DIC : Annual Securities Report (Fiscal year from January 1, 2023 to December 31, 2023)［3,010KB］

The 126th Business Term

Annual Securities Report

Fiscal year	From	January 1, 2023
To	December 31, 2023

DIC Corporation

E00901

ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In all cases, the Japanese-language original shall take precedence.

Table of Contents
	Page
Cover
Part 1 Corporate Information………………………………………………………………………………………………………	1
I. Overview of the Company ……………………………………………………………………………………………………	1
1. Key Financial Data and Trends …………………………………………………………………………………………...	1
2. History ………………………………………………………………………………………………………………….…	3
3. Description of Business …………………………………………………………………………………………………...	4
4. Subsidiaries and Affiliates …………………………………………………………………………………………………	6
5. Employees …………………………………………………………………………………………………………………	9
II. Business Overview …………………………………………………………………………………………….……….……	11
1. Basic Management Policy, Business Environment, and Challenges to be Addressed ……………………………………	11
2. Approach to Sustainability and our Initiatives…………………………………………………………………………….	14
3. Business Risks ……………………………………………………………………………………………….……………	19
4. Management's Analysis of Financial Position, Operating Results and Cash Flows ………………………………………	35

1. Material Business Agreements, etc. ...……………………………………………………………………………………. 42
2. Research and Development Activities ……………………………………………………………………………………. 43 III. Facilities…………………………………………………………………………………………………………...………... 45

1. Overview of Capital Expenditures ……………………………………………………………………………...………… 45

1. Major Facilities ……………………………………………………………………………………………………………. 46
2. Plans for New Installation and Retirement of Facilities …………………………………………………………………... 49

IV. Information on the Company…………………………………………………………………………………….………… 50

1. Information on the Company's Shares……………………………………………………………………………………. 50

1. Total Number of Shares, etc. ……………………………………..……………………...………………...…………. 50
2. Stock Acquisition Rights ……………………………………………………………………………………………... 50

(3) Exercise of Bonds with Moving Strike Warrants, etc. ………………………………………………………...……… 50

1. Changes in Number of Shares Issued, Capital Stock, etc. ………………………………………………………......... 51
2. Shareholder Composition …………………………………………………………………………………………….. 51

(6) Major Shareholders …………………………………………………………………………………………………… 52

1. Voting Rights …………………………………………………………………………………………………………. 55
2. Share Ownership by Directors/Other Officers and Employees ….……………………………………………………. 56

2. Acquisition, etc., of Treasury Stock …………………………………………………………………………………….... 57

3. Dividend Policy ………………………………………………………...…………………………………………………	58
4. Corporate Governance ………………………………………………….…………………………………………………	59
V. Financial Information …………………………………………………….…………………………………………………	100

1. Consolidated Financial Statements ……………………………………..………………………………………………… 101

1. Consolidated Financial Statements …………………………………………………………………………………… 101
2. Other Information ……………………………………………………..……………………………………………… 169

VI. Stock-Related Administration for the Company ……………………………...……………………………………………	170
VII. Reference Information of the Company ………………………………………...…………………………………………	171

1. Information on the Parent Company ……………………………………………………………………………………… 171
2. Other Reference Information ………………………………………………………………………………...…………… 171 Part 2 Information on Guarantors, etc., for the Company ………………………………………………………………………… 171 [Audit Report]

(Note) Non-consolidated financial statements are included in the Japanese-language original.

