof compensation) for determining details, amounts and numericalcalculation methods regarding performance-based compensationand non-monetary remuneration
Performance-based compensation is designed to heighten awarenessof the need to improve performance each fiscal year. It consists of cash
compensation reflecting performance, the amount of which is calculated
based fundamentally on total dividends and ordinary profit each fiscal
year, and is paid as a bonus given at a set time annually. For the fiscal
year under review, performance-based compensation totaled ¥35 million.
Non-monetary remuneration involves the offering of transferrestricted shares, and is granted as an incentive to encourage sustained
improvement in corporate value, as well as to further promote sharedinterest with Yotai shareholders. Yotai Directors (excluding Directors
serving as Audit and Supervisory Committee members) are given
monetary claims granting transfer-restricted shares, for a total amountcapped at ¥50 million per year; Yotai can issue or dispose of up to
100,000 shares of common stock annually (however, in the event of a
split of Yotai shares of common stock (including the gratis allotment ofsuch shares) or a stock merger, depending on the split or merger ratio,
the total number of such shares is adjusted within a rationale scope, as
needed). These claims are dispensed at a set time annually. For the fiscal
year under review, the Company paid non-monetary remuneration totally¥14 million in monetary claims treated as contributed assets, and allotted
10,464 shares. As warranted, this system is reviewed upon request fromthe Nomination and Compensation Advisory Committee.

Total Remuneration for Fiscal 2023
Total compensation by type (Thousands of yen)

Director/Officer

Total compensation(Thousands of yen)

Basic compensation

Directors (excl. External Directors)

166,700

118,011

34,09014,5995

Corporate Auditors (excl. External Corporate Auditors)

18,32718,327——2

External Directors

24,74023,040

1,700

—

5

Performance-based compensation Non-monetary remuneration

Eligible Director/Officer(Persons)

Notes: 1. Total compensation for Directors does not include the employee salary paid to Directors serving concurrently in key personnel roles.
2. Total compensation for Directors includes a provision for bonuses of directors of ¥35 million for the fiscal year under review.
3. Total compensation for Directors (excluding External Directors) includes amounts paid to one Director who retired at the conclusion of the 124th Ordinary General Meeting of
Shareholders held on June 23, 2022.

42

Integrated report 2023

The Board of Directors had defined the basic policy below regarding
development of the Company’s internal control systems. Based on
this policy, Yotai and its subsidiaries work to ensure the suitablenessof their operations, while constantly reviewing the status of theircurrent systems to achieve ongoing improvements, with the goal ofbuilding a more effective internal control systems going forward.

