Accelerating Momentum

Integrated Report 2022
2021.5 ~ 2022.4

AIN GROUP’S VISIONCONTENTSAIN GROUP’S VISION3MESSAGE FROM THE PRESIDENT

6

OUTLINE OF THE AIN GROUPAIN GROUP’S VISION

1Our Vision

		
		

7

Value Creation Story

		
		
		
		
		
		
		

		
		
		
		
		

25
27
28
29
33
34
35

Materiality Initiatives (Progress vs. KPIs)
Initiatives to Tackle Environmental Issues
Initiatives to Tackle Social Issues
Corporate GovernanceRisk Management
Internal Control and Compliance
Board of Directors and Corporate Auditors

BASIC INFROMATION / DATAREINFORCING THE MANAGEMENT BASE

37

REINFORCING THE MANAGEMENT BASE
AIN GROUP’S VALUE CREATION

We are committed to ensuring our employees are happy and motivated.
We want the AIN Group to be a workplace where employees seek out
new challenges to grow and develop, dedicating themselvesto improving the health and happiness of customers.
Our goal is to be a leading corporate group that constantly embraces change.

AIN GROUP’S VALUE CREATION

		
7
Value Creation Process		
9Materiality
		
11 Creating Shared Value through Our Business (CSV)			  11 Dispensing pharmacy business			  15 Cosmetic and drug store business		
19 Strengthening Intangible Assets that Support Value			  19 Human resources strategy and respect for human rights			  23 DX strategy

25Group Statement

AIN Group in Numbers
AIN Group Corporate History

OUTLINE OF THE AIN GROUPAIN Group operates a dispensing pharmacy business which is the leader
in the Japanese market by sales, and a cosmetic and drug store businessfocused on AINZ & TULPE store, a unique retail format mainly selling cosmetics.
The AIN Group is also working to help create a sustainable society by tacklingand solving social issues through its business activities and realizing our vision.

6
6

MESSAGE FROM THE PRESIDENT

Aiming to be a company that people
welcome to their communities

37 Characteristics of Japan’s Dispensing Pharmacy Sector
39	Management’s Discussion and Analysis of Financial Condition
and Results of Operations
41 11-year Financial and Non-financial Summary / ESG Data
43 Investor Information
44 Editorial Policy / External Evaluations

BASIC INFORMATION / DATA

Forward-looking Statements
This integrated report contains forecasts and projections concerning the plans, strategies andperformance of the AIN Group. These forecasts and projections constitute forward-looking statementsthat are not historical facts, but are based on assumptions and beliefs in accordance with information
currently available to management.
These forward-looking statements are subject to a number of risks and uncertainties that include,
but are not limited to, economic conditions, intense competition in the healthcare industry, etc.,
demand, tax systems, and laws and regulations. As such, the Group wishes to caution readers that
actual results may differ materially from those projected.

1 AIN HOLDINGS

2

MESSAGE FROM THE PRESIDENT

Fiscal 2022 in review
Responding to the pandemic and laying the foundations for growth

Cosmetic and drug store businessPreparing for post-pandemic opportunities and opening overseas stores
AINZ & TULPE’s merchandise lineup is focused on domestic and international
cosmetic brands, which are displayed and sold in highly innovative retail layout.
The cosmetic and drug store business was hit hard by the COVID-19 pandemic,
but we are updating our retail strategy whenever necessary in response tochanges in consumption patterns. Going forward, we will continue to fine-tune
our merchandising strategy and retail layout to strengthen the AINZ & TULPE
brand, aiming to make the cosmetic and drug store business a second key sourceof earnings after the dispensing pharmacy business.

AINZ & TULPE at BUKIT JALIL TSUTAYABOOKS, Pavilion Bukit Jalil (Malaysia)

BASIC INFORMATION / DATA

3 AIN HOLDINGSREINFORCING THE MANAGEMENT BASE

For fiscal 2022, ended April 30, 2022, the AIN Group reported net sales of¥316,247 million, up 6.4% year on year, operating profit of ¥15,139 million, up
38.5%, and profit attributable to owners of parent of ¥7,092 million, up 5.9%.
The dispensing pharmacy business saw a lingering impact from the pandemic,
but prescription volume is steadily returning to pre-pandemic levels. Pharmacies
that were opened in the previous fiscal year also performed well.
In the cosmetic and drug store business, earnings of stores in urban markets
were affected by a drop-off in inbound demand and a decline in mobility due
to the COVID-19 pandemic, but stores in semi-urban markets registered strong
sales. Responding to changes in consumer behavior, we adjusted criteria for
opening new AINZ & TULPE stores and optimized costs, aiming to improve
profitability in the business by fiscal 2023.

Online pharmaceuticalguidance services

AIN GROUP’S VALUE CREATION

Kiichi Ohtani

Official AIN Pharmacy app,
Anytime AIN Pharmacy

OUTLINE OF THE AIN GROUP

President and Representative Director

The operating environment in the dispensing pharmacy business is changing
rapidly. In April 2022, requirements for online pharmaceutical guidance wereeased and repeat prescriptions started. Digital prescriptions are expected to be
implemented in January 2023.
In 2018, the Group established the IT Management Division (currently the
Digital Promotion Division), which has led digital transformation (DX) efforts
across our business, such as building internal IT systems and responding toadvances in technology. In February 2022 we released a new dispensing
pharmacy app, Anytime AIN Pharmacy, which allows users to receive advice fromprimary care pharmacists and access online pharmaceutical guidance services,offering patients the kind of added-value only the AIN Group can provide.
In pharmacy operations, we introduced a new field manager (FM) system
in November 2021. Previously, management staff responsible for each area
also worked as dispensing pharmacy leaders. However, thanks to recent steadyprogress in pharmacist recruitment, we have built up a deeper talent pool,
allowing us to create the FM system staffed by specialist managers. FMs work
closely with each dispensing pharmacy leader to help them address any issues
and maximize value delivery, while also carefully monitoring compliance tomitigate business risks.
Progress with DX has created an environment that allows immediate access tovarious types of business data. FMs use this data to rapidly visualize conditions
and issues for each dispensing pharmacy. This also offers potential synergies withhuman resources and DX strategies. FMs already assess and use a wide rangeof data to develop budgets and annual sales and profit targets with dispensing
pharmacy leaders. I believe these skills and tools will translate into a dominantadvantage for the AIN Group in pharmacy operations as well.
In this way, DX and the new FM system are enhancing dispensing pharmacy
management, which will help accelerate the Group’s growth and allow us toprovide unique added-value to patients. By offering services that meet the diverse
needs of patients in all aspects of their lives, we aim to create an environmentthat supports even greater peace of mind for patients receiving prescription
medication.

MESSAGE FROM THE PRESIDENT

Thank you for your continued support of the AIN Group.
The prolonged COVID-19 pandemic has had a major impact on the Group’s
operating environment. In our core dispensing pharmacy business, digitization
is gaining momentum, while our cosmetic and drug store business is seeingchanges in consumer behavior. Against this backdrop, we launched the official
AIN Pharmacy app, Anytime AIN Pharmacy, in February 2022, allowing patientsto receive online pharmaceutical guidance from any dispensing pharmacy in our
nationwide chain. The cosmetic and drug store business remained solid, backed
by its merchandising strategy and better brand visibility through store openings
aimed at building a dominant market presence. This included the March 2022
opening of the AINZ & TULPE FUKUOKA TENJIN-NISHI DORI, which is our flagshipstore in the Fukuoka-Hakata area, and the opening of our fourth store in thesame area, AINZ & TULPE LaLaport FUKUOKA, the following month.
While the pandemic has impacted our business, the last few years have given
us a good opportunity to review earning structures and organizations in eachbusiness and reassess measures to accelerate growth. These preparations arenow starting to bear fruit. While the outlook is increasingly uncertain due toeconomic and social disruption and major developments worldwide, the AINGroup will draw on its combined strengths to step up growth.

Promoting DX and introducing a FM system

AIN GROUP’S VISION

Aiming to be a company that people welcome to theircommunities by working with them to tackle social issues

Dispensing pharmacy business

4

MESSAGE FROM THE PRESIDENTAIN Group in Numbers

Dispensing pharmacy business(Fiscal 2022 / As of April 30, 2022)

Net salesNumber of pharmacists

Dispensing pharmacy market sharePrescription volume¥283.1billion

Net sales

Human resources strategy(up 6.4% YoY)

22,077 thousandCosmetic and drug store businessNet sales

Pharmacist training

Ratio of beauty products¥20.5 billion

87.4%

Management efficiency
ROA

Dispensing pharmacy business
Cosmetic and drug store business
Other businesses

ROE

3.4%

89.5%
6.5%
4.0%

6.0%

Financial base
Shareholders’ equity ratio

56.0%
Diversity

Ratio of female directors

Ratio of female managers

25.0%

AIN Group Corporate History

1993
Opened firstdispensing pharmacy

2002

Opened first AINZ &TULPE store

2006

Started genericpharmaceuticalwholesales

2010

Listed on First Section ofTokyo Stock Exchange

2006

1993

■Opened firstdispensing pharmacy
1980

Net sales■ Entered drug store retail market(¥ billion)350
300■ Online pharmaceuticalguidance – first in Japan
2016

2002

2019

■ Opened first AINZ & TULPE store■ Released official
AINZ & TULPE app
2010■ Listed on
First Section ofTokyo Stock
Exchange

Launched official
AIN Pharmacy app

2022■Launched official
AIN Pharmacy app,
Anytime AIN Pharmacy

2020

2002

1994

2022

■ Number of Group■Opened AIN pharmacy at Dokkyo
dispensing pharmacies
Medical University (one of the largest
reaches 1,000
dispensing pharmacies in Japan)■ Secured top position indispensing pharmacy sector by sales■ Established ■ Listed onclinicalJASDAQ market
testingbusiness

Opened AIN pharmacy
at Dokkyo Medical
University

2020

2015

2022

■ Opened AINZ&TULPEWEBSTORE■ Moved to holding
company structure

Ordinary
profit■Opened first(¥ billion)
overseas
AINZ & TULPE store
35
30
25

200

20

150

15

100

10

50

5

Net sales

1994

Ordinary profit

1998

2002

2006

2010

BASIC INFORMATION / DATA

250

1969

2020

2018

■ Started genericpharmaceutical wholesales

0

5 AIN HOLDINGS

1994
Listed on JASDAQ
marketREINFORCING THE MANAGEMENT BASE

In May 2021, we defined six areas of materiality for the Group and set targets
to be achieved by fiscal 2026. We are now implementing concrete measures toreach those targets. Our goal is to be a company that people welcome to theircommunities. Specifically, we aim to “contribute to local healthcare” and “provide
beauty and happiness” through our business, while also actively addressing
environmental issues through decarbonization, promoting diversity and inclusion
such as the empowerment of women in the workplace, and implementing healthand productivity management.
In addition, we need to strengthen the Group’s earnings capabilities to ensure
we continue to meet the expectations of investors and other stakeholders. We
want to create conditions that encourage investors to hold AIN HOLDINGS sharesfor the long term. This will mean constantly thinking about how to transform ourearnings structure, as well as delivering on our stated performance goals – anoperating margin of more than 8%, ROA of 4.5% and ROE of 15%.
I also want to establish a positive cycle for our business by building a strong
reputation in CSR and ESG, which will give our employees added pride andconfidence and strengthen our brand. We will continue to push ourselves inall these areas to demonstrate the AIN Group’s dominant role in the sector.
I hope we can count on your continued support as we work to make this visiona reality.

34.0%

AIN GROUP’S VALUE CREATION

Continuing to meet stakeholder expectations

OUTLINE OF THE AIN GROUP

Basic etiquette

The dispensing pharmacy business is opening large pharmacies close to
major hospitals and key regional hospitals that require large numbers ofpharmacists. In April 2022 we welcomed a record 660 new pharmacists to
the AIN Group. Pharmacists are required advanced pharmaceutical expertiseand strong communication skills, so we have an internal training course withover 50 modules. Highly motivated human resources who want to work in
specialist settings, where pharmacists will handle advanced prescriptions andpharmaceutical management, are choosing to join the AIN Group, where they
undergo internal education and training, creating a positive cycle of recruitment.
In DX, personnel, product development and other areas, we are also actively
recruiting mid-career professionals who can support our growth strategy
by bringing a different perspective. As part of these efforts, we are building
a new personnel evaluation and employee grade system to be rolled out fromfiscal 2023.

MESSAGE FROM THE PRESIDENT

Continuing to improve recruitment and training

5,768

No.1

¥316.2 billion

AIN GROUP’S VISION

Meanwhile, through a joint venture established in March 2022 with Marubeni
Corporation, we began the rollout of the AINZ & TULPE chain overseas with the
opening of our first overseas store in Kuala Lumpur, Malaysia in May. More storesare planned for Kuala Lumpur in 2022, marking a key milestone in the brand’s
overseas development.

OUTLINE OF THE AIN GROUP

2014

2018

2019

2020

2021

2022

0

■ Dispensing pharmacy business ■ Cosmetic and drug store business ■ AIN Group

6

AIN GROUP’S VALUE CREATION
Value Creation Process

AIN GROUP’S VISION

Value creation story
Dedicated to improving the health and happiness of our customers
The AIN Group is dedicated to improving the health and happiness of our customers by supporting their health andbeauty through its business activities. The Group has consistently strived to attain this goal, which is enshrined in theGroup Statement, by taking a sound and ethical approach in all its corporate activities. Going forward, we will seek togrow in a sustainable way by adjusting and responding to the needs of our customers and all our other stakeholders,
while also practicing sustainability management* that creates social, environmental and economic value.

Business activities■

Output*Human capital
Diverse, first-class human resources

Social capital

Financial factors
Create shared value
through businessactivities

X

Carefully respond todiverse risks» See pages 11-18» See pages 33-34

Net sales¥316.2 billion
Ordinary profit

Profit attributableto ownersof parent¥7.0 billion

Growth Strategy

Non-financial factors

ROA

E Environment

3.4%

CO2 emissions (GHG) of the Group
Scope 1 and 2

ROE

Scope 3

6.0%

1,720

27.3%

Averagemonthly
overtime per
employee

4.7hours

Full-time
employeeturnover ratio

6.9%

G Governance

33.3%

Ratio of female
directors

25.0%*Data are for the fiscal 2022 or as of April 30, 2022,
except for the governance data, which is as of July 28, 2022.

Outcomes
Contribute toa sustainable society
Materiality initiatives

3 Safety, peace of mind and trust
4 Protect the environment and54
6

6 Cooperate with local communities and businesses

Related
SDGs

Improve level of stock market
appraisal

5 Ensure sound management base

DX strategy» See pages 19-22» See pages 23-24

Strengthen management capitaland competitive advantages
Evaluation by and communication
with customers, business partners,
communities

reduce environmental impact

Human resources strategy
and respect forhuman rights

Expand the business

2

3

Reinforce earnings capabilities
REINFORCING THE MANAGEMENT BASE

1

2 Provide beauty and happiness

Strengthen intangible assets that support value

Sustainably increase
corporate value» See pages 9-10

1 Contribute to local healthcare

Intellectual capital

Aim to be
a companythat people
welcometo theircommunities

AIN GROUP’S VALUE CREATION

Enhance qualityof product andservices

Anticipate andflexibly respondto change

Nationwide network ofdispensing pharmacies
Network of AINZ & TULPE storesin prime retail locations

Improve level of external appraisaletc.
 Co-creation withstakeholders

BASIC INFORMATION / DATA

Corporate governance / Risk management / Internal control and compliance

7 AIN HOLDINGS

2

Number ofprimary carepharmacists

Dividend
payout ratio

Manufactured capital

Natural capital, etc.

2

S Social

Financial capital

Accumulated dispensing knowhow
Unique store management
expertise in the cosmetic anddrug store businessStore development capabilities

21.0 thousand t-CO
684.5 thousand t-CO

Ratio of independent
outside directors

Train andutilize humanresources

Our vision

OUTLINE OF THE AIN GROUP¥16.0 billion

Strong customer baseTrusted by customers, patientsand medical institutions

Sound financial structure» See pages 41-42

MESSAGE FROM THE PRESIDENT

Capital input*A management approach based on the idea that contributing to the sustainable development of society also supports the sustainable development of the company

See here for more information about stakeholder engagement outcomes (Japanese only)

https://www.ainj.co.jp/csr/#engagement» See pages 29-34

8

AIN GROUP’S VALUE CREATION
Materiality

Our stakeholders and materiality

Process for defining materiality and formulating action plans
In December 2020, we used the following process to define and disclose the Group’s materiality and the supporting value
creation story.
We also established project teams for each area of materiality. The teams devised initiatives and set KPIs, which weredisclosed in May 2021. We are currently implementing the initiatives to achieve our targets. » See pages 25-26 for the progress report
Step 1
Local communities
Create a prosperous society
for future generations

Employees
Grow and develop in a stable,
motivating workplace

Business partners
Achieve sustainable growth

Customers
Access high-quality services

Shareholders and investors
Back companies with prospects
for sustainable growth

Step 2
Define materiality

Create the Group’s value
creation story

Take action to achieve themateriality goals

Refer to ISO 26000, the United
Nations Global Compact,
SDGs and criteria set by ESG
assessment bodies to explore awide range of issues

Define the Group’s materiality
by assessing the importance ofissues identified along twolines: importance for the Groupand impact for stakeholders

Organize and finalize theGroup’s value creation story inline with materiality

Form project teams for eacharea of materiality to implement
measures, set and work
towards KPIs

Regularly review and adjust

S

CSV

S

Sustainability governance

AIN Group’s six materiality areas

2

Contributeto localhealthcare

Providebeauty andhappiness

We have formed a Sustainability Committee to establish, promote and embed a sustainability management system acrossthe Group. The committee discusses and determines policies and measures related to the AIN Group’s sustainability activities
and regularly reports and puts forward proposals on key matters to the Board of Directors. The committee also utilizes
Management Meetings to promote sustainability throughout the Group.
Board of Directors» See pages 15-18

Audit

Report» See pages 11-14

5

Business process
E

S

Safety, peaceof mindand trust» See pages 23-24

6

4

Cooperate withlocal communities
and businesses

Protect the environmentand reduce
environmental
impactEnvironment

SocialG

Progress toward materiality KPIs
(Mid-year and year-end)

Management Office

Promotion support

Sustainability Management
Department

Expert seminar

Local communities and businesses
S» See page 28

S

Endorsement of and disclosures
based on TCFD recommendations

E

2nd Sustainability Management Study Seminar
In April 2022 we invited outside expert Toshihiko Goto to
speak at our Sustainability Management Study Seminar.
Mr. Goto has extensive experience in formulating andpromoting international standards on sustainability andhas worked to encourage adoption of the United Nations
Global Compact in Japan. Members of the Sustainability
Committee and personnel responsible for promoting
sustainability in the AIN Group also attended the seminar,
which was titled “The Why, What and How of Sustainability
Management and Expectations on the AIN Group.”