[Cover]
[Document filed]	Annual Securities Report ("Yuka Shoken Hokokusho")
[Applicable law]	Article 24, paragraph 1 of the Financial Instruments and Exchange Act of Japan
[Filed with]	Director, Kanto Local Finance Bureau
[Filing date]	March 28, 2024
[Fiscal year]	The 126th Business Term (from January 1, 2023 to December 31, 2023)
[Company name]	DIC Kabushiki-Kaisha
[Company name in English]	DIC Corporation
[Name and title of chief executive officer]	Takashi Ikeda, Representative Director, President and CEO
[Registered address]	35-58, Sakashita 3-chome,Itabashi-ku, Tokyo, Japan
[Phone number]	[phone] (main)
[Contact person]	Fumito Shirai, Group Manager, General Affairs Group
[Contact address]	7-20, Nihonbashi 3-chome,Chuo-ku, Tokyo, Japan
	Corporate headquarters, DIC Corporation
[Phone number]	[phone] (main)
[Contact person]	Jun Kaneko, General Manager, Accounting Dept.
[Locations where records are available for	Corporate headquarters, DIC Corporation
public inspection]	(7-20, Nihonbashi 3-chome,Chuo-ku, Tokyo, Japan)
	Osaka Branch, DIC Corporation
	(5-19,Kyutaro-machi3-chome,Chuo-ku, Osaka, Japan)
	Nagoya Branch, DIC Corporation
	(7-15, Nishiki 3-chome,Naka-ku, Nagoya, Japan)
	Tokyo Stock Exchange
	(2-1, Nihonbashi Kabuto cho, Chuo-ku, Tokyo, Japan)

Part 1 Corporate Information

I. Overview of DIC Corporation ("the Company")

1. Key Financial Data and Trends

1. Consolidated financial data, etc.

Fiscal Year		122nd	123rd	124th	125th	126th
Year end		December 2019	December 2020	December 2021	December 2022	December 2023
Net sales	(Millions	768,568	701,223	855,379	1,054,201	1,038,736
of yen)
Ordinary income	(Millions	41,302	36,452	43,758	39,946	9,216
of yen)
Net income (loss) attributable	(Millions	23,500	13,233	4,365	17,610	(39,857)
to owners of parent	of yen)
Comprehensive income	(Millions	28,473	20,396	40,596	52,233	(11,609)
of yen)
Net assets	(Millions	343,497	351,364	381,008	421,088	399,267
of yen)
Total assets	(Millions	803,083	817,950	1,071,481	1,261,637	1,244,889
of yen)
Shareholders' equity per share	(Yen)	3,304.34	3,364.92	3,654.61	4,088.60	3,844.70
Earnings (losses) per share	(Yen)	248.29	139.81	46.12	186.05	(421.06)
(basic)
Earnings per share (diluted)	(Yen)	－	－	－	－	－
Shareholders' equity ratio	(%)	38.9	38.9	32.3	30.7	29.2
to total assets
Return on Equity (ROE)	(%)	7.7	4.2	1.3	4.8	(10.6)
Price-earnings ratio	(Times)	12.2	18.6	62.8	12.5	－
Net cash provided by (used in)	(Millions	50,637	54,462	44,812	7,935	89,095
operating activities	of yen)
Net cash provided by (used in)	(Millions	(24,884)	(33,037)	(147,612)	(73,160)	(66,457)
investing activities	of yen)
Net cash provided by (used in)	(Millions	(26,799)	6,338	99,549	83,948	(2,920)
financing activities	of yen)
Cash and cash equivalents at	(Millions	16,690	41,354	37,572	62,560	84,642
end of the period	of yen)
Number of employees	(Persons)	20,513	20,242	22,474	22,743	22,255

(Notes)

1. Diluted earnings per share is not stated because there are no diluted shares.
2. Price-earningsratio for 126th is not stated because loss per share was recorded.
3. The Company has introduced the Board Benefit Trust (BBT). The shares held by the trust are recorded under net assets as treasury shares. The number of treasury shares excluded from the number of shares issued as of the consolidated balance sheet date used for the calculation of equity per share includes the number of shares held by the trust. The number of treasury shares excluded from the weighted-average number of shares issued during the fiscal year used for the calculation of earnings (losses) per share includes the number of shares held by the trust.