1. System for ensuring the Directors and key personnel of Yotai and its subsidiaries execute duties in conformance with the law and the Articles of Incorporation(1)	Yotai has defined a corporate philosophy, code of conduct and ethical guidelines, extensively spreads awareness of these among all Yotai Group Directors, officers and employees, and complies with laws
and internal regulations in line with its basic rules regarding compliance.
(2)	Based on internal audit regulations, the Internal Audit Office collaborates with the Audit and Supervisory Committee and others to conduct internal audits for examining whether the Yotai Group is inconformance with laws and internal regulations.
(3)	The Yotai Group seeks to prevent situations in which the execution of duties by Directors and key personnel is in violation of laws, the Articles of Incorporation or internal regulations, or are lacking inlegitimacy; the Group also fulfills its social responsibility as a corporation by ensuring the reliability of financial reporting and providing appropriate information. Together with monitoring regulations
designed to contribute to the maintenance and improvement of the Group’s social trust, Yotai strives to discover and correct wrongdoing as early as possible.
2. System for storage and management of information pertaining to execution of duties by Directors(1) For information below pertaining to the execution of duties by Directors, such information is stored and managed in line with the law and internal regulations.
1. Minutes from the General Meeting of Shareholders 2. Minutes from meetings of the Board of Directors 3. Minutes from the Full-time Directors Meeting 4. Other information(2) Yotai maintains such information so that it is readily viewable by Directors.
3. Regulations and other systems for managing the risk of losses for Yotai and its subsidiaries(1) Based on the current status of regulations regarding the risk management system, the Group maintains a risk management system that clarifies responsibilities and authority.
(2) The Group clarifies acute and latent risks, and rates the impact such risks pose to management.
(3) For risks believed to pose a significant impact for Yotai Group management, the Group maintains a monitoring system and a system for minimizing losses caused by risks that materialize.
(4) The identification and evaluation of risks to the Yotai Group are periodically reviewed.
4. System for ensuring efficient execution of duties by Directors of Yotai and its subsidiaries(1)	The Board of Directors, based on Board rules and the operating guidelines of the Full-time Directors Meeting, strives to enhance management efficiency without injuring the soundness of the Company itself.
(2)	The Board of Directors decides management targets based on management policies, and spreads awareness extensively to key personnel through the Management Meeting, consisting of Directors andpersonnel in charge of each department and division.
(3)	The Board of Directors, in principle, meets at least once monthly. In conducting efficient management, the Board evaluates goal achievement status and works to review management driven by rapid
decision-making.
(4)	In parallel with the election of Independent External Directors and preparing to shift to a system that emphasizes the supervisory functions of the Board of Directors, Yotai is introducing an Executive Officer
system in a bid to strengthen operational execution functions.
(5)	Yotai has established the Nomination and Compensation Advisory Committee, with Independent External Directors comprising over half the membership, as an advisory body to the Board of Directors. The
Committee is entrusted with ensuring the fairness, transparency and objectivity of procedures pertaining to the nomination of and compensation for Directors.
5. System related to reporting to Yotai of matters pertaining to the execution of duties by Directors of subsidiaries
Yotai’s operating manuals for its Production Meeting and Management Meeting mandate the periodic reporting of subsidiary operating results, financial condition and other important information to the Company.
6. Matters regarding key personnel assisting the Audit and Supervisory Committee
Key personnel to assist Audit and Supervisory Committee in the performance of their duties are allocated as needed upon request by the Audit and Supervisory Committee, with personnel chosen based on
specialized skills for the task.
7. Matters related to ensuring independence from Directors (excluding those who are Audit and Supervisory Committee members) of the aforementioned key personnel and efficacy of instructions
given to such personnel
The appointment, transfer, period of assistance and other decision-making matters regarding personnel authority pertaining to key personnel assisting the Audit and Supervisory Committee requires the priorconsent of the Audit and Supervisory Committee to ensure independence from the Directors (excluding those who are Audit and Supervisory Committee members).
8. System for reporting by Directors and key personnel to the Audit and Supervisory Committee and system for prohibiting mistreatment of reporters(1)	Directors and key personnel are to immediately report, upon discovery, any events that could have a significant or dramatic impact on Yotai Group management, or any such matters conveyed to themfrom outside the Company, to the Audit and Supervisory Committee.
(2) Upon request from the Audit and Supervisory Committee, Directors and key personnel are to report, without delay, on any matters pertaining to the status of execution of their duties.
(3) In accordance with internal reporting regulation, any retaliatory behavior against a reporter is prohibited.
9. Matters related to policy pertaining to advance payment of expenses arising from execution of duties by Directors who are members of the Audit and Supervisory Committee, reimbursement
procedures and other expenses arising from said execution of duties and treatment of debt
When requested by Directors who are members of the Audit and Supervisory Committee to pay in advance for expenses arising from the execution of their duties, following deliberation by the relevant
department or division, the requested expenses or debts are dealt with immediately, with the exception of cases in which these are recognized as unnecessary.
10. System for ensuring the effective conduct of other audits by the Audit and Supervisory Committee(1) The Audit and Supervisory Committee meets regularly with the President to exchange opinions and information.
(2) The Audit and Supervisory Committee has access to all important management-related information, and consistently monitor management.
(3) The Audit and Supervisory Committee has the authority to directly request reexamination based on the results of internal audits reported by any division or department.
11. Basic approach to and status of other preparations for dealing with anti-social forces(1)	Eliminating anti-social forces from civil society is both necessary and important from a corporate social responsibility perspective. Accordingly, as stipulated in its ethical guidelines and basic regulations
on compliance, the Yotai Group has no relationships whatsoever with anti-social forces and promotes compliance management.
(2)	As an integrated response department, the Company has installed personnel responsible for preventing inappropriate requests at the Head Office General Affairs Department. These staff members work in
partnership with police and other external specialists to respond firmly to inappropriate requests from anti-social forces.

Policy regarding cross-shareholding
Yotai views the maintenance and development of relationships of trust andcollaborative relationships cultivated with a wide range of business partners
through business activities over the years as extremely important, from theperspective of both sustainable growth and medium- to long-term improvement
in corporate value. Yotai will pursue such shareholding whenever it is deemed
to maintain or strengthen transactional relationships with the business partners,
enhance the profitability of both companies, or when doing so will contributeto improvement in Yotai’s own corporate value. Each year, Yotai considers

each individual shareholding qualitatively to determine whether it contributes toimprovement in the Company’s corporate value, and quantitatively to determine
if it is commensurate with capital cost. After a comprehensive determination
is made, stocks deemed to offer little significance in holding further are soldoff, while paying close attention to the market impact of doing so. In reviewing
shareholding significance, the first evaluation is made by the Full-time Directors
Meeting, with final decisions on the suitability of cross-shareholding made by
the Board of Directors in light of this initial determination.