Drawing on different perspectives, Mr. Goto talked about
various sustainability issues and evaluated the AIN Group’s
sustainability measures, including areas for improvement.

BASIC INFORMATION / DATA

9 AIN HOLDINGSE

Formulation of human rights policy» See page 27

SDG preamble
Human rights for all people» See pages 19-22, 23-24, 29-34

Management Meetings
Divisions, Businesses,
Group Companies

Management baseG

Committee Chairman: President and Representative Director
Committee Vice Chairman: Representative Senior Managing Director
Members: 19

REINFORCING THE MANAGEMENT BASE

Ensure soundmanagementbase3

SDG preamble
Human rights for all people

Creating Shared Value

Key sustainability issues discussed
by the Board of Directors
in fiscal 2022

Sustainability Committee

Business process

AIN GROUP’S VALUE CREATION1OUTLINE OF THE AIN GROUP

Cosmetic and drug store business

Dispensing pharmacy business

CSV

Step 4

Explore a wide range ofsocial issues

Stakeholders

CSV

Step 3MESSAGE FROM THE PRESIDENT

Patients
Alleviate concerns about
health and nursing care

AIN GROUP’S VISION

The AIN Group is committed to achieving sustainable development with society in order to meet the expectations anddemands of customers and all its other diverse stakeholders. We have therefore identified and categorized a wide rangeof CSR, ESG and sustainability issues and assessed them from two perspectives – degree of importance to the AIN Groupand degree of impact on stakeholders – to define the Group’s materiality.

Toshihiko Goto
Chief Executive of Sustainability Forum Japan,
President of UN Global Compact Network
Japan

Governance

10

AIN GROUP’S VALUE CREATION
Creating Shared Value through Our Business (CSV)
Dispensing pharmacy business

AIN GROUP’S VISIONAIN Pharmacy at Nippon Medical School
Musashikosugi Hospital

AIN Pharmacy at Abashiri-Kosei General Hospital

AIN Pharmacy at KKR Sapporo Medical Center

AIN Pharmacy at Japan Health Care University

AIN Pharmacy at JAPANESE RED CROSSHADANO Hospital

MESSAGE FROM THE PRESIDENT

1

AIN Pharmacy at Nasu Red Cross Hospital

2
5
4

3

AIN Pharmacy at Tokyo University Hospital

6

OUTLINE OF THE AIN GROUP

Dispensing pharmacy business

Materiality

1
Contributeto localhealthcare

2

ProvideChanging market structure
beauty andhappiness social security costs
Stronger policies to control

 egular revisions to drug prices and dispensing feesRAdvances in medical treatment / Deregulation

Key strategies

Related SDGs

Koshinetsu 108

Number of openings
in fiscal 2022 (including M&A)

49

Total number of pharmacies

1,099Top-line growth aising quality of dispensing pharmacies andR
improving specialist skills of pharmacists
Strengthening human resources andoperational capabilities
Addressing advances in healthcare andtechnological innovation

5

Hokkaido 109(at the end of fiscal 2022)

Hokuriku 26

Tohoku 165
Kanto 342

Chugoku / Shikoku 89
Tokai 80

Kyushu / Okinawa 57

AIN GROUP’S VALUE CREATION

Market environment

Dispensing pharmacy network

We aim to be the leading player in the sector by raising the quality of the Group’s
dispensing pharmacies and improving the specialist skills of our pharmacists to
support local healthcare provision.

Kinki 123

Top-line growth

REINFORCING THE MANAGEMENT BASE

In fiscal 2022, we opened large dispensing pharmacies adjacent to medical institutions and village-type pharmacies serving
multiple medical institutions in the same area. For pharmacies located close to advanced treatment hospitals or major regional
hospitals, our goal is to provide more than just convenient access – we coordinate closely with the local hospitals, train andassign highly skilled pharmacists and work to improve the quality of our pharmacies, aiming to make them a key part ofprescription drug treatment for patients.

Ensure soundmanagement
base

Number of pharmacies and EV / EBITDA multiples

200

3.96

(times)
6.0

4.88
3.71

3.74

4.13

5.0
4.0

23

150

3.0
100
50
0
(50)
(100)

134
25
11
(73)
18/4

(54)
19/4

14
6

15
14

(64)

(52)

20/4

Number of pharmacies opened (organic growth)
Number of pharmacies acquired through M&A
Number of pharmacies closed and sold

21/4

2.0

25
24
(15)

22/4

1.0
0

Raising quality of dispensing pharmacies and improving specialist skills of pharmacists(FY)

EV / EBITDA multiples

Responding to new demands on pharmacies and pharmacists
We train pharmacists using a system with more than 50 different modules that can be tailored to the career stage of each
employee. Backed by this training, our pharmacists strive to contribute to local healthcare based on close cooperation withmedical institutions.
In August 2021 the government launched a new system that certifies dispensing pharmacies as community coordination
pharmacies or specialized medical institution coordination pharmacies » See page 13 . The certification system gives patients aclearer way of understanding the functions of pharmacies, allowing them to select the best pharmacy for their needs. The AINGroup has been working to improve the specialist skills of its pharmacists, while also responding to demands on pharmacies
to play a greater role in local healthcare provision, such as home-based healthcare and greater coordination with medical
institutions. We are now actively seeking certification for our pharmacies to formalize these efforts. One of the AIN Group’s
areas of materiality is “Contribute to local healthcare.” As a KPI for this issue, we aim to secure either one of these two types

BASIC INFORMATION / DATA

Number of pharmacies(stores)250

EV / EBITDA multiples

 harmacy openings
P
3 focused on investment
efficiency
Safety, peace
Since opening its firstlocation in 1993, Daiichi Dispensingof mindand trust
Pharmacy (now called
AIN Pharmacy Toyooka), theAIN Group has steadily built a nationwide network of
1,099 dispensing pharmacies (at the end of fiscal 2022).
We have expanded the business through organic
pharmacy openings 4and through active use of M&A.
Investment efficiency is a key consideration with bothProtect the environment
approaches. We target
and reduce investment efficiency using clear
environmental
criteria for opening new
impact locations and our extensive trackrecord in pharmacy openings, while also reliably responding
to changes in the operating environment such as revisions
to dispensing fees.
6

11 AIN HOLDINGS

Cooperate withlocal communities
and businesses

12

AIN GROUP’S VALUE CREATION
Creating Shared Value through Our Business (CSV)
Dispensing pharmacy business

Certificated Pharmacy

Community coordination pharmacy
Pharmacies that can work with other medical
institutions to manage prescription information in
an integrated and continuous way, including forhome-based healthcare and hospital admission
and discharge, as well as general physician visits.

Health support pharmacy
Pharmacies with the basic functions of primarycare pharmacists and pharmacies, and that canalso actively support people’s efforts to maintainand improve their health.

Strengthening human resources and operational capabilities

More than
50% ofpharmacies

Key roles of field managers
Improve pharmacy environments to increase
patient satisfaction
Strengthen primary care and specialist functions•
Deploying staff to optimal locations•
Handle home-based dispensing•Manage budgets and performance•

Maximizevalue delivery•Improve patient servicesEnsure rigorous legal compliance•Analyze, direct and improve safety management•Improve efficiency / Ensure compliance with
operational manuals•Train and develop pharmacy leaders and staff••

Mitigatebusiness risks

AIN GROUP’S VALUE CREATION

Official AIN Pharmacy app, Anytime AIN Pharmacy

We introduced a new field manager (FM) system in November
2021. Previously, sales areas were divided into blocks andmanagement staff in charge of each block were responsible
for overseeing multiple dispensing pharmacies while also
working as dispensing pharmacy leaders themselves. With the
FM system, we selected 100 new FMs from our workforce tobecome dedicated management personnel, each responsible
for roughly 10 dispensing pharmacies. Using this system, weplan to reinforce pharmacy management to maximize value
delivery and mitigate business risk. Over the years, we haveconsistently recruited and trained talented people, giving us
a strong base of personnel with excellent management andcommunication skills who can fill the FM role.
Backed by our DX strategy » See pages 23-24 , FMs will beable to visualize dispensing pharmacy data, allowing themto drive improvements at each location by providing full
support for pharmacy operations and personnel, leading tohigher-quality dispensing pharmacy services.

OUTLINE OF THE AIN GROUP

Improving communication with patients
In February 2022, we launched the official AIN Pharmacy
app, Anytime AIN Pharmacy. With the app, users can easily
message or video call primary care pharmacists for advice
with the Prescription Medication Support function or theOnline Pharmaceutical Guidance function (bookings, video
calls, pharmaceutical deliveries, and credit card payments).
By offering services that meet the increasingly diverse
needs of patients and by helping patients to connect toprimary care pharmacists from their own homes, we aim
to create an environment that supports even greater peaceof mind for patients receiving prescription medication,
increasing the Group’s added value.

All pharmacies
to obtain
either one of
the twocertifications

MESSAGE FROM THE PRESIDENTof certification for all of our dispensing pharmacies by fiscal
2026, ending April 30, 2026. As of April 30, 2022, 178of the Group’s dispensing pharmacies were certified ascommunity coordination pharmacies and 18 were certified as
specialized medical institution coordination pharmacies.
As the leading company in the sector, we will continue
to enhance the quality of the Group’s pharmacies andpharmacists and deliver services that encourage patients tochoose our dispensing pharmacies for their healthcare needs.

AIN GROUP’S VISION

Specialized medical institution
coordination pharmacy
Pharmacies that can work closely with othermedical institutions while providing advanced
prescription drug management and highly
specialized, specific dispensing services forpatients with cancer and other conditions that
require expert pharmaceutical management.

Targets forfiscal 2026

Addressing advances in healthcare and technological innovation

Aiming to foster skillsin pharmacists to meet
diversifying needs
Miya Oishi
Managing Director,
Division Manager of Dispensing
Pharmacy Operating Management

13 AIN HOLDINGS

Trial prescription drug deliveries using drones
BASIC INFORMATION / DATA

The role of dispensing pharmacists is changing dramatically.
In October 2015, the government set out its vision forpatient-focused dispensing pharmacies. Revisions todispensing fees in April 2022 are designed to realize thisvision by promoting local healthcare provision including
home-based healthcare; encouraging pharmacists to use
their initiative and specialist skills in collaboration withvarious medical professionals; and rewarding dispensing

pharmacies that adapted to the new realities of the
COVID-19 pandemic. The AIN Group is actively working toaddress home-based healthcare needs, coordinating withvarious medical professionals and upgrading its specialist
skills so that dispensing pharmacies and pharmacists canfulfill the roles envisaged by the government.
Amid increasingly diverse patient needs and advancesin healthcare, pharmacists will need to be more closely
involved in patient treatments than ever before. In response,
we are leveraging the Group’s primary care pharmacy andpharmacist capabilities and stepping up training to help ourpharmacists increase their specialist knowledge.
In April 2022, 660 newly graduated pharmacists
joined the Group, a new record. Going forward, we willcontinue to train our pharmacists to become highly
skilled professionals to support the provision of services
to patients nationwide as a key part of Japan’s healthcare
infrastructure.

REINFORCING THE MANAGEMENT BASE

A Message from the Managing Director

The AIN Group is implementing measures that support government efforts tocreate advanced healthcare services, such as online pharmaceutical guidance.
We are also actively participating in joint research with partners in the academic
sector. For example, AIN Pharmacy at Asahikawa Medical University teamed
up with the university and Asahikawa City to trial prescription drug deliveries
using drones, integrated with online medical examination and pharmaceuticalguidance services. AIN Group pharmacists were also part of a project by the
University of Tokyo to develop a prescription question database. Leveraging thisexperience, we are joining innovative initiatives to further improve healthcare
service provision and support the broader development of the dispensing
pharmacy sector.
We aim to fulfill our responsibility as the leading company in the sector
while also steadily improving patient services and strengthening the Group’s
competitiveness, ensuring we are well-placed to respond rapidly andappropriately to the expected wide-ranging deregulation.

14

AIN GROUP’S VALUE CREATION
Creating Shared Value through Our Business (CSV)
Cosmetic and drug store business

AIN GROUP’S VISION

12

MESSAGE FROM THE PRESIDENT

5
4

3
6

1
Contributeto localhealthcare

AINZ & TULPE KAMEIDO CLOCK

2
Providebeauty andhappiness

5

Ensure arrowing quality gap
Ninsoundthe retail sector, including
management
drug storesbaseDiversifying values and lifestyles
Faster spread of information via social media, etc.
Increase in store closures / exits in other sectors amid
the pandemic
Expanding market in Asia

Reinforcing differentiation strategy

 nique merchandise lineup
U
The beauty category,
which is focused on cosmetics centered on skincare and make-up products, accounts for approximately
Cooperate withlocal communities
90% of the merchandise
lineup at AINZ & TULPE stores, setting them apart from typical drug stores. The cosmetics lineup
and businesses
is extensive, ranging from reasonably priced cosmetics to premium cosmetics such as consultation-based and therapeutic
products. The lineup also includes a wide choice of original brands such as AYURA and LIPS and HIPS.
M&A deals are another approach we are using to make our merchandise lineup stand out in the market. We acquired
the AYURA cosmetics brand, which offers original products based on oriental aesthetics, from Shiseido Co., Ltd. in 2015

Department
stores12.4%

Customerbase

People who seek “innerand outer beauty” and“healthy beauty”

Families, overseas
visitors

High-income
earners, including
overseas visitors

Merchandise

Beauty products
account for
approximately 90%
of lineup

Daily necessities
and food accountfor more than
50% of lineup

Brand products
only

Pricing

NormalDiscount

Premium

Sales
areas

Customers canpersonally try various
beauty products
in store

Displays various
products

Brands soldthrough own
boutique stores

26.4%
27.4%
33.8%

Beauty products
Foods and health foods

Over-the-counter drugs
and sanitary products
Daily necessities*1 Data is for the fiscal year ended April 2022
*2 Source: Monthly Report on the Current Survey of Commerce (fiscal 2022), Ministry of
Economy, Trade and Industry

and the makeup and cosmetics brand DAZZSHOP in 2019. DAZZSHOP sells eye makeup products and colored contact lenses
that are popular with younger consumers. Going forward, we will strengthen AYURA and other original brands to improvemerchandising capabilities.
Recognizing the strong appeal of the AIN Group brand, cosmetics makers are increasingly supplying versions of national
brand products that are exclusive to AINZ & TULPE stores. As part of our differentiation strategy, we plan to step up
development of original brand products and these tie-in products to reinforce our brand.
Store operations
Another key part of our differentiation strategy is store operations. One of the features of our cosmetic and drug store
business is its ability to rapidly procure and sell new products that are in tune with the latest trends, thanks to theconsiderable operational independence given to each store. Stores are also allowed to update merchandise lineups and retailareas on a daily basis to create stimulating retail spaces that make the hours fly by. Merchandise trends and other information
are quickly rolled out to other stores in the AINZ & TULPE chain, with priority given to strong-selling items to drive growth insales volumes, which also helps to lift profit margins.
Even during the pandemic, stores have operated on the principle of being as welcoming as possible to customers, aiming
to offer an enjoyable but uncrowded, non-contact shopping experience.
We are also harnessing digital transformation (DX) to steadily improve service levels. In October 2019 we launched an
official app with point card function, followed by the AINZ & TULPE WEBSTORE in May 2020. Twitter, Instagram and othersocial media are being used to step up product marketing, and we intend to use the app as an information platform thatprovides one-stop information on loyalty points and stores. Furthermore, we want to give more people the opportunity toenjoy the same unique AINZ & TULPE shopping experience online as they do in store, and we plan to link the app and EC sitewith physical stores to develop the AINZ & TULPE fan base and attract new customers.

