Integrated Report 2023
2022.52023.4

AIN GROUP’S APPROACH

AIN GROUP’S VISION

External Evaluations

Holding beautiful will.

Aiming to be a company that people
welcome to their communities
Inclusion in ESG indexes

MESSAGE FROM THE PRESIDENT

Group Slogan• 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*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
an evaluation by independent assessors. The FTSE Blossom Japan Sector Relative Index is widely used to create andevaluate sustainable investment funds and other financial products.

Group Statement

First, we must be a company that values its employees. And be a rewarding place to work.
Only when these requirements are met can we do our best for our customers.
Our management philosophy holds that “putting employees first” is the ultimate form of “putting customers first.”
This message expresses our strong will to aim and continuously live up to the name and reality of being a leadinggroup for our customers, employees, and all stakeholders.

service marks of MSCI or its affiliates.

• Morningstar Japan ex-REIT Gender Diversity Tilt Index

Selected as a company that has strong gender diversity policies embedded
in its corporate culture and that ensures equal opportunities to employees,
irrespective of their gender.
*Morningstar, Inc., and/or its affiliated companies (individually and collectively, “Morningstar”) have authorized AIN
HOLDINGS INC. to use the Morningstar Japan ex-REIT Gender Diversity Tilt Logo (“Logo”) to reflect the fact that, forthe designated ranking year, AIN HOLDINGS INC. ranks in the top quintile of companies comprising the Morningstar
Japan ex-REIT Gender Diversity Tilt Index (“Index”) on the issue of gender diversity in the workplace. Morningstar
has authorized the use of the Logo by AIN HOLDINGS INC. solely for the purposes of providing information. AINHOLDINGS INC.’s use of the Logo should not be interpreted as an endorsement by Morningstar of AIN HOLDINGS
INC. or as a recommendation, offer or solicitation to purchase, sell or underwrite any security associated with AINHOLDINGS INC. Although the Index is designed to reflect gender diversity in the workplace in Japan, Morningstar
does not guarantee the accuracy, completeness or timeliness of the Index or any data included therein. Morningstar
makes no express or implied warranties regarding the Index or the Logo, and expressly disclaim all warranties ofmerchantability or fitness for a particular purpose or use with respect to the Index, any data included therein or the
Logo. Without limiting any of the foregoing, in no event shall Morningstar or any of its third party content providers have
any liability for any damage (whether direct or indirect), arising from use or reliance on the Index or the Logo by any
party concerned, even if Morningstar is notified of the possibility of such damage. The Morningstar’s name, Index nameand the Logo are the trademarks or services marks of Morningstar, Inc. Past performance is no guarantee of future
results.

VALUE CREATION STRATEGY

Connecting closely with the thoughts and feelings of all the people we encounter.
A company that can take pride and joy in this statement is what the AIN Group endeavors to be.
Like Audrey Hepburn, who captivated the world as an actress, lived as a mother and an independent woman, anddevoted her later years to being a Goodwill Ambassador for the United Nations International Children’s Emergency
Fund (UNICEF).
We aspire to be a company where each employee holds a beautiful will, supporting people with love and hope.

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 seekout new challenges to grow and develop, dedicating themselves toimproving the health and happiness of customers.
Our goal is to be a leading corporate group that constantly embraceschange.

Society is changing drastically, and people’s needs and values are becoming increasingly diverse.
In• our business environment, there are various ways in which patients and customers can fulfill their wishes of
MSCI Japan Empowering Women (WIN) Select Index
staying healthy and beautiful.
Selected for empowering women and scoring highly for gender diversity from
TheconstituentsAIN Groupofisthededicatedto improving the health and happiness of our customers, which is enshrined in the
MSCI Japan IMI Top 500 Index
Group
Statement,
through
contributes
to people’s
health and beauty. To consistently*The inclusionof AIN HOLDINGS
INC. inits
any business
MSCI index, andactivities
the use of thethat
MSCI logos,
trademarks, service
marks
or index names herein by AIN HOLDINGS INC., do not constitute a sponsorship, endorsement or promotion of AIN
strivetoattain
this
goal,
we
will
continuetoadjustandrespond
to
the
needs
of our customers and all our other
HOLDINGS INC. by MSCI or any of its affiliates.
The MSCI Indexes
the aimexclusive
MSCI. MSCI andthe people
MSCI indexwelcome
names and logos
trademarksorstakeholders
asarewetoproperty
be a ofcompany
that
toare
their
communities.