Integrated report 2023

43

Initiatives Supporting Improved Corporate Value

Compliance and Risk Management / Directors and Officers

Compliance
Basic Compliance Rules
Yotai’s “Basic Compliance Rules” define compliance as adherence
to laws and regulations (including administrative notices andguidelines), internal rules, and our corporate philosophy, and serveas our basic management policy. Employees shall not only faithfully
observe laws and regulations, but shall also be fully aware of ourcorporate philosophy and code of conduct, and shall perform theirduties with common sense and responsibility as members of society.

Promotion System
In order to ensure that all employees are fully aware of their
responsibilities, the Director in charge of the General Affairs
Department serves as the promotion officer, with the head of eachbusiness site designated as the person in charge of promotion. The
department in charge of promotion is the Head Office General Affairs
Department.
All Directors, officers and employees work constantly anddiligently to improve compliance awareness. An internal compliance

How Yotai Creates Value

Initiatives to Enhance Corporate Value

Initiatives Supporting Improved
Corporate Value

Data and Corporate Information

Directors and Officers
consulting helpline has also been established to better enablebusiness execution based on a compliance mindset.

Directors (excluding those who are Audit and Supervisory Committee members)

Training Program

Mitsuo Taguchi

Shinichiro Takebayashi

As needed, we strive to raise awareness of compliance and provide
correct knowledge by posting notices in our internal newsletter andon our website, as well as holding training sessions.

President
Chair, Nomination andCompensation Advisory Committee

Managing Director
General Manager, General Affairs
Department, Head Office

Tadashi Taniguchi

Yorisada Matsumoto

Director
Plant Manager, Hinase Plant

Director
General Manager, Tokyo BranchInternal Reporting System
We have established an “Internal Reporting System” for reportingto the Company the details of violations of internal rules, laws andregulations, and other violations of corporate ethics in the workplace.
The Compliance Control Department is the internal contact point
for reporting compliance violations, with an external consultation
organization as the external contact point for reporting violations.
The General Manager of the Compliance Control Department is
the officer in charge of the Head Office General Affairs Department.
The member of the Compliance Control Department is appointed andcomposed by the General Manager of the Compliance Control Department.

Risk Management
Risk Management Regulations

Information Security Management Structure

The Company has established “Risk Management Regulations”
regarding the development of a management system to preventthe occurrence of risks, and to respond to any risks that may
occur at the Company. Risks are the following factors that may
impede the performance of operations.
1. Compliance-related matters
2. Financial reporting-related matters
3. Information system-related matters
4. Research activity-related matters
5. Business procedure-related matters
6. Environment-related matters
7. Disasters, incidents and other related matter
8. Other matters related to the Company’s business

The Information Security Management Committee has been
established as an umbrella organization for information security.
The committee promotes thorough information security basedon the Information Security Policy and oversees the overall
information security of the entire Company, including theestablishment of decision criteria for matters not stipulated in the
Information Security Policy.
The committee is chaired by the Director in charge of the
Head Office General Affairs Department, and the information
management manager appointed by the chairperson checks thestatus of information security as necessary.

Risk Management Committee
The Risk Management Committee works closely with eachdepartment to develop a comprehensive system for theCompany’s risk management. The committee consists of thefollowing members. The committee is convened at least once a
year by the chairperson.
Chairperson: Director of Head Office General Affairs Department
Committee members: Heads of each division (Head Office(department), offices, branch offices, business divisions, plants)

Information Security Management
The Company has defined “Information Security Management
Regulations” designed to ensure the Company’s businessactivities occur normally and smoothly, and to prevent incidents
involving employees, by properly safeguarding information from
customers, business partners and others handled in the course ofbusiness, as well as the Company’s own information assets andemployee data, from threats of every kind. These regulations aresupervised by the Head Office General Affairs Department, withresponsibility designed to the Director in charge of the Head Office
General Affairs Department.

44

Integrated report 2023

Directors who are members of the Audit and Supervisory Committee
Takashi Umezawa

Shinobu Akiyoshi

Audit and Supervisory Committee
Member (Full-time)

External Director, Audit andSupervisory Committee Member
Nomination and Compensation
Advisory Committee

Katsuhiko Omoto

Yusuke Otsuka

External Director, Audit andSupervisory Committee Member
Nomination and Compensation
Advisory Committee

External Director, Audit andSupervisory Committee Member
Nomination and Compensation
Advisory Committee

Initiatives for Personal Information Protection
We have established “Personal Information Management Rules” toprevent unauthorized acquisition, use and disclosure of personal
information, as well as other illegal activities involving personal
information.
The personal information protection manager is the General
Manager of the Head Office General Affairs Department. In
addition, an audit manager appointed by the President periodicallyinspects whether personal information is being handled properlyin the Company and how these rules are being applied. An
audit report is prepared on the results of the inspection, which isreported to the President.