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(2) Non-consolidated financial data, etc., of the Company

Fiscal Year		122nd	123rd	124th	125th	126th
Year end		December 2019	December 2020	December 2021	December 2022	December 2023
Net sales	(Millions	219,849	195,403	231,550	246,495	239,771
of yen)
Ordinary income	(Millions	12,660	7,093	23,966	13,720	1,729
of yen)
Net income (loss)	(Millions	17,663	6,930	29,811	10,287	(3,338)
of yen)
Capital stock	(Millions	96,557	96,557	96,557	96,557	96,557
of yen)
Number of shares issued	(Thousands	95,157	95,157	95,157	95,157	95,157
(common stock)	of shares)
Net assets	(Millions	297,940	300,089	319,291	318,147	300,203
of yen)
Total assets	(Millions	688,683	691,051	829,904	880,585	886,495
of yen)
Shareholders' equity per share	(Yen)	3,147.97	3,170.49	3,373.21	3,361.20	3,171.41
Cash dividends per share	(Yen)	100.00	100.00	100.00	100.00	80.00
[Interim dividend per share]	[60.00]	[50.00]	[50.00]	[50.00]	[50.00]
Earnings (losses) per share	(Yen)	186.62	73.22	314.94	108.68	(35.26)
(basic)
Earnings per share (diluted)	(Yen)	－	－	－	－	－
Shareholders' equity ratio	(%)	43.3	43.4	38.5	36.1	33.9
to total assets
ROE	(%)	6.0	2.3	9.6	3.2	(1.1)
Price-earnings ratio	(Times)	16.3	35.6	9.2	21.4	－
Dividend payout ratio	(%)	53.6	136.6	31.8	92.0	－
Number of employees	(Persons)	3,593	3,662	3,681	3,744	3,973
Total shareholder return	(%)	93.0	83.2	94.8	80.9	96.5
[Comparison index: TOPIX	(%)	[118.1]	[126.8]	[143.0]	[139.5]	[178.9]
including dividends]
Highest stock price	(Yen)	3,635	3,130	3,380	3,100	2,820.5
Lowest stock price	(Yen)	2,534	1,833	2,492	2,206	2,245

(Notes)

1. Diluted earnings per share are not stated because there are no diluted shares.
2. Price-earningsratio and dividend payout ratio for 126th are not stated because loss per share was recorded.
3. The Company has introduced the Board Benefit Trust (BBT) and the shares held by the trust are recorded under net assets as treasury shares. The number of treasury shares excluded from the number of shares issued as of the balance sheet date used for the calculation of equity per share includes the number of shares held by the trust. The number of treasury shares excluded from the weighted-average number of shares issued during the fiscal year used for the calculation of earnings (loss) per share includes the number of shares held by the trust.
4. The highest and lowest share prices were recorded on the Tokyo Stock Exchange (Prime Market) on and after April 4, 2022, and prior to that, on the Tokyo Stock Exchange (1st Section).

