1

2

Your life.
Yo u r b e a u t y.

From chasing society 's dreams to following your own:
The times are changing.
W e ' r e h e r e t o h e l p y o u f i n d y o u r b e a u t y.
We're here to make your life shine.

3

4

Real

L i v e y o u r t r u e b e a u t y.

56

Be true to yourself!
E a s y t o s a y, h a r d e r t o d o .
We believe everyone possesses
peerless beauty—a way of living
vibrantly entirely their own.

78Creative

D i s c o v e r y o u r s m i l e . D i s c o v e r y o u r b e a u t y.

910Helping someone uncover the
beauty within requires trust—a relationship built little bylittle, month by month.
As a customer ’s connection with
their own true beauty deepens,a stylist can help them discover
new ways of revealing andexpressing it.
Professional Hair Stylists:
F a c i n g b e a u t y, f a c i n g t h e s o u l .

1112

S a l o n s : N o t j u s t f o r h a i r. F o r t h e c o m m u n i t y.

They’re places where stylists and clients meetto discuss possibilities, share trends, and findinspiration. They’re spaces to chat, to learn, tos m i l e , a n d t o s h a r e o u r l i v e s w i t h o n e a n o t h e r.

H e l p i n g p e o p l e e n h a n c e t h e i r l i v e s t h r o u g h b e a u t y:Your stylist, your salon.

13

14

Yo u r l i fe , y o u r b e a u t y.
S t a r t i n g to d a y.

L i t t l e b y l i t t l e , w e h e l p y o u f i n d y o u r b e a u t y,
your charm, and your smile. The dazzling
future you’ve been looking for starts here.

15

16

Your Beauty
（Real

Real:

Creative）

Discovering a unique way to live
y o u r b e a u t y.

Creative:

Uncovering the hidden beauty
that only your stylist can see.

Our business is focused onbuilding a beauty market that canforge these connections and help
them thrive far into the future.

17

18

Milbon Integrated Report 2020

Milbon Integral Strategy

1 Our CredoYour Beauty

Pp. 1–18

2 Value Creation

01 Message from the President

Pp. 23–30

02 Our Story

Pp. 31–32

03 The Story of Our Value Creation

Pp. 33–34

04 The Milbon Business Model

Pp. 35–36

05 Financial and Non-Financial Highlights

Pp. 37–38

06 Financial Strategy

Pp. 39–40

07 People of Milbon

Pp. 41–42

08 Introduction to Our Brands

Pp. 43–44

09 R&D and Production

Pp. 45–46

10 Sales and Salon Education

Pp. 47–48

11 Corporate Branding

Pp. 49–50

Strategy

1
2

Our Credo

Value Creation
Strategy

3 Sustainable
Growth3

Sustainable
Growth

01 Feature: A Discussion on
Milbonʼs SDG Contribution
02 Sustainability

Pp. 57–58

03 Corporate GovernancePp. 59–62

Company Overview and Stock Information
19

Pp. 53–56

Pp. 63–64
20

S t e a d i l y, f l e x i b l y.

21

Value Creation Strategy

Co-Creating the Future“For all people to live with individuality, enrichment and radiance.”
We believe that we can make a difference by inspiring beauty through hair stylists and their art.
In times of great change, we continue to create new values to enhance people’s beauty and contributeto business growth for salons by uncovering challenges from the perspectives of customers and society
at large.
The field in which we can create this value is growing. In line with our long-term vision for 2033,
we will strive to create greater social and economic value through our dedication and educational
support toward local beauty industries across the globe to become the world’s No.1 professional haircare manufacturer.
We will strengthen our relationships of trust with all stakeholders to develop the beauty industry
and global beauty culture, contribute to the realization of a sustainable society, and continue creating aprosperous future together.

Ryuji Sato
President and CEO

23

24

Message from the President
Becoming a Global Manufacturer of Professional-Use Hair Cosmetics
That Creates New Beauty ValueFirst of all, I would like to express my sincere
condolences to all those who have lost a loved
one during the COVID-19 pandemic andextend my heartfelt sympathy to those who arebattling the illness or recovering from it.

Supporting the evolution of salonsas an industry leader
Since its foundation in 1960, Milbon has managed to achieve sustainable growth together
with the beauty industry. However, as the social
environment has changed dramatically, theindustry now faces some major challenges.
The first of these is the impact of demographic change in Japan. As birthrates fall andthe population ages, salon customers will generally rise in age, while it will become more difficult to recruit young staff.
The second challenge is related to labor
issues. Amid the rising corporatization of salon
management in recent years, society has increasingly scrutinized the management practices andworking conditions of salons. In particular, thereform of work practices, including reductions
in working hours and encouraging the use of
paid holidays, has become an unavoidable topic.
The third challenge is the way in whichsalon business models and revenue models
25

are structured. Currently, the majority of a salon’s
sales and profit come from payment for technicalprocedures such as cuts and coloring. However,it will become harder to increase revenues
through technical procedures alone, taking into
account the conditions previously mentioned,
including population decline, growing labor
shortages, and the demand for shorter working hours.
In these circumstances, a promising future
pillar of sales and profit growth for salon management will be the sale of Milbon’s products.
Stylists can use their knowledge and insightto provide their customers with numerous suggestions and advice. By adding such expertise to high-quality, professional-use products,
salons can realize retail operations with highadded value and distinguish themselves from
regular retailers. To support the growth of suchretail operations, Milbon launched a B-to-B-to-C
e-commerce website that connects salons withcustomers, in addition to physical sales channels.
To achieve sustainable development of
the beauty industry, salon management needs
to become more stable by improving productivity and diversifying revenue models. At thesame time, it is important to further strengthen
relationships of trust with customers by diversifying contact points to attract a larger numberof “lifelong customers.” Individual salons willneed to transcend the current boundaries of

the industry to evolve into “communities ofbeauty and soul” that are a supportive presence in customers’ lives. Milbon’s mission as aleading manufacturer of professional-use
haircare and hair coloring products is to support this salon evolution in a variety of ways.

Advancing diverse growth strategies globally and domestically that
adopt the perspectives of customers and society
As a step toward realizing this future, in FY
2019, Milbon launched its 2019–2023 medium-term management plan with the theme of“Change the Stage!!” The key concept of thisplan is to shift away from an industry perspective to adopt the perspectives of customers
and society at large.
“Adopting the perspective of society” means
looking squarely at what the essential role ofsalons in society should be, and our answer—
as mentioned above—is “communities of beautyand soul.” Furthermore, “adopting the perspective of customers” means that Milbon should
adopt the perspective of not only the salons andstylists who are our direct clients but also thesalon visitors who are their customers to consider what we can do and what we should pursue.
These perspectives have inspired many ofthe measures we are implementing, such as
our e-commerce business and digital transformation, our branding strategy, our entry into thecosmetics market, and the strengthening ofour global business. For example, our professional-use e-commerce website is a B-to-B-to-C
business that has truly been built from the perspective of customers and consumers. While
Milbon operates the website and manages theordering and delivery processes, we use a product distribution system in which customers orderthrough salons registered on our website, contributing to sales growth for these salons. Salon
customers also enjoy the convenience of being
able to buy products when they need, so we
expect the website to be effective in boosting theratio of repeat customers.
We are also strengthening our cosmetic
product sales through capital and business alliances with KOSÉ Corporation. In the 60 years
since the Company’s founding, we have developed as a company that supplies professional-use hair cosmetics to salons, but this alliance
now enables us to offer our customers a morecomprehensive approach to beauty. Additionally,
because the cosmetics market is significantly
larger than that for hair products, entry into thismarket should be an important driver of future
growth for both Milbon and salons. For our
global development, we will establish a business environment tailored to each market to

expand our presence. For example, we havedeveloped new products that cater to the hairtypes and colors of European and North
American customers, and we have started
test marketing of them in the United States.
To further accelerate product development,
which responds to such specific regional needs,
we plan to establish regional research facilities in our main overseas bases such as China
and Thailand.

Developing motivated, responsible
employees who respond swiftly
to customers’ needs
Our people are the most integral force forachieving the targets of our medium-term
management plan. At Milbon, we have established three principles for behavior based on
our conviction “to build a solid company that
won’t collapse”: “to be in the field,” “to pay attention,” and “to be independent.” “To be in the field”
means to regularly visit salons and carry out
work that brings us closer to stylists and theircustomers. “To pay attention” means listening
sincerely to these salons and their customers.
However, in reality, being attentive does notstop here. It is important to grasp the situation at the salon and understand the essenceof a customer's voice beyond their words.

This essence will generate motivation anda sense of responsibility in employees thatmake them want to act. “To be independent,”
our third principle of behavior, means that eachand every employee should possess this motivation and sense of responsibility and act basedon their own ideas. Milbon delegates a lot of
authority to our employees to enable them toact independently.
We welcome efforts by our employees totake on any sort of challenge, regardless of age
or experience, as long as they follow Milbon’s
policy and act for the true benefit of salons andtheir customers.
We have thoroughly instilled these principles in all Group employees. I myself act according to the principles and visit around 400 salonseach year, including 300 in Japan and 100 in
20 other countries around the world, and talkdirectly with stylists and their customers. This26

is because I believe it is essential for me tohave a good understanding of the actual concerns and needs of salons in order to formulate
business strategies and decide whether to implement an initiative as part of management from a
broader perspective.
We will continue to strengthen our education and training systems to develop humanresources who not only act in accordance with
our three principles of behavior but also haveleadership ability, a global mindset, and a willingness to take on challenges.

Strengthening win–win relationships
with stakeholders as a fellow memberof global and regional society
Together with the new medium-term management plan, we formulated the Global VisionRoadmap, which is a management vision created from a longer-term perspective up to 2033.
This represents our aim “to become the world’s
No. 1 professional hair care manufacturer
through our dedication and educational support toward local beauty industries across theglobe.” To achieve our long-term vision, we must
steadily execute each initiative of the medium-term management plan and create a chain of
innovation from the perspectives of customers
and society at large. At the same time, we must27

fulfill our responsibilities as a global company
by factoring achievement of the SDGs into ourmanagement, to further increase the sustainability of our corporate activities.
Although Milbon started its SDG promotion activities in 2019, we had actually been
taking initiatives to help realize a sustainable
society long before the UN adopted the SDGs
in 2015. For example, since 2002, we have beenusing some of our salon education events to
support Save the Children, an organization
engaged in safeguarding the human rights ofchildren around the world. Another initiative
focused on human rights and diversity was
our early implementation of policies to encourage the hiring of people with disabilities.
We also promote the environmental andsafety aspects of our business through initiatives such as using environment- and people-friendly materials in our products and building

traceability systems for materials procurement.
Furthermore, our efforts to help salons evolve
into “communities of beauty and soul” that are
essential to the lifestyles of people in their communities fits well with the aim of SDG 11:“make cities inclusive, safe, resilient, andsustainable.”
Naturally, Milbon cannot achieve the SDGs
by acting alone. It is essential for us to coordinate and collaborate with salons in Japanand overseas as well as with other stakeholders such as distributors and materials suppliers. We will keep working to strengthen win–
win relationships with all stakeholders as afellow member of global and regional society.
Milbon will continue growing sustainably
and raising its corporate value by contributing
to achieving the SDGs and developing globally
beauty industry from the perspectives of customers and society at large, as it works to realize its long-term vision.