Response to COVID-19
In our response to COVID-19, we prioritize the protection ofhuman life, including employees and their families, customers
and related parties, and neighboring communities, and strive toprevent the spread of infection and ensure business continuity.
In addition, basic measures to prevent the spread of infection
are thoroughly implemented, such as wearing gapless masks,
washing and disinfecting hands, frequent ventilation of offices, andprohibiting conversation when eating and drinking.

Integrated report 2023

45

Initiatives Supporting Improved Corporate Value

External Director’s Message

How Yotai Creates Value

Initiatives to Enhance Corporate Value

Initiatives Supporting Improved
Corporate Value

Data and Corporate Information

External Director’s Message

Being an enterprise that employees findappealing to work for will be a huge strengthfor Yotai
External Director, Audit and Supervisory Committee Member
Nomination and Compensation Advisory Committee

Shinobu Akiyoshi

I consider my appointment by Yotai as its first female External Director an expressionof the Company’s respect for and commitment to promoting diversity. In the two years
since my appointment, I have come to see Yotai as a company that greatly values
its employees. Even though the Company is currently having conversations with andconducting surveys of female employees in the runup to a project to promote career

Helping strengthen structures for creating new
products and services, bringing new partners
into view by linking management with frontline
capabilities
External Director, Audit and Supervisory Committee Member
Nomination and Compensation Advisory Committee

Katsuhiko Omoto

I recognize that the fiscal year ending March 31, 2024, the final term of Yotai’s First
Medium-term Management Plan, will be an extremely important year for the Company,
and I am honored to have been chosen as an External Director at this stage. I
also recognize that because of my own 13-year history as a business executive in

Supporting medium- to long-term improvement
in shareholder value as the “unsung hero”
behind Japanese industry
External Director, Audit and Supervisory Committee Member
Nomination and Compensation Advisory Committee

Yusuke Otsuka

46

Integrated report 2023

Since Yotai’s business isn’t for the general consumer, the Company might, at
first glance, come across as plain. Yet, through refractories, Yotai is supporting
manufacturing, construction and other industries in Japan at the most foundational
level. Calling the company an “unsung hero,” then, really does make sense.
As an accounting and tax specialist, I hope to contribute to Yotai’s management on

advancement for women, what I’ve been impressed by is an expressed desire to see Yotai become a place where juniorand young employees want to stay, and to create an organization known for enabling people to thrive regardless of sex or
national origin. Rather than stopping at individual satisfaction, there is a real sense that people have become aware thathaving a robust environment where anyone can flourish is tied to improvement in corporate value. I think that being anenterprise that employees find appealing to work for will be a huge strength for Yotai. This most recent initiative won’t stop at
the advancement of women; we can expect it to lead to greater opportunities for all employees to thrive even more.
As a publicly listed company, meeting the expectations of shareholders and other stakeholders takes precedence
over everything else. Two General Meetings of Shareholders have taken place since my appointment, and from each one
I received shareholder suggestions. These spoke to the kind of company that shareholders want Yotai to be, and had me
consider how best to respond to these expectations; ultimately, they were important opportunities for me to be more awareof the importance of the discussions happening at the Board of Directors and other meetings. I can also praise both Yotai’stransition to a “Company with Audit and Supervisory Committee” structure and its clear steps to comply with the Corporate
Governance Code as initiatives that will strengthen corporate governance. Going forward, I think that considering the kind ofvalue that Yotai will create from an even longer-term perspective, and packaging it as an intuitive vision to stakeholders, will
help to build relationships of trust.

manufacturing, and given the changes afoot in Yotai’s business environment and market, I will be asked to offer advice
to empower the management team to take appropriate risks. With themes such as companywide DX advancement,
quality improvement for products and services, improved productivity in manufacturing work, and the promotion of ESG
management as a baseline, I want to support the establishment of management strategies for Yotai’s sustainable growth.
At meetings of the Board of Directors, my sense is that there are excellent discussions taking place, led by President
Taguchi, in support of Yotai’s growth. What’s more, at the point when I was unofficially offered the position, I was asked toperform plant diagnostics and visited each of Yotai’s four domestic production plants. My impression was that each plant ismoving aggressively ahead on rationalization and other work commensurate with its own position.
Looking at the First Medium-term Management Plan, the message that appropriate investments would be madewherever needed was very clear. I felt it was at this point that the mood at Yotai might have changed. Today, Yotai is building
a rock-solid position in the refractories market. Under the Second Medium-term Management Plan, I want to help strengthen
structures for creating new products and services while bringing the formation of new partnerships into view, even as we
continue to link management with frontline capabilities.