BASIC INFORMATION / DATA

We opened the first AINZ & TULPE store, AINZ & TULPE Chikagai (Sapporo), in 2002. As the brand developed, we opened AINZ
4
& TULPE SHINJUKU HIGASHIGUCHI as our flagship store in the Tokyo area in July 2015. We are now developing AINZ & TULPE
Protect the environment
stores into comprehensive
beauty outlets where shoppers with an interest in beauty can drop by and browse freely. Focusing on
and reduce
environmental
the latest trends, AINZ& TULPE stores stock a wide range of items in the health and beauty categories – from cosmetics centeredimpacton skincare and make-up products to healthcare products such as over-the-counter drugs, and fashionable accessories.
We have steadily built up our experience in store operations based on strong merchandise lineups and unique retail layout
designed by staff at each store. This differentiation strategy is helping to reinforce the AINZ & TULPE brand.

Drug stores

REINFORCING THE MANAGEMENT BASE

Safety, peaceof mindand trust

15 AIN HOLDINGS

9.2%

Related SDGs

Reinforcing differentiation strategy• Unique merchandise lineup• Store operations
Stepping up store openings in semi-urban
markets
Moving into the Asia market

AINZ & TULPE

General drug stores *2

1.9% 1.5%

87.4%
Key strategies

3

6

AINZ & TULPE *1

Differences between AINZ & TULPE and other retail formats

AIN GROUP’S VALUE CREATION

Market environment

AINZ & TULPE stores are comprehensive beauty outlets with store operations
based on a completely different retail concept to other formats. We aim to growthe business into a second key source of earnings after the dispensing pharmacy
business by continuing to improve merchandise and customer service to strengthenbrand power and earnings.

 omparison of AINZ & TULPE and general drug stores:C
product mix

OUTLINE OF THE AIN GROUP

Cosmetic and drug store business

Materiality

Lineup of original brands

16

AIN GROUP’S VALUE CREATION
Creating Shared Value through Our Business (CSV)
Cosmetic and drug store businessBusiness strategies and positive growth cycle

Unique store operations
AIN GROUP’S VISIONManagement division
Business strategy

Communicates basic policy
on product procurement and sales, etc.

Open stores in prime locations of urban and semi-urban markets
Target people who seek “inner and outer beauty” and “healthy beauty”
Specialize in cosmetics and other beauty products
Create retail spaces tailored to customers and local area

StoresResearch into characteristics of local area,
customers, successful approaches fromother stores and latest trends

AINZ & TULPE AMU PLAZA KAGOSHIMAAINZ & TULPE ekisoare Nishijin Chuo

AINZ & TULPE CenTerrace TENMONKANMESSAGE FROM THE PRESIDENT

Merchandising meetings

Growth in requests toopen storesGreater brand power
Improved profitability

Improve convenience bylinking physical stores with
EC site and app

Held 1-2 times each week to adjust
displays, product lineup

Increase repeat customers
Create retail layout that are always fun and fresh

AINZ & TULPE LaLaPort FUKUOKAOUTLINE OF THE AIN GROUP

Cosmetic and drug store network(at the end of fiscal 2022)

Store opening strategy

78

AINZ & TULPE FUKUOKA TENJIN NISIDORIA Message from the Executive Officer

Increasing brand power
and visibility
Kaori Ishikawa
Executive Officer, Division Manager
of Cosmetic and Drug StoreOperating Management

Customer traffic recovered from the previous fiscal year,
but the cosmetic and drug store business continued to see
an impact from the COVID-19 pandemic in fiscal 2022,
particularly in urban markets.
Based on careful analysis of changing consumer activity

patterns caused by the prolonged impact of the pandemic,
we actively opened new stores around terminus stations
near residential areas in semi-urban areas.
In response to the pandemic, we adjusted criteria for
opening new stores and optimized costs, aiming to returnthe business to profit in fiscal 2023.
We plan to make further improvements to localized
store designs and merchandise lineups – one of thestrengths of the AINZ & TULPE format – and expand ourrange of exclusive original brands to boost brand power
and visibility. We will continue to use Twitter, Instagram andother social media to market our products, which will raiseawareness of the AINZ & TULPE store’s unique features. We
will also keep up our efforts focusing on store development
to encourage even more consumers to visit AINZ & TULPE.

BASIC INFORMATION / DATA

17 AIN HOLDINGS

Total number of cosmetic
and drug stores

REINFORCING THE MANAGEMENT BASE

Moving into the Asia market
We have started expanding overseas to support medium and long term growth in the cosmetic and drug store business. In
March 2022 we established a joint venture with Marubeni Corporation to lead the international development of the AINZ &TULPE chain in Asia. In May, the joint venture opened its first overseas store, AINZ & TULPE at BUKIT JALIL TSUTAYA BOOKS,
Pavilion Bukit Jalil shopping complex in Kuala Lumpur, Malaysia. We
plan to open more stores in Kuala Lumpur during 2022.
Using the Group’s expertise gained from operating stores with awide range of specialist beauty and healthcare merchandise, and the
Marubeni Group’s experience in overseas joint ventures and knowledgeof next-generation business development, we will reach out to gen-Y
and gen-Z consumers in physical and online channels to offer productsthat match their needs. We plan to use Malaysia as a foothold toAINZ & TULPE at BUKIT JALIL TSUTAYA BOOKS, Pavilion Bukit Jalil(Malaysia)
support the development of the AINZ & TULPE brand across Asia.

12

AIN GROUP’S VALUE CREATION

Stepping up store openings in semi-urban markets
Since 2015 the AIN Group has opened a string of large AINZ & TULPE stores in highly convenient locations in the Tokyo
metropolitan area and other urban markets. In fiscal 2022 we opened 12 new stores, taking the total number of stores to 78.
Earnings in the cosmetic and drug store business deteriorated sharply in fiscal 2022 due to a temporary but large impact fromthe COVID-19 pandemic at stores leased in department stores and station buildings in major metropolitan areas. However, wehave set up a project team to implement structural reforms with the goal of returning the business to profitability in fiscal 2023.
No two AINZ & TULPE stores are the same, thanks to flexible store designs tailored to each location. This store development
approach, which can be easily adapted to different locations, customer segments and floor areas, as well as the brand’s ability
to bring in shoppers, is attracting attention from property developers and other parties, leading to more offers to open AINZ& TULPE stores in prime locations with favorable leasing terms. The Group has put in place the necessary funds and people
to take advantage of these opportunities. Specifically, we are opening more stores in semi-urban markets, where demandremains strong relative to other parts of large metropolitan areas, and we are developing stores that offer good prospects forstable earnings in the post-pandemic world. Backed by this area strategy, we plan to steadily open unique, appealing storesthat strengthen and increase the visibility of the AINZ & TULPE brand.

Number of openings
in fiscal 2022

18

1

2

AIN GROUP’S VALUE CREATION
5

4

3Strengthening Intangible Assets that Support Value
6

Human resources strategy and respect for human rights
1
Contributeto localhealthcare

We are using recruitment activities and building training systems to cultivate talent in personnel who can deliver reliable services
to customers and patients. Our approach is to train our employee to always be connect closely with the patients, customers andother stakeholders. We believe this will give them the motivation to take on challenges that help to solve issues faced by society.

2
Providebeauty andhappiness

5
Ensure soundmanagement
base

Safety, peaceof mindand trust

The AIN Group is reinforcing its human resources strategy as a key element supporting
the Group’s business base. We are building a human resources system that respects
diversity and helps every employee maximize their full potential. We are also upgrading
personnel evaluation systems to support diverse career development. By supporting thedevelopment of our people into highly skilled human resources who can deliver reliable
services to customers, we aim to provide opportunities to grow and develop, improve
the health and happiness of customers, and drive innovation across the Group.

Medium-term actions

Concrete measures
Change workplace culture by embedding
the Group Statement
Promote diversity and inclusion by hiring diverse
personnel and effectively deploying humanresources
Train highly skilled personnel and create highly
productive workplaces
Step up efforts to improve employee healthImplement measures to support human rights(persons)■Pharmacists ■Others

1,500

952

1,000

431
500
0

152
279

18/4

534
277
257

19/4

1,018

999

392

405

339

560

613

660

20/4

21/4

22/4

850
250
600

23/4
(plan)

Human resources training program
As a company committed to the happiness of customers and patients, the aim of our training program is to encourage
employees to cultivate both the skills and the empathy to sincerely address user needs. Our program enables employees tosteadily acquire a broad skillset, from basic competencies as a member of society through to specialized skills required foreach role in our organization. We provide them with training to become self-sufficient so that they can identify and resolve
issues themselves, leading to improvements in individual skills that also lift the capabilities of the whole Group.
Groupwide training and grade-based training

Pharmacists

All employees (including officers)• Sustainability training
Fiscal 2022 themes:
Corporate philosophy, compliance, human rights,
information security, health and productivity
management, the environment, etc.
Managers• 
Women’s career training / Harassment training
Senior managers• 
Senior management study seminars• Harassment training• 
Sustainability management study seminar

Basic training・N ew entrant training
・Follow-up training
Specialist training・A dvanced pharmaceutical management
・Academic meetings, thesis publication
・Support for acquiring external qualifications
Leadership training・T rainer development training
・National employee training
・Supervising pharmacist training
・Leadership and followership training

Medical support staff••

New entrant training
Follow-up training

Retail staff••••

AIN GROUP’S VALUE CREATION

 ass on a corporate culture of sincerity and fairnessP4and strengthen solidarity by sharing value
Create workplace environments that enable eachProtect the environment
employee to maximize
and their
reduce full potential
Increase productivityenvironmental
by harnessing the capabilities
impactof each employee

Related SDGs

Number of graduates hired

OUTLINE OF THE AIN GROUP

3

Human resources strategy
and respect for human rights

Recruitment track record
The AIN Group needs to recruit talented people to support its
aggressive dispensing pharmacy and store opening programs. In
April 2022, the dispensing pharmacy business hired 660 newly
graduated pharmacists, a new record for the Group and anincrease from 613 in 2021. Going forward, we will continue torecruit high-quality human resources and improve the specialist
skills of our pharmacists to support the Group’s provisionof services to patients nationwide as a key part of Japan’s
healthcare infrastructure.

MESSAGE FROM THE PRESIDENT

Basis for the AIN Group’s sustainable value creation

Materiality

AIN GROUP’S VISION

Strengthening human resources

New entrant training
Follow-up training
Registered salesperson trainingP roduct study seminars, Product Department
merchandising meetings

6
Cooperate
A Message
from with
the Director
local communities
and businesses

Rieko Kimei
Director,
Division Manager of Personnel

To sustain our growth as a company, we have to attract andretain talented people and provide working environments
where all employees can continue to grow and develop.
To achieve these objectives, the AIN Group is taking thefollowing steps:

Led by our new Personnel Division, established in May
2022, we are stepping up efforts to maximize the Group’s
human capital. The Group’s operating environment andthe values of its customers are becoming increasingly
diverse. Seeing these developments as opportunities, wewill respond flexibly to change while also taking on new
challenges to ensure patients and customers continue tochoose the AIN Group.

We are creating welcoming workplaces through introducing performance evaluation frameworks, systems to support thedevelopment of diverse career paths and other measures. We are also implementing a range of measures to promote diversity
and inclusion and health and productivity management, which the Group has identified as areas of materiality in sustainability
management. Going forward, we will continue to build a system to support opportunities for people of all backgrounds,
including addressing human rights issues and risks, supporting work-life balance, providing childcare and nursing careschemes, and addressing the needs of LGBT employees.
Empowering each employee
Employees in the AIN Group have the option to work from home, choose their working hours and request assignments inspecific regions. In 2021 we also partially revised internal rules and regulations to allow secondary jobs or concurrent work
arrangements, creating a system that enables employees to tailor work styles to their specific situation.
In addition, each year we present the AIN’s Power Award
Staff turnover rate*1
6.9%
to employees who put our philosophy of thinking and acting
independently into practice. The award, which receives a
4.7 hours
Overtime*2
large number of nominations each year, helps to motivate our
14
Internal awards*3
personnel. Meanwhile, an increasing number of employees areaiming to advance their careers by applying for new positions
Internal appointments
77
through internal appointments, seeking transfers to different*1. Turnover rate for full-time employees*2. Average non-statutory working hours (monthly, per person)
types of roles, or by studying to acquire specialist qualifications.

BASIC INFORMATION / DATA

1. Providing more opportunities for women(diversity and inclusion)		As a company with a large number of female employees,
providing more opportunities for women in the workplace
will significantly contribute to the AIN Group’s growth.
We are working to transform employee mindsets andprovide more support for work-life balance in various
ways, such as holding career training for female employees
and managers, offering flexible working hours, andCreating welcoming workplaces

REINFORCING THE MANAGEMENT BASE

Creating welcoming workplaces
for everyone

encouraging more male employees to use childcare leave.
2. Promoting health and productivity management
		In 2021, we expanded employee eligibility for stresstesting and reinforced follow-up services provided byoccupational health professionals and nutritionists. We
believe that creating healthy and supportive workplaces
for all employees will energize our whole organization andallow us to focus our energies on customers and patients.
3. Implementing work style reforms
		To help employees develop their careers throughout theirworking lives, we revised internal rules and regulations in
2021 to allow them to have secondary jobs or concurrent
work arrangements. By creating workplaces with flexible
work styles, we want to foster diverse values in our
workforce while also addressing growing needs fordifferent career development pathways.

*3. 24 nominations

19 AIN HOLDINGS

20

AIN GROUP’S VALUE CREATION
Strengthening Intangible Assets that Support Value
Human resources strategy and respect for human rights

Support for childcare and nursing care
Kurumin and Eruboshi
certification

As of April 30, 2022

Childcare leave

657

Reduced working hours
for childcare

1,008

Nursing care leave4

Flexible working hours

474

Ratio of female directors / managers
As of April 30, 2022
(actual)

As of April 30, 2026
(plan)

Ratio of female directors*1

25.0%

More than one third

Ratio of female managers*2

34.0%

40.0%

Employing people with disabilities
Employees with disabilities play an active role in various departments. As of April 30, 2022, the ratio of AIN HOLDINGS
employees with a disability was 2.6%. We plan to work with Group companies to expand the available roles andopportunities for people with disabilities, while also making improvements to the working environment, such as designing
barrier-free offices and taking into account their needs.

Respect

The Company’s human rights responsibilities

December 2021
Human Rights Policy
2023 (scheduled)
CSR Procurement Policy

Prevent and
Identify andevaluate P
D mitigate
negativerisks
Addressing
impactshumanrights risks
Disclose A
information

C

Conduct
follow-up
investigations

RemedyRemedy procedures for infringements of human rights

AIN GROUP’S VALUE CREATION

Post-retirement rehiring scheme
We have set up a rehiring scheme for employees who have reached the mandatory retirement age. The aim is to create anenvironment where older employees can continue to use their many years of experience and hard-earned skills, while also
passing on their expertise to younger generations. As of April 30, 2022, 183 employees were aged 65 or over.

Human rights due diligence
The AIN Group began conducting human rights due
diligence from June 2021. In accordance with the Respect
and Remedy principles of the United Nation’s Guiding
Principles on Business and Human Rights, our due diligencemeasures focus on “addressing human rights risks among
employees,” “human rights risks in the supply chain,” and“creating access to remedies.”

Overview of human rights due diligence

OUTLINE OF THE AIN GROUP*1 AIN HOLDINGS INC.
*2 S ubsection chiefs, pharmacy managers, store managers and higher management
grades in the AIN GroupBasic stance
The AIN Group is dedicated to improving the health andhappiness of its customers by supporting their healthand beauty through its business activities. The Groupconsistently strives to attain this goal by taking a sound andethical approach in all its corporate activities. In support ofthis, we recognize clearly that respecting the rights of all
people affected by our business activities is an integral partof the Group’s corporate activities.
As a minimum standard, the AIN Group recognizes
and respects the fundamental human rights stipulated
in the International Bill of Rights and the International
Labour Organization (ILO) Declaration on Fundamental
Principles and Rights at Work. The Group also supports
and implements measures in accordance with otherinternational standards on human rights, such as the United
Nation’s Guiding Principles on Business and Human Rights,
the Ten Principles of the United Nation Global Compact,
and ISO 26000.

MESSAGE FROM THE PRESIDENT

Empowering female employees
The AIN Group has a large numberof female employees, accounting forroughly 80% of the total workforce(as of April 30, 2022). We have put inplace systems to help female employees
continue their careers with the AINGroup during changes in their lives,
such as marriage and childbirth. We
are also empowering women throughtraining courses designed to support
advancement with the aim of increasing
the ratio of female managers.

Respect for human rights

AIN GROUP’S VISION

Promoting diversity and inclusion
Aiming to drive innovation by supporting diverse work styles and career development paths, the AIN Group is actively
promoting diversity by creating working environments and organizations that are welcoming and motivating for all
employees, regardless of gender, age, nationality, religion, background, physical ability or sexual orientation. We have set up adiversity and inclusion team as part of the Sustainability Committee to implement concrete measures and to step up support.
This includes designing promotion plans for female employees, supporting work-life balance, and addressing the needs ofLGBT employees.

Whistleblower line and complaints process(Compliance hotline, etc.)

Recruiting mid-career personnel
We are working to recruit mid-career human resources with high-level skills and experience who can immediately make acontribution to the AIN Group. In response to developments in the operating environment, we are seeking to reinforce theDigital Promotion Division, the Personnel Division and other management departments, and hire experienced people for eachbusiness. In fiscal 2022, 134 mid-career personnel joined the AIN Group.