Evaluation of Health and Productivity Management, Diversity, etc.
• Health and Productivity Management

Selected as an Outstanding Health and Productivity Management Organizationfor 2023• Eruboshi Certification

SUSTAINABILITY

Certified at the third level (highest level) for outstanding support for women’s
participation and career advancement in the workplace• Platinum Kurumin Certification

Received the Platinum Kurumin Certification as a company that provides
exceptional childcare support. The Platinum Kurumin is a certification that isawarded to Kurumin certified companies that provide childcare support at aneven higher standard.

Participation in the initiative• United Nations Global Compact

INFORMATION

The world’s largest initiative for establishing a healthy global society. Signatorycompanies and organizations are required to affirm its Ten Principles related toprotecting human rights, eliminating unfair labour, responses to the environment,
and anti-corruption, and to continuously strive to practice these principles. The
Group has signed the United Nations Global Compact.
• TCFD

Endorsed the final report of the TCFD (TCFD recommendations) and joined the
TCFD Consortium

01

0262

AIN GROUP AND LOCAL COMMUNITIES

We at the AIN Group aim to create a society where people can live healthy, beautiful, and happy lives byconnecting closely with the thoughts and feelings of each individual. We operate dispensing pharmacy andcosmetic and drug store businesses in a bid to serve as a local infrastructure of such society.

Dispensing pharmacy business (Fiscal 2023 / As of April 30, 2023)
Dispensing pharmacy businessConnecting closely with local communities
It is to connect closely with the lives of each individual
Led by AIN Pharmacy, we operate dispensing pharmacies
throughout Japan spanning from Hokkaido to Okinawa. We are

Fiscal 2023
Net sales¥358.7 billion

actively involved in supporting the health of local residents bystrengthening cooperation with local medical institutions andrelated facilities.

Cosmetic and drug store business
Being closest to the people who want to be beautiful
We operate AINZ & TULPE cosmetic and drug stores witha focus on the Tokyo metropolitan area and other urban cities.
We have a wide range of offerings to help customers enjoy
a beautiful and healthy life.

Number of pharmacies

Number of pharmacies that
supports home-based healthcare

Number of health support
pharmacies

1,209

1,152

171

We open dispensing pharmacies inlocations that are highly convenient
for patients, and are also focusing
on coordination with medical
institutions.

In order to further contribute to
local healthcare, we are proactively
participating in home-basedh e a l t h c a re . We v i s i t p a t i e n t s ’homes and facilities to support theirprescription medication.

We actively engage in organizing
health consultation events andparticipating in local events with theaim of contributing to the health of
local residents.

Composition
Dispensing pharmacy business89.6%

Cosmetic and drug store business

7.2%

Other businesses

3.2%

Number of pharmacists

Number of primary carepharmacists

Prescription volume

6,331

2,084

25,050 thousand

In addition to the active recruitmentof pharmacists, we provide training
programs tailored to various careers
to develop human resources
with a high level of expertise andcommunication skills.

We a re w o r k i n g t o s t re n g t h e n
o u r f u n c t i o n s a s p r i m a r y c a repharmacists and pharmacies inorder to support a large number ofpatients.

We a c c e p t p re s c r i p t i o n s f ro m
medical institutions nationwide, andstrive to ensure that patients cancontinue to receive prescription
medication with peace of mind.

Cosmetic and drug store business (Fiscal 2023 / As of April 30, 2023)

03

Number of cosmetic anddrug stores

Beauty product sales
composition

Number of official app users

78

88.2%

1,290 thousand

We are working to open stores inhighly convenient locations suchas the Tokyo metropolitan area andterminal stations near residential
areas so that customers can easily
drop by.

Unlike general drug stores, we offer
mainly beauty products such as
skincare and makeup, as well asother items related to beauty andwell-being.