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2. History

Month/Year	Event
February 1908	Kawamura Ink Manufactory is established. (Changes company name to Kawamura Kijuro Shoten in 1912)
May 1932	Shanghai Branch opened.
February 1937	Incorporates Dainippon Printing Ink Manufacturing Co., Ltd.
March 1945	Head office (main plant) is relocated from Honjo to Itabashi (currently Tokyo Plant).
May 1950	Has initial public offering on the Tokyo Stock Exchange. (Assigned to the First Section of the exchange in
	1961.)
February 1952	Japan Reichhold Chemicals Inc. (JRC) is established through a joint venture with Reichhold Chemicals, Inc., a
	U.S. manufacturer of synthetic resins, to manufacture and sell various types of synthetic resins.
July 1960	Establishes Thailand Wathana Industry as a joint venture and starts printing ink production in the suburbs of
	Bangkok in 1962.
November 1960	JRC goes public over the counter.
November 1961	JRC lists its shares on the Second Section of the Tokyo Stock Exchange.
October 1962	Absorbs JRC and changes company name to Dainippon Ink and Chemicals, Incorporated (DIC).
January 1968	DIC-Hercules is formed as a joint venture between DIC and Hercules Inc. of U.S. to operate paper making
	chemicals business. (In 1992, DIC purchased Hercules Inc.'s entire stake in DIC-Hercules and renamed it as
	Japan PMC Corporation. In 2003, Japan PMC merged with Seiko Chemical Industries Co., Ltd. to form SEIKO
	PMC CORPORATION, now a subsidiary of DIC.)
May 1968	Establishes Singapore Dainippon Ink.
October 1968	Develops production method for epoxy resins using an innovative home-grown technology that makes effective
	use of petroleum fractions.
May 1973	Develops high-performance,long-lasting nematic liquid crystals (LCs).
March 1974	Siam Chemical industry Co., Ltd. was formed as a joint venture in Thailand.
July 1974	Launches spirulina-based nutritional supplement.
March 1979	Acquires U.S. graphic arts materials manufacturer, Polychrome Corp.
October 1980	Introduced polyphenylene sulfide (PPS) compounds technology from Phillips Petroleum.
December 1986	In a bid to reinforce its global competitiveness, DIC acquires the graphic arts materials division of U.S. firm Sun
	Chemical.
September 1987	Acquires Reichhold Chemicals Inc. of the United States.
December 1996	Japan PMC (now SEIKO PMC) is listed on the Second Section of the Tokyo Stock Exchange.
December 1997	Establishes Kodak Porychrome Graphics (KPG), a joint venture with Eastman Kodak of United States, to
	operate printing material business.
December 1999	Acquires Coates, the printing inks division of France's TOTALFINA.
July 2003	Establishes DIC (China) Co., Ltd., a holding company for DIC Group companies in the People's Republic of
	China (PRC).
April 2005	Redeems capital interest in joint venture KPG.
September 2005	Sells stake in Reichhold.
April 2008	On the occasion of its 100-year anniversary, changes company name to DIC Corporation
October 2009	Establishes DIC Graphics Corporation, joint venture with Dai Nippon Printing Co., Ltd. (DNP) integrating
	DIC's domestic printing ink business and DNP's printing ink business.
January 2012	SEIKO PMC is listed on the First Section of the Tokyo Stock Exchange.
July 2012	Acquires Benda-Lutz Group and enters the effect pigment business on a full scale.
July 2015	Acquires Kingfisher Colours Limited and enters the cosmetic pigment business on a full scale.
January 2017	Enters capital and business alliance with Taiyo Holdings Co., Ltd.
June 2021	Acquires pigments business (Colors & Effects business) from BASF.
April 2022	Transitions from the First Section of the Tokyo Stock Exchange to the new Prime Market following the
	reorganization of the exchange's market segments.

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3. Description of Business

DIC Group ("the Group") consists of DIC Corporation, 166 subsidiaries and 18 affiliates. The main businesses of DIC Group are as follows:

The following three segments are the same as those stated in "V. Financial Information 1. Consolidated Financial Statements.

1. Consolidated Financial Statements Notes."

Segment	Product Division	Principal Products
		Printing Materials	Gravure inks, flexo inks, offset inks, news inks, jet inks,
Packaging & Graphic	metal decorative inks, printing plates, security inks
		Packaging Materials	Polystyrene, packaging adhesives, multilayer films
			Pigments for coatings, pigments for plastics, pigments
		Color Materials	for printing inks, pigments for specialty applications,
Color & Display	pigments for color filters, pigments for cosmetics, health
	foods
		Display Materials	TFT liquid crystals, STN liquid crystals
			Synthetic resins for inks and coatings, molded products,
			adhesives and textiles (polyester resins, epoxy resins,
		Performance Materials	polyurethane, acrylic resins, plasticizers, phenolic
		resins), papermaking chemicals, sulfur chemicals, fiber
Functional Products		and textile colorants, metal carboxylates, surfactant for
			electronics equipment
			PPS compounds, plastic colorants, industrial adhesive
		Composite Materials	tapes, hollow-fiber membranes and modules, medical
			diagnostics products

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The above is shown in the following structure.