New Concepts of Beauty for the“New Normal”
The spread of COVID-19 since early 2020 not
only threatened people’s lives and health but
also dramatically affected social activity andsignificantly impacted economies around theworld. This resulted in the successive placingof restrictions on going out in countries where
Milbon does business, including China, South
Korea, and the United States. In Japan, manysalons had to voluntarily close—particularly
during April and May, when a national state of
emergency was declared. Moreover, salons thatremained open, with measures to prevent infection in place, saw a decrease in visitors because
people chose to stay home. These factors had amajor effect on the Company’s business.
While conditions continue to make it difficult for us to visit our customers, it is Milbon’s
mission and one of our core values to be close
to our customers no matter what the situation.
While other industries may be focusing on working remotely, face-to-face contact is fundamental to the services a salon provides. Milbon
believes that providing excellent service to ourcustomers means being close to them by understanding what their problems are and what
they hope to achieve, and then taking action torealize it. Based on this approach, employees
in each division used their creative ingenuity
to follow up with salons and develop a rangeof activities to provide support, such as procuring and distributing masks and alcohol-based disinfectant.
In terms of business results, April and May
saw considerable losses. However, in June,
when many salons returned to full-scale operations, we saw a rebound in demand as people
began to go out again, leading to results that
surpassed the same period of the previous fiscal year. As for our overseas markets, it looks
like it will take some time for North America torecover. In South Korea and China, however,which account for a large proportion of overseas sales, February and March were a struggle, but performance roughly returned to normal in April. Thereafter, we saw year-on-year
growth of around 10% in May and 30% in
June.
While these results suggest a steady recovery in the beauty markets in Japan and overseas, we now need to consider the current situation—in which we must live with the virus—aswell as the post-pandemic period. Changes inlifestyles and the ways people work will leadto a “new normal” for society. This will definitely have a large effect on the beauty market,
including on how work is carried out and how
salons are managed. To date, Milbon has

always monitored developments in beauty
markets and considered how they shouldchange amid social transformation and trends.
Accordingly, we have compiled a report titled
New Concepts of Beauty for the “New Normal,”which reconsiders our scenarios taking into
account changes caused by the pandemic,
and it was presented to all employees.
This report essentially outlines our projections of future beauty markets and our basic
stance on our responses, but it does not contain directives for each division. We want thedivisions to come up with specific measuresby themselves, based on the projections, andput them into action.

Accelerating the business transformation to reach a new growth stage
in 18 months
Our report contains explanations of what the
pandemic has brought to various aspects ofthe beauty markets—such as sales, salon operations, retail channels, education, and productivity—as well as projections of how we thinkthese will change.
I cannot go into all the details, but in termsof sales we think that salons will shift to developing “lifelong customers” who know the salon
and who in turn are known by the salon. This28

2019–2023 Medium-Term Management Plan
Shift away from an industry perspective to adopt the perspectives of customers and society at large.
The business environment surrounding Milbon, which includes conditions in the Japanese beauty market andtrends worldwide and in Japan, has entered a period of major change.
In this environment, Milbon formulated its 2019–2023 medium-term management plan, which focuses on measures torealize transformation in every stage (“Change the Stage!!”), with the aim of achieving sustainable growth in the years ahead.

Accelerating our evolution to a new stage of the beauty market through“Change the Stage: 18-Month Missions!”

18-Month Missions!
Trajectory for the accelerated evolution to a newstage of the beauty market throughthe 18-Month Missions
Trajectories for sales and evolution
to a new stage of the beauty market
according to initial plans

New sales trajectory influenced
by the shift in trajectory toward
a new stage of the beauty market

2019

Jan. 2020

July 2020is because it will become increasingly difficult
to capture walk-in customers to reduce the riskof infection and grasp the routes of infection.
We also think effort will be made to shorten
the overall time spent in salons as a means of
avoiding extended periods of close contact.
In terms of retail channels, the online saleof salon-exclusive products will become a pillar of revenue and its importance as a means ofconnecting salons with their customers will
surely increase. As for education, we should
see seminars and education programs switching to digital methods at an accelerating pace.
In fact, a lot of these changes are notentirely new. As with remote working, a lot of
29

Jan. 2022

Dec. 2023

the processes were already underway, driven
by factors such as structural changes in thesocial environment and technological innovation, and they have merely been accelerated
by the pandemic. In fact, we have been undertaking business reforms under our medium-term
management plan focused on these changes
in the market environment with the theme of“Change the Stage!!” The challenge now is thatthe impact of the pandemic has increased the
speed of such changes, which has forced us torevise drastically the timetable for reforms.
Under the heading of “Change the Stage:
18-Month Missions!,” we have decided to carryout the business reforms that were planned

for implementation by the end of 2023 within
an 18-month period from July 2020 to December
2021, so that we can move to a new stage ofbusiness that will put us back on a growth track.
Based on this strategy, each division has started
taking actions to achieve this by December 2021,
by thoroughly considering specific measures
including targets, schedules, and budgets.
We must acknowledge that the impact of
the COVID-19 pandemic will make it difficult
for us to achieve our quantitative targets for2020. However, we are confident that we canachieve the targets of the medium-term management plan despite the current delays andrealize medium- to long-term growth beyond
that point, if we can complete the transition toa new stage of business by December 2021.
Milbon will continue working with stakeholders to create the future of the beauty
industry by adopting the perspectives of customers and society at large, always remaining
close to stylists, and providing products andservices that are genuinely needed. I look forward to your continued support.

Medium-Term Vision

Milbon’s Global Vision

Shift away from an industry perspective to adopt theperspectives of customers and society at large.

To become the world’s No. 1 professional
hair care manufacturer throughour dedication and educational support toward
local beauty industries across the globe.

“Change the Stage!!”—Continuously Creating a New Future—
Shift the focus and pursue the creation of a new beauty industry
based on beauty culture emanating from Japan.

Overview of the Global Vision Roadmap

Become a company that creates a chain of innovation from the perspective of society and customers.
Become a company that contributes to the SDGs by earning society's trust by sustainable growth and contributions to society.

Ryuji Sato2024–2028 Medium-Term Management Plan

2029–2033 Long-Term VisionJapan• Aim for a 25% market share (total sales of 44.5 billion yen)
• Establish cosmetics business• Consider establishing domestic subsidiaries• Launch businesses for e-commerce and product sales
through salons• Aim for a 30% market share• Consider a transition to a holding company structure• Realize new collaborations with partners in
different industries• Realize collaborations with overseas brands• Aim for a 35% market share• Create an overwhelming lead in terms ofmarket share

Overseas• Achieve overseas sales of 8.5 billion yen, comprising 17.5% of
total sales• Plan to double sales staff at sales agencies (lay the foundation)• Establish new overseas research centers and a production site

• 5 billion yen plan in China (local supply structure)• Establish a presence in coloring markets in Europe
and North America• Expand into the Indian market• Become a main player (the industry top three)• Implement growth strategies in the European
and North American markets

People-Centered
Marketing System—Chain of Innovation• FP System (prepare unit-type sales offices)• Evolve TAC Product Development System from a “to C” angle• Promote employee specialization and diversity• Establish a professional-use e-commerce website• Prepare for global implementation of the FP System (operate small unit-type and matrix-type organizations)• Evolve a global scale, regional-focused TAC product development system• Move to the next stage of specialization with an FMS: FSE + FCE ratio of 1:2

Strategic
Incorporationof the 17 SDGs (ESG)• SDGs Promotion Committee: Continue to promote SDGs as
its major role
• Contribute to the development of future leaders for the
beauty industry through stylist education• Reduce inventory write-off losses by extending products'
quality guarantee periods• Use AI and IoT to improve productivity and reduce CO2 emissions• Advance models for training and employing people with disabilities• Improve employee productivity by implementing work stylereforms and providing active roles for women• Maintain governance by having an executive officer systemand outside directors

Build a Solid Company
That Won’t Collapse

The Milbon Way—Engaging stylists in everything we do . . .

Establish a No.1 Positionin the Asian Market

Beauty Market

ProprietaryBusiness
Model

Business
Continuity

President and CEO

2019–2023 Medium-Term Management PlanSociety

Milbon’s Philosophy

Full-Scale Growth in Europe andNorth America• Procure materials responsibly• Create business models that solve environmental
and social issues• Realize a 1:1 ratio of inside to outside directors• Consider and implement the recycling of plastic
materials

Become a Global
Main Player• Build a beauty industry recycling cycle for
packaging and other materials• Make salons community spaces that provide
people-friendly environments, connect
people, and make them feel supported• From 2030, advance into a world beyond
the SDGs

30

Our Story

10-Year Consolidated Financial Summary and the Targets of New Medium-Term Management Plan
Net Sales (Billions of Yen)
Operating Income (Billions of Yen)

A History of Contributing to Increasing Salons’ Revenues andRealizing Sustainable Growth

19.1
3.27

19.7
3.57

20.5
3.79

21.8
3.98

23.8
4.30

25.2

27.3

1969

1969
Ueno Plant Opens
The Ueno Dai-Ichi
Plant is establishedin Ueno City (now Iga
City), Mie Prefecture,as Milbon’s first full
factory operation.

COLUMN
Our Founder’s Dream“We will build a solid company that won’t collapse”
Ichiro Konoike, the founderof Milbon, was driven by his
belief that “a company must be
sustainable and to achievethis, the company must be
essential to society.” This belief
persists today as one of theCompany’s core values.

31

1984

1987

Building a Proprietary Business Model
Milbon built its own business model through theField Person System and the TAC ProductDevelopment System. These continue to provide
the foundations of our business model today.

1984

Start of Field Person System
The first Field Person training
center opens in Miyakojima
Ward, Osaka, and the first roundof Field Person training begins.

1987

Start of TAC ProductDevelopment System
Milbon’s original productdevelopment system thatlearns from successful hairstylists who are trusted bycustomers is introduced.

2001

2004 2005

2001

2005

Listing on the First Sectionof the Tokyo Stock Exchange
In 2000, Milbon is listed on theSecond Section of the Tokyo
Stock Exchange and thenmoved to the First Section of
TSE the following year. This
marks the start of 22 consecutive years of sales growth.

Yumegaoka Plant
Opens
Following growth insales volumes, theYumegaoka Plant isestablished in Iga
City, Mie Prefecture.

2009

2010

2011

4.72

4.45

MILBON USA Established
MILBON USA, Inc., a consolidated
subsidiary, is established in New York.

TAC Product Development
1993

Launch of nigelle
The nigelle series for natural hair
design creation is launched.