In addition to providing producti n f o r m a t i o n t h a t e n s u re s h i g hcustomer satisfaction and keeps
up with trends, the app also offers
convenient features and benefits
such as loyalty points and coupons.
04

INFORMATION DISCLOSURE SYSTEM / EDITORIAL POLICY / FORWARD-LOOKING STATEMENTSCONTENTS

Information disclosure system

INTRODUCTION

Financial information

Reports

WebsiteNon-financial information

Integrated Report 2023

Integrated Report

We explain our vision, growth strategies, and activities for improving corporate value
over the medium- to long-term

2023

Annual Securities Report (Japanese only)

Corporate Governance Report

DATA FILE

ESG Data Book

IR Information
https://www.ainj.co.jp/corporate/english/Sustainability
https://www.ainj.co.jp/corporate/english/sustainability.html

Financial results briefing

Forward-looking Statements

06 Contents
MESSAGE FROM THE PRESIDENT

07 Message from the President
AIN GROUP’S VALUE CREATION

11 Value Creation History
13 Value Creation Story
15 Materiality
17 Special Feature: Dialogue with Experts

General Meeting of Shareholders

Dialogue

01 AIN Group’s Approach
02 AIN Group’s Vision
03 AIN Group and Local Communities
05 Information Disclosure System / Editorial Policy /Stakeholder engagement

Individual meetings with domestic andoverseas institutional investors

VALUE CREATION STRATEGY

23 Creating Shared Value through Our Business (CSV)
31 Strengthening Management Capital that Supports Value

Editorial policy
The AIN Group implements a variety of initiatives aimed at generating sustainable growth and creating social, environmental, andeconomic value. Since the fiscal year ended April 30, 2010, we have published an Annual Report in English to strengthen communication
with shareholders, investors and other stakeholders through deeper understanding of the Group’s specific initiatives and ideas. From2022, we are publishing an Integrated Report in Japanese and English, which includes expanded information on the Group’s materiality,
human resources strategy, digital transformation 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 Collaborative Value Creation 2.0 formulated by the Ministry of Economy, Trade andIndustry (METI). The AIN Group works to actively disseminate information to stakeholders, including regular updates through news
releases and other information disclosures on its website.
https://www.ainj.co.jp/corporate/ (Information partially available in English)*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.

Period covered

Scope

Fiscal year ended April 30, 2023 (May 1, 2022 - April 30, 2023) This report includes the latest information as of thedate of publication.
AIN HOLDINGS INC., 30 subsidiaries and 3 affiliates

Forward-looking Statements
This integrated report contains forecasts and projections concerning the plans, strategies and performance of the Group. These
forecasts and projections constitute forward-looking statements that are not historical facts, but are based on assumptions and beliefs inaccordance 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 Groupwishes to caution readers that actual results may differ materially from those projected.

05

SUSTAINABILITY

39 Materiality Initiatives (Progress vs. KPIs)
41 Initiatives to Tackle Environmental Issues
44 Initiatives to Tackle Social Issues
45 Corporate Governance
49 Risk Management
50 Internal Control / Compliance
51 Message from Outside Directors
53 Board of Directors and Corporate Auditors
INFORMATION

55 Characteristics of Japan’s Pharmacy Sector
57 Management’s Discussion and Analysis of Financial
Condition and Results of Operations

59 11-year Financial and Non-financial Summary / ESG Data
61 Investor Information
62 External Evaluations
06

MESSAGE FROM THE PRESIDENT

Driving the industry as a leading company

President and Representative Director

The time we strove to be the “defacto standard for dispensing
pharmacies”

07

Expansion of AINZ & TULPE
Another pillar of the Group’s business are thecomprehensive beauty outlets in the cosmetic anddrug store business, AINZ & TULPE. We are actively
expanding this business to meet diverse needs and tap
into new markets by adopting a one-and-only style thatdiffers from other stores in areas such as product mixes
and retail layout design.
The cosmetic and drug store business has a longer
history than the dispensing pharmacy business. As
pharmacies in urban areas have been turned into

INFORMATIONThe AIN Group’s vision is to become a company thatpeople welcome to their communities. To this end,
we endeavor to serve as the infrastructure of local
communities.
The Group opened its first pharmacy in 1993,
marking the beginning of our current dispensing
pharmacy business. In the 1990s, the separationof medical and dispensary services was rapidly