REINFORCING THE MANAGEMENT BASE

Overview of the AIN Group Human Rights Policy

The AIN Group Human Rights Policy(Formulated December 1, 2021)

Health and Productivity Management Declaration

Corporate Philosophy (Group Statement)
We are committed to ensuring our employees are happy and motivated.
We want the AIN Group to be a workplace where employees seek out new
challenges to grow and develop, dedicating themselves to improving the healthand happiness of customers.
Our goal is to be a leading corporate group that constantly embraces change.
To realize this Group Statement, it is vital that we prioritize the health of every
employee and create stimulating environments with opportunities for all.
Focusing first on employee health and workplace environments will lead to a
corporate culture that motivates and encourages employees to always aim higher,
creating an organization that is fully committed to serving customers.
With these goals in mind, the AIN Group pledges to step up efforts to promotehealth and productivity management and to work across its entire organization tomaintain and improve the health of employees.
Kiichi Ohtani, President and Representative Director

21 AIN HOLDINGSThe AIN Group Human Rights Policy sets out our clear
stance on respecting human rights across the Group’s entire
value chain.
All officers and employees in the Group are subject tothis policy. Every individual is covered by the policy’s respectfor human rights, and is also responsible for leading its
implementation in practice.
In addition, the AIN Group expects all business partners
to support and put into practice the principles stated in thepolicy as part of a joint effort to advance respect for humanrights.

1. Respect for international standards related tohuman rights
2. Governance and promotion framework
3. Human rights due diligence
4. Stakeholder engagement
5. Whistleblower line and complaints process
6. Education and awareness7. Reporting and information disclosureBASIC INFORMATION / DATA romoting health and productivityP
management
Chaired by the President of AIN HOLDINGS, theHealth and Productivity Promotion Committee
is leading the implementation of measures that
resolve health and productivity issues in the AINGroup.
In March 2022, the Group received
certification as an Outstanding Health andProductivity Management Organization for 2022,
which recognizes leading companies in healthand productivity management.

8. Commitment to addressing human rights issues

Please see here for more details about the AIN Group Human Rights Policy.

https://www.ainj.co.jp/Portals/0/images/csr/sustainability/humanrights_english_20211201.pdf

22

AIN GROUP’S
1 VALUE CREATION
Strengthening
Intangible Assets that Support ValueContributeDX strategy

to localhealthcare

1

Official AIN Pharmacy app – Anytime AIN Pharmacy

Providebeauty andhappiness

2
Providebeauty andhappiness

5
Ensure soundmanagement
base

5

3

Ensure soundmanagement
base

Safety, peaceof mindand trustDX strategy
The environment surrounding healthcare is changing on a daily basis, driven by
deregulation and technological innovation. The AIN Group is actively stepping up
digital transformation (DX) in response to these changes. By reinforcing our businessbase and providing added value that is unique to the AIN Group, we aim to increase
profitability and establish a competitive advantage in the sector.

Aging / Declining
Safety, peacepopulationof mindUneven distribution/
trust
Depletion andof healthcare
resources
4
Response to pandemic and natural disaster

Tighter control of national healthcare spending
Dispensing pharmacies and pharmacists expected to play greater rolein healthcare
Diversifying values and lifestyles / Lack of logistics capacity

Protect the environmentand reduce
environmental
Revisionsto dispensing fees
impactOnline pharmaceutical guidance
Online eligibility checks(online checks of health insurance cards)
Digital drug prescriptions
Repeat prescriptions

Deliveries using drones and robots
Use of AI and big data

6 the business baseReinforce

Respond to deregulation

Provide added value to customers

Business divisions
Cooperate with
Use automation
to increase efficiency of
local communities
dispensing
and ordering andand operations
businesses
work shift planning
Upgrade core IT system for dispensing
Distribute pharmacist learning content
Groupwide
Digitize business processes / Introduce
business intelligence (BI) tools
Use single sign-on and other methods
to strengthen internal security
Reinforce networks to address growthin data volume
Utilize smart devices
Strengthen internal- and external-facing
call centers (AI + people)

Reinforce customer information security
Leverage official AIN Pharmacy app –Anytime AIN Pharmacy
Provide online pharmaceutical guidanceservice via all pharmacies
Respond to introduction of digitalprescriptions and online eligibility checks
Strengthen cooperation with hospitals,
local communities

Integrated management of patient data
Leverage digital patient medication
notebook app
Provide 24-hour advice for customers(AI chatbot + pharmacists)
Utilize digital devices for home-based
dispensing
Leverage official AINZ & TULPE app /Link to e-commerce channels
Reinforce logistics / Introduce
route-based distribution

Shift from a focus on dispensing drugs toProtect thecommunication
environment
one-on-one
with patientsand reduce
Wider useof generic drugs
environmental
Classificationof pharmacies based on
impact6functionsThree key aims of the AIN Group’ s DX strategy

Cooperate withlocal communities
and businesses

Improve profitability

Using DX to improve operational efficiency
Dispensing pharmacy businessIn the past, preparing work shifts for dispensing pharmacy
employees was a complex process, reflecting the irregularnature of working hours due to coordination with local
hospitals and difficulties assigning staff for all the various
jobs within each pharmacy. However, the introduction of
automated shift calculation and staffing management systems
has reduced the need for complicated shift adjustments andhelped to optimize the deployment of personnel.

Message from the Executive Officer

Creating added value only
the AIN Group can provide
Branding / Strengthen competitivenessToshiya Wada

23 AIN HOLDINGSInternal systems and organization

Securing human resources

Set up a Groupwide decision-making body that meets monthly
to discuss investment in business reform, including IT and DX
initiatives: tasked with making investment decisions on IT and DX
measures, approving key decisions for each project, andmonitoring progress
Under the leadership of senior managers, the Management
Meeting shares information about progress with DX strategy
across the Group to reinforce internal commitment to the DX
strategy

Working to attract and retain human resources by creating
personnel systems tailored to the needs of personnel who will
promote DX
Increase headcount in the Digital Promotion Division by about
10 each year to steadily establish a framework for promotingDX

DX allows us to design systems that provide only thenecessary information at the optimal time. This will improve
communication between head office and the Group’s
stores and dispensing pharmacies, resulting in a platformthat ensures instructions are implemented. Through DX-led
improvements in operational efficiency and the launch of

our FM system in the FY 2022, we will spur greater sharingof successful approaches between dispensing pharmacies
to raise the quality of pharmacy operations.
We have also introduced system tools and RPA athead office divisions, allowing them to redirect time andresources away from data document preparation to coretasks. By upgrading groupware, installing new accounting
systems and taking other steps, we aim to build a robust
framework to support store operations.
DX is also a vital part of our response to far-reachingc h a n g e i n o u r o p e r a t i n g e nv i ronment, i nc l udi ng
deregulation, by making the AIN Group’s services moreconvenient and reliable. Through far-sighted investment in
DX, we aim to create added value that only the AIN Groupcan provide.

BASIC INFORMATION / DATA

Initiatives to promote DX

Executive Officer,
Division Manager of Digital Promotion

Cosmetic and drug store business
The introduction of cloud-based services linking the head
office of cosmetic and drug store business and each retailstore has made communication smoother and spurred
information sharing among stores. The system also enables
stores to confirm instructions from head office divisions
more rapidly, giving store staff more time to focus on
improving store operations and serving customers.

REINFORCING THE MANAGEMENT BASE

Technological innovation

Upgrading the business baseWe have deployed BI tools in the form of digital dashboards for senior managers
and field managers (FM). The dashboard for FMs allows them to see and understandoperating data for individual pharmacies, even when they are away from the office oron the move. These dashboards, along with the introduction of strategic accounting
at head office divisions, enable faster, more accurate management decisions.

AIN GROUP’S VALUE CREATION

Deregulation

4
Revisions to dispensing
fees

Building a stronger base for store operations
OUTLINE OF THE AIN GROUP

Operating environment

3

The April 2022 dispensing fee revisions relaxed rules governing online pharmaceuticalguidance. The Group developed and launched a new proprietary app in February
2022 that allows patients to access pharmaceutical guidance online as well as atour dispensing pharmacies physical locations. In addition to online pharmaceuticalguidance and the ability to message or video call pharmacists for advice, the app
allows patients send prescriptions directly to pharmacies, reducing wait times. Theapp also helps improve patient medication compliance through synchronization withthe functions of the existing patient medication notebook app, such as automaticrecord-keeping of medications received. We plan to further upgrade functionality
to make the app an everyday tool for patients in both face-to-face and online
interactions with our dispensing pharmacies.

MESSAGE FROM THE PRESIDENT

Materiality

AIN GROUP’S VISION

2Contributeto localhealthcare24

REINFORCING THE MANAGEMENT BASE
Materiality Initiatives (Progress vs. KPIs)

Materiality

1. Contribute to local
healthcare
CSV issue S

Number of certified pharmacies*1
All pharmacies have obtained oneof the following certifications• Specialized medical institution
coordination pharmacy• Community coordination
pharmacySpecialized medical institution
coordination pharmacies: 18
Community coordination
pharmacies: 178

Number of health support
pharmacies*2
Secure certification for more than
50% of pharmacies

Health support pharmacies:
126

Number of home-based services
All pharmacies to conduct at least
24 cases per year

Conducted at 67.9% ofpharmacies

Rieko Kimei
Director, Division Manager of
Personnel

Deployed primary carepharmacists to 85.4% ofpharmacies

Hideki Fujiwara
Senior Executive Officer,
Division Manager of Operational
Support<Project leader>
Kaori Ishikawa
Executive Officer, Division
Manager of Cosmetic andDrug Store Operating
Management

Develop innovative and original Number of manufactured clean
beauty*4 private brand products
products that help customers
create their own unique
50% of manufactured products
lifestyles.

Continually improve quality
assurance and safety
management systems toreinforce product quality andsafety.

Internal audit performanceNumber of issues raised in pharmacy
chain: 0
All cosmetic & drug stores withoutstanding ratings*5

Business process issue S

Maintained usage rate at
57.9% of pharmacies

Business process issue E<Project leader>
Hideki Fujiwara
Senior Executive Officer, Division
Manager of Operational Support

25 AIN HOLDINGS

reducing industrial waste.

*Set as vision for fiscal 2031

Pharmaceutical disposal rate
Disposal rate of less than 0.02%

Koji Nozawa
Executive Officer, Division
Manager of Corporate Planning

Completed registration ofcompany vehicles exempt
from traffic rules in event ofemergency

Female manager ratio
Female manager ratio: 40%
Disclose LGBT declaration
Step up efforts to improve
employee health.

Deepen engagement withvarious stakeholders andcontinually reinforce board
oversight functions.

Disposal rate of 0.05%

Board of Directors evaluation points
At least 4 or 5 points for all
categories
Ratio of outside directors
At least two-fifths of board

Ratio of female directors
At least one-third of board

5.4% of manufactured
products

CO2 (GHG) emissions
Scope 1 and 2 21,000 t-CO2
Scope 3    684,500 t-CO2

Address all items needed to receive
outstanding health and productivity
management organization
certification*9
Secure certification (White 500)

Number of security incidents
Reinforce systems to protect
Major security incidents: 0
corporate information assets
and increase system security;
also establish regulations andstandards and overhaul the
management framework toensure secure system operation.

Number of active users 330
thousand / month
Number of page views 560
thousand / month

Issues raised at 57.0% ofpharmacies
64.0% of cosmetic & drug
stores with outstanding
ratings*5

Kurumin / Platinum Kurumin
certification*7 and Eruboshi / Platinum
Eruboshi certification*8
Maintain Platinum Kurumin,
On track to receive Platinum
Platinum Eruboshi certification, etc.
Kurumin certification in fiscal2024

SDG preamble
Human rights
for all people

6. Cooperate with local
communities andbusinesses

Local community/ partner cooperation issue
S E<Project leaders>*10
Toshihide Mizushima
Representative Senior Managing
Director, In charge of Operating
Management, Operational
Support and Digital Promotion
Miya Oishi
Managing Director, Division
Manager of Dispensing Pharmacy
Operating Management

Female manager ratio: 34%
Rules on personal appearance
unified for men and womenAwarded certification as
an Outstanding Health andProductivity Management
Organization (large enterprise
category) in March 2022
Major security incidents: 0

4 or 5 points for all categories

Ratio of outside directors
one third of board(4 out of 12 members)
Ratio of female directors
one quarter of board(3 out of 12 members)

Contribute to society throughwellness activities and otherinitiatives to build mutually
beneficial partnerships withlocal communities.

Number of community events heldAt least four each year at allpharmacies

Promote sustainability
across the entire supply
chain by implementing CSR
procurement.

Develop CSR procurement guidelines,
raise awareness and implement
Disclose CSR procurement guidelines Formulated draft CSR
procurement policy andHold briefings for companies
guidelines
in supply chain and monitor
implementation

Work with pharmaceuticalwholesalers to build systems
that reduce environmental
impact.

Number of pharmaceutical deliveries
at participating pharmacies
Implement at 500 pharmacies
Reduce CO2 emissions fromdeliveries by 75% by cutting numberof deliveries
Reduce delivery inspection time by
75% by cutting number of deliveries*1. 	Certified pharmacies (specialized medical institution coordination pharmacy / community
coordination pharmacy): A new function-based pharmacy certification system started inAugust 2021 as part of revisions to the Pharmaceuticals and Medical Devices Act.
*2. 	Health support pharmacies: Pharmacies that meet certain standards set out by the Ministerof Health, Labour and Welfare; pharmacies with basic primary care pharmacists andfunctions that also actively help people in the local community to independently maintainand improve their health.
*3. 	Safety verification drills: Training to confirm the safety of employees and their families andsafe conditions at pharmacies/stores as a matter of priority and to assess support systems
to ensure the continued viability of medical service provision.
*4. 	Clean beauty: Beauty items that contain (i) ingredients that are kind on the body and skin(mild formulas), and (ii) natural or naturally derived ingredients (organic) and environmental
ingredients (eco-friendly, cruelty-free).
*5. 	Outstanding stores: Stores with three or fewer categories flagged in internal audits.
*6. 	The rate of reduction is based on emissions in fiscal 2022.
*7. 	Kurumin / Platinum Kurumin certification: A certification system developed by theHeld 278 events nationwide

Implemented at 49 pharmacies
Reduce CO2 emissions fromdeliveries by 75% by cutting
number of deliveries
Reduce delivery inspection
time by 75% by cutting
number of deliveries

Ministry of Health, Labour and Welfare based on the Act for Measures to Support theDevelopment of the Next Generation; companies with general employer action plans thatmeet certain standards with respect to progress versus targets are certified as Parenting
Support Companies. Kurumin-certified companies that implement more far-reaching
initiatives receive special Platinum status from the Minister of Health, Labour and Welfare.
*8. 	Eruboshi / Platinum Eruboshi certification: A certification system developed by the Ministryof Health, Labour and Welfare based on the Act on the Promotion of Female Participation
and Career Advancement in the Workplace; companies that meet certain standards withrespect to supporting women’s participation and career advancement in the workplace
receive Eruboshi certification as outstanding companies. Eruboshi-certified companies that
implement more far-reaching initiatives receive special Platinum status.
*9. 	Outstanding health and productivity management organization: A program administeredby the Ministry of Economy, Trade and Industry (METI) and Nippon Kenko Kaigi
recognizing outstanding companies in health and productivity management. The top 500
large enterprises for health and productivity management are included in the White 500.
*10. 	Project leader assigned to each initiative.

BASIC INFORMATION / DATA

4. Protect the environmentand reduce
environmental impact
Protect the environment by

Toshiya Wada
Executive Officer, Division
Manager of Digital Promotion

Achieved 96.0% response
rate<Project leader>Miya Oishi
Managing Director, Division
Manager of Dispensing Pharmacy
Operating Management
Identify and reduce greenhouse Build processes to ascertain thegas emissions.
Group’s greenhouse gas emissions
Reduce Scope 1 and 2 CO2 (GHG)
emissions by 30%*6

Miya Oishi
Managing Director, Division
Manager of Dispensing Pharmacy
Operating Management

Test rate: 98.0%,
correct answer rate: 91.8%

REINFORCING THE MANAGEMENT BASE

3. Safety, peace of mind
and trust

Use app to connect with users andoffer more buying opportunities
Official app• Number of active users
1 million / month• Number of page views
1.5 million / month

Promote diversity andinclusion by hiring diverse
personnel and efficiently
deploying human resources.

SDG preamble
Human rights
for all people

AIN GROUP’S VALUE CREATION

CSV issue S

Ratio of disaster base hospital
pharmacies with emergency stockpiles
Ensure all pharmacies supporting
disaster base hospitals havestockpiles

G

Formulated and disclosed
the AIN Group Human Rights
Policy in December 2021

RelatedSDGs

OUTLINE OF THE AIN GROUP

Open stores with productranges aligned with retail
trends, consumer needs andlocal areas to empower people
through beauty.

Continually improve BCP andstrengthen execution capabilities
Achieve 100% response rate forsafety verification drills*3

Develop awareness checklist and set
benchmarks for test rate and correct
answer rate
Test rate: 100%,
correct answer rate: 100%

Management structure issue<Project leaders>*10
Toshihide Mizushima
Representative Senior Managing
Director, in charge of Operating
Management, Operational
Support and Digital Promotion

Formulate human rights declaration
Disclose human rights declaration

KPI
Outcomes in fiscal 2022

MESSAGE FROM THE PRESIDENT

We will fulfill the roles
requested and expected ofpharmacies to realize theproper use of medicines, andtake the initiative in creating
new mechanisms required bysociety.