two fronts. For one, across every facet of the internal management framework, including account settlement, taxes, andthe internal control system, my experience and insight as both a CPA and tax accountant will make me a good consultant
for administrative departments. On another front, I’m looking to give input from my CPA perspective on the right balance
between shareholder returns and growth investments. This is particularly key for issues like capital cost and responding toachieve share price-conscious management, which have become important topics in recent years.
Yotai has a solid financial foundation and is effectively debt-free, and it is clear from the financial statements that it
has enjoyed extremely sound and stable management for many years. On the flip side, one might feel that the lack of debt
despite external factors, including long-term stagnation in Japan’s manufacturing and construction industries, means that
Yotai hasn’t made many assertive investments. This is why I would argue that the Company may need to take a risk andmake investments to go on the offensive.
Although Yotai belongs to a sector with high barriers to entry, changes in the external environment are occurring,
namely demand for ESG-conscious management and management that is more aware of share-price level. As I continue
to reflect from my position as an External Director serving on the Audit and Supervisory Committee, I hope to contribute toimproving Yotai’s medium- to long-term shareholder value.

Integrated report 2023

47

Data and Corporate Information

How Yotai Creates Value

Financial Review (Consolidated)

Initiatives to Enhance Corporate Value

Initiatives Supporting Improved
Corporate Value

Data and Corporate Information

Fiscal 2023 Financial Review
Dividend Policy

Operating results	Net sales rose 9.0% year on year to a new record high, mainly atop firm demand from steel manufacturers, Yotai’s principal
client industry
	Operating profit declined 1.9% year on year, largely reflecting the shifting of high prices for raw materials and fuel into sales
prices, along with cost-reduction efforts	In the engineering business, sales and profit both rose to record highs, lifted by workforce expansion efforts, including midcareer hires, and the taking on of numerous construction projects

Financial Analysis

	Analysis of change in operating profit

Net sales for the consolidated fiscal year
under review rose ¥2,338 million year on
year, to ¥28,250 million. Higher sales volume
for refractories, driven by increased demand
from steel manufacturers, was the main
factor behind this growth.
Ordinary profit rose ¥20 million year
on year (ordinary profit to net sales ratio of
14.7%), to ¥4,143 million. In addition tosales price revisions and cost-reduction
efforts, profit rose atop the sale ofmarketable securities, and came despite
soaring prices for raw materials and fuel.

¥4,089¥4,012

Increased profit
from engineering business¥56 million

millionRise in unit
sales prices¥1,998 million
Cost reduction
via capital
investment¥232 million

millionCost reduction via
solar power
generation system¥22 million

Increase inprofit from
China-based
affiliate¥114 million

Increase in burden
for fixed cost fromdecline inproduction volume-¥203 million
Rise in cost for
raw materials,
fuel and unit pricefor purchased goods-¥2,133 million

Increase in selling,
general andadministrative expenses-¥156 million

Profit decrease of ¥76 million
FY2022

FY2023

Performance by Segment
Organizationally, Yotai is fundamentally composed of the refractories business and the engineering business. The
Company devises comprehensive domestic and overseas strategies and conducts business activities for each businessindividually. Accordingly, Yotai categorizes “refractories” and “engineering” as its reporting segments.

Refractories Segment
Net sales for the segment rose 9.1%
year on year to ¥23,107 million, withsegment profit up 0.5% to ¥4,932
million for the same period. Growthcame atop increased demand fromsteel manufacturers.

	Refractories Segment – Net sales and segment profit
Net sales
23,972The speed of technological change and advancement in theindustry is dramatic, making investment in the upgrade andstreamlining of production facilities extremely important. In
principle, the capital necessary to do so is allocated from internal
reserves.
In terms of policy with respect to dividends, backed by afundamental commitment to the continued payment of a stabledividend, our basic policy is to strengthen the Company’s financial
structure, while building and augmenting internal reserves andpaying a dividend commensurate with earnings.
Guided by this approach, under the First Medium-termManagement Plan (FY2022 to FY2024), in parallel with allocations
to promote strategic investments, upgrade investments, IT
investments and others to develop a management base tosupport sustainable growth, we are reinforcing fund allocation toshareholder returns. Regarding such returns, we intend to continue
payment of a stable dividend, with a target consolidated payout
ratio of 30%, while flexibly purchasing treasury shares.
In terms of year-end dividends from retained earnings forfiscal 2023 (ended March 31, 2023), we paid a dividend per shareof ¥25, after accounting for a comprehensive range of factors,
including financial condition and business performance. Combinedwith an interim dividend per share of ¥20, the full-year dividendwas ¥45 per share, or ¥2 higher than in the previous fiscal year.

