Denka : Report 2018 / Integrated Report

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CONTENTS

CONTENTS

Denka's Corporate Philosophy and Value Creation Process

P3

A Message from the Chairman

P4

Trajectory of Denka's Growth

P5

Denka's Latest Products and Solutions

P7

A Message from the President

P9

Special Feature 1: Dialogue-What Denka Must Do to Create New Value over the Medium to Long Term

P13

CSR Management

P15

E Initiatives to Preserve and Protect the Environment

P17

E Special Feature 2: Denka's Hydroelectric Power Plants

P19

• S Human Resource Development

  P21

• S Prioritization of Safety

  P23

• S Social Contribution Activities

P25

G Corporate Governance

P27

G Directors and Audit &

P31

Supervisory Board Members

Outline of the "Denka Value-Up" Management Plan (fiscal 2018 - 2022)

P33

Business Portfolio Shift

P35

Introduction of Innovative Processes

P37

Business Strategies

P39

Special Feature 3: Dialogue between Staff in Charge of Life Science

P50

Resource Allocations

P53

Company Overview/Stock Information/ Global Network

P54

Consolidated Financial Statements (Summary)

P55

Taking Action to Achieve Our MissionOur Strategies for Securing Sustained GrowthDenka's Approach to ESG-Oriented Management

"Denka Value-Up" Management Plan

Corporate Information

Editorial Policy

The Denka Report 2018 printed brochure is the first integrated report issued by Denka Company Limited. The issuance of this report is intended to provide our stakeholders, including shareholders and investors, with a robust communication tool that focuses on conveying what we have been doing to create new value over the medium to long term from the viewpoint of addressing environmental, social and governance (ESG) issues.

Along with the aforementioned printed brochure, we have also compiled the Denka Report 2018 PDF edition, an expanded version encompassing various updates on typical CSR-related topics and Denka's environmental performance. We have also decided to update the status of CSR activities undertaken by individual business sites by creating dedicated pages on our corporate website (http://www.denka.co.jp/eng/sustainability/) in place of the former Site Reports. This move is aimed at enhancing the quantity and quality of relevant information being communicated to our stakeholders.

Coverage

performance statistics from the past several fiscal years. Date of publication: November 8, 2018

Scope

In general, this report encompasses topics on the Denka Group's business sites within the scope of consolidation. However, some articles are based on data gleaned outside the scope of consolidation. These articles individually specify the organizations subject to reporting.

Guidelines

• ◯ The GRI Standards of the Global Reporting Initiative (GRI)

◯The Environmental Reporting Guidelines 2012 of Japan's Ministry of the Environment

◯The International Integrated Reporting Framework of the International Integrated Reporting Council (IIRC)

Note: The GRI Content Index is posted on the CSR Section of Denka's corporate website.

Inquiries

CSR & Corporate Communications Dept. Denka Company Limited

Fiscal 2017 (April 1 2017 through March 31, 2018) in principle; this report includes additional information on some initiatives undertaken subsequent to the fiscal 2017 year-end while presenting data on numerical targets for and

TEL. [phone] FAX. [phone]

Nihonbashi Mitsui Tower, 1-1, Nihonbashi-Muromachi 2-chome, Chuo-ku, Tokyo 103-8338, Japanhttp://www.denka.co.jp/eng/

Overview of the Denka Report 2018 and Other Supplementary Reporting Tools

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supplement the Denka Report 2018 printed brochure (integrated report). Denka Report 2018 PDF edition (expanded version) Denka Report 2018 printed brochure (integrated report) We update reporting on relevant
and investors, with a robust communication tool that focuses on conveying what we have been doing to create new value over the medium to long term from theactivities and detailed data that ha Website :http://www.denka.co.jp/eng/ Information on CSR activities (website)

activities and detailed data that has not

Denka's Corporate Philosophy and Value Creation Process

INPUTS Six types of capital
Financial capital - Stable financial base Manufacturing capital - 14 manufacturing bases serving growth markets at home and abroad Intellectual capital - Combination of organic and inorganic chemistry Human capital - 6,000 Group employees, sincere and earnest professionals operating in regions around the globe Natural capital - Company-owned limestone mines - 10 company-owned hydroelectric power plants that generate clean energy Social capital - Involvement in open innovation and industry-academia initiatives - Community development and social contribution activities

A Message from the Chairman

The Denka Value, a Corporate Philosophy Reflected in Denka's Future-Thinking Business Approach

Marking the celebration of its centennial in 2015,

Denka established The Denka Value, a new corporate philosophy that serves as the foundation for all of its business activities. I have always believed that the ultimate goal of a corporation must be something nobler than the pursuit of numerical targets and performance. No corporate citizen is exempt from its social responsibilities, responsibilities related to environmental preservation and the well-being of the communities in which it operates. Fulfilling these responsibilities is as essential as accomplishing robust corporate performance. A corporation's business and social missions are equally important and are inextricably linked. The Denka Value, our new corporate philosophy, is designed to encapsulate the thoughts described above.