SUSTAINABILITY

Kiichi Ohtani

The collapse of the Group’s main bank in 1997 marked
a major turning point in the company’s history. The
vulnerability of our corporate stance, which hadprioritized business expansion and was too focused onsales and profit figures, was exposed following our mainbank’s collapse, causing us to face a major crisis.
We learned from the various struggles at the timethat it was important not only to expand our business,but also to focus on fund procurement and financial
soundness. Thanks to that experience, we have beenable to build a solid business and financial base, andthe fruits of that labor are now leading to further growthinvestments.
Having a sound financial structure has also become
an overwhelming strength of the Group today, and
it is also benefiting us greatly in terms of building
relationships of trust with business partners andsecuring human resources, creating a further virtuous
cycle.
Another turning point was the Great East Japan
Earthquake of 2011. This unprecedented earthquake
caused great disruption to medical facilities acrossJapan, and our pharmacies were no exception. In thedisaster-stricken areas, medical activities themselves
faced difficulty surviving. To contribute to the provisionof medical care during this crisis, employees of theGroup’s headquarters, bases nationwide, and bases

We have set forth digital transformation promotion andthe introduction of an FM (field manager) system as
strategies geared toward future growth. We believethese two initiatives can produce significant results inmaximizing business value and avoiding management
risk.
From the experience of the Great East Japan
Earthquake mentioned above, we lear ned that
promoting digital transformation is essential to building
an operational system that can remain in operation
no matter what. In addition to strengthening ourmanagement base by bolstering our internal networkand revamping our core drug dispensing system,
we also introduced online pharmaceutical guidanceservices and digital drug prescriptions that respond toderegulation, and released our official app, Anytime AIN
Pharmacy. Through such moves, we will achieve thegovernment’s vision for patient-focused pharmacies thatalign with governmental policy. We are also undertaking
various measures to provide added value to patients,
including integrated management of patient data, digitalpatient medication notebook app, and the introductionof route-based distribution to reinforce logistics. We also
have plans to upgrade our accounting system down theroad.
As can be seen, the Group’s digital transformation
promotion is still in its early stages, and we will continue
to expand measures going forward.
Our FM system is based on the OFC (operation
field counselor) system adopted by Seven-Eleven
Japan of Seven and i Holdings, a major retail company
in Japan, with which we have a capital and businessalliance. While it is well known that the existence of

VALUE CREATION STRATEGY

Two turning points that led to thegoal of being a local infrastructure

Introduction of digital transformation
promotion and FM system as growthstrategies

OFC contributes significantly to Seven-Eleven Japan’s
earnings growth, we had long been convinced that theframework of this system will work effectively for the
AIN Group as well. In reality, however, it was difficult
to achieve, due to factors such as the scale of ourbusiness and a lack of employees. In the past, we had
adopted a block system in which a block consistingof six to seven pharmacies was managed by a single
block manager, who also worked as a dispensing
pharmacy leader. In addition to managing their own
stores, they had to oversee the other stores within
the block. This system resulted in a lack of thoroughoperation management. Under the newly introduced FM
system, FMs are now dedicated managers responsible
for the management of a small organization. They
manage the operations of the pharmacies in their field
while coordinating with dispensing pharmacy leaders.
While referencing the OFC system, the FM system wasintroduced in a way that adheres to the Group’s own
systems and human resources.
Although there were some issues with FMs’ lackof experience and disruptions over coordinating withpharmacies, after a year following the introduction of the
new system, we were able to perform the functions forwhich we were originally aiming. Now, we are beginningto see results that can be considered the fruits of these
efforts. Furthermore, having selected FMs learn about
management in a practical setting also contributes tothe training of future management personnel.
In addition to these two strategies, we will step up
moves to promote our business expansion growthstrategy. In 2022, we acquired all shares of Pharmacy
Holdings Co. Ltd. (Hiroshima Prefecture), whichmainly operates pharmacies in the Chugoku region,
and welcomed its 101 pharmacies into the Group,
the largest M&A we have carried out to date. Goingforward, we will continue to expand the scale of ourbusiness through organic store openings and M&As,
and to capitalize on economies of scale.