Cash Flows
Cash and cash equivalents as of March 31, 2023 stood at¥5,841 million, a decline of ¥2,696 million year on year, as
profit before income taxes and an increase in depreciation wereoffset by growth in inventories from increases in raw materials
and ingredients, difference between increase/decrease in tradereceivables, and cash used for the purchase of treasury shares(¥1,538 million).
	Cash flows(Millions of yen)

FY2022Financial Position
Total assets as of March 31, 2023 stood at ¥39,645 million, an
increase of ¥895 million from the previous consolidated fiscal yearend. This growth mainly reflected increases in raw
materials and supplies, buildings and structures, finished products,

22,26021,176

23,107(Millions of yen)

5,857
4,910

4,787

4,932

3,609

Cash flows from operating activities

421

1,781

Cash flows from investing activities(1,208)(1,954)

Cash flows from financing activities(2,111)(2,536)

Effect of exchange rate changes oncash and cash equivalents

45

12Change in cash and cash equivalents(2,853)(2,696)

Cash and cash equivalents, end of term

8,537

5,841

	Sales performance (non-consolidated) by industry sector and outlook
Steel

CementNonferrous(Millions of yen)

12,60912,521

11,263(Millions of yen)

4,195

11,152

4,044

3,953

4,101
3,614

(Millions of yen)

2,344

8,809

’20.3

’21.3

’22.3

’23.3

’19.3

’20.3

’21.3

’22.3

Net sales’19.3

Segment profit

4,394

4,465

4,735

’20.3

’21.3

’22.3

’23.3

Environment(Millions of yen)

(Millions of yen)

5,142

771

634

699

716

2,010

1,992

’20.3

’21.3

2,100

2,215

’22.3

’23.3

’23.3

	Engineering Segment– Net sales and segment profit

3,902

FY2023

Segment profit(Millions of yen)

19,089’19.3

Engineering Segment
Net sales for the segment rose 8.6%
year on year to ¥5,142 million, withsegment profit up 7.7% to a record
high of ¥771 million. Growth was
spurred by an increase in orders forlarge-scale construction projects.

and notes and accounts receivable - trade and came despite adecrease in cash and deposits.
Liabilities amounted to ¥8,580 million, a decrease of ¥60
million from a year earlier. This decrease was mainly due to a
decline in accounts payable - trade.
As a result, the capital adequacy ratio as of March 31, 2023
was 78.4%. While this was up 0.7 percentage points from 77.7%
at the previous fiscal year-end, the Company’s financial position isstill deemed to be in good shape overall.

’19.3

’20.3

’21.3

’22.3

3,720

’19.3

Electronic parts(Millions of yen)

4,164

’23.3

4,376

4,565

(Millions of yen)

1,019

FY2024 Outlook

Steel

1,257
1,096

591

FY2023 Actual

1,439

4,428
1,002

CementNonferrous
Environment

’19.3

48

Integrated report 2023

’20.3

’21.3

’22.3

’23.3

’19.3

’20.3

’21.3

’22.3

’23.3

’19.3

’20.3

’21.3

’22.3

’23.3

’19.3

’20.3

’21.3

’22.3

’23.3

Electronic parts

Integrated report 2023

49

Data and Corporate Information

How Yotai Creates Value

Key Financial and Non-financial Data

Initiatives Supporting Improved
Corporate Value

Initiatives to Enhance Corporate Value

Data and Corporate Information

Key Financial Data
2013.32014.32015.32016.32017.32018.32019.32020.32021.32022.32023.3

Net sales

20,357

20,107

21,123

21,46522,23624,217

27,87526,65423,55425,912

28,250

Cost of sales

16,822

17,095

17,78718,002

18,182

18,527

20,587

20,535

18,594

19,565

21,824Gross profit

3,535

3,011

3,336

3,462

4,054

5,690

7,287

6,118

4,960

6,347

6,426

Operating profit

1,441

884

1,179

1,309

1,913

3,559

5,134

4,017

2,921

4,089

4,012

Ordinary profit

1,554

1,043

1,346

1,396

2,013

3,663

5,224

4,134

3,021

4,123

4,143

852

793

924

936

1,374

2,625

3,610

2,794

1,845

2,966

2,971

Consolidated Fiscal Year (Millions of yen)

Profit attributable to owners of parent
R&D expenses

147

149

167

156

138

124

134

137

167

188

225

2,512

903

1,580

693

3,070

(1,759)

3,048

5,413

4,803

421

1,781

Cash flows from investing activities

(470)

(370)

(466)

(658)

(527)

(778)

(943)

(1,111)(1,202)(1,208)(1,954)

Cash flows from financing activities(1,096)

(354)

(244)

(248)

(234)

(229)

(317)

(398)

(418)