33.8

36.3

34.9

88.0

29.1

5.11

6.75

5.34

Starting the new medium-term plan one year ahead

2019–2023
New Medium-Term Management Plan

2012

2013

2014

2015–2019
Medium-Term Management Plan
2015

2016
2017 ※12018 ※2(12 months and 11 days)

2019

2020

2021

2022

2023
(Target)Notes: 1. FY 2017 was an irregular accounting period consisting of 12 months and 11 days. (The date for settlement of accounts had been December 20 until FY 2016, and it switched to December
31 from FY 2017.)
2. Because the Company adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 30, 2018) and the associated Implementation Guidance (ASBJ
Guidance No. 30, March 30, 2018) from the beginning of FY 2019, FY 2018 results have been restated in accordance with the new standards.

Expansion into New Areas
2017

Establishment of KOSÉ Milbon
Cosmetics Co., Ltd.
We entered the cosmetics
industry through a joint venturewith KOSÉ Corporation.

Global Expansion
2004

33.4

6.26

2010–2014
Medium-Term Management Plan
1960

48.5

Achieved final target
one year early

Sales growth for 24 consecutive years since listing andoperating income growth for 10 consecutive years

Milbon began in 1960 as a specialist manufacturer of professional-use hairstyling products,
such as cold perming chemicals and shampoos. Since our foundation, we have beenstanding alongside salons and stylists and continued to develop with them under ourmanagement principle of “engaging stylists in everything we do.”New medium-term target

Toward the
new target…

2007

2009

2013

2016

1998

1999

2007

2010

Shanghai Subsidiary
Established
Milbon Trading(Shanghai) Co., Ltd. isestablished in China.

Launch of Liscio
Liscio, a thermalreconditioning systemfor permanentstraightening, islaunched.

South Korea
Subsidiary Established
Milbon Korea Co., Ltd.
is established in South
Korea.

Launch of DEESSE’SDEESSE’S, a haircare product series
for colored hair,is launched.

Thailand Factory Established
MILBON (THAILAND) CO.,LTD. is established in
Thailand and a new
production factory is built.

Launch of ORDEVE
ORDEVE, a hair coloringproduct for foiling,is launched.

2019

Launch of iMPREA
A salon-exclusive cosmetics
brand is jointly developedwith KOSÉ Corporation.

Launch of milbon
A global hair care brand isdeveloped based on advanced hairanalysis technology.

Launch of Aujua
A hair care brand that caters forindividual hair and scalp needs
is launched.

32

The Story of Our Value Creation
Demystifying Milbon’s Value Creation Process

Working with Salons to Inspire the Beauty of Their Customers
To become the world’s No.1 professional hair care manufacturer.

Unique Value in Sales and Education

Our original Support Triangle
System*3 aims to solve eachsalon's issues

Cultivating Beauty Partners helps
salons boost their appeal

Sales and
Education
Flow

Sales and Education

Ensuring safety and thorough quality management

See P. 59

See P. 45 for details.

Field Marketing
Salesperson

Sales and Education*2: Field Person System

Sustainability
Management

Unique Value in Manufacturing
Manufacturing

Strict quality control

OHSAS*4 certified safety management

未提供

See P. 57

Development andManufacturing
Flow

Field Cosmetics
Educator

FMS

Providing salons with educational opportunities
through the Field Person System*2

Production / Logistics / Procurement

Corporate
Branding

FCE

Field Salon
Educator

A fieldwork system in which our field
personnel (Field Persons) makeproposals tailored to individual salons
to help boost their revenues and profits.
Furthermore, the system leads toincreased product sales for Milbon.
See P. 47 for details.

Planning and Development

TAC Product Development System*1*3: Support Triangle System

Product Development

Yumegaoka Plant (Mie Prefecture)

Robust Financial
CapitalSee P. 37

Unique Human
CapitalUnique Value in Product Development
See P. 41

Spreading Our Management Philosophy: The Milbon Way

33*1: TAC Product Development
SystemThe Target Authority Customer(TAC)
Product Development System is acustomer-oriented development
system created by Milbon.

Field Persons
FSE

Terminology

See P. 47 for details.

TAC Product Development System –The Fusion of Science and Sensibility
Study market
trends anduser needs

Collect informationfrom salonsthroughout Japan

Select Target
Authority
Customers

A system in which Field Persons are
divided into three specialized roles
to identify and solve the issues
individual salons face.

Identify andstandardize
successful
beauty caretechniques*4: OHSAS Certification
Look deeper
into customers’
needs

Create new
products

OHSAS 18001 is an international
standard for strategic risk managementthat protects worker’s health, including
mental health.

34

The Milbon Business Model
A Distinctive Business Model That Creates Value Together with Stakeholders

Global Footprint (As of March 31, 2020)
Business Locations
PlantsCreating Communities ofBeauty and Soul

GERMANY

Salon
Customers

TURKEYHONG KONG

Enhancing Salon Customers' Lives through Beauty• Contribute to enhancing thevalue of salons as important
community spaces

Strong Partnership• Understand the needs ofcustomers and society

THAILANDMALAYSIASINGAPORE• Develop professional-standard
products

SOUTH KOREA
JAPAN

USA

TAIWANPHILIPPINESVIETNAMINDONESIA• Cultivate employees to become
good partners to stylists

Multi-Faceted Support for Salons• Contribute to increasing
salon revenues and profitsGroup Employees Worldwide

SalonsMerchandise

Sales
Distributors

Group Employees
Worldwide

Merchandise

The Roles of Milbon Employees• Business activities shared between 21 offices in 13 regions worldwide• Contribute to the global beauty industry through field activities focused on
salon education• Possess a deep understanding of and empathy for the joys
and difficulties experienced by stylists

Disclosure of Business Results, Reportingand Dialogue concerning Growth Strategy• Learn how to provide salon marketing support and becomea partner to stylists• Growth strategy that is disclosed and discussed• Conduct basic research in pursuit of leading edge products
to remain a front runner in the hair and scalp field• Develop products that blend science with a stylist’s sensibility

35

CHINA

Employees

Shareholders andInvestors• Ongoing fair disclosure• Corporate governance that matches the trust placed in us
by shareholders

36

Sales by Segment

Financial and Non-Financial Highlights

Cosmetic Products
0.5%

Hair Care
Products
58.8%

Hair Coloring
Products
35.80%

Overseas
Sales
5,857
（16.2%）(Millions of Yen)

Net Sales
36,266

Domestic
Sales
30,409（83.8%）

11- Year Financial Summary
Sales Growth Ratio

Operating Margin

+7.0％

ROE

18.6％

13.1％

Years ended Dec. 31, 2009 to Dec. 31, 2019

R&D Expenditure as a
Percent of Net Sales

Equity Ratio

4.23％

85.6％

Number of Employees (Consolidated)

Dividend Payout Ratio(Consolidated)

40.6％

Net sales

910% of Female
Managers

12％% of Female
Employees

Operating income
Ordinary income
Profit attributable to owners of parent
Net assets
Total assets
Cash flows from operating activities

Turnover Rate

2.0％
% of Employees with Disabilities

40％

2.67％

2009

2010

2011

2012

2013

2014

2015

2016

2017 *1

2018 *2

2019

19,18912,214
3,277
3,103
1,785
16,653
20,353

19,74913,002
3,578
3,327
1,831
17,69920,843

20,526
13,620
3,792
3,545
2,304
19,05922,592

21,887
14,833
3,986
3,735
2,128
20,367
23,662

23,82916,174
4,302
4,059
2,516
22,14926,321

25,226
17,281
4,451
4,218
2,621
24,10428,13827,377
18,681
4,727
4,427
2,950
26,21230,79929,134
20,100
5,113
4,733
3,069
27,70632,44433,456
22,797
5,345
4,997
3,817
31,10337,64233,882
22,189
6,260
5,811
4,495
33,151
39,63436,26623,711
6,751
6,231
4,517
35,882
41,912

3,079-1,680
-725
1,116
1,444

2,433
-727
-688
1,010
940

3,157
101
-836
1,014
528

2,977
-1,506
-910
952
840

3,511
-1,198-1,387
882
1,680

2,766
-1,236-1,052
1,008
1,028

3,895
-2,834-1,135
1,038
2,779

3,355
-4,366-1,262
1,083
4,262

4,346
-1,919-1,317
1,278
1,570

6,487
-1,202-1,639
1,380
1,149

4,486
-2,777-1,869
1,493
1,605

53.96
503.3320.83

55.36
534.9422.73

69.68
576.2626.67

64.35
615.8427.50

63.69
563.4828.33

80.03
736.0534.00

90.10
800.51
37.00

93.73
846.1639.00

116.58949.9946.00

137.31
1,012.58
54.00

137.99
1,096.02
56.00

81.8
11.0
8.9
63.7
17.1
16.2
9.3
38.6

84.9
10.7
8.9
65.8
18.1
16.8
9.3
41.1

84.4
12.5
10.6
66.4
18.5
17.3
11.2
38.3

86.1
10.8
9.2
67.8
18.2
17.1
9.7
42.7

84.1
11.8
10.1
67.9
18.1
17.0
10.6
37.1

85.7
11.3
9.6
68.5
17.6
16.7
10.4
42.5

85.1
11.7
10.0
68.2
17.3
16.2
10.8
39.3

85.4
11.4
9.7
69.0
17.6
16.2
10.5
41.6

82.6
13.0
10.9
68.1
16.0
14.9
11.4
39.5

83.6
14.0
11.6
65.5
18.5
17.2
13.3
39.3

85.6
13.1
11.1
65.4
18.6
17.2
12.5
40.6

Operating results (millions of yen)
Gross profit

Human
Capital

Other
0.7%

Permanent Wave
Products
4.2%

Fiscal Year Ended December 31, 2019

Financial
CapitalComposition of Sales (Domestic and Overseas)

Cash flows from investing activities
Cash flows from financing activities
Depreciation
Capital expenditure
Per-share information (yen) *3
Earnings per share
Net assets per share
Dividend per share
Financial indicators (%)

Education and Training Expenses
per Employee

101,588yen

Social Capital

Milbon Corporate University Participants(Management Training)

42

Return on equity (ROE)
Return on assets (ROA)
Gross profit margin
Operating margin
Ordinary margin

Number of Studios*

Stylist Seminar Participants (Annual)

25

27,936*Training studios at sales offices in Japan and overseas are rented to stylists free of charge.

37

Equity ratio

Net profit margin
Dividend payout ratio (Consolidated)

Notes: 1. FY 2017 was an irregular accounting period consisting of 12 months and 11 days from December 21, 2016 to December 31, 2017. As for consolidated results, overseas subsidiaries used a 15-month accounting period from
October 1, 2016 to December 31, 2017.
2. Because the Company implemented the early adoption of the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 30, 2018) and the associated Implementation Guidance (ASBJ Guidance No.
30, March 30, 2018) from January 1, 2019, FY 2018 results have been restated in accordance with the new standards.
3. In Per-share information (yen), information for Earnings per share and Net assets per share retroactively reflect three stock splits implemented during the 11-year period. The details of these stock splits are as follows:
1) A 1 for 1.1 split implemented on December 21, 2010. 2) A 1 for 1.2 split implemented on December 21, 2013. 3) A 1 for 2 split implemented on January 1, 2018.