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4. Subsidiaries and Affiliates

1. Consolidated subsidiaries

		Capital Stock		Ownership
Name	Location	Description of Business	of Voting	Details of Relationship
(Millions of yen)
				Rights (%)
Packaging & Graphic
	Chuo-ku,				The company purchases raw materials for
DIC Graphics Corporation	500	Manufacture and sale	66.6	printing ink from the Company.
Tokyo
of printing inks	Interlocking directors, etc.: Yes
					Guaranteed liabilities: Yes
		－	Investments and loans
Sun Chemical Group Coöperatief	Weesp,	(Eur	100.0
to Sun Chemical	Interlocking directors, etc.: Yes
U.A.	Netherlands	2,469,852	(100.0)
		thousand)	Group companies
	New Jersey,	US $	Manufacture and sale	100.0
Sun Chemical Corp.	of printing inks and	Interlocking directors, etc.: Yes
U.S.A.	500,001	(100.0)
		thousand	organic pigments
PT. DIC GRAPHICS	Jakarta,	IDR	Manufacture and sale	100.0	The company sells organic pigments to the
Indonesia	450,969	of printing inks and	(100.0)	Company.
		million	organic pigments		Interlocking directors, etc.: Yes
	Nantong,	RMB	Manufacture and sale	100.0	The company purchases raw materials for
	of printing inks, ink
Nantong DIC Color Co., Ltd.	printing ink from the Company.
PRC	401,244	(100.0)
intermediates, and
		thousand		Interlocking directors, etc.: Yes
		organic pigments
	Kolkata,	Rs	Manufacture and sale	71.8	The company purchases raw materials for
DIC India Limited	printing ink from the Company.
India	91,789	of printing inks	(71.8)
		thousand			Interlocking directors, etc.: Yes
DIC Graphics (Dongguan) Co.,	Dongguan	RMB	Manufacture and sale	100.0	Interlocking directors, etc.: Yes
Ltd.	PRC	126,000	of printing inks	(100.0)
		thousand
	Bangkok,	Baht	Manufacture and sale	100.0	The company purchases raw materials for
DIC Graphics (Thailand) Co.,	of printing inks, fiber
Thailand	637,000	(100.0)	printing ink from the Company.
Ltd.	and textile colorants,
	thousand		Interlocking directors, etc.: Yes
		and plastic colorants
DIC (MALAYSIA) SDN. BHD.	Selangor,	MYR	Manufacture and sale	100.0	The company purchases raw materials for
Malaysia	57,436	(100.0)	printing ink from the Company.
of printing inks
		thousand		Interlocking directors, etc.: Yes
Other 93 companies
Color & Display
		－	Manufacture and sale
	New Jersey,	(US$	100.0
Colors & Effects USA LLC	of pigments and	Interlocking directors, etc.: Yes
U.S.A.	484,602	(100.0)
		thousand)	related products
Sun Chemical Colors & Effects	Ludwigshafen	Eur	Manufacture and sale	100.0
of pigments and	Interlocking directors, etc.: Yes
am Rhein,	26	(100.0)
GmbH
Germany	thousand	related products
Qingdao DIC Finechemicals CO.,	Qingdao,	RMB	Manufacturing, sales	100.0
of liquid crystal	Interlocking directors, etc.: Yes
LTD.	PRC	93,646	(100.0)
		thousand	materials and R&D
	California,	US $	Manufacture and sale	100.0	The company sells spirulina products to the
Earthrise Nutritionals LLC	Company.
U.S.A.	16,700	of spirulina-related	(100.0)
Interlocking directors, etc.: Yes
	products
		thousand		Loans receivable: Yes
Other 18 companies