(2,111)(2,536)

Net assets

16,30517,02918,00018,31919,72822,16325,104

27,23429,03230,10931,065

Total assets

21,926

22,74324,55824,163

26,432

29,33634,18634,44335,39638,75039,645

38.03

35.54

42.03

42.61

62.53

119.44164.29127.1784.59

141.28147.33

Cash flows from operating activities

Consolidated Fiscal Year-end (Millions of yen)

Per-share indicators (Yen)
Basic earnings per share
Dividends per share (annual)

10.00

9.00

10.00

10.00

10.00

12.00

15.00

16.00

17.00

43.00

45.00

Net assets per share

727.46774.38818.64

833.34897.581,008.43

1,142.27

1,239.17

1,332.86

1,460.90

1,582.45

7.1

4.4

5.6

6.1

8.6

14.7

18.4

15.1

12.4

15.8

14.2

Financial Indicators
Operating profit margin (%)
ROE (return on equity) (%)

5.4

4.8

5.3

5.2

7.2

12.5

15.3

10.7

6.6

10.0

9.7

Capital adequacy ratio (%)

74.4

74.9

73.3

75.8

74.6

75.5

73.4

79.1

82.0

77.7

78.4

PER (Price-earnings ratio) (Times)

7.81

8.61

9.30

6.81

6.06

6.68

3.11

4.95

12.14

8.91

10.30

Share price (Year-end closing price) (Yen)

297

306

391

290

379

798

511

630

1,027

1,259

1,518

Payout ratio (%)

26.3

25.2

23.8

23.5

16.0

10.1

9.1

12.6

20.1

30.4

30.5

Net sales per employee (Millions of yen)

32.44

33.37

36.86

37.72

38.84

42.98

50.82

48.16

42.71

47.07

49.47

2020.32021.32022.32023.3

Non-financial Data
2019.32019.3

Environment

2020.32021.32022.32023.3SocialRefractory Production Volume (t)127,857

115,624

101,430

121,357

113,403

Working hours *1 (hours/year)

GHG Emissions (t-CO2e)51,98953,311

46,282

48,37545,160Age brackets Under 30 years old

97

37,18738,82433,02334,641

32,60830-39 years old

112
134

Scope 1
Scope 2
Energy Usage (GJ)Electricity Usage (MWh)Water Usage (m³)

2,010

99

98

108

109

119

118

124

139

135

128

129

133

13,25913,733

12,552547,177

514,473

482,076

509,188

478,02950-59 years

71

85

95

108

108

22,44060 years or older

3

4

5

6

10

2

Days of paid leave taken * (days/year)

15

15

15

15

15

No. of care leave claimants

1

0

0

0

0

Disabled employment rate (%)

1.91

2.13

2.13

1.95

1.99

0

0

0

0

12

1

0

1

1

6

25,472

25,10277,857

22,944
77,16423,97074,51573,295

566

537

564

578

417

442

444

475

499

Pct. female employees (%)

9.4

12.0

13.5

13.1

13.6

No. of managers

69

69

75

73

74

No. of female managers

0

0

0

0

1

15.23

14.67

15.29

14.64

14.20

Average years of continuous employment Females (years)

10.59

8.53

8.40

8.79

8.41

Turnover rate 3 years after employment (%)

31.6

25.0

20.0

15.0

50.0

Voluntary retirement rate (%)

2,171

14,487

541

Average years of continuous employment Males (years)

2,064

14,801Social[non-consolidated]

2,178

40-49 years old

79,785

No. of employees [consolidated]

2,238

3.4

2.3

2.5

3.8

3.8

No. of childcare leave claimants Males
Females
Childcare leave reinstatement rate (%)

100

—

100

100

100

No. of education/training days *3

10

12

15

20

28

No. of fatalities (cases)

0

0

0

0

0

No. of accidents (cases)

9

9

10

10

11

No. of claimants for mental health leave

0

0

0

0

1

Health and Safety*1: Skilled laborers only. Scheduled working hours are 1,940 hours *2: Skilled laborers only. Union member average *3: Sponsored by Head Office50

Integrated report 2023

Integrated report 2023

51

Data and Corporate Information

How Yotai Creates Value

Company Profile (As of March 31, 2023)

Corporate Overview

Share Information
Total no. of authorized shares

70,000,000 shares

Establishment

August 1936

Total no. of outstanding shares

25,587,421 shares

Representative

Mitsuo Taguchi

Shareholders

1,799

Head office location 8-1 Nishikinaka-machi, Kaizuka-shi, Osaka

Prefecture 597-0093
No. of employees

578

Paid-in capital

2,654 million yen

Business
description

Manufacturing and sales of refractories/ newceramics, and related engineering businesses