38

Financial Strategy

1996, which enables us to secure cash for new
investment in growth without resorting to loans.
The main factor behind this sustainablegrowth is our investment in human resources.
Our business activities are focused on the areasof “professional stylists” and “beauty care,” andby taking societal and customer perspectives,
we have contributed to solving the issues facing salons and helping them to be successful.
Through these efforts, we have also sustainably
grown our own business. To further evolve thisoriginal business model, we continue to invest
proactively in recruiting and developing exceptional people.
For example, we provide a nine-month training program to our new employees when they

Data Reflecting Sustainable Growth
10-Year Average Equity Ratio

84.48％
Consecutive Fiscal Years of Sales Growth

24 (since listing)39

Education and Training Spending

2017

101,588yen

88

2018

10-Year Average ROE

11.94％
Fiscal Years with Dividend Increase

23/24

join the Company. During this period, trainees do
not participate in any business activities sothey can focus exclusively on training. Also,
when considering sales and profit targets forthree or five years into the future, we use theamount to be spent on personnel, recruitment,
and training during this period as the starting
point for setting these targets. Our investment in
human resource development is based on thispeople-orientated approach and is reflected inour spending on training and education for theprevious fiscal year, which amounted to 101,588
yen per employee.
Taking Operations to the Next Level with
Higher Awareness of Financial Indicators
among Employees
Over almost a quarter of a century since listing,our market capitalization reached around 200
billion yen at one point, reflecting investors’
rising expectations for the Company. In response,
we must continue to realize growth in our business and corporate value, while also focusing
on higher shareholder returns.
We have been focusing on net sales andoperating income as the management indicators that best reflect the success of the Company’s business activities and capabilities. In
addition to these, we practice management thatconsiders indicators directly linked to shareholder

151

2019

Realizing Sustainable Growth through an Original Business Model and Investment in
Human Resources
A People-Orientated Approach in Focused
Business Areas
One of Milbon’s strengths is a sound financial
standing that is resilient to fluctuations in thebusiness climate. At present, we continue topractice debt-free management to keep financial risk low. Regarding the efficient use of shareholders’ equity, in FY 2019 we recorded ROE of
13.1%, outperforming the average of just over 9%
for listed companies in Japan, which shows
our capital efficiency is relatively high. While
our financial policy realizes debt-free management, it is neither our main goal nor financial
policy. It is a result of our achievement of sustainable growth, including 24 consecutive fiscal
years of sales increases since our listing in

Total Participants in Financial Training Sessions

193

returns, such as profit attributable to ownersof parent and equity spread which indicates thedifference between the cost of capital and ROE.
Also, in April 2020, we introduced a stock compensation system for directors as a new framework in addition to a performance-based compensation system. We aim to incentivize directors to achieve sustainable growth in corporate
value and to share values with shareholders.
Moreover, to realize further sustainablegrowth and increase corporate value, eachindividual employee in every business location,
including sales, planning and development, andproduction divisions, needs to both focus onsales and maintain a clear awareness of costs,
including promotional and production costs. To
apply and accelerate this kind of initiative at a
Companywide level, the Chief Financial Officer
is providing financial training sessions in person
to employees selected from among applicants.
Over the last three years, approximately 200
employees have completed this training. As
employees learn how to use the “indicators” as
one of the criteria in making various judgments
related to their work, we are taking our operations to the next level, including product planning,

Sales per Employee (Thousands of Yen)

Operating Income per Employee (Thousands of Yen)
10,00050,00041,56140,00037,593

41,1048,000

30,0006,000

20,0004,000

10,0002,000

0Number of
Employees

2017
(805)

2018
(856)

2019
(910)

0
Number of
Employees

6,598

6,640

2017
(805)

2018
(856)

7,314

2019

(per employee)

development and production, problem-solving
at salons, and management support by our
Field Persons.
Sustainable Growth Beyond
the COVID-19 Crisis
The impact of the COVID-19 pandemic has hit
salons hard across Japan, reducing customer
traffic and forcing some to voluntarily close. The
same is also happening in beauty markets in
Asia, Europe, and North America. As Milbon’s customer salons are spread widely across Japan andoverseas, its business will inevitably be impacted
if this situation is prolonged. This may result incases where we have to postpone investments,
but we intend to thoroughly protect the employment of our people, who we consider as our greatest assets. A sound financial standing is one of
the Company’s strengths and that also makes
us robust enough to protect our employees as
we see out this emergency situation. We will continue to communicate thoroughly with our stakeholders to work toward sustainable growth as acompany that is indispensable to society.

2019
(910)

40

Number of New Employees

People of Milbon

47

Developing Hand-in-Hand with Stylists

New Employee Training Flowchart
Approx. 3 months
Understanding the Company and our business

Milbon Person Training
G e neralca reertrack
Join
MilbonApprox. 3 months

Development of applied skills for individual salonsSelf-analysis for improvement

Field Persons Training

OJT

Advanced beauty technique acquisition

Experience real
success andfailure in the field

Training for salon
problem solving

Cultivate an understanding of productdevelopment by experiencing all stepsof development to determine the trainee’s suitability
Learn all the necessary steps for creating Milbon products

41

Job
assignment

Understanding Milbon’s Philosophy andCore Values
Using The Milbon Way as a guide, trainees learn
the mindset required for Milbon employees andthe Company’s mission. A session regarding thisis taught by President Sato himself.

Product Developer Training

About Milbon

Milbon Person Training to Learn Our
Philosophy and Salon Business
New Milbon employees undergo nine months oftraining, which includes on-the-job (OJT) training.
The first three months consist of Milbon Person Training, which is compulsory for both career
tracks. This training aims to deepen employees’
understanding of Milbon’s core values and thesalon-exclusive market in which we do business.
Through this training, our employees foster theability to think and act for themselves, which
is a requirement for all employees, particularly
those assigned to sales divisions.

Milbon Person Training Overview

Approx. 3 months

The beauty
industry

Beautytechniques
R es earc hc a reer
track

2017

The Milbon Way
The Milbon Way is a handbook containing the core values that every employee
is expected to share. It was compiled by the president himself in 2012 andhas been revised in line with the times based on the theme of “continuity
and change.” This handbook ensures that the values are passed on to Milbon
employees over the years.
In 2019, an employee awareness survey was carried out among all
Milbon employees, including those based overseas. The assessment of
employees’ understanding and application to their work of The Milbon Way
produced an average rating of 4.13 out of 5. This result was extremely highcompared to similar surveys carried out at other companies.

Job
assignment

Understanding a Stylist’s Work by Acquiring
Their Skills
Trainees learn everything they need to know toprovide educational support to salons, from how
to use Milbon products to the beauty techniques
used by stylists at work. Proficiency is checkedusing an internal certification system.

Understanding Salon Management
Trainees deepen their understanding of salon
management by familiarizing themselves with thechallenges faced and support required by salons
today to share the concerns of salon owners.

54

2018

Proportion of New Graduates

61

Approx.
2019

85%

2019

The Advantages Engendered by Milbon
Person Training
By means of an in-depth, three-month training
period, trainees gain an understanding of both
“The Milbon Way” and salon work. This understanding enables them to take the initiative indeveloping ideas to help salons flourish and to
implement these throughout the entire value
chain, from production to sales.
As for our Field Persons, they acquire theknowledge and techniques necessary for not
only proposing products but also for helping
salons solve a wide range of issues, as our mottosuggests, “Don’t sell products, sell concepts.”
The extent of challenges that salons facevaries from customer analysis to staff development and human resource management. Milbon
has a track record of producing employees who
engage themselves with the different issues
faced by each and every salon so that the Company and the salon can grow together. This is oneof the main reasons why salons consider Milbon
as the best partner in the industry.

42

Number of Salons Supplied with Premium Brands
Aujua

Introduction to Our Brands
A Customer-Inspired Lineup for Realizing a Lifetime of Beauty

Premium Brands Premium brands with an emphasis on feminine values

milbonNet Sales (Millions of Yen)

Villa Lodola

5,571

7,674

3,166 3,271 3,698

3,966

2017 2018 20192017 2018 2019

6,895

A global hair care and styling brand that realizes “360-degree Beautiful Hair,” bringing out the intrinsic beauty of
the individual

9,0152017 2018 2019Technique-Focused Brands Brands exclusively for hair designers that are suitable for moreadvanced technique

A professional hair coloringbrand that keeps a woman’s
hair vibrant as she advances
through different life stages

A hair care brand developed specifically to beautify thehair of Japanese women, inspired by Japan’s climate,culture, and the characteristics of Japanese hair

8,085

33,456 33,882 36,266

2017

2018

2019

Cosmetics Brand
iMPREA is a cosmetics brand designed to
draw out each individual’s true beauty,
inspired by talented stylists’ ability to transform the impression a customer gives off.

An organic hair care and color brand that responds to thedesire to “be beautiful and live beautifully”

Professional-Use Brands Brands for professional use tailored to the needs of different generations

Skincare Technology Realized throughJoint Development

A leave-in* brand that realizes comfortable hair styles forany occasion* Leave-in: A type of treatment that does not have to be rinsed out
after application

43

A simple care* brand that helps women on the go realize
striking and beautiful hair

* Simple care: Products that work effectively without the user having
to change their hair care routine

A hair care and styling brand that sparks an awarenessof beauty in women on the go, awaking their desire forbeautiful hair

A technical care* brand that complements a stylist’s abilities and realizes
higher quality hairstyles for women* Technical care: Products that enhance thequality of professional hair color and perm
techniques

A straight perm brand that targets
heat damage. Inspired by protein science, it helps create easy-to-maintainbase hairstyles

A hair color brand for realizing sophisiticated blond hairstyles with a fullsheen. Sutiable for a wide range ofhair types (not sold in Japan)

KOSÉ’s skincare research meets Milbon’s hair careresearch. Healthy hair contains keratin, and thisgroundbreaking brand leverages both companies’
strengths to enhance skin appeal by repairing keratin found in the skin’s cornified layer.

44

R&D Expenses (Millions of Yen)
研究開発費

R&D and Production
Creating Products for Diversified Needs through the Fusion of Science and Sensibility

TAC Product Development System
When developing products, rather than focusing
solely on what we want to achieve as a manufacturer, we listen to the ideas and concerns ofstylists to create the products they truly need.
Milbon is a developer of beauty products andsolutions, and the TAC* Product Development
System is the basis for the unique process Milbon
uses to create these new beauty care techniques
and products.
To implement this system, we first locate
hairstylists who have outstanding techniques
or other ideas in a specific field, such as coloring or hair care. We call these people TAC hairstylists. They share their knowledge with us forscientific analysis to develop innovative products. Only products that meet the high expectations of these TACs receive our final approval
for commercialization.
Our Central Research Institute plays an in-strumental role in this process. By pursuing
the fusion of science and sensibility, specialists
at this institute transform the knowledge andexpertise of TAC hairstylists into products, enabling the sophisticated techniques possessedby only the most talented stylists to be realized
at every salon.