AIN GROUP’S VALUE CREATION

accelerated by governmental policy, leading to many
pharmacies being opened in response to the rapidly
increasing number of out-of-hospital drug prescriptions.
Against this backdrop, the Group developed its
operations to establish a position as the “de facto
standard for dispensing pharmacies.” At a time whenpharmacies were lesser known due to the preconceived
notion that medicine is received at the hospital, AIN
Pharmacy decided to become the model for dispensing
pharmacies. To achieve this, we considered having
sufficient business scale to be our top priority andactively worked to develop our business.
However, the environment surrounding dispensing
pharmacies has changed drastically over the past 30
years. Along with that, the vision of the Group has alsochanged.

in disaster-stricken areas coordinated closely, listened
to the needs expressed by patients, and continued towork diligently to supply medicine.
This experience made us strongly aware of theimportance of backing up patient medical information
with a database and of the information management
function of pharmacies, leading to the acceleration of
the Group’s digital transformation. In addition, throughrecognizing the importance of the role of providing
medical care once again, we saw pharmacies as asocial foundation, which prompted us to review ourvision of the dispensing pharmacy business from being
the “de facto standard for dispensing pharmacies” tobeing the “local infrastructure.”

MESSAGE FROM THE PRESIDENT

Making AIN Pharmacy the infrastructure of local communities

08

MESSAGE FROM THE PRESIDENT

When it comes to running a company, I believe it isvery important that the president’s vision and direction
resonate with employees. I could even go as far as tosay that the growth of a company is determined by how
well the president’s views are conveyed throughout
said company. My strong determination to make AIN
Pharmacy the infrastructure of local communities isconveyed to employees, fostering a resonance withthem. This resonance transforms into the motivation offrontline employees, and ultimately pushes the entire
company toward the achievement of our vision. For thisto happen, I keep in mind the importance of maintaining
this strong determination myself, engaging in dialogue
with employees, and also always being true to mywords so that they can see my actions.

Our stance as a leading company

Closing remarks
With regard to the arrest and prosecution of former
officers of the Group, I would like to express my sincere
apologies once again for the great inconvenience andconcern we have caused to our customers, business
partners, shareholders, our staff and their families, andall those involved in the Group. The Group will takethis matter very seriously and address it once a judicial
decision has been made at the upcoming trial.
We will continue to endeavor to become a company
that is needed again by our stakeholders. We will strive
to restore trust as soon as possible by maintaining evenmore sincerity in our attitude and in our actions, andstriving to further advance our business.

INFORMATION

09

Conveying the thoughts of thepresident

One of the issues the Group needs to tackle isdeepening our sustainability management. In May
2021, to promote sustainability management, we haveset key initiatives, KPIs and fiscal 2026 targets in eacharea of materiality: “Contribute to local healthcare,”“Provide beauty and happiness,” “Safety, peace ofmind and trust,” “Protect the environment and reduce
environmental impact,” “Ensure sound management
base,” and “Cooperate with local communities andbusinesses.” In April 2022, we endorsed the Task
Force on Climate-related Financial Disclosures (TCFD)’s
Final Report (TCFD Recommendations) presented
internationally. The Group also joined the TCFD
Consortium, a group of domestic companies, financial
institutions and other bodies that have endorsed andare working to implement the TCFD’s recommendations.
However, we recognize that these are just the firststeps in implementing sustainability management.
M o re o v e r, i n E u ro p e a n d t h e U S , t h e l e v e l o fcommitment to ESG investments is being scrutinized
more heavily than ever. In light of this, we must continue
to take concrete actions to ensure that the recognitionof sustainability management does not end up being
superficial, and that it leads to profit.
I believe this will help us realize the Group’scommitment to the value creation story of being
dedicated to improving the health and happiness of ourcustomers.

SUSTAINABILITY

One of the key factors that underpin the Group’s various
growth strategies is securing talented human resources.
To promote digital transformation, it is essential for
employees to not just have a high level of expertise,
but also to have a deep understanding of the Group’s
goals. As such, over the past few years, we havebeen working to expand the number of personnel
in specialized departments. This year, we hired 40
new employees and assigned temporary workers as
appropriate, and now have a team of about 100 people
within the Company. In addition, in the FM system, newpositions incurred new personnel costs for the 100 FM
pharmacists that have gained experience. We wereable to create the FM system because we were able
to secure human resources as well as the capital that
could support investments in these human resources.
The foundation of strategic investments requires
human resources to carry them out. We have been able