Market listing
Securities code

Data and Corporate Information

Major Shareholders

Head Office

8-1 Nishikinaka-machi, Kaizuka-shi, Osaka Prefecture 597-0093

Sales Offices
Head Office Sales Division

8-1 Nishikinaka-machi, Kaizuka-shi, Osaka Prefecture 597-0093

Tokyo Branch

1-1-1 Koraku, Bunkyo-ku, Tokyo (TK-CENTRAL 6th Floor) 112-0004

Kyushu Branch

4-6 Konya-cho, Kokurakita-ku, Kitakyushu-shi, Fukuoka Prefecture(Kitakyushu Dai-ichi Bldg., 7th floor) 802-0081

Nagoya Branch2103-1 Oda-cho, Mizunami-shi, Gifu Prefecture 509-6112

Okayama Branch2601 Hinase, Hinase-cho, Bizen-shi, Okayama Prefecture 701-3204

No. of shares
owned

Shareholding
ratio (%)

Sumitomo Osaka Cement Co., Ltd.

3,589

18.29

Prime market, Tokyo Stock Exchange

The Master Trust Bank of Japan, Ltd.
(Trust account)

1,618

8.24

5357

Sunshine D Investment Partnership
Executive Partner
UGS Asset Management Inc.

1,110

5.65

Challenge No.2 Investment Partnership
Executive Partner
Capital Management Ltd.

1,000

5.09

Hinase Plant

2601 Hinase, Hinase-cho, Bizen-shi, Okayama Prefecture 701-3204

The Tachibana Securities Co., Ltd.

998

5.08

Yoshinaga Plant

1250 Minamikata, Yoshinaga-cho, Bizen-shi, Okayama Prefecture 709-0223

The Chugoku Bank, Ltd.

908

4.62

Capital Gallery Co., Ltd.

810

4.12

Sanei Kosan Co., Ltd.

750

3.82

Sunshine G Investment Partnership
Executive Partner
UGS Asset Management Inc.

564

2.87

Custody Bank of Japan, Ltd. (Trust account)

500

2.55

Director/Officer Composition(as of June 22, 2023)
President

Mitsuo Taguchi

Managing Director
General Manager, Head Office Shinichiro Takebayashi
General Affairs Department
Director
Plant Manager, Hinase Plant

Tadashi Taniguchi

Director
General Manager, Tokyo
BranchDirector
Audit and Supervisory
Committee (Full-time)

52

Initiatives Supporting Improved
Corporate Value

List of Business Locations

Yotai Refractories Co., Ltd.

Corporate name

Initiatives to Enhance Corporate Value(thousand shares)(Note)	The shareholding ratio is calculated after a deduction of 5,956 thousand shares of treasury
stock.

Shareholder Memo
Fiscal year

April 1st to March 31st of the next year

Yorisada Matsumoto

Confirmation date forshareholder eligibility to receive
year-end dividends

March 31st

Takashi Umezawa

Confirmation date forshareholder eligibility to receive
interim dividends

September 30th

Ordinary general meeting ofshareholders

June each year

Director
Audit and Supervisory
Committee (External)

Shinobu Akiyoshi

Director
Audit and Supervisory
Committee (External)

Katsuhiko Omoto

Director
Audit and Supervisory
Committee (External)

Yusuke Otsuka

Integrated report 2023

Shareholder namePlantsYoshinaga Plant, Second Branch 426 Mitsumata, Yoshinaga-cho, Bizen-shi, Okayama Prefecture 709-0225
Kaizuka Plant

8-1 Nishikinaka-machi, Kaizuka-shi, Osaka Prefecture 597-0093

Mizunami Plant

2103-1 Oda-cho, Mizunami-shi, Gifu Prefecture 509-6112

Mizunami Plant, Toki Factory

95-8 Dachi-cho, Toki-shi, Gifu Prefecture 509-5401

R&D Division
Advanced Materials Laboratory

8-1 Nishikinaka-machi, Kaizuka-shi, Osaka Prefecture 597-0093

Technical Research Laboratory

2601 Hinase, Hinase-cho, Bizen-shi, Okayama Prefecture 701-3204

Engineering Division
Engineering Division

2601 Hinase, Hinase-cho, Bizen-shi, Okayama Prefecture 701-3204

Account management institution
Mitsubishi UFJ Trust and Banking
for shareholder registry
Corporation
administrator special accountWebsite Guide

Announcement method

Will be announced electronically

Please visit the website for the latest information on Yotai

Announcement URL

https://www.yotai.co.jp/ir/j_annual.html

https://www.yotai.co.jp/en/

However, in the event that an accident or other unavoidable factor prevents
electronic announcement, announcements will instead be made via The
Nihon Keizai Shimbun.

Integrated report 2023

53