Basic Research
Milbon considers the provision of accurate information supported by science as one of our mostimportant duties as an industry leader. The basic
research we conduct not only covers the studyof the physical properties and the structure ofhair itself, but it also solves the issues and concerns of our end-users. This involves exploringsuch questions as, What kinds of phenomena
occur within damaged hair? We also conduct
more in-depth investigations into beauty techniques, such as the different finishes an individual styling product can produce depending on
its application. Going forward, we will expand
research into the area of “beauty as a sensibility” to discover scientific explanations to suchquestions as, What aspects of hair are universally considered beautiful?

Research on Predicting Hair Condition Wins a Top Awardat Cosmetic Science and Technology Congress
At the 30th Congress of the International Federation of Societies of Cosmetic Chemists
held in September 2018, a Milbon researcher
won the top award in the Poster category. Her
research looked at the hair and scalps of 2,461
Japanese women, exploring the relationshipbetween scalp color, hair shininess, and theamount of gray hair. In the future, we hope to
use the results of this study to help salons provide scalp care based on scientific predictionsof hair condition.

1,422

1,479

1,534

2017

2018

2019

Actual Production (Millions of Yen)
生産実績

32,382

2017

40,444 39,926

2018

2019

Production System
We have established a manufacturing system that produces safe, reliable
products based on Good Manufacturing Practices (GMP), an international
standard for the manufacturing and quality control of pharmaceuticals
enforced by the World Health Organization (WHO). Domestic production
operations are conducted at the Yumegaoka Plant in Iga City, Mie Prefecture,and overseas production takes place at the Thailand Factory. Strict quality
controls realize uniform product quality at both production locations, ensuring a stable supply of reliable products to markets in Japan and overseas.
We also consistently work to enhance productivity by improving production systems, including implementing C3 activities* in which all employees get together and develop ideas to improve efficiency and reduce costs.
* C3 activities: C3 stands for Change, Challenge and Customer, and it refers to activities that aim to enhance
productivity.

Main Research Topics

Production System Features

CAT imaging results for damaged hair

Hair aged between
20 and 29, magnified

Illustrationof damage

Hair aged between
50 and 59, magnified

Stick-shaped voids
Hair strand

From B to B to C – TAC Product Development System

Study market
trends anduser needs

Collect informationfrom salonsthroughout Japan

Select TACs

Identify and
Look deeper into
standardize successful
customers’ needs
beauty care techniques

Visual AnalyticTechnology
We used SPring-8, the world’s
highest performance largescale synchrotron radiation facility, to x-ray hair anddiscovered that Stick Shape
Voids (SSV) cause various
types of hair damage.

Createnew products

顧客のニーズの深堀* TAC: Target Authority Customer (development system based on customer representation)
   A TAC hair stylist is a stylist who is widely admired by our target customers.

45

Central Research InstituteScalp Flora Research
We were the first in the world
to discover the relationshipbetween the balance of flora
found on the scalp and hairloss/graying.

Big Data Analysis
We have developed an original hair analysis technology based on the collectionof hair and scalp data fromaround 3,000 women.

Multi-Product Variable
Volume Production LineWe have realized both product and volume flexibility
in production tailored to avariety of hair color needs
through such methods as
automation.

Sensual Assessment
Possessing the sensibilities
of a stylist, our staff assesses the sensual aspects of a
product, including feel, texture, and lather.

Environmentally FriendlyPlantsWe are reducing our environmental impact through suchinitiatives as installing bacterial wastewater cleaningsystems and solar and wind
power generation equipment at our plants.

46

TAC 製品開発システム
Number of Salon Education
ラインナップ数
Event Participants

Number of Field Persons
研究開発費

Sales and Salon Education
Enhancing the Appeal of Salons and Stylists

345

362

2017

2018

378

Number of Milbon Studios in Japan
生産実績

27,936

16

16

17

2019

2017

2018

2019

18,438 19,392

2019

2017

2018

Salon Education Support Structure for FY 2020

Identifying and Resolving Issues Facing
Salons through the Field Person System
The Field Person System is our proprietary sales
strategy reflecting our core motto of “Don’t sell
products, sell concepts.” We believe that solving a salon’s problems always benefits its customers. Rather than just selling products, wework to provide added value in the form of applications, ideas, and expertise that work inharmony with our products. We achieve thisthrough our “Support Triangle,” a tripartite collaboration between three types of Field Persons.
Field Persons engage with the issues facing a
specific salon, as well as the owner’s thoughts, toprovide support. This support ranges fromholding training sessions for stylists to improvetheir skills, participating in salon meetings, proposing annual schedules and promotion plans,
47

Field Person System
Field Person

FSE

FCE

Salon Educator

Cosmetics
Educator

FMS

MarketingSalesperson

Products
Knowledge andTechnique

Distributors

SalonsCustomers

knowledge regarding facial cosmetics. Throughour Field Persons, Milbon has developed agood rapport with salons by helping them solve
not only problems regarding products but also concerns related to management and staff
development.

2018

2019

Provides education about effective coloring
techniques for stylists aiming to enhance their
proposal capability.

Cultivation of

DA-PHOTO WORKS-:“Beauty Partners”

Cultivating Hair Design Capabilities-stylists who can support
customers’ pursuitof beauty throughout
their lives

Allows stylists to express themselves throughhair design captured in photographs. An eventfor design representation in the form of a contest.
Aujua Conference:

Cultivating Expertise
An opportunity for stylists who qualify as “Aujua Sommeliers,” Milbon’s internal certification
for hair-care specialists, to enhance each otherby sharing knowledge and information.

Support in developing expertise on the characteristics of each product brand to optimize
performance.

In addition, we hold approximately 1,100 seminars each year.

Educational Support

to creating salon management plans. Three Field
Persons work together to ensure salons flourish: a Field Marketing Salesperson (FMS) who
visits salons together with distributors to discover their specific issues; a Field Salon Educator(FSE) who provides training on cutting edge
hair styling techniques; and a Field Cosmetics
Educator (FCE) who provides training and expert

2017

8

Cultivating Proposal Capabilityand Hair Coloring Techniques

Developing Expertise that Provides
a Competitive Advantage

Needs and Issues

7

Milbon Color Academy (MCA):

Support in improving techniques to take thenext career step through training in counselingskills, with a focus on direct interaction withcustomers.

Support in improving essential appeal andvalue as a hairstylist by improving their hairstyling capabilities based on the values ofsensibility and creativity.

7

Educational Support for SalonsImproving Counseling Skills for
Discovering a Customer’s True Beauty

Cultivating Hairstyling Design
Capabilities to Enhance Proposals

Number of Milbon Studios
Overseas
当社海外拠点スタジオ数( 拠点)

Supporting Growth by Staying One
Step Ahead
The goal of Milbon’s salon education efforts is
to develop “Beauty Partners” who are always
one step ahead in making proposals. In otherwords, they become lifetime partners who salon
visitors can depend on to take care of not only
their hair styling but also every other aspect of
their beauty.

Becoming a Beauty Partner requires highlevels of skill in three areas: counseling skills
for discovering a customer’s true beauty, hairstyling design capabilities to enhance proposals, and expertise that provides a competitive
advantage. Milbon supports the education ofstylists and salons by providing a training structure that includes educational programs tostrengthen their abilities in each of these areas.

The skills required for stylists constantly
change with the times. Therefore, We always
stays one step ahead by providing salons withvenues and opportunities to learn from us sothat we can grow together. We strongly believe
this stance helps to support the continuous evolution of professional stylists.

48

写真あたりTwitter Followers

Corporate Branding

Approx. 90,000
Approx. 50,000
Approx. 5,000

Working with Salons to Produce Beauty Partners Trusted by Customers

The Milbon Brand
Milbon has been carrying out brand perception
surveys for several years. The results have consistently shown that customers rate us highly insuch areas as “trustworthiness” and “approachability.” In fact, these fit well with the values women look for in beauty salons. Since our founding, our approach has been to work “together
with salons,” and rather than just showcasing our
products, we have been pursuing the corporate

Shohei Takebuchi

Instagram Followers

2017worthiness; we think about our salons, distributors, and customers more than our competitors
do. This has become the foundation that supports the Milbon brand.
In addition, we hope to create the impression that we are progressive and innovative as
we take on a new challenge in cosmetic products. We intend to expand our brand prudently
yet boldly.
This year we launched an e-commerce website that is exclusively for use via salons. This is
one of the measures that we are taking to workwith salons to raise customer value in a way thatfits the times.

slogan of “Find Your Beauty.” This may be why
we are known as the brand that has the closest relationship with beauty salons and professional stylists.
Our Relationship with Salons
The reason why salons continue to choose
Milbon brands is because our Field Persons
are successful in building steady relationships
with salons through daily interactions. We sell
exclusively to salons, and this is a value that
we try to impress upon our customers. Because
we have long adhered to this approach, we havedeveloped a reputation of stability and trust-

Milbon’s Corporate Branding

Our Vision and Implementation Measures
To date, we have concentrated on being customer-orientated and have worked to get to know
our customers. Going forward, we think it is important to develop this one-way process into interactive communication. As one example, inrecent years we have increasingly hosted events,
such as small-scale, fan social events, but even
there we never lose sight of our fundamentalrole as partners—working “together with salons.”
Beauty salons that use Milbon products not
only increase their own value, but also attract
more customers. Salons that develop together
with Milbon become salons that are chosen by

Examples of Milbon Corporate Branding (under

2018

2019

FYB MAGAZINE
Page Views per MonthApprox. 130,000
Approx. 110,000

Approx. 30,000
Approx. 10,000
Approx. 5,000
2017

customers, and we hope that this relationshipwill increase the value of both partners.
Changing Times and Looking to the Future
We live in an era of information overload, where
our customers’ needs are changing at a dizzying
pace. In this environment—what has come to be
known as “The Age of Personalization”—Will people accept this kind of uniform brand image?
We think that the concept of “together withsalons” is key to answering this question. Salonsare constantly faced with changing customer
needs, and they have a long history of meeting these needs at every turn. No matter the

2018

Approx. 40,000

2019

2017

2018

2019

age, salons have always provided the value of
personalization.
We will continue to work with salons—those“communities of beauty and soul” that haveconsistently met the needs of their customers—
no matter how their lives change. We will ensurethat the value of salons is not forgotten, butrather grows together with the times—and with
us alongside.
This is the Milbon strategy, tried, tested,and perfected.

in the diagram on the left)

2 to CManager of Brand Strategy
Corporate Strategy
Development Department
3

Salon
Distributors

1 B to B

1 B to C

SalonsFYB MAGAZINE, a website providing customers with beauty
care information

Customers

Branding that strengthens connections between salons and their customers
1 Forge strong relationships with salons, creating connections to their customers
2 Showcase the value of salons and salon-exclusive products to customers
3 Strengthen Milbon internally to create a platform for communication with salons and customers
Key corporate visual

49

Events for general customers

50

Shaping the future.

51

Sustainable Growth

Feature: A Discussion on Milbon’s SDG Contribution
Promoting SDG-conscious management driven by individuals

Since 2019, Milbon has been actively incorporating efforts to achieve the Sustainable Development Goals (SDGs) into our business activities.
Hidemitsu Sasaya, a consultant specializing in CSR and the SDGs, and Masahiro Murai, the Chairman of Milbon’s SDGs
Promotion Committee, shared their opinions regarding achievements in the first year of SDG-conscious management and thechallenges to be faced going forward.