Sustainability management that
leads to profit

in the business environment, our stance as a leading
company is attracting even more attention.
Initiatives for the natural environment are also an
issue, and the upper limit on overtime for truck drivers,
which comes into effect in April 2024 and will impact
logistics, is one of the most pressing challenges. As
reducing the number of deliveries to pharmacies is
not easy, precise inventory management and store
management will be necessary. In addition, we mustbuild cooperation not only within the Group, but alsowith other pharmacies in the region, to operate more
efficiently. The Group will stand at the forefront of the
supply chain and industry and will strive to addressthese issues.
Changes in the system could also have a wide andsevere impact on the industry as a whole, such as
causing a reduction in drug prices. In the past, drug
price revisions have simply acted as negative factors
and were generally offset by business expansion.
However, from now on, through such changes andderegulation, we will discover what kind of pharmacy
is needed, and actively respond to this demand to
become a company needed by patients and society,and evolve into a growth company.
The Group’s stance on viewing change as anopportunity for growth remains unchanged even amidsuch large and continuous changes. We see this very
moment as an opportunity for growth, and will continue
to provide encounters that will make people welcome
us to their communities.

VALUE CREATION STRATEGY

Investing in human resources

To enable future generations of human resources
to share the same views, we hold top conferences(meetings where officers and employees can interact)
all over Japan, and also provide opportunities for
employees to interact with people of their own
generation through annual trainings and groupmeetings. Based on the premise of ongoing concern,
we will give form to invisible assets and steadily pass on
our legacy to future generations and beyond.

AIN GROUP’S VALUE CREATION

to secure these human resources because the Grouphas gained recognition as a leading company in theindustry, which is a fact of which we are proud. Backed
by the expansion of our business and achievements,
the AIN Group has become more widely recognized
and financially sound, enabling us to earn trust.
In terms of hiring new graduates, the number ofstudents wanting to join the Group is increasing year
by year. I believe this is not just because of the Group’s
stability, due to its size, but also because of a strong
drive to learn many different things from the diversityof this expansion. This new willingness to take on thechallenge of expansive learning while standing on afoundation of stability will ensure further growth for theGroup.
Meanwhile, rapid scale expansion, including M&As,
has spilled over into the challenges of increasingly
complex corporate governance and the growing needfor diverse work styles. We will strive to anticipate therisks and address these issues at a faster pace than the
expanding scale. We are also constantly considering
ways to provide a place where employees can fully
demonstrate their skills while working closely withdiverse personnel with unique backgrounds. As partof these efforts, we started an employee engagement
survey in 2022. We are implementing appropriate
measures after listening to the needs expressedby each employee and clarifying the actual issues
they face. Furthermore, in 2023, we revamped our
personnel system to establish evaluation standards andenable diverse work styles. We will continue to make
improvements to enable better employees to work more
efficiently.

MESSAGE FROM THE PRESIDENT

drug store chains, we have continued to develop ourbusiness differently, as comprehensive beauty outlets
that create unique encounters and experiences.
Together with the changing times, the concept of beauty
has become increasingly diverse, and AINZ & TULPE isconstantly evolving as well. No one store has the same
product mixes or sales area. Our staff members thinkon their own about how they can create a sales areathat matches the characteristics of the surrounding
commercial area and the store location. They repeat
this practice every day to provide new encounters that
go beyond the needs of our customers.
In recent years, our highly original store development
efforts have been rated highly, leading to the receipt ofmany requests to open leased stores. We have beenachieving a virtuous cycle in which one achievement
leads to another store opening, which leads to the
opening of stores in even prime locations.
Also, in March 2022, we established a joint venturewith Marubeni Corporation with the aim of opening
stores in Asia as a stepping stone to global expansion.
At the same time, we opened our first overseas store
in Malaysia, where there is a high population ratio of
millennials and gen-Z consumers, the main targets ofour stores, and demand for cosmetics among young
people is rapidly rising due to recent economic growth.
By further refining our strengths in store creation thatare unique to the Group and proactively opening stores
under favorable conditions, we aim to further expand
the scale of our business while reinforcing a structurethat can sustain profitability as a business.

As Japan’s healthcare system undergoes majorchanges, including the start of online pharmaceuticalguidance in 2022 and the operation of the digital drugprescription management service in 2023, the Group isquickly moving forward with measures that adhere toeach system. Meanwhile, amid such constant changes

10

AIN GROUP’S VALUE CREATION