Protect the lives and healthof employees and ensure
the continued provision ofpharmaceuticals and healthcare
services, even during natural
disasters, pandemics and othermajor events.

2. Provide beauty andhappiness

5. Ensure soundmanagement base

Key measures

Number of primary care pharmacists
Contribute to theDeploy primary care pharmacists tosustainability of the social
all pharmacies
security system by controlling
medical costs through efficientpharmaceutical usage andGeneric drug usage rate
healthcare provision.
Maintain usage rate at 85% orhigher at all pharmacies

Related
SDGs

KPI
Targets for fiscal 2026

Key measures
Implement human rights
initiatives.

KPI
Targets for fiscal 2026

<Project leader>Miya Oishi
Managing Director, Division
Manager of Dispensing Pharmacy
Operating Management

KPI
Outcomes in fiscal 2022

Materiality

AIN GROUP’S VISIONIn May 2021, to promote sustainability management, the AIN Group disclosed key initiatives, KPIs and fiscal 2026 targets(year ending April 30, 2026) in each area of materiality. Officers were also assigned to each project to lead the roll out of
measures to achieve the targets. In this section, we provide an update of progress with these materiality initiatives.

26

3

4

REINFORCING THE MANAGEMENT BASE

REINFORCING THE MANAGEMENT BASE

Initiatives to Tackle Environmental Issues

Initiatives to environmental
TackleSocial Issues
impactProtect the environmentand reduce

Safety, peaceof mindand trustMateriality

4

Responding to 6climate change

Materiality

6
Cooperate withlocal communities
and businesses

The AIN Group are creating social value through our business activities and tackles social
issues through a wide range of initiatives. In addition to responding to the COVID-19
pandemic, we are supporting communities in the event of natural disasters and coworking with local governments and other partners.

Our response to the COVID-19 pandemic

Cooperate with

*Task Force on Climate-Related Financial Disclosures, established by the
Financial Stability Board (FSB) at the request of the G20 finance ministers
and central bank governors; the task force published its recommendationsin its final report in June 2017.

Related SDGs

1. Contribute to
local healthcare

Backed by thorough measures to prevent the spread of infection, our dispensing pharmacies have continued to provide
prescription medicines and healthcare services during the pandemic, while also supporting the rollout of the government’s
vaccination program at vaccination centers nationwide. In addition, we have helped to maintain health in local communities by
supporting vaccinations for AIN Group employees, their families and the employees of business partners at their workplaces,
and we have dispatched a total of 1,500 pharmacists to help set up and staff COVID-19 testing centers for the public.

MESSAGE FROM THE PRESIDENT

communities
Climate change islocal
becoming
more serious each year. As a key partandbusinessesof its efforts to create a sustainable society, the Group endorsed therecommendations of the TCFD* in April 2022. The Group also joined
the TCFD Consortium, a group of domestic companies, financial
institutions and other bodies that have also endorsed and areworking to implement the TCFD recommendations.

Materiality

AIN GROUP’S VISION

Protect the environmentand reduce
environmental
impactProtecting the environment and reducing environmental impact is one of the AINGroup’s areas of materiality. To help realize a sustainable society, the Group is actively
implementing various initiatives with stakeholders.

Process of scenario analysis based on TCFD recommendations, implemented from June 2021

Governance steps

2

Board of Directors makes decisions on key matters and oversees efforts of Sustainability Committee,
chaired by the President.
Sustainability Committee discusses and finalizes risk management, strategies and goal setting.
Climate Change Response Team within Sustainability Committee compiles data, drafts proposals and works
on risk management, etc.

3

Risk evaluation

Scenario definition

Impact analyzed based on scenarios developed by theIntergovernmental Panel on Climate Change (IPCC)
2°C scenario SSP1 RCP2.6
Under this scenario, the rise in global
temperature is restricted to below 2°C
through sustainable development
4°C scenario SSP5 RCP8.5
Worst-case emissions scenario, assuming
continued reliance on fossil fuels and noclimate change policies.

Explore and implement responses to specified risks
and opportunities; regularly review risks andopportunities and related response measures.

Climate Change Response Team, composed of staff fromeach relevant department, evaluated business impact ofeach risk and opportunity and formalized them as
Material Risks and Opportunities for the AIN Group.

Indicators and targets

Physical risks andopportunities

Transition risks
and opportunities

Material risks and opportunities for the AIN Group
Policy,regulatory,legal

1. Increased restrictions on greenhouse gas (GHG) emissions
2. Other tighter restrictions on energy and resources

Shifts inmarkets andtechnologies

3. Promote energy-saving initiatives and renewable energy programs

Evaluation

4. Stakeholders (Expectations and concerns about responsible actions)
5. Changes in attitudes and behavior of customers and patientsUrgent

6. Increasingly severe abnormal weather events(Typhoons, torrential rain, other damaging wind and rain)
7. Pandemics caused by climate change

Chronic

8. Changes in rainfall and weather patterns(Increase in average temperatures, rising sea levels)

Related SDGs

Reinforcing the Group’s business continuity plan (BCP) is
one of our materiality initiatives. As part of this, we ran
a first-response training drill at all Group pharmacies in
October 2021, based on the scenario of a major earthquake
occurring during dispensing pharmacy operating hours. We
are also strengthening the Group’s resilience in preparation
for a natural disaster, such as deploying electric and hybrid
vehicles and generators to pharmacies to ensure accessto power supplies, and registering company vehicles for
exemptions from traffic regulations to ensure emergency
deliveries of prescription medicine.

Partnership agreement with Inabe City

Materiality

Related SDGs

6. Cooperate withlocal communities
and businesses

In March 2022, we signed a partnership agreement with
Inabe City in Mie Prefecture to drive the developmentof comprehensive local care systems and cohesive local
communities. By bringing together people and resourcesfrom different generations and fields, the aim is to build
cohesive local communities for lifestyles, livability and thewider area, with the AIN Group playing its part in thosecommunities. The end-goal is to create communities that
support healthy and active lifestyles for the elderly, provide
comprehensive support for the elderly, and are safe andcomfortable for the elderly.

BASIC INFORMATION / DATA

Targeting carbon neutrality (net-zero GHG emissions (Scope 1, 2))
by 2050, the Group aims to reduce CO2 emissions (Scope 1, 2) by
30% compared with the FY 2022 and convert 30% of energy
consumption to renewable sources by 2030.
In addition, the Group is working with wholesale partners on a trial
to reduce the number of pharmaceutical deliveries to dispensing
pharmacies in order to cut emissions in Scope 3.

Business impact
assessment

Materiality

1. Contribute to
local healthcare

REINFORCING THE MANAGEMENT BASE

4

Response definitions

Disaster training at all dispensing pharmacies

AIN GROUP’S VALUE CREATION

Climate change risks and opportunities classified into transition
risks and opportunities arising from the shift to a low-carbon
society, and physical risks and opportunities arising fromincreasingly severe and frequent extreme climate change
events and from long-term changes in climate patterns.

5

OUTLINE OF THE AIN GROUP

1Please see here for more details about disclosures based on the TCFD recommendations. (Japanese only)https://www.ainj.co.jp/csr/protection2.html

27 AIN HOLDINGS

28

REINFORCING THE MANAGEMENT BASE
Corporate Governance (As of July 28, 2022)■ Outside directors and outside corporate auditors

The AIN Group assumes responsibility for people’s health and the well-being of the wider community through its
business activities. The Group promotes a highly efficient and transparent management system and implement ongoing
initiatives toward enhancement of corporate governance.

Compliance with the Corporate Governance CodeAIN HOLDINGS has implemented all of the principles in Japan’s Corporate Governance Code, which was revised in June 2021.

Outside director activities* and reason for the appointment [Attendance at the Board of Directors meetings]
Name

Activities / Reason for the appointment

Noriko Endo

Basic policy on corporate governanceOutsideDrawing on her extensive knowledge and experience from positions in the editing department of an economics magazine
and in a public policy research, as well as her broad knowledge of corporate management in telecommunications,railroad, department store and other businesses, Ms. Endo proficiently fulfills her role in the effective supervision of theGroup’s business by providing advice from different perspectives in discussions about business strategy, board resolutions
and other topics.

Independent[100% (11/11)]

Junro Ito
Outside[91% (10/11)]

Shigeru Yamazoe
Newly appointed Outside

Ratio of independent outside
directors on the Board of Directors[—]

Ratio of female directors on
the Board of Directors

Corporate governance structure Corporate Auditor System

Number of directors

12 (including 4 outside directors)*

Chairman of the Board of
Corporate Auditors

Full-time corporate auditor
Koichi Kawamura

Number of corporate auditors

3 (including 2 outside corporate
auditors)*

Hideki Kuriyama

25%

33%

Independent

Newly appointed Outside

[—]

67%

Independent

Mr. Yamazoe has extensive knowledge and experience from his previous role as a representative director of a general
trading company. Mr. Yamazoe has been appointed as a new outside director, as the Company believes he can draw
on this knowledge and experience to further improve the Group’s business strategy, financial affairs and cosmetic anddrug store business, as well as provide oversight of management policy and corporate strategy decisions and businessexecution.
Mr. Kuriyama has extensive knowledge and experience in organizational governance and human resources development,
having served as the manager of a professional baseball team and as a professor at a university. Mr. Kuriyama has been
appointed as a new outside director, as the Company believes he can draw on this knowledge and experience to further
improve the Group’s legal affairs, risk management, and sustainability management, as well as provide independent andobjective oversight of management policy and corporate strategy decisions and business execution.

67%
Outside corporate auditor activities*
Name

Ratio of independent
outside corporate auditors on
the Board of Corporate Auditors

Board of Directors meetings
Number of meetings: 11 (97.7 %)*(Attendance of outside directors)
Board of Corporate Auditor
meetings (Attendance ofoutside corporate 33%
auditors)

Number of meetings: 25%
13 (100%)*

Voluntary advisory committeeof the Board of Directors

Nomination and Remuneration
Committee

Executive officer system

Yes

Ratio of outside officers
on the Nomination andRemuneration Committee

Akira Ibayashi
OutsideIndependent

Osamu Muramatsu
OutsideIndependent

Activities

AIN GROUP’S VALUE CREATION

Chairman of the Board

Kiichi Ohtani (President andRepresentative Director)

Drawing on his extensive knowledge of environmental, social and corporate governance (ESG) issues and his experience
leading group companies as a director of a major global retailer, Mr. Ito proficiently fulfills his role in the effective
supervision of the Group’s business by actively providing opinions and recommendations from a professional perspective
regarding business strategy, risk management, sustainability management and important matters in the cosmetic anddrug store business.

IndependentOUTLINE OF THE AIN GROUP

As a Group that operates a dispensing pharmacy business and a chain of cosmetic & drug stores, which are both responsible
for people’s health, the Group recognizes that it is essential to ensure robust and transparent business activities that put thehighest priority on compliance.
To achieve that, the Group adopted the corporate auditor system to oversee major business decisions and businessexecution, as well as all other areas of corporate management.

Outline of corporate governance

MESSAGE FROM THE PRESIDENT

Please see here for more details about our Corporate Governance Report.
https://www.ainj.co.jp/Portals/0/images/csr/governance/20220729corporategovernance_english_2.pdf

AIN GROUP’S VISION

The Board of Directors is comprised of twelve members, including four outside directors. Two of the Company’s three
corporate auditors are outside corporate auditors. There are no conflicts of interest between the Company and its outside
directors and outside corporate auditors.
The outside directors and outside corporate auditors have a number of functions and roles in the Group’s corporate
governance. Drawing on their specialist knowledge and experience, they contribute to the Group’s business strategy,
discussions on board resolutions, and internal control, mainly by monitoring business execution and providing input at
meetings of the Board of Directors from a neutral, independent and objective standpoint.
The Company currently has no specific standards in place, but the basic policy for recruiting outside directors and outside
corporate auditors is to ensure they can fulfill the above roles effectively.

Provides necessary input based on his specialist knowledge and experience from working at financial institutions.
Provides necessary input based on his specialist knowledge and experience from working at a major securities firm.

*Fiscal year ended April 2022

67%

67%

*Fiscal year ended April 2022

REINFORCING THE MANAGEMENT BASE

Message from newly appointed outside directors

Corporate governance structure
General Meeting of Shareholders
Appointment / Dismissal
Board of Directors
Outside Directors
Appointment

Appointment

Appointment / Dismissal

Appointment/ Dismissal

Nomination and Remuneration
Committees

Suggestion

Representative
Directors

Appointment

Appointment / Dismissal

Board ofCorporate Auditors

Accounting Auditors

Audit

Audit

Business execution

Cooperation

ReportingCompliance
Committee
Sustainability
Committee

Management
Meeting

ReportingInternal Audit Office

Reporting
Audit
Divisions

Guidance

ReportingGroup Companies

29 AIN HOLDINGS

Hideki Kuriyama

Outside director

Outside director

My name is Shigeru Yamazoe, newly appointed outside
director. For more than 40 years I have worked in the global
electric power and machinery operations of a general trading
company, as well as in management positions at various
operating companies. In my role on the Board, I would
particularly like to contribute to improving the AIN Group’s
management strategy, financial operations, and cosmetic
and drug store business, drawing on my knowledge andexperience in global business management at the general
trading company and several years as a director and in
corporate management.

My name is Hideki Kuriyama, newly appointed outside
director. I have coached professional baseball teams andserved as a professor at universities. I secured some majorwins as a baseball manager, but more importantly, over thelast 10 years, I have seen how challenging it is to develop
players. I want to effectively use what I learned from thattrial and error process. I have also lectured at universities,
mainly in business faculties, about how industry can benefit
from sport. As a member of the Board, I would like to
use my knowledge and experience in human resources
development to help improve the AIN Group’s legal affairs,risk management and sustainability management.

BASIC INFORMATION / DATA

Executive Officers
Board ofManaging Directors

Shigeru Yamazoe

Audit

30

REINFORCING THE MANAGEMENT BASE
Corporate Governance (As of July 28, 2022)

Skill matrix
Main skills

Male

Male

Male

experience

President andRepresentative
Director / Chairmanof the Board of
Kiichi Ohtani
Directors / Chairmanof the Nomination
and Remuneration
Committee
Representative Senior
Masahito Sakurai
Managing Director
Representative Senior
Shoichi Shudo
Managing Director
Representative Senior
Toshihide Mizushima Managing Director●

Finance

Legal affair
Dispensing Cosmetic andSustainable
and riskpharmacy
drug store
management
managementbusinessbusiness

●

●

●

●

●
●

●

●

●

●

●

●

●

FemaleMiya Oishi

Managing Director●●

Female●●Rieko Kimei

Director

Male

Hidehiro Awaji

Director

Male●

Director

Noriko Endo

Director

Outside / Independent

Male

Junro Ito

Director

Outside / Independent

●

Male

Shigeru Yamazoe

Director●

Male

Hideki Kuriyama

Director

Outside / Independent/ Newly appointed
Outside / Independent/ Newly appointed

Male

Koichi Kawamura

Corporate Auditor(full-time) / Chairmanof the Board of
Corporate Auditors

Male

Akira Ibayashi

Corporate Auditor

Outside / Independent

Male

Osamu Muramatsu

Corporate Auditor

Outside / Independent

●
●

●

●
●

●

●

●

●

●
●

●
●

●

●

●

●

●

●

●

●

31 AIN HOLDINGS

Basic policy
To ensure the Group fulfills its social role and responsibilities by contributing to local communities and by providing beautyand happiness, the Company expects directors to improve the Group’s business performance and support sustainablegrowth while also sharing the same values as stakeholders. The remuneration system for directors consists of a fixed monthly
remuneration component in accordance with each role and its responsibilities, a bonus linked to earnings performance,
and a non-monetary compensation component to foster greater awareness of sustainable growth from the perspective ofshareholders. However, the remuneration system for outside directors is set up to reflect their role and responsibilities inoverseeing the Company’s management from an independent and objective standpoint.
Policy for determining monthly remuneration
Basic monthly remuneration is determined based on a number of criteria, including the position, responsibilities and tenure of
the individual, as well as the balance of compensation relative to employee remuneration, trends at other companies in theindustry and past remuneration.
Policy for determining bonuses
Bonuses are determined based on a range of factors, including consolidated operating income and ROE for each fiscal year,
the individual’s contribution to tackling environmental and social issues for each fiscal year and other value that does notdirectly appear in financial metrics, as well as dividends, the balance of bonuses relative to those paid to employees, trends atother companies in the industry and previous bonus payments.
Policy for determining non-monetary compensation
Non-monetary compensation for directors is restricted stock. Each year up to a total of ¥50 million in monetary compensation
claims may be granted to directors in accordance with standard amounts determined by their position and level of
responsibility. Common stock is allocated to the claims as contributions in kind. The number of shares of common stock to beallocated as restricted stock compensation shall not exceed 50,000 each year.
Breakdown of compensation
The ratio of remuneration for directors (excluding outside directors) is generally 70:20:10 for monthly remuneration, bonuses,
and non-monetary compensation, taking into account the characteristics of the Group’s business, the operating environment,
and trends at other companies. Outside directors receive only basic monthly remuneration.
Policy for determining details of individual compensation
The Nomination and Remuneration Committee prepares proposals on the amount of compensation for each individual,
including the range of monthly compensation for each position, details of earnings performance and other evaluation metrics
for bonuses, and the amount of non-monetary compensation for each position. After approval by the Board of Directors,
the President is responsible for making final decisions on
Remuneration by category of director and corporate auditor
compensation within the scope of the details approvedin fiscal 2022
by the Board. To enhance fairness, transparency andRemuneration by type
Total
Numberobjectivity in processes for determining remuneration for(¥ million)
remunerationof eligible
Category
Non-monetary
Basic
directors, a majority of Nomination and Remuneration(¥ million)
individuals
Bonus
remuneration
remuneration
Committee members are independent outside officers andDirectors
the committee adheres to the above policies governing(excluding outside
179
148
31
–
6
directors)
remuneration for directors and other personnel.
 esolutions related to remuneration at the GeneralR
Meeting of Shareholders
The maximum amount of remuneration for directors islimited to ¥500 million per year (including ¥50 million per

Corporate auditors(excluding outside
corporate auditors)

7

7

0

–

1

Outside directors

18

18

–

–

3

Outside corporate
auditors

12

12

–

–

2

BASIC INFORMATION / DATA

To improve the effectiveness of the Board of the Directors, the board asks directors and corporate auditors to participate
in an annual self-appraisal survey that assesses board performance in 17 categories on a scale of one to five. In the fiscal
2022 survey, inside directors, outside directors and corporate auditors gave the board above-average marks in all categories.
The results show that the Company’s Board of Directors is generally fulfilling its duties in an effective manner. However, thesurvey identified the need for further improvement in some areas, such as more detailed explanations about medium- tolong-term strategies and compliance issues, as well as supplementary information about the industry operating environmentand other topics.