Masahiro Murai

Hidemitsu Sasaya

Managing Director, Milbon Co., Ltd.

CSR/SDGs Consultant

Chairman of the SDGs Promotion Committee
Profile Joined Milbon in 1992.
He has served as a manager in
the Company for many years,
primarily in charge of administrative divisions. He is currently
responsible for Corporate Administration Department, Corporate Strategy Development
Department, Finance Department, and other areas as amanaging director. Since February 2019, he has been promoting Companywide initiatives to achieve the SDGs as
Chairman of the SDGs Promotion Committee.

53

Profile Joined Japan’s Ministryof Agriculture and Forestry in
1977. He has served as deputy
director-general for the Ministry of the Environment, deputy
director-general of the Ministry
for Agriculture, Forestry and
Fisheries, and director-generalof the Kanto Regional Forest
Office before leaving the ministry in 2008. In the same year,
he joined Ito En, Ltd. and served
as a director, among other positions, until April 2019. He has
been teaching as a visiting professor at The Graduate Schoolof Information & Communication since April 2019. He leverages his experience serving in
administrative bodies and of
business management to provide corporations and local governments with consulting andadvice regarding the theory andpractice of sustainability.

One year has passed since the SDG
initiatives started. What kind of response haveyou seen so far?
ーMurai: In 2019, the first year of action, we worked
to raise awareness of SDGs at Milbon. We asked
Professor Sasaya to cooperate in our initiatives through activities such as visiting every
division and our board members, and holding
study sessions and workshops for all employees, including part-timers, for approximately
two months. We felt it was crucial that each individual employee fully understood our initiatives aimed at achieving the SDGs so that we
can realize a Companywide effort. It cannot justbe left to board members and the divisions responsible for certain areas. The responses we received from employees were more favorable
than expected, and now many of them want tolead activities in their divisions. I also feel thatthe board members recognize now that SDG
efforts need to be directed at an executive level.
Sasaya: I think that this ability to get all employees working together toward the same goal,from the very top down to the frontlines, is oneof Milbon’s greatest strengths. What has been
the response from external stakeholders?
Murai: We have been sharing our SDG initiatives in dialogues with investors. They haveasked us various questions and are showinginterest in our progress. We are confident thatthe market has a positive expectation about
the results.
Sasaya: ESG investment is becoming increasingly prominent globally, and many investors
have started using a company’s contribution
toward achieving the SDGs as an indicator whenweighing up ESG considerations. SDG initiatives
are already an important management issue forcompanies and one that has a direct impact onshare price, so investors are most probably paying close attention.
In 2019, in addition to raising awareness among employees, you created an ESG/
SDG matrix and SDG value chain. How do you
plan to utilize these?

ー

Murai: The ESG/SDG matrix shows how each of
the 17 SDGs relates to each ESG topic, providing a visualization of the key issues we should
be addressing. The content of the matrix was
created based on advice from Professor Sasaya
and we will use it and share it as a KPI.
The SDG value chain shows how each of
the SDGs map onto Milbon’s value chain in the
sectors of procurement (selecting materials),planning and development, manufacturing anddistribution, and sales and marketing. It also
clarifies what we should be aiming for in eachof these sectors to develop beauty markets andsolve social issues. The matrix and the value

chain have been posted on the Company intranet so that all employees have access andcan use them as a reference. At the end of 2019,
we used them as a basis for setting specific SDG
targets in each sector, including quantitative targets, and the president himself shared thesewith employees at the announcement of theCompany’s management plan. In 2020, we started working to achieve these targets.
Sasaya: The ESG/SDG matrix is an SDG-focusedmanagement tool that presents information ina structured and easy-to-understand way, making it effective for communicating ideas bothwithin and outside a company. The process ofcreating this matrix provided an overview thatfacilitates integrated thinking. The method of
mapping the SDGs onto the value chain is also
an extremely effective way to prompt real action. This approach gives individual employees
a concrete idea of specific targets they should
be working toward within wide-ranging goals,
increasing their sense of agency. By not only
showing individual cases but also giving an overview of all activities being carried out across theCompany, you can also appeal and be persuasive when explaining SDG activities to external
stakeholders; why you are focusing on certain
key issues and what you hope to achieve throughSDGs promotion.
Murai: Exactly. These tools provide a visualization of the Company’s activities in non-finan54

研究開発費MILBON ESG/SDGsマトリックス（2020年～2022年版）●=直接的に関連があると考えられる。

〇=間接的に関連があると考えられる。

SDGs 17目標との関連
E SG

Feature: A Discussion on Milbon’s SDG Contributions

7つの中核主題

ESG重要課題

主な目標（KPI項目）

2020年〜2022年目標

社外取締役を3名に増員する〇

次期経営幹部の育成
企業統治

●

〇

●

取締役会の実効性評価実施方法を検討し、機能の向上を図る。継続的な改善を行う。

●

取締役の業績連動報酬を経営指標に直接連動したものに見直す
コーポレート・ガバナンス

IR（投資家との対話）

ガバナンス

サステナビリティ教育
統合報告書の発刊
有効なリスクマネジメント体制の確立
リスクマネジメント

コンプライアンス
公正な取引の遵守
サプライチェーンマネジメント
反社会勢力の排除
あらゆる差別の禁止

人権●●代表取締役、担当取締役による機関投資家との対話推進。

〇

四半期ごとに機関投資家との対話内容をIRレポートにまとめて取締役会で報告

〇

●

〇

●

に、各投資家からの期待を把握する。

サステナビリティ・マネジメント

公正な事業慣行〇

内部統制システムをより機能させるための体制の確立（規程の見直しを含む）

各調査機関からのESG調査に適宜回答することで、会社のESGに関する現状を把握するととも組織統治

サステナビリティマネジメント体制の確立(Produced under
the direction of
Hidemitsu Sasaya)(In Japanese only)●

取締役、監査役に対して年1回以上トレーニングを実施する
内部統制

人権の尊重
人権侵害加担の回避

BCP管理

コンプライアンス対応力の強化取引に関する法令の遵守と、社内浸透〇

サステナビリティ推進体制の確立〇

国連グローバル・コンパクトに署名する〇

新入社員、海外駐在社員向けSDGs勉強会の実施〇

2020年度より発行を始め、継続して統合報告書を発刊する

●

●
●
●
●

〇

リスクマネジメント体制をより実効性のあるものに強化する。
生産本部におけるBCPの確立〇

各部門におけるBCPの検討〇

階層型、部門別研修、従業員意識調査の継続実施

〇

●

●

●

〇

〇

〇

〇

〇

〇

関係法令の把握と、対応プログラムの作成

●

●

●

原料調達のサプライチェーンマネジメントの実施 サプライチェーンマネジメントシートの完成と、取組課題抽出

●

●

〇

●

Check below for details regarding the ESG/SDG matrix:

反社会勢力の排除指針の策定
人権方針の策定

社内人権啓発運動の実施

反社会勢力の排除指針の策定●

人権方針の策定●

社内人権啓発運動の内容検討

●

〇

●

●

●

https://www.milbon.co.jp/company/sustainability/
esg-sdgsmatrix.pdf/

CSR調達の推進
健康宣言の策定

従業員の健康・安全

サステナビリティ基本方針の策定

労働時間短縮・有給取得の促進

サプライチェーンマネジメントシートの完成と、取組課題抽出●

ミルボン健康宣言の策定と発信●

所定外労働時間の短縮、有給取得率70％以上〇

安全な職場環境の整備

全社安全衛生委員会の継続実施〇

安全運転活動の推進

全社事故発生率〇〇％以下〇

多様なキャリアパスモデルの実現

ミルボンCDPの作成（ Carrer Development Program）

〇

●

〇

●

●

〇

〇

〇

●

Milbon’s SDG Value Chain (target year: 2030)

cial areas. We plan to share them externally,
while also using them to motivate and raise
employees’ understanding to accelerate efforts
in each sector. We will also focus on using themin dialogues with stakeholders to provide information that is more complete and clear.
Sasaya: Who takes responsibility for each SDG?
Murai: Our approach is that all board members
are responsible for working to achieve the SDGs.
We have the SDGs Promotion Committee providing Companywide support, but rather than implementing top-down initiatives, we would like all
employees to share our ideas and objectives
concerning the SDGs so that each individual
can show initiative and take action.
Sasaya: In addition to strong leadership, corporate culture is one of the biggest factors inwhether a company’s efforts will lead to success in achieving the SDGs. Companies thatprovide an environment where each individualis aware of the issues and can take action canachieve a lot more than organizations without

55

this awareness. Milbon is definitely the former.
Milbon's corporate culture cannot be realized
overnight, and I think it is an asset that reflects
the Company’s character.

Values tobe CreatedFinally, please share your outlook andany thoughts about upcoming challenges.

Procurement (Selecting Materials)

Planning and Development

Manufacturing and Distribution

Sales and Marketing

Responsible and Sustainable
Procurement

Beauty Solutions that Create
Values Unique to Stylists

Production Systems that are
Conscious of Both Quality andEnvironment

Beauty Industry Development• A development system thatlearns from the world’s best
stylists (Global TAC ProductDevelopment System)• A lineup of products andservices that are up to dateand meet the various needs ofstylists• Quality standards attuned tothe sensibilities of stylists• Securement of Milbon’s
original techniques based on apatent and IP strategy• Development of newtechniques through open
innovation• Research structures that
produce leading-edge
technology• Inspection technology that
ensures high levels of safety• Multi-product variable volume
production systems in
response to varied demands• Quality controls that take into
account the sensual aspects
of products• Use of recyclable productionenergy• Energy-efficient production• A stable supply network
comprising global production
and distribution systems• Market policies tailored toeach global region thatconsider social factors suchas demographics• Strategic support systems forsalons (FP Support Triangle
Systems)• Provision of essential training
programs for stylists througha variety of methods• Advanced technique training
provided by specialists• Information sharing overbroad areas in cooperation
with distributors• Expertise certification
systems that enhance a
stylist’s value• Coordinated services that
address every aspect ofbeauty• Network of salons that act as
local hubs (Japan)• Socially and environmentallyaware development processes• Development of original
materials that pursues bothsustainability and functionality• Development of environmentallyfriendly containers• Development of efficient andenvironmentally friendly
manufacturing technologies• Emissions standards thatfactor in recycling• Proactive contribution toregional revitalization• Sanitization of wastewaterfrom factories• Local awareness-raising
aimed at realizing asustainable society• Proactive contribution toregional revitalizationー

Sasaya: I think Milbon has made an extremely
good start, but the top runners regarding theSDGs have already incorporated each of the
169 targets contained within the 17 goals into
their efforts. I hope Milbon will get its Companywide
approach moving forward quickly so it can also
advance to the next stage.
Murai: I agree. As you point out, it is importantto carry out activities that target specific social issues, and we intend to actively employ
these targets.
Sasaya: I think that target 12.8, which involves
contributing to “sustainable development andlifestyles,” is an example of an area where Milbon
can make a difference. You have already started
taking action in this area, such as using sustainable palm oil in products and recycling containers, but I think you can also leverage the strength
you offer through your network of client salonsacross Japan to raise awareness of sustainability among these salons and their customers as well as offer suggestions of what they
can do. I think the essence of SDG-conscious

What We
ShouldPursuemanagement is setting yourself ambitious
challenges while also carefully controlling any
risk factors.
Murai: We recognize that contributing to thedevelopment of the beauty industry is an essential factor for SDG-conscious management. For
the industry to develop sustainably, we need toturn salons into special presences as “communities of beauty and soul” that really connect withpeople. Milbon will strive to support the evolutionof the beauty industry all over the world throughour business activities. I believe the promotionof SDG-conscious management will be a significant driver for realizing this.
Sasaya: The desire to be beautiful and live a
fulfilling life is universal. As an issue-solving
company that is concerned with both beautyand soul, I hope that Milbon will leverage its
influence both inside and outside the Company
to become global No. 1.