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Name	Location	Capital Stock	Description of Business	Ownership	Details of Relationship
of Voting
(Millions of yen)
				Rights (%)
Functional Products
			Manufacture and sale
			of papermaking		The company sells raw materials for printing
SEIKO PMC CORPORATION	Chuo-ku,	2,000	chemicals and	54.5	inks to the Company.
Tokyo	products for printing	Interlocking directors, etc.: Yes
			ink and recording		Loans receivable: Yes
			materials
			Manufacture and sale		The company sells raw materials for PPS
				compounds and large membrane modules for
	Sodegaura-city,		of PPS neat polymers
DIC EP Corporation	100	100.0	water to the Company.
Chiba	and large modules for
			Interlocking directors, etc.: Yes
			water treatment
				Loans receivable: Yes
			Manufacture and sale
			of decorative boards,		The company purchases coatings for building
DIC Decor, Inc.	Okegawa-city,	480	interior housing	100.0	materials from the Company.
Saitama	products, coatings for	Interlocking directors, etc.: Yes
			building materials and		Guaranteed liabilities: Yes
			decorative sheets
			Manufacture and sale		The company purchases raw materials for
	Chuo-ku,		of unsaturated
DIC Material Inc.	450	100.0	synthetic resins from the Company.
Tokyo	polyester resins and
			Interlocking directors, etc.: Yes
			vinyl ester resins
	Saitama-city,		Manufacture and sale		Interlocking directors, etc.: Yes
DIC PLASTICS Inc.	100	of plastic molded	100.0
Saitama	Guaranteed liabilities: Yes
		products
DIC Zhangjiagang Chemicals	Zhangjiagang,	RMB	Manufacture and sale	100.0	The company purchases raw materials for
of synthetic resins and	synthetic resins from the Company.
Co., Ltd.	PRC	206,686	(100.0)
		thousand	PPS compounds		Interlocking directors, etc.: Yes
	Bangkok,	Baht	Manufacture and sale	100.0	The company purchases raw materials for
Siam Chemical Industry Co., Ltd.	synthetic resins from the Company.
Thailand	130,000	(64.0)
of synthetic resins
		thousand		Interlocking directors, etc.: Yes
Guangdong DIC TOD Resins	Shaoguan,	RMB	Manufacture and sale	100.0	Interlocking directors, etc.: Yes
PRC	130,000	(100.0)
Co., Ltd.	of synthetic resins
	thousand
Changzhou Huari New Material	Changzhou,	RMB	Manufacture and sale	100.0	Interlocking directors, etc.: Yes
PRC	127,019	(100.0)
Co., Ltd.	of synthetic resins
	thousand
DIC SYNTHETIC RESINS	Zhongshan,	RMB	Manufacture and sale	100.0	The company purchases raw materials for
PRC	135,498	of synthetic resins and	(100.0)	synthetic resins from the Company.
(ZHONGSHAN) CO., LTD.
	thousand	metal carboxylate		Interlocking directors, etc.: Yes
LIDYE CHEMICAL CO., LTD.	Taipei,	NT $	Manufacture and sale	51.0	The company sells synthetic resins to the
Taiwan	160,000	Company.
of synthetic resins
		thousand		Interlocking directors, etc.: Yes
Other 21 companies
Others
DIC INVESTMENTS JAPAN,	Chuo-ku,	91	Investments and loans	100.0	Interlocking directors, etc.: Yes
LLC.	Tokyo	to group companies
	Shanghai,	RMB	Investments and loans
DIC (CHINA) CO., LTD.	PRC	2,335,469	to group companies in	100.0	Interlocking directors, etc.: Yes
		thousand	China region
			Investment, loans to
	Singapore,	S $	group companies in
	Asia-Oceania region
DIC Asia Pacific Pte Ltd	Singapore	310,161	100.0	Interlocking directors, etc.: Yes
and manufacture and
		thousand
		sale of The Company
			products
Other 7 companies

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