Introduction of non-monetary compensation (restricted stockcompensation)(Ratio of basic monthly remuneration, bonuses and non-monetarycompensation = approximately 70:20:10)
Bonuses determined based on business performance as well as contributions
to tackling environmental and social issues in each fiscal year
Revision to amount of director remuneration (maximum annual amountchanged from ¥300 million to ¥500 million)

REINFORCING THE MANAGEMENT BASE

Evaluating the effectiveness of the Board of Directors

Key changes effective from the fiscal year ending April 30, 2023:

AIN GROUP’S VALUE CREATION

Selection and dismissal of directors, nomination of corporate auditors
When appointing directors, the Board of Directors endeavors to give due consideration to diversity by taking into account a
broad range of factors, such as the individual’s balance of capabilities covering each function and business of the Group, andthe need to have the right person in the right position to ensure accurate and rapid decision-making.
In addition, to enhance fairness, transparency and objectivity in procedures for appointing and dismissing directors,
the Company has established the Nomination and Remuneration Committee, of which more than half the members
are independent outside officers. As an advisory body, the committee discusses and makes recommendations about theappointment and dismissal of directors.
Corporate auditor candidates are nominated based on a comprehensive set of criteria from the perspective of recruiting
the most qualified person for the right position, while also ensuring a balance of various perspectives related to expertisein finance and accounting, knowledge about the Company’s businesses, and corporate management. Based on the above
policies, the Board of Directors makes decisions on candidates put forward by the President.

At a meeting on June 29, 2022, the Board of Directors
resolved to change the policy for determining individual
director compensation, including revisions to the amountof compensation for directors and the granting of restricted
stock as compensation to directors (excluding outside
directors). Details are provided below.

OUTLINE OF THE AIN GROUP

Masato Sakai

Female

●

●

●
●

●

Remuneration for directors and corporate auditors

MESSAGE FROM THE PRESIDENT

Male

Name

Outside / Independent/ Newly appointed Management

AIN GROUP’S VISION

GenderPosition /Responsibilities

32

REINFORCING THE MANAGEMENT BASE
Corporate Governance / Risk Management / Internal Control / ComplianceBusiness and other risks
5. Risks of lossof trust in the
Company

a. Dispensing operation•

Medical accidents due to dispensing errors

b. Protection of personal data•

Leaks of personal information due to accidents or criminal behavior

6. Risk in business strategy
7. Interest rate risks
8. Impact of consumption tax
9. Risk information related to the COVID-19
outbreak

Cross-shareholdings, etc.

10. Natural disasters

Business and other risks

b. Easing of drug sales regulations

Risks that may affect operating results and undermine public trust in the Group•• rders from supervisory authorities to halt business activities or revoke operatingO
licenses, etc.
Deregulation of pharmaceutical sales, leading to market entrants from other sectors, etc.

2. Dispensing pharmacy openingsand demand trendsS uccess or failure of the dispensing pharmacy opening strategy including M&A, andtrends in dispensing pharmacy openings at competitors• 
Trends in non-hospital prescriptions from medical institutions, which are hard to forecast
and are the main source of demand, and the temporary closure or exit of medical
institutions from the market

3. Industry trends•Changes in earnings structure due to revisions to the medical treatment fee system, etc.

4. Securing qualified staff•

Difficulties recruiting pharmacists•

33 AIN HOLDINGS

Please see here for more details of “Business and Other Risks” in the Company’s Annual Securities Report (Japanese only).
https://ssl4.eir-parts.net/doc/9627/yuho_pdf/S100M2R1/00.pdf

Internal Control and ComplianceIn accordance with the AIN Group’s Code of Conduct, officers and employees comply with all laws, regulations and the
Articles of Incorporation, and also strive to follow a sound and ethical approach in all corporate activities, recognizing thatthey are engaged in a business that involves people’s health.
The Group has established a Compliance Committee to manage all aspects of compliance at Group companies. The
committee is tasked with improving compliance by ensuring the Group’s operations comply with laws and regulations, theArticles of Incorporation, and internal rules.
In addition, in order to rapidly identify and remedy legal violations and other compliance-related issues, we haveestablished a Compliance Hotline that allows issues to be reported directly to an external party.
In accordance with Insider Trading Prevention Regulations, the Group has established a system to prevent insider trading
by strictly managing undisclosed material facts and by working to ensure timely disclosure of appropriate information.
As an independent body, the Company’s Board of Corporate Auditors is responsible for establishing and operating theinternal control system as part of its role of auditing the execution of duties by directors.
From a standpoint independent of the business execution organization, the Internal Audit Office audits compliance withlaws, regulations, and the Articles of Incorporation by the Group’s officers and employees.

A Message from the Representative Senior Managing Director

Building a systemthat can adapt to changes
in the operating environment
Toshihide Mizushima
Representative Senior Managing Director
in charge of Operating Management,
Operational Supportand Digital Promotion

As a corporate group involved in the provision of healthservices, compliance is vital to ensuring the AIN Group
continues to conduct business activities in a sound andtransparent manner. In particular, the dispensing pharmacy
business is continually exposed to the risk of dispensing
errors, and measures to avoid this risk are our top priority.
We also recognize that the dispensing sector, and thehealthcare industry as a whole, may face evolving risks due
to changes in government systems and policies.
In addition, we need to build a system to ensure
continuity of healthcare service provision even during

a disaster, which is contingent on first confirming thesafety of our employees. The transformation of the global
environment caused by climate change means these risks
could increase. To reinforce our ability to respond to theserisks, we formed the Compliance Committee and in May
2022, established the Risk Management Office, which
was merged with the Risk Management Section in the
Administrative Department. The Risk Management Office
works closely with the Store Operations and Training
Department, which is responsible for store operations,creating a unified risk management framework covering
dispensing pharmacies, retail stores, head office andofficers.
We also conduct compliance training at all levels of
the Group to foster risk management awareness amongindividual employees and to increase awareness throughout
the Group.
Going forward, we will continue to upgrade our risk
management system so that it is responsive to changes
in the operating environment, while also ensuring theimplementation of internal controls.

BASIC INFORMATION / DATA

1. Laws andregulations

a. Regulations under the Law for
Ensuring the Quality, Efficacy,and Safety of Pharmaceuticals
and Medical Devices, etc.

 ispensing pharmacy business: Decrease in number of prescriptions
DCosmetic and drug store business: Decrease in customer traffic• 
Natural disasters such as extensive damage from high winds, typhoons, heavy rain, etc.,
caused by climate change•

REINFORCING THE MANAGEMENT BASE

Business and other risks
Management has identified the following key risks that could have a material impact on the financial position, operating
results and cash flows of the Group’s consolidated companies.
Forward-looking statements are based on judgments made by the Group as of April 30, 2022.

Revisions to the rate of consumption tax that are not reflected in drug prices•

AIN GROUP’S VALUE CREATIONThe AIN Group has formulated Risk Management Regulations and Risk Management Guidelines that establish the risk
management framework for the whole Group. Departments are assigned to manage each category of risk, ensuring acomprehensive and exhaustive approach to risk management.
The Risk Management Office is in charge of risk matters and is responsible for issues and measures related to theimplementation of risk management across the Group.
The Internal Audit Office conducts field audits to check whether risk management rules are being strictly observed and toassess the effectiveness of risk management systems.
In addition, to ensure the AIN Group continues to operate during times of crisis, we have formulated a Group business
continuity plan (BCP), which is actively disseminated to all officers and employees.

•

OUTLINE OF THE AIN GROUP

Risk Management

 isks related to M&A activity, including poor progress with post-merger integration, lossR
on valuation of shares of subsidiaries, impairment losses on goodwill and other losses• 
Difficulties securing returns on investments from M&A deals• 
Fluctuations in interest rates and other trends in financial markets•

MESSAGE FROM THE PRESIDENTThe Company holds shares for reasons other than
Number of company stocks held and balance sheet value(As of April 30, 2022)
pure investment purposes (cross-shareholdings). CrossNumber of
Total value on balance
Categoryshareholdings include the stocks of companies that offer
companies
sheet (¥ million)
potential mutual benefits, such as business alliances related
Unlisted
16
1,244
to the Company’s operations or business relationships that
Other than unlisted
8461
need to be maintained and reinforced, and the stocks ofcompanies that the Company requires to maintain links
with local communities. In principle, the Company seeks to keep the value of cross-shareholdings at less than 5% of total
assets on the consolidated balance sheet. If the value of cross-shareholdings exceeds that level, the Company’s basic policy
is to consider steps such as rapidly selling the shares. In addition, the Board of Directors considers whether the rationale forholding the shares is appropriate, whether benefits and risks are commensurate with the cost of capital, and if there are more
effective uses of funds, which informs decisions on whether to continue holding the shares or reduce holdings through sharedisposals or other means.
With respect to the exercise of voting rights for cross-shareholdings, the Company emphasizes dialogue with investees
and makes decisions on a case-by-case basis from the standpoint of prospects for increased corporate value and shareholder
returns, rather than taking a uniform approach to all voting decisions.

Risks that may affect operating results and undermine public trust in the GroupAIN GROUP’S VISION

year for outside directors, but excluding employee salaries for directors who also serve as employees), as approved at the 53rd
General Meeting of Shareholders on July 28, 2022. As of the close of the meeting, the Company had 12 directors.
The maximum amount of restricted stock that may be granted as compensation to directors (excluding outside directors,
hereinafter referred to as “eligible directors’’) is limited to ¥50 million per year, as approved at the 53rd General Meeting of
Shareholders on July 28, 2022. As of the close of the meeting, the Company had eight eligible directors.
The maximum amount of remuneration for corporate auditors is limited to ¥30 million per year, as approved at the 22nd
General Meeting of Shareholders on July 30, 1991. As of the close of the meeting, the Company had two corporate auditors.

34

REINFORCING THE MANAGEMENT BASE
Board of Directors and Corporate Auditors (As of July 28, 2022)*Figures in brackets show the number of AIN HOLDINGS shares held as of April 30, 2022.

Board of Directors

Corporate Auditors
Miya Oishi

Noriko Endo

Koichi Kawamura

President and Representative Director(3,238 thousand shares)

Managing Director,
Division Manager of Dispensing Pharmacy Operating Management(5 thousand shares)

Director Outside(200 shares)

Corporate Auditor(5 thousand shares)

July 1980

President and Representative Director of Ohtani Corporation(now AIN HOLDINGS INC.)
November 1981 Founder and Director of Daiichi Medical Testing Laboratories
Co., Ltd., Asahikawa (now AIN HOLDINGS INC.)
July 1983
President and Representative Director
May 1985
Managing Director of the Company
May 1988
President and Representative Director (current post)

Masahito Sakurai

Rieko Kimei

Junro Ito

Akira Ibayashi

Representative Senior Managing Director(1 thousand shares)

Director, Division Manager of Personnel(6 thousand shares)

Director Outside(- shares)

April 1972

Joined Ministry of Health and Welfare(now Ministry of Health, Labour and Welfare)
April 1987
Director of Administration Division, Fund for Drug ADR Relief
July 1996
Director of Planning Division, Air Protection Bureau,
Environment Agency (now Ministry of the Environment)
July 1998
General Director of Regional Medical Affairs Office for
Tokai-Hokuriku
January 2001 Retired from Ministry of Health and Welfare
February 2001 Commissioner of All-Japan Federation of National Health
Insurance Organizations
October 2008 Advisor of the Company
July 2009
Senior Managing Director
November 2015 Representative Senior Managing Director (current post)

April 1986
Joined The Daiei, Inc.
December 1995 Joined Daiichi Medical Testing Laboratories Co., Ltd., Sapporo(now AIN HOLDINGS INC.)
May 2003
Department Manager of Merchandise, Cosmetic and Drug StoreBusiness of the Company
May 2004
Department Manager of Personnel, Administration Division
May 2009
Division Manager of Cosmetic and Drug Store Business andDepartment Manager of Merchandise
August 2009
Executive Officer
May 2013
Executive Officer, responsible for Personnel
July 2014
Director (current post), responsible for Personnel
September 2015 Vice President and Representative Director of AYURALABORATORIES INC.
July 2016
President and Representative Director
February 2018 Director of AIN PHARMACIEZ INC. (current post)
July 2018
In charge of Personnel of the Company
May 2022
Division Manager of Personnel (current post)

August 1990
May 2009

Joined Seven-Eleven Japan Co., Ltd.
Director of Seven and i Holdings Co., Ltd. (current post),
Executive Officer and Senior Officer of the Corporate
Development Department
April 2011
Senior Officer of the CSR Management Department
May 2016
In charge of the Group Corporate Support
July 2016
Senior Officer of the Corporate Support Department
December 2016 Managing Executive Officer (current post), and Head of the
Corporate Development Office
March 2017
Director of Ito-Yokado Co., Ltd.
March 2018
General Manager of the Corporate Development Division of
Seven & i Holdings Co., Ltd. (current post)
July 2019
Outside Director of the Company (current post)

April 1968
June 1992
April 1995
June 1995

Shoichi Shudo

Hidehiro Awaji

Shigeru Yamazoe

Osamu Muramatsu

Representative Senior Managing Director
in charge of Store Development(9 thousand shares)

Director(4 thousand shares)

Director Outside(- shares)

Joined Daiichi Medical Testing Laboratories Co., Ltd.,
Asahikawa (now AIN HOLDINGS INC.)
May 1991
Division Manager of Corporate Planning of the Company
June 1994
Director and Division Manager of Administration of
AIN MEDICAL SYSTEMS Inc. (now AIN HOLDINGS INC.)
February 2000 Department Manager of Kansai Sales, Dispensing
Pharmacy Business of the Company
July 2000
Director
May 2003
Managing Director
May 2004
Division Manager of Dispensing Pharmacy Business
May 2012
Senior Managing Director
November 2015 Representative Senior Managing Director in charge of Store
Development (current post)
May 2020
Chairman of Nippon Pharmacy Association (NPhA)(current post)

December 1983 Joined Daiichi Medical Testing Laboratories Co., Ltd., Asahikawa(now AIN HOLDINGS INC.)
February 2000 Department Manager of Tohoku Sales, Dispensing Pharmacy
Business of the Company
August 2000 Branch Manager of Tohoku, Dispensing Pharmacy Business
May 2004
Branch Manager of Hokkaido, Dispensing Pharmacy Business
June 2007
Branch Manager of Tohoku, Dispensing Pharmacy BusinessAugust 2009 Executive Officer
May 2010
In charge of Western Japan, Dispensing Pharmacy Business
July 2014
Director
November 2015 Retired as Director of the Company
Managing Director, Division Manager of Dispensing Pharmacy
Business, and in charge of Western Japan of AIN PHARMACIEZ INC.
May 2018
Senior Managing Director, Division Manager of Dispensing
Pharmacy Business, and in charge of Western Japan (current post)
July 2018
Director of the Company (current post)

April 1978
April 2006
April 2009

Toshihide Mizushima

Masato Sakai

Representative Senior Managing Director
in charge of Operating Management,
Operational Support and Digital Promotion(27 thousand shares)

Director,
Division Manager of Store Development
and Department Manager of Group Liaison(7 thousand shares)

April 1982
April 1986
May 2000

April 1995
January 1999
May 2004
May 2006
July 2011

April 2020
August 2020
July 2022

Joined The Nisshin Oil Mills, Ltd.
Joined the Company
Branch Manager of Tohoku, Dispensing Pharmacy Business
Division Manager of Corporate Planning
Executive Officer and Division Manager of Sales, Dispensing
Pharmacy Business in Tokyo Metropolitan Area
November 2012 In charge of Dispensing Pharmacy Business in Tokyo Metropolitan
Area, and Branch Manager of Tokyo
June 2014
President and Representative Director of Asahi Pharmacy Co., Ltd.
July 2014
Director of the Company
November 2015 Retired as Director of the Company
December 2016 Director in charge of Dispensing Pharmacy Business in EasternJapan of AIN PHARMACIEZ INC. (current post)
July 2018
Director of the Company (current post)
May 2019
Division Manager of Store Development
August 2019 Division Manager in charge of Store Development, andDepartment Manager of Group Liaison (current post)