• Procurement based on
BeautyMilbon’s original sustainability
Marketstandards and organizational
Development structures• Disclosure of procurement
standards• Securement of stableprocurement channels

SocialIssuesPlatformfor Value
Creation• Securing traceable major
materials• Using environmentally friendly
containers• Continuing efforts to reduceresource consumption

To become theworld’s No. 1
professional
hair caremanufacturer• Leadership from the Corporate Governance, Risk Management, and Compliance committees• Personnel and organizational systems that are transparent and• Open dialogue with stakeholders
facilitate diversity• Spread management philosophy within the Company• Financial strategy that facilitates agile yet stable business development• Development of human resources who understand the• Respect for human rights in accordance with the Universal Declaration ofmarket and can create value accordingly (Field Person
Human Rights
training, specialization systems)

56

Sustainability
Each Employee Leading the Way to a Sustainable Society

Basic Approach
Following the management philosophy on which
the company was founded, Milbon has developed a business focused on the beauty market.
We believe that achieving sustainability in thebeauty industry will lead to the realization of asustainable society. Each and every employee,
including members of our executive team, engages in these efforts by envisioning and taking
action toward a sustainable society.
Basic Policy for Sustainability

Milbon is committed to realizing a sustainable society by creating a beauty industry
that offers a richness of beauty and soulthrough hair stylists.
Structure for Promoting Sustainability
At Milbon, we expect each employee to play aleading role in advancing sustainability basedon our Basic Policy for Sustainability, and wehave established the SDGs Promotion Committee to provide Companywide support for
Board ofDirectors

SDGs
Promotion
Committee

Development of Companywide
promotion
management
supportstrategy

57

Individual
Employees
Leading role inadvancing SDGs

these efforts. Chaired by a board member, thecommittee works to incorporate sustainability
into management strategy through the Boardof Directors.
In-House Education
In 2019, study sessions on the SDGs were heldfor each tier of employees, including board members, managers, and domestic employees,with the aim of engaging each individual employee. We will also create opportunities forincoming employees to gain an understanding of
the SDGs, and we will hold study sessions for
subsidiaries and representative offices overseas
through online videos by the end of 2020.
Sharing Sustainability Policy with Our Partners
Milbon cannot develop a sustainable beauty
industry alone. In February 2020, we held a sus-

tainability policy presentation for the distributors and salons we work with to share our activities and to create a framework for realizing
an industry-wide partnership.

President Sato giving a presentation on Milbon’s efforts to achieve
the SDGs

Sustainability Initiatives• Sustainable Procurement
The consumption of palm oil is growing worldwide as it is increasingly used in food and cosmetics due to its excellent processing properties.
However, large volume production is leading toParticipation in the UN Global Compact
In May 2020, Milbon joined the UN Global Compact (UNGC). The UNGC is a voluntary initiative to encourage businesses worldwide to adopt sustainable and socially
responsible policies.
As a signatory, we contribute to creating a sustainable society by adhering to
10 principles related to human rights, labor, environment, and anti-corruption.

notable problems such as deforestation and theuse of child labor.
As a manufacturer that uses palm oil, in
2019, Milbon became a member of Roundtable on Sustainable Palm Oil (RSPO), an organization that promotes the sustainable useof palm oil to help solvethese problems.
Currently, a portion of
our products use RSPO
certified palm oil and weare working to expand its
application across our en- RSPO Trademark Logo
9-2994-19-100-00
tire product lineup.
Relevant SDGs

• Helping Children to Build a Future throughOur Products
Milbon participates in“Kids Helping Kids,” aninitiative led by the Kids
Earth Fund (KEF). This
NPO supports children
who suffer from the effects of war, poverty, and Elujuda FO (left) andenvironmental contami- Elujuda MO (right) in thenation. As part of this ini- special packaging
tiative, we launched products presented in

Employment for People with Disabilities
Milbon actively supports the employment of people
with disabilities to realize a society in which a diverse
workforce can thrive.
Since 2005, we have been working with Iga Koiku-kai, a social welfare corporation, to offer people withdisabilities an off-site work program at our Yumegaoka Plant in Mie Prefecture. As of May 2020, we havearound 30 people working on our production lines
through the program and in some cases, this has led
to direct recruitment by the Company.
We participate in Iga City’s efforts to provide employment opportunities to people with disabilities
through an off-site work program, which is widely attracting attention as the “M.I.E Model,” (also known as
the Mie Inclusive Employment project). In February
2020, President Sato spoke at “The Forum of Off-Site
Work Program, M.I.E Model” to showcase our experiences working with people with disabilities. On thesecond day of the Forum, we offered a site visit of
our Yumegaoka Plant to the participants.

special packaging that used these children’s art
for a limited time.
Milbon and KEF share a common spirit ofpositive energy for creation. We hope to create
a better future for children around the world bycombining our beauty products with KEF’s support for children through art.

President Sato giving the keynote talk at The Forum of
Off-Site Work Program, M.I.E Model

A tour of the Yumegaoka Plant during The Forum of OffSite Work Program, M.I.E Model

Relevant SDGs

Relevant SDGs

58

Corporate Governance
Sustainably Growing Corporate Value through Transparent, Fair,
and Effective Management
We consider enhancing corporate governance tobe of the utmost importance for our management.
We aim to sustainably grow our corporate value
by increasing the transparency, fairness, andeffectiveness of management.
For details, please visit the link below for our
Corporate Governance Report.
https://www.milbon.co.jp/english/ir/management/
management_04.html

Corporate Governance Framework (As of March 31, 2020)
Governance Structure

Company with a board of corporate auditors

Number of Directors

9*1 (including two outside directors)

Number of Corporate Auditors

3*2 (including two outside corporate auditors)

Term of Office for Directors

2 years

Executive Officer System

AdoptedVoluntary Advisory Committees Nomination and Compensation Committees
to the Board of Directors
establishedAccounting Auditor

Directors and Corporate Auditors (As of March 31, 2020)*2 Maximum number of auditors stipulated
in the Articles of Incorporation: 4*3 For details on how we are interpretingthe corporate governance code, see theCompany’s website or Corporate
Governance Report

GYOSEI & CO.

Reason for Appointment

Meeting Attendance (Board of Directors/Board of Auditors)

59*1 Maximum number of directors stipulated
in the Articles of Incorporation: 15

Ryuji Sato

President and CEO

15/15

Ryuji Sato has wide-ranging experience in sales, product development, marketing, corporate planning, and other fields. Since his appointment
as president and CEO in 2008, he has demonstrated strong leadership and contributed to the Company’s growth.

Noboru Shigemune

Senior Managing Director
15/15
In charge of FP Headquarters Dept., Educational Planning
Dept., and International FP Headquarters Dept.

Noboru Shigemune has held positions of responsibility in many different divisions, including marketing, corporate planning, accounting, andsales, giving him abundant experience of and insight into the operations of the entire company. He has contributed to the Company’s growth
as General Manager of the sales divisions.

Masahiro Murai

Managing Director
15/15
In charge of Corporate Administration Dept., Corporate
Strategy Development Dept., Internal Audit Dept., Finance Dept.,
and Cosmetics Planning Dept.

Masahiro Murai has served as a manager in the Company for many years, primarily in charge of administrative divisions, and he has abundant
experience and wide-ranging knowledge of all facets of administration. He is currently developing the Company’s personnel framework andfinancial strategy.

Teruo Murata

Director
General Manager of Production Headquarters Dept.

15/15

Teruo Murata has served as a manager in Production Headquarters for many years and has significantly contributed to building up the Company’s
production platform. Currently, he is further enhancing production systems with an eye toward increases in the supply of products todomestic and overseas markets.

Yasuhumi Takeda

15/15
Director
General Manager of Development Headquarters Dept.

Yasuhumi Takeda has abundant experience in and wide-ranging knowledge of product development and he has contributed to the Company’s
growth for years.

Mitsuru Oshio

Director
In charge of Business Development Dept.

Kazunobu Konoike

Director
15/15
Manager of Information System Dept. and in charge of
CS Promotion Dept.

Kazunobu Konoike has a track record of developing overseas markets as president of the Company’s first overseas subsidiary, as well as
experience as Manager of Corporate Strategy Development Department.

Shoichiro Takahata

Independent Outside Director
Certified Public Accountant

Shoichiro Takahata has built up knowledge of finance and accounting as a Certified Public Accountant and also has a broad perspective andabundant experience as the president of the Management Strategy Research Institute.

Taizo Hamaguchi

13/15
Independent Outside Director
Advisory Member at ITOCHU-SHOKUHIN Co., Ltd.

15/15

13/15

15/15

Koji Murata

Corporate Auditor

Keisuke Endo

Independent Outside Corporate Auditor
Lawyer

15/15

Yoshihiko Okuda

Independent Outside Corporate Auditor
Certified Public Tax Accountant(New appointment)

8/8
8/8

Mitsuru Oshio served as a branch manager across Japan for many years and has abundant experience in and a broad insight into sales strategy.

Taizo Hamaguchi has abundant experience as an executive of a major trading company and as an executive of a food products wholesaler.
Koji Murata has spent many years engaged in corporate planning and internal auditing among other duties. As a result, he has extensive
experience and a deep understanding of the beauty industry and Milbon’s business model, as well as insight and expertise related toadministration and auditing.

TAIZO
HAMAGUCHI
社外取締役
Outside Director

濱口 泰三

KAZUNOBUKONOIKE取締役
Director

鴻池 一信

TERUO
MURATA取締役
Director

RYUJI SATO
代表取締役社長
President and CEO

村田 輝夫

佐藤 龍二

YASUHUMI
TAKEDA取締役
Director

武田 靖史

KEISUKE
ENDO
社外監査役
Outside Corporate Auditor

遠藤 桂介

Keisuke Endo offers legal knowledge and experience as a qualified lawyer.
Yoshihiko Okuda offers knowledge and experience of accounting and tax matters as a Certified Public Tax Accountant.