Guided by this philosophy, we are striving to always be sincere in our dealings while decisively taking on the challenges that come our way in the course of business activities. At the same time, we constantly strive to understand the stakeholder perspective in order to secure the soundness and transparency of our corporate management.

The Denka Mission

"Taking on the challenge of expanding the possibilities of chemistry to create new value and contribute to sound social development."

For 100 years, the Denka Group has been in the vanguard of the chemical industry's development while simultaneously expanding its network into regions around the world. Throughout the course of its history, Denka has maintained a corporate culture that encourages the pursuit of challenging goals. Such pursuit is our raison d'être. Denka believes that its corporate activities centered on manufacturing must help facilitate the sound development of society. The Denka Mission has thus been identified to summarize these long-cherished concepts that underlie our manufacturing operations, which can be traced back to Dr. Tsuneichi Fujiyama, one of Denka's founders (see also page 5) and have been passed down by successive predecessors to the present generation. Over the passage of time, we may shift the area of our focus or grow into a significantly larger company. However, our commitment to creating new value via manufacturing will remain unchanged. That is why we recognize a future-thinking business approach as Denka's core value.

We will thus remain courageous as we seek to tap into new business fields while steadfastly focusing on enhancing our strengths in our area of specialty.

The Denka Principles

To ensure that a sense of purposefulness toward the betterment of society is shared throughout our organization, we have established the Denka Principles, a set of precepts aimed at guiding the actions of all Denka Group employees to fulfill our corporate responsibilities.

We also intend to foster a corporate culture that encourages employees to think freely and act autonomously rather than wait for instructions from management or supervisors. Furthermore, we embrace a bottom-up approach and work to proactively incorporate employee suggestions. To that end, a card bearing the Denka Principles is issued to all employees.

Looking ahead, the Denka Group will strive to live up to the trust and expectations of all of its stakeholders via the pursuit of ongoing initiatives aimed at realizing The Denka Value.

We:

• ◯ Boldly confront challenges with determination and sincerity.

• ◯ Think and take action today with the future in mind.

• ◯ Deliver new values, and inspire customers through innovative monozukuri .*

• ◯ Respect the environment and create a cheerful workplace that prioritizes safety.

• ◯ Contribute to a better society, whilst taking pride in being a trusted corporate citizen.

* Japanese-style craftsmanshipTrajectory of Denka's Growth

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Ever since its founding, Denka has created a wealth of products via the application of calcium carbide production technologies and pursued the ultimate in Monozukuri (Japanese-style craftsmanship) while changing its output in response to the needs of the times.

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Denka Value-Up

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Trajectory of Denka's Growth

-Taking on the Challenge of Expanding the Possibilities of Chemistry for More than a Century

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Denka's Latest Products and Solutions

Our products are used in various ways to support day-to-day living while contributing to the sound development of society.

Healthcare (Life Innovation Products)

Medical inspection and healthcare institutions

• ◯ Virological diagnostic reagents

• ◯ Lifestyle disease diagnostic reagents

• ◯ Reagents for measuring sd LDL-C to determine heart disease risk

Hospitals and clinics

• ◯ Influenza HA vaccines

• ◯ Joint function improvers (Macromolecular sodium hyaluronate preparation)

The Environment and Energy (Electronics & Innovative Products, etc.)

Lithium ion secondary batteries

• ◯ Ultra-pure acetylene black

Rubber hoses, belts and air suspension systems

• ◯ Synthetic rubber (chloroprene rubber and DENKA ER)

Speakers and motors

• ◯ HARDLOC structural adhesives

• ◯ Synthetic rubber

PCs and smartphones

• ◯ Semiconductor encapsulant fillers

• ◯ Thermally conductive sheets and spacers

• ◯ Dicing tapes and electronic packaging materials

LED lights and televisions

• ◯ DENKA HITTPLATE thermally conductive insulated metal substrates

• ◯ Thermally conductive sheets

• ◯ Phosphors

Railcars

• ◯ DENKA AN and SN Plates ceramics substrates for invertors

• ◯ DENKA ALSINK aluminum and MMC compound materials

High-Value-Added Infrastructure (Infrastructure & Social Solutions)

Airport runways

• ◯ SUQCEM ultrahigh-strength fiber-reinforced concrete

Concrete and other structures

• ◯ DENKA PRETASCON nonshrink grouting materials

• ◯ The Denka Rising Method used for the repair of steel-reinforced concrete

• ◯ TEFKA fluorine-based films for membrane structure construction

Parentheses indicate relevant business segment.

Denka's Latest Products and Solutions

Tunnels

• ◯ DENKA NATMIC quick-setting agent for shotcrete

• ◯ HARDLOC II adhesive used for the repair of concrete cracking

Hydroelectric power plant conduits

• ◯ DENKA Σ80N ultrahigh-strength concrete

Buildings and condominiums

• ◯ CO2-SUICOM eco-friendly concrete

• ◯ EIEN prolonging the lives of concrete buildings

Other Key Operations

Elastomers Styrene monomer

Polymer processing products (rain gutters and industrial tapes)

Cement

Calcium carbide-related products Fertilizers

The above featured exemplars of Denka's lineup provide a glimpse of the variety of its products and their breadth of application.