Joined The Hokkaido Bank, Ltd.
General Manager of Human Resources Division
Branch Manager of Kushiro
Director in charge of Regional Sales and Branch Manager ofKushiroExecutive Officer
Managing Executive Officer in charge of Regional Sales and
Branch Manager of Asahikawa
Director, Executive Officer and Deputy President
Retired from The Hokkaido Bank, Ltd.
President and Director of Hokkaido Tatemono Co., Ltd.
Corporate Auditor, The Hokkaido Bank, Ltd.
Retired as Corporate Auditor
Corporate Auditor, Asbic Co., Ltd.
Outside Corporate Auditor of the Company (current post)

Corporate Auditor(- shares)

OutsideIndependent

April 1972
Joined Nomura Securities Co., Ltd.
June 1994
Branch Manager of Sapporo
June 1996
Director, Deputy Branch Manager of Osaka
January 1999 President of Nomura Fundnet Securities Co., Ltd.
November 2004 Advisor of Nomura Securities Co., Ltd.
April 2007
Corporate Auditor of AIN MEDICAL SYSTEMS INC.
(now AIN HOLDINGS INC.)
October 2007 Retired from Nomura Securities Co., Ltd.
August 2011 President and Representative Director of Executive Partners, Inc.
June 2012
Outside Corporate Auditor of Asahi Pharmacy Co., Ltd.
(current post)
July 2016
Outside Corporate Auditor of the Company (current post)
August 2018 Chairman of Executive Partners Inc. (current post)

Hideki Kuriyama
Director Outside(- shares)

Independent

Newly appointed

April 2004
Assistant Professor of Hakuoh University
April 2008
Professor (current post)
November 2011 Manager of Hokkaido Nippon-Ham Fighters baseball teamNovember 2021 Manager of Japan National Baseball Team (current post)
January 2022 Professor (Senior Coach) of Hokkaido Nippon-Ham Fighters(current post)
April 2022
Specially Appointed Professor of Hokkai-Gakuen University(current post)
July 2022
Outside Director of the Company (current post)

BASIC INFORMATION / DATA

Joined SSP Co., Ltd.
Joined Ohtani Corporation (now AIN HOLDINGS INC.)
Department Manager of Drug Store, Cosmetic and Drug StoreBusiness of the Company
July 2000
Director
February 2001 Division Manager of Cosmetic and Drug Store Business
May 2003
Managing Director
May 2012
Senior Managing Director and Division Manager of
Administration
November 2012 President and Representative Director of WHOLESALE STARS
Co., Ltd. (current post)
November 2015 Representative Senior Managing Director of the Company(current post) in charge of Operating Management andOperational Support
July 2018
In charge of Operating Management, Operational Support andInformation Technology Management
May 2020
In charge of Operating Management, Operational Support andDigital Promotion (current post)

Joined Marubeni Corporation
Executive Officer and COO of Power Projects Division
Managing Executive Officer, COO of Power Projects &Infrastructure Division, and Chief Corporate Officer of
Abu Dhabi Trade House Project Department
Managing Executive Officer, Member of the Board, Advisor
to the President for Machinery Group, and Vice Chairman of
Investment and Credit Committee
Senior Managing Executive Officer and Member of the Board
Senior Executive Vice President, Member of the Board, andChief Executive Officer of Power Projects & Plant Group
Vice Chairman and Member of the Board
Outside Director of Fujitec Co., Ltd. (current post)
Outside Audit & Supervisory Committee Member of Mizuho
Capital Partners Co., Ltd. (now MCP Partners Co., Ltd.)(current post)
Chairman of Marubeni Power & Infrastructure Systems Corporation
Outside Director and Audit and Supervisory Committee Memberof Bewith, Inc. (current post)
Outside Director of the Company (current post)

June 2001
June 2003
June 2003
June 2005
June 2009
June 2011
July 2012

Independent

REINFORCING THE MANAGEMENT BASE

April 2018
June 2018
April 2019

Newly appointed

June 1999
June 2000

OutsideAIN GROUP’S VALUE CREATION

April 2012
April 2015

July 2012OUTLINE OF THE AIN GROUP

June 2010

May 2003
April 2005

Joined Daiichi Medical Testing Laboratories Co., Ltd., Sapporo(now AIN HOLDINGS INC.)
Deputy Department Manager of Accounting of the Company
Corporate Auditor
Managing Director and Department Manager of Accounting of
AIN MEDICAL SYSTEMS Inc. (now AIN HOLDINGS INC.)
Department Manager of Administrative of the Company
Corporate Auditor of AIN MEDICAL SYSTEMS Inc.
(now AIN HOLDINGS INC.)
Corporate Auditor of the Company (current post)

Corporate Auditor(- shares)

Independent

Independent

May 1995
July 1997
April 2000

MESSAGE FROM THE PRESIDENT

June 1994
Joined DIAMOND, Inc.
April 2004
Head and Director of Tokyo Office, Kyushu University
March 2006
Deputy Editor of Diamond Weekly, DIAMOND, Inc.
September 2013 Visiting Researcher at Policy Alternatives Research Institute,
University of Tokyo
April 2015
Project Professor, Graduate School of Media and Governance,
Keio University
June 2016
Outside Director of NTT DOCOMO, INC.
July 2018
Outside Director of the Company (current post)
June 2019
Outside Director of Hankyu Hanshin Holdings, Inc. (current post)
Outside Director of VLC HOLDINGS CO., LTD.
April 2020
Specially Appointed Professor of Keio University Global ResearchInstitute (current post)
March 2021
Outside Director of Techpoint, Inc. (current post)
June 2021
Outside Director of Japan Elevator Service Holdings Co., Ltd.
(current post)
June 2022
Outside Member of the Board of NIPPON TELEGRAPH AND
TELEPHONE CORPORATION (current post)

October 1985

September 1990 Joined KYOEIDO Co., Ltd.
July 1993
Director of DAICHIKU Co., Ltd. (current post)
May 2007Managing Director
July 2008
President and Representative Director
April 2011
Vice President and Representative Director of AIN MEDICALSYSTEMS Inc. (now AIN HOLDINGS INC.)
February 2012 President and Representative Director
July 2012
Director and Deputy Department Manager of Dispensing Pharmacy
Business of the Company
July 2014
Managing Director (current post)
November 2015 Division Manager of Operating Management
President and Representative Director of AIN PHARMACIEZ INC.
(current post)
May 2019
In charge of Dispensing Pharmacy Operating Management of theCompany
July 2021
Division Manager of Dispensing Pharmacy Operating Management(current post)

March 1982

35 AIN HOLDINGS

Independent

AIN GROUP’S VISION

Kiichi Ohtani

36

BASIC INFORMATION / DATA
Characteristics of Japan’s Dispensing Pharmacy Sector

A range of measures to reform and deregulate the dispensing pharmacy sector have led to changes in the operating
environment. These trend is likely to continue, so the ability to adapt to change will become even more important.
In the face of these developments, we will continue to provide high-quality services by actively promoting digitaltransformation (DX).

Market size

2022

Outlook

Online pharmaceutical guidance services
April 2020
Conditions eased
temporarily as part ofresponse to COVID-19

September 2020
Revisions to Pharmaceuticals andMedical Devices Act allowed patientsto receive pharmaceutical guidance
via video phone, etc.

April 2022
Revisions to Pharmaceuticals and Medical
Devices Act allows online pharmaceuticalguidance regardless of treatment or
medication type

Online eligibility checks

Market size(¥ trillion)

Non-hospital dispensing ratio（right scale)

Dispensing pharmacy market value (left scale)(%)

Ratio of elderly people（right scale)

100

75.3%

10

28.9%

4

80

Repeat prescriptions

60

4.75

January 2023~
Scheduled start of digital
drug prescriptions
Linked to My Number ID portal

October 2021
Start of full
implementation phase

7.75

56.0%

6

April 2021
Start ofpre-implementation
phase

Digital drug prescriptions

OUTLINE OF THE AIN GROUP

8

2

2020

MESSAGE FROM THE PRESIDENT

Barriers to entry are high in Japan’s dispensing pharmacy sector due to various risks faced by pharmacy operators, such as
government policy calling for pharmacies and pharmacists to play a greater role in healthcare provision, annual revisions to
drug prices, revisions to dispensing fees every two years, and a lack of trained pharmacists.
Japan’s dispensing pharmacy market was worth roughly ¥7.7trillion in fiscal 2022 (April 2021 to March 2022), but themarket remains fragmented, with the top five companies accounting for a combined market share of only 14.2%. While
the market has matured, deregulation such as the start of online pharmaceutical guidance and a new pharmacy certification
scheme are likely to lead to wider gaps in performance between dispensing pharmacy companies. The AIN Group aims toincrease market share by responding to these changes in the operating environment.

12

Operating environment
AIN GROUP’S VISION

Differences in national healthcare policy and other factors mean Japan’s dispensing pharmacies are different topharmacies in the US and other countries. In this section, we look at the main characteristics of Japan’s dispensing
pharmacies.

April 2022
Introduced with medical treatment fees revisions

40

20.8%

11.5%
11.0%

20

0.47
0

1990

1995

2000

2005

2010

2020 (April to March year) 0

2015

The growing role of dispensing pharmacies

Dispensing pharmacy company market share

Market structure — Breakdown by company size

Top 5 major companies*
14.2%

Top 50major companies
34.9%

Others
65.1%

55.3％
10 or fewer pharmacies
14.4％
11-50 pharmacies*Top 5 major companies: AIN HOLDINGS INC., NIHON CHOUZAI Co., Ltd.,WELCIA HOLDINGS CO., LTD., SAKURA PHARMACY GROUP, Qol Holdings Co., Ltd.

Small and medium size
pharmacies accountfor more than 50%of the market

The role of dispensing pharmacies is shifting from a focus on dispensing drugs to one-on-one communication with patients.
They are also being asked to play a greater role in local healthcare. The provision of high-quality services and closer
coordination with medical institutions, in line with the vision for patient-focused dispensing pharmacies being promoted by
Ministry of Health, Labour and Welfare, is expected to mitigate dispensing risks and lead to better collaboration in advanced
healthcare services.
Vision for patient-focused dispensing pharmacies
Health support functions

Advanced pharmaceutical management functions+

Disease prevention and health support

Source: AIN HOLDINGS estimates

Responding to advanced pharmaceuticalmanagement needs

Primary care pharmacists and pharmacies

Source: A IN HOLDINGS estimates, based on data from DRUG Magazine (July 2022)
and Trends in Dispensing Pharmaceutical Expenditure released by the Ministry of
Health, Labour and Welfare.

Integrated, continuous monitoringof drug usage data
Continuous checking of side-effects
and efficacy
Prevention of over-prescription, double
medication and drug interactions

Difference between Japan and USJapan

24-hour services andhome-based healthcare
Nighttime, public holiday andhome-based healthcare

US

Universal healthcare (0-30%)

Private health insurance (depends on contract terms)

Freedom to select hospitals
by patients

No restrictions

Affiliated service providers

Non-hospital dispensing ratio

75.3% (fiscal 2022 (April 2021 to March 2022)

100%

Drug prescriptions

RepeatDrug prices

Set by the government (Revised regularly)

Repeat    hard copy / patient data
Market price

Coordination with medical institutions
Prescription question, prescription suggestions
Feedback on side-effects, drug treatments
Information sharing through medical
data cooperation networks

BASIC INFORMATION / DATA

Medical insurance(patient cost)(from April 2022)   hard copy only*

REINFORCING THE MANAGEMENT BASE

Others accountfor 65%of the market

30.3％
51 or more pharmacies

AIN GROUP’S VALUE CREATION

Source: Japan Pharmaceutical Association, Trends in Dispensing Pharmaceutical Expenditure (Ministry of Health, Labour and Welfare), White Paper on Ageing Society (Cabinet Office)

Advice about medications and health
Recommendation for receiving treatments
in medical institutions+
Dispensing drugs*In Japan, patients can only receive repeat prescriptions in person or by delivery after pharmacist has sighted hard copy of prescription

37 AIN HOLDINGS

38

BASIC INFORMATION / DATAManagement’s Discussion and Analysis of Financial Condition
and Results of Operations

Dispensing pharmacy business
By providing services to meet the increasingly diverse needsof patients, such as by responding to the start of the repeat
prescription in April 2022, the easing of regulations on online
pharmaceutical guidance, and the expected start of digitalprescriptions, we aim to create an environment that allows
every patient to easily access pharmaceutical treatments in theirlocal community.
In business development, the Group is targeting further
business expansion through a strategy of actively opening large
pharmacies and using M&A deals that emphasize investment
returns, while also improving pharmacy operating efficiency.
The business continues to be impacted by the COVID-19
pandemic, but sales and profits both increased year on year,
supported by a recovery in the number of prescriptions andsteady growth in sales at dispensing pharmacies opened in theprevious fiscal year.
As a result, for the fiscal year under review, the dispensing
pharmacy business reported sales of ¥283,111 million, up
7.6% year on year, and segment profit of ¥25,082 million, up
19.7%.
During the fiscal year, the Group opened a total of 49
dispensing pharmacies, including those acquired throughM&A deals, and closed 10 dispensing pharmacies and sold 5,
resulting in a total of 1,099.

Basic policies for profit distribution
The Company considers the return of profits to shareholders as
an important management issue. Our basic policy is to repay
investors proportionately to profits generated, and to maintainpayments at stable levels.
Internal reserves are held to strengthen the corporate
structure and in preparation for new store openings and future
development of the business. We will make effective use of
these funds to generate profits to be returned to shareholders
in the future.
The Company’s basic policy is to pay dividends fromretained earnings once each year at the end of the fiscal year.
Taking into account a range of factors, including profit
levels for the fiscal year under review and plans for futurebusiness development, the Company paid a full-year dividendof ¥55 per share, equating to a dividend payout ratio of 27.3%(down 1.8 percentage points from the previous fiscal year). For
the fiscal year ending April 30, 2023, the Company intends to
pay a full-year dividend of ¥60 per share, an increase of ¥5 pershare.

Cash flows from investing activities
Net cash used in investing activities was ¥13,943 million,
compared with net cash used of ¥9,493 million in the previous
fiscal year.
This mainly reflected payments of ¥2,322 million forpurchases of shares in subsidiaries resulting in change in scopeof consolidation related to shares acquired in four companies
through M&A deals, ¥5,880 million for purchases of property,
plant and equipment related to the opening of new cosmetic
and drug stores and dispensing pharmacies, ¥3,842 million
for payments of leasehold and guarantee deposits and ¥3,186
million for increase in investments and other assets.
Cash flows from financing activities
Net cash used in financing activities was ¥7,753 million,
compared with net cash provided in ¥3,643 million in theprevious fiscal year.
The main items were net repayment of ¥3,548 million
from short-term and long-term debt repayment and proceeds,¥2,015 million of purchase of treasury shares, and ¥1,948
million for cash dividends paid.

BASIC INFORMATION / DATA

Cosmetic and drug store business
The cosmetic and drug store business continued to face achallenging market environment due to the impact of the
COVID-19 pandemic. The Group continued to create appealing
retail displays by strengthening product lineups. Also, theGroup pushed ahead with store openings in locations withgood prospects for profitability and optimized costs.
The business opened its third store in the Fukuoka area inMarch 2022, AINZ & TULPE FUKUOKA TENJIN-NISHI DORI, andits fourth store in the same area the following month, AINZ& TULPE LaLaport FUKUOKA. The AINZ & TULPE FUKUOKATENJIN-NISHI DORI store is steadily becoming the flagship store
in the area, helping to raise the visibility of the AINZ & TULPE
brand in Fukuoka.

The balance of total assets at the end of the fiscal year
increased ¥8,798 million from the end of the previous fiscal
year to ¥212,461 million. This mainly reflected declines fornotes and accounts receivable - trade and for goodwill,outweighed by increases for cash and deposits and forleasehold and guarantee deposits.
The balance of liabilities at the end of the fiscal year underreview increased by ¥5,625 million to ¥93,450 million.
The balance of short- term and long-term debts decreasedby ¥3,508 million to ¥8,458 million.
Total net assets increased by ¥3,173 million to ¥119,010
million and the shareholders’ equity ratio decreased 0.8
percentage points to 56.0%. Also, return on assets (ROA)
remained the same at 3.4% as the previous fiscal year, while
return on equity (ROE) rose by 0.1 percentage point to 6.0%.

REINFORCING THE MANAGEMENT BASE

39 AIN HOLDINGSBusiness results by segment

Cash flows from operating activities
Net cash provided by operating activities was ¥26,156 million,
compared with net cash provided of ¥14,928 million in theprevious fiscal year.
The main items that were positive for cash flow wereincome before income taxes of ¥13,125 million, as well
as depreciation and amortization of ¥4,792 million andamortization of goodwill of ¥4,133 million related to businessexpansion through new store openings and M&A.
The main item negative for cash flow was income taxes
paid of ¥4,396 million.

AIN GROUP’S VALUE CREATION

During the current fiscal year (May 1, 2021 to April 30,2022), the Japanese economy continued to face challenging
conditions due to the COVID-19 pandemic. Although there
were signs of a pickup in consumer spending, the outlook
remained uncertain.
In this economic environment, the Group rigorously
implemented measures to prevent the spread of COVID-19 andworked to provide healthcare and retail services, in line withits mission to “contribute to local healthcare” and “provide
beauty and happiness” – two of the Group’s materiality issues.
To help solve various social issues through its business activities,AIN HOLDINGS aims to be a company that “people welcome
to their communities.”
In March 2022, the Group received certification as an
Outstanding Health and Productivity Management Organizationfor 2022 (large enterprise category) under a program run
jointly by the Ministry of Economy, Trade and Industry (METI)
and Nippon Kenko Kaigi that recognizes leading companies
in health and productivity management. To “ensure a soundmanagement base,” one of its other materiality issues, theGroup is working to improve the health of employees to reduce
the staff turnover rate and lift productivity by harnessing theperformance of every employee.
Recognizing the importance of creating a sustainable
society amid the growing impact of climate change, the Groupis tackling another materiality issue, “protect the environmentand reduce environmental impact.” In April 2022, the Groupendorsed the recommendations of the TCFD to improve

Financial position

In the fiscal year under review, cash on hand and in banks(“cash”) increased ¥4,460 million year on year to ¥59,470
million.
Cash flows from each category and their relevant factors
are as follows.

OUTLINE OF THE AIN GROUP

Business overview for the fiscal year

Other businesses
Net sales from other businesses declined 14.9% year on yearto ¥12,677 million and the segment loss narrowed to ¥146
million from ¥721 million in the previous fiscal year, mainlyreflecting efficiency improvements in store operations at retailstores acquired in March 2020.

Cash flows

MESSAGE FROM THE PRESIDENT

The core business of the AIN Group (the Group) is thedispensing pharmacy business that includes preparing anddispensing drugs based on prescriptions. Earnings at dispensing
pharmacies are largely determined by dispensing fees and drug
prices, which are regularly revised by the Ministry of Health,Labour and Welfare as part of the government’s policy to curb
national healthcare expenses.
Under revisions to the Pharmaceuticals and Medical
Devices Act (partial revisions to the Act on Securing Quality,
Efficacy and Safety of Products Including Pharmaceuticals
and Medical Devices), which come into effect from August
2021, prefectural governments introduced a new pharmacy
certification system. Dispensing pharmacies with advanced
pharmaceutical management capabilities will be certified as
specialized medical institution coordination pharmacies andpharmacies with advanced primary care functions will becertified as community coordination pharmacies. The gap in
performance between companies in the sector is widening due
to this new certification system, as well as other developmentsin the operating environment such as a relaxation of the criteria
governing online pharmaceutical guidance.
Seeing these developments as an opportunity, the Grouphas been making preparations to adapt to any changes ahead,aiming to ensure sustained growth while also helping to solve
issues faced by society.

However, the cosmetic and drug store business reported
sales of ¥20,558 million, up 5.9% year on year, and a segment
loss of ¥1,764 million, compared with a segment loss of¥1,999 million in the previous fiscal year, which included an
ongoing impact from the COVID-19 pandemic.
During the same period, the Group opened 12 AINZ &TULPE stores and closed three stores, resulting in a total of 78
cosmetic and drug stores at the end of the fiscal year.

AIN GROUP’S VISION

Business environment surrounding
the AIN Group

information disclosure for all stakeholders. The Group alsojoined the TCFD Consortium, a group of domestic companies,
financial institutions and other bodies that have endorsed andare working to implement the TCFD recommendations. Goingforward, the Group will disclose appropriate information using
the TCFD recommendations and explore the best approach fordialogue with stakeholders, aiming to increase corporate value
while building mutual trust with stakeholders.
Through businesses that support human health and beauty,
the Group will work to realize sustainability management
in order to generate sustainable growth and create social,environmental and economic value.
For the fiscal year under review, net sales rose 6.4% year
on year to ¥316,247 million, operating profit increased 38.5%
to ¥15,139 million, ordinary profit increased 26.8% to ¥16,041
million and profit attributable to owners of parent increased
5.9% year on year to ¥7,092 million.

40

BASIC INFORMATION / DATA
11-year Financial and Non-financial Summary / ESG Data

11-year financial and non-financial summary

2015/4

2016/42017/42018/4

2019/42020/42021/4

142,790
12,83910,253
10,547
4,899
5,870
1,749

154,560
14,7409,701
10,292
5,075
7,235
2,212

170,225
15,635
10,113
10,587
5,259
6,328
2,258

187,904
17,50911,452
11,697
6,197
6,413
2,553

234,843
23,915
14,61915,158
7,917
11,2093,259

248,110
27,52914,56315,080
7,949
4,786
3,687

268,385
28,37019,622
20,12910,567
5,311
3,596

275,596
29,295
16,067
16,637
9,029
9,919
3,903

292,615
30,793
16,068
16,822
9,179
10,536
4,087

297,305
35,222
10,932
12,649
6,697
8,122
4,243

316,247
34,832
15,13916,041
7,092
12,756
4,792

33,69533,74585,90815,940,790
494
56

38,31238,356
95,83915,940,740
560
61

42,122
42,240101,382
15,854,190
616
59

47,92848,046
114,149
31,707,617
754
56

53,25853,324
139,888
31,707,617
881
52

60,10560,178156,323
31,707,568
1,066
52

96,697
96,733
183,380
35,427,524
1,029
48

103,855
103,922
189,02135,427,484
1,132
54

110,915
111,003
193,451
35,427,484
1,088
63

115,758
115,837
203,662
35,427,321
1,065
69

118,923
119,010
212,461
35,127,301
1,099
78

153.67
1,056.89
25.0

159.181,201.71
30.0

165.04
1,328.43
30.0

195.45
1,511.57
30.0

249.691,679.69
40.0

250.71
1,895.63
50.0

310.082,729.44
50.0

254.872,931.48
55.0

259.113,130.77
55.0

189.04
3,267.49
55.0

201.47
3,385.51
55.0

4,290

4,765

4,495

4,245

5,340

7,720

7,300

8,840

6,030

6,070

5,840

7.2
3.4
6.0
15.5
39.2

6.3
3.3
5.6
14.1
40.0

5.9
3.1
5.3
13.1
41.5

6.1
3.3
5.8
13.8
42.0

6.2
3.4
6.2
15.6
38.1

5.9
3.2
5.4
14.0
38.4

7.3
3.9
6.2
13.5
52.7

5.8
3.3
4.8
9.0
54.9

5.5
3.1
4.8
8.5
57.3

3.7
2.3
3.4
5.9
56.8

4.8
2.2
3.4
6.0
56.0

ESG data*1: Equity capital =Total net assets – Non-controllinginterests*2: The Company conducted a 2-for-1 stock
split of common shares with an effective
date of October 1, 2014. Earnings
per share, net assets per share and cash
dividends per share have been adjusted
retroactively to reflect the impactof the stock split.
*3: Return on sales =Profit attributable to owners of parent /Net sales × 100*4: Return on assets =Profit attributable to owners of parent /Total assets (yearly average) × 100*5: Return on equity =Profit attributable to owners of parent /Equity capital (yearly average) × 100

2020/42021/42022/4

400
584
725
—
—

351
640
875
—
—

432
657
1,008
26
13,126SocialEmployees using maternity/paternity leave
Employees using childcare leave
Employees with reduced hours for childcare
Average training hours per full-time employee
Average training cost per full-time employee
Health & Productivity Management
Health & Productivity Management Declaration Yes (Japanese only)
Average monthly overtime per employee (hours)
Occupational accident frequency rate (%)
Other
Full-time employee average annual compensation (¥ thousand)

4,614

4,484

4,398

12
4
3
25
11
90.5
100

12
4
3
25
11
100
100

12
4
3
25
11
97.7
100

3
2
11
100

3
2
13
100

3
2
13
100

213
175
7
18
12

213
175
7
18
12

218
180
7
18
12

2(100)

2(100)

4(100)—

3(98.1)3(91.2)BASIC INFORMATION / DATA

Governance
Board of Directors
Number of directors
Independent outside directors
Female directors
Ratio of female directors (%)
Number of meetings
Average attendance for outside directors (%)
Average attendance for outside corporate auditors (%)
Board of Corporate Auditor Meetings
Number of corporate auditors
Outside corporate auditors
Number of meetings
Average attendance for outside corporate auditors (%)
Executive Remuneration
Director and corporate auditor remuneration
Inside directors (¥million)
Inside corporate auditors (¥million)
Outside directors (¥million)
Outside corporate auditors (¥million)
Nomination and Remuneration Committees
Number of meetings (Average attendance %)Sustainability Committee
Number of meetings (Average attendance %)https://www.ainj.co.jp/csr/health_promotion2.html
5.8
3.9
4.7
—
—
0.37

REINFORCING THE MANAGEMENT BASE

41 AIN HOLDINGS

Note:
Amounts of less than one million yen wererounded down.

AIN GROUP’S VALUE CREATION

2020/42021/42022/4
Environment
https://www.ainj.co.jp/csr/health_promotion2.html
Environmental protection action plan   Yes (Japanese only)
Number of environmental infringements——0
Environmental data
CO2 emissions
Scope 1 and 2 (t-CO2, thousand)——
21.0
Scope 1 (t-CO2, thousand)——
1.0
Scope 2 (t-CO2, thousand)——
20.0
Scope 3 (t-CO2, thousand)
—
—
684.5
Total energy use (TJ)
—
—
399.0
Electricity use (TJ)
—
—
373.9
Hot and cold water use (TJ)——
6.0
CO2 emissions per unit of production (Scope 1 + Scope 2) (t / million yen *net sales)
—
—
670
Other
Pharmaceutical disposal rate (%)——
0.05
Socialhttps://www.ainj.co.jp/Portals/0/images/csr/sustainability/humanrights_english_20211201.pdf
Human Rights Policy    YesEmployment: Human resources activity
Total employees
13,15813,06513,009
Male
2,407
2,448
2,467
Female10,751
10,617
10,542
Pharmacists
5,273
5,477
5,768
Non-Japanese employees
97
70
36
Number of graduates hired
952
1,018
999
Pharmacists
560
613
660
Full-time employees average age
33.5
33.5
33.6
Full-time employees turnover rate (%)
6.7
5.2
6.9
Pharmacists (%)
6.0
4.5
5.7
Proportion of employees continuing work after mandatory retirement age (%)
45.2
60.8
82.4
Human resources utilization / training
Eruboshi certification   Yes Third level – highest level of certification
Kurumin certification  YesRatio of female graduate recruitment (%)
76.1
81.4
82.5
Ratio of female managers (%)
31.7
32.6
34.0
Directors (%)
33.3
27.3
26.3
Executive officers (%)
16.0
14.3
19.2

2022/4OUTLINE OF THE AIN GROUP

2014/4MESSAGE FROM THE PRESIDENT

2013/4AIN GROUP’S VISION

For the year:
Net sales
Selling, general and administrative expenses
Operating profit
Ordinary profit
Profit attributable to owners of parent
Capital expenditures
Depreciation and amortization
At the end of the year:
Equity capital*1
Total net assets
Total assets
Number of shares outstanding (shares)
Number of stores: Dispensing pharmacy business
Number of stores: Cosmetic and drug store business
Per share information (¥):
Earings*2
Net assets*2
Cash dividends*2
Stock information (based on the closing price as of April 30) (¥):
Stock price
Ratios (%):
Operating margin
Return on sales *3
Return on assets (ROA) *4
Return on equity (ROE) *5
Shareholders’ equity ratio(¥ million)

2012/442

BASIC INFORMATION / DATA

Investor Information (As of April 30, 2022)

Editorial Policy / External Evaluations

Corporate data

Stock information

Editorial policy

Corporate nameAIN HOLDINGS INC.

Transfer agent
Mizuho Trust & Banking Co., Ltd.

Head office
5-2-4-30, Higashi-sapporo,
Shiroishi-ku, Sapporo-shi,
Hokkaido, Japan

Stock listings
Tokyo Stock Exchange, Prime Market
and Sapporo Securities Exchange

Paid-in capital¥21,894,970 thousand
Number of employees
13,009(consolidated)(including part-timers)

Securities code number
9627
Fiscal year
May 1 to April 30 of the following year

*In June 2021, IIRC merged with the Sustainability Accounting Standards Board (SASB) to form the Value Reporting Foundation (VRF). VRF subsequently merged by the International
Sustainability Standards Board (ISSB) together with Climate Disclosure Standards Board (CDSB) in June 2022.

Ordinary general meetingof shareholders
July

Period covered: 	Fiscal year ended April 30, 2022 (May 1, 2021 - April 30, 2022)
This report includes the latest information as of the date of publication.
Scope: The Company (AIN HOLDINGS INC.), 35 subsidiaries and 3 affiliates

Date of record
April 30
(The Company will announce otherdates as and when required.)External evaluations

OUTLINE OF THE AIN GROUP

Business lines
Planning, management and operationof the corporate Group, focused ondispensing pharmacy and cosmetic
and drug store operations, genericdrug wholesaling, sales of cosmetics,
and operation of retail shops, and theGroup’s other businesses

Number of shareholders
11,008The AIN Group implements a variety of initiatives aimed at generating sustainable growth and creating social, environmental,
and economic value. Since the fiscal year ended April 30, 2010, we have published an Annual Report in English to strengthencommunication with shareholders, investors and other stakeholders through deeper understanding of the Group's specific initiatives
and ideas. Starting this year, we are publishing an Integrated Report in Japanese and English, which includes expanded informationon the Group’s materiality, human resources strategy, DX strategy and other initiatives aimed at increasing value over the medium
and long term.
In editing this report, we referenced the International Integrated Reporting Framework published by the International Integrated
Reporting Council (IIRC)* and the Guidance for Integrated Corporate Disclosure and Company-Investor Dialogue for Collaborative
Value Creation formulated by the Ministry of Economy, Trade and Industry (METI). The AIN Group works to actively disseminate
information to stakeholders, including regular updates through news releases and other information disclosures on its corporatewebsite. https://www.ainj.co.jp/ir/index_eng.html.

MESSAGE FROM THE PRESIDENT

Established
August 1969

Number of shares outstanding
35,428,212 shares(including treasury stock)

AIN GROUP’S VISIONBASIC INFORMATION / DATA

Inclusion in ESG indexes
Major shareholders

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

3,821

10.88

Kiichi Ohtani

3,238

9.22

Seven & i Holdings Co., Ltd.

2,750

7.83

North Pacific Bank, Ltd.

1,743

4.96

Retirement Benefit Trust managed
by Mizuho Trust & Banking Co., Ltd.
(Marubeni Corporation account)*2

1,594

4.54

The Hokkaido Bank, Ltd.

1,472

4.19

STATE STREET BANK AND TRUST COMPANY 505103

1,270

3.62

Custody Bank of Japan, Ltd. (Trust account)

1,129

3.22

THE BANK OF NEW YORK MELLON 140044

1,010

2.88

939

2.67

JP MORGAN CHASE BANK 385151
Notes:

1. Shareholding ratios are calculated excluding 300,911 treasury shares.
2. Shares held in the Retirement Benefit Trust managed by Mizuho Trust & Banking Co., Ltd. (Marubeni
Corporation account) are part of Marubeni Corporation’s retirement benefit trust.

		 *FTSE Russell (registered trademark of FTSE International Limited and Frank Russell Company) hereby certifies that AINHOLDINGS INC. has met the requirements for inclusion in the FTSE Blossom Japan Sector Relative Index following anevaluation by independent assessors. The FTSE Blossom Japan Sector Relative Index is widely used to create and evaluatesustainable investment funds and other financial products.

• MSCI Japan Empowering Women (WIN) Select Index
		Selected for empowering women and scoring highly for gender diversity fromconstituents of the MSCI Japan IMI Top 500 Index		*	The inclusion of AIN HOLDINGS INC. in any MSCI index, and the use of the MSCI logos, trademarks, service marks or index
names herein by AIN HOLDINGS INC., do not constitute a sponsorship, endorsement or promotion of AIN HOLDINGS INC.
by MSCI or any of its affiliates.
			The MSCI Indexes are the exclusive property of MSCI. MSCI and the MSCI index names and logos are trademarks or service
marks of MSCI or its affiliates.

REINFORCING THE MANAGEMENT BASE

Shareholding
ratio*1(%)

AIN GROUP’S VALUE CREATION

Number ofshares held
(thousandshares)Shareholders• FTSE Blossom Japan Sector Relative Index
		Selected for inclusion in an index composed of Japanese companies that demonstrate
outstanding environmental, social and governance (ESG) performance in their respective
sectors

Evaluation of Health and Productivity Management, Diversity, etc.
• Health and Productivity Management
		 Selected as an Outstanding Health and Productivity Management Organization for 2022
• Eruboshi Certification
		Certified at the third level (highest level) for outstanding support for women’s participationand career advancement in the workplace• Kurumin Certification
		 Recognized as an outstanding company for childcare support

BASIC INFORMATION / DATA

Participation in the initiative• TCFD		Endorsed the final report of the Task Force on Climate-related Financial Disclosure (TCFD)(TCFD recommendations) and joined the TCFD Consortium

43 AIN HOLDINGS

44