SHOICHIROTAKAHATA
社外取締役
Outside Director

高畑 省一郎MITSURU
OSHIO
取締役
Director

大塩 充

NOBORUSHIGEMUNE
専務取締役
Senior Managing Director

重宗 昇

MASAHIRO
MURAI
常務取締役
Managing Director

村井 正浩

KOJI
MURATA
常勤監査役
Corporate Auditor

村田 浩二

YOSHIHIKO
OKUDA
社外監査役
Outside Corporate Auditor

奥田 芳彦

60

Assessment of Board EffectivenessOnce a year, we conduct an assessment andanalysis of the Board of Directors’ effectiveness.
The results are shared at Board of Directors
meetings and used as the basis for discussing
improvement measures.
An assessment of the effectiveness of theBoard in FY 2019 was carried out in February
2020. The method and results of the assessment
are shown below.
Subjects: All directors (10) and corporate auditors(3) serving during FY 2019
Assessment Method: Questionnaire and individualinterviews with each subject
Major Categories of Questions: Composition of theBoard of Directors, composition of voluntary advisorycommittees, roles and responsibilities of directors,
status of Board of Directors meetings operations,information provision and training for directors
and auditors
Achievements and Challenges in FY 2019
Achievements•Discussions and deliberations on various aspects
have been conducted, which prompted the dynamic
exchange of opinions regarding topics such as mediumto long-term management strategies and challenges,
the needs of diverse stakeholders, and risk management.
•Organization and scheduling of agenda items to be
proposed at Board of Directors meetings has been
improved.

Challenges•It was suggested that there is still room for improvement
regarding the appropriate number of directors, criteria for
agenda items, and the enhancement of director training.

61

Training for Board Members and Auditors
Training to enable board members and auditors
to properly fulfill their role in implementing
corporate governance is held at least once ayear. In FY 2019, a study session on the SDGs
was held, through which participants improved
their knowledge of the key matters needed tomake management decisions.
Cultivating Future Managers
Milbon considers succession planning for top
management positions as one of its mostimportant business strategies. In 2015, welaunched Milbon Corporate University (MCU),
an in-house program for cultivating managerial
talent for the next generation. MCU has carriedout the two-year program successively with
42 participants divided into four groups. The
Company plans to select a future CEO fromcandidates identified through the program.
Board members also actively participate in the
program and provide oversight, with directors
giving lectures on their fields of expertiseand responsibility.

Director Compensation System
Before the decision of compensation amounts
are made, the Board of Directors proposes its
plan to a compensation committee comprised
mainly of outside directors, and then receives
advice.
The director compensation system has
been modified effective April 2020 to improve
its effectiveness as a healthy incentive to realize
the Company’s sustainable growth. It is comprised of fixed compensation, performance-based compensation, and stock compensation.

For independent, outside directors andauditors, the Company believes that compensation linked to business results is not appropriate,
and therefore only provides
fixed compensation.
Policy for Cross-Shareholdings
In principle, Milbon does not engage in shareholding for short-term trading. Also, while wehold stocks of companies other than affiliatesthat are expected to contribute to our businessgrowth, our policy is to continue holding these

New System for Director Compensation (Effective April 2020)
Milbon Corporate University (MCU): Succession Plan for Top Management Positions
Directors

Aim: Provide growth opportunities for
future management executives throughsessions with current board members
and other means, covering topics fromcontinuing the Company’s core values
to fostering a forward-looking vision
Theme: Continuity and change
Points of Edification: Full understanding of core values, self-awareness,
future-orientation, foresight, determination, and executive capabilities
Program Length: Two years (First
four programs were carried out
during the 2015–2019
medium-term management
plan)

Outside Directors
Corporate Auditors
Outside Corporate Auditors

End-of-Program
Assessment Test

Creation of a hypothetical medium-termbusiness plan

Second-Year Activities

Discussions concerning visions for the
future, fostering of an organizational
cultureFirst-Year Activities

Knowledge acquisition through 10 internalcourses (company history and core values,organization and personnel, humanresources development, marketing,leadership qualities and mission, etc.)

Governance Enhancement Timeline
Performance-based
compensation

Fixed compensation

Stock
Compensation

Fixed compensation• Fixed Compensation (Monetary Compensation)
Fixed amount based on position.
• Performance-Based Compensation (Monetary Compensation)

Set amount based on position and business performance multiplied by a performancecoefficient (0–200%)
Performance coefficient: A variable, performance-based figure calculated with the weightingof the previous fiscal year’s target achievement ratio of 60% for net sales, 30% for operating
income, and 10% for profit attributable to owners of parent.

• Stock Compensation

based on an annual comprehensive assessment to verify the benefits gained from theholding. If a holding is no longer consideredbeneficial, we will consider selling cross-shareholdings. In FY 2019, the Board of Directors
carried out a comprehensive assessment of
individual cross shareholdings, including theircost of capital.

Grant of transfer restricted shares of the Company to the value of 20% of monetarycompensation.

2015 Milbon starts MCU, an in-house program for
cultivating future management
2016 Two outside directors appointed
Nomination and Compensation Committees
established with outside directors as chairs
The first questionnaire survey conducted to assess
and analyze the effectiveness of the Board of
Directors with the results reviewed by the Board
2017 The Board starts assessing cross-shareholdings
to determine the sale of some companies’ shares2019 Adopted an executive officer system
Conducted interviews with outside directors in
addition to the questionnaire survey for the Board
effectiveness assessment
2020 Revised director compensation scheme with a
new framework more focused on the Company’s
financial performance. Introduced transfer
restricted stock compensation scheme

62

Company Overview and Stock Information(As of December 31, 2019)

Stock Information

Principal Shareholders

Stock listing

Tokyo Stock Exchange,
First Section

Stock code

4919

Number of shares per unit

100

Total number of sharesauthorized

120,408,000

Number of shares outstanding

33,117,234

Number of shareholders

11,274Company Overview
Number of shares held

Shareholding ratio

Trade Name

Milbon Co., Ltd.

Corporate Website

Konoike Asset Management Company

1,920,000

5.86 ％

Established

July 1960

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

1,868,400

5.71 ％

Keiko Murai

1,483,624

4.53 ％

Capital

2.0 billion yen

For further information about Milbon, please
visit our website using the link below.

Maiko Kitajima

1,482,424

4.53 ％

Number of Employees

SMBC Trust Bank Ltd. Designated Securities Trust

1,328,000

4.06 ％

Non-Consolidated: 723
Consolidated: 910

SSBTC CLIENT OMNIBUS ACCOUNTHead Office

Kyobashi Edogrand, 2-2-1 Kyobashi, Chuo-ku,
TokyoCentral ResearchInstitute2-3-35 Zengenji-cho, Miyakojima-ku, Osaka

http://www.milbon.com/en/

Branches

Saitama, Tokyo Aoyama, Tokyo Ginza, Nagoya,
Osaka, Hiroshima, Fukuoka

IR Website

Sales Offices

Sapporo, Sendai, Yokohama, Kanazawa,
Shizuoka, Kyoto, Kobe, Okayama, Matsuyama,
Kumamoto

Information for shareholders and investors isavailable, including materials related to financial
results and video and audio broadcasts offinancial results briefings.

PlantsYumegaoka, Thailand

Subsidiaries

MILBON USA, INC. / Milbon Trading (Shanghai)Co., Ltd. / Milbon Korea Co., Ltd. / MILBON(THAILAND) CO., LTD. / MILBON MALAYSIA SDN.
BHD. / MILBON VIETNAM CO., LTD. / MILBONSINGAPORE PTE. LTD.

Shareholder

1,128,725

3.45 ％

Japan Trustee Services Bank, Ltd. (Trust Account)991,200

3.03 ％MILBON Cooperating Companies Shareholding Association

959,156

2.93 ％

Sumitomo Mitsui Trust Bank, Limited

934,400

2.85 ％

Kazunobu Konoike

861,328

2.63 ％

Note: Shareholding ratios have been calculated based on the total number of shares outstanding excluding treasury shares (378,250 shares).

Shareholding Ratio by Type of Shareholder

Share Price and Trading Volume(Yen)

Individuals
and Others

Financial
Institutions

32.17%

29.05％

Financial
Instruments
Firm
0.56%

Foreign Institutions
and Individuals
24.2%

63

Other Domestic
Companies

14.01%

Website Information(Number of shares)

Share price

7,000

3,600,000

Trading volume

6,000

3,000,000

5,000

2,400,000

4,000

1,800,000

3,000

1,200,000

2,000

600,000

0 Dec.

2014

Dec.
2015

Dec.
2016

Dec.
2017

Dec.
2018

Dec.
2019

Mar.
2020

0

Representative Offices

Taiwan, Hong Kong, Turkey, Indonesia,
Philippines, Europe

https://www.milbon.co.jp/english/ir/

Website for Stylists (in Japanese only)
Milbon performs a wide range of activities forthe benefit of beauty industry professionals.

https://www.milbon.co.jp/beauty64

F i n d Y o u r B e a u t y.
Getting to know yourself is a longa n d b e a u t i f u l j o u r n e y.

6566

Editorial Policy
Milbon considers it important to provide stakeholders with regular explanations about both financial
and non-financial information concerning the Company, including information related to theenvironment, society, and governance (ESG), as well as human resources. Our goal is to give a wide
range of stakeholders a complete picture of the Company. To provide a deeper understanding of ourmanagement strategy and business activities, a particular focus has been put on the concepts thatdefine the Company and how we interact with salons and stylists. With that focus in mind, we havedivided our first integrated report into three sections: Our Credo, Value Creation Strategy, andSustainable Growth.
We hope this report will help you to get to know us better and enrich interactions with
our employees.

Note Concerning Forward-Looking Statements
Business result forecasts and other forward-looking statements set forth in this report are projections

Milbon Integrated Report 2020 “Your Beauty”

made using information that was available at the time of writing. They involve risks and uncertainties

Models: JUN (JUN Style), Yuuka Nakashima (Hirata Office), Hima Mizukoshi (IPSILON)

and do not represent a commitment from the Company that they will be achieved. Therefore, we

Photographer: Teppei Hoshidarecommend that investment decisions should not be made solely based on these statements. The
Company’s actual results are influenced by various material factors and actual results may differ

Stylist: Yoshiaki Komatsu
Hair&Makeup: Tomoe Nakayama
Produced by: Hirohide Ando (MILBON), Yoshinori Kimura (MILBON),

significantly from forecasts. Factors that can influence actual results include, but are not limited to, theChihiro Ikeyama (GREAT WORKS), Akira Endo (GREAT WORKS)

business environment around the Company’s business areas, exchange rates including yen-US dollar

Creative Direction: Shinji Oota (Steve* inc.)rates, and the Japanese stock market.

Art Direction: Toshinori Matsuura (Steve* inc.)
Design: Shiori Kuroda (Steve* inc.), Fumiko Shimizu (Brain Center Inc.)
Editor: Shiori Kurihara (Brain Center Inc.)
Planner: Yoshimasa Nakamura (Brain Center Inc.)
Direction: Mitsunari Oyamada (Steve* inc.), Masato Kato (Steve* inc.), Yosuke Takenowaki (Brain Center Inc.)
Special Thanks: Miho Isshi

67

In consideration of the global environment, this report is printed
on paper certified by the Forest Stewardship Council® (FSC®)
using vegetable oil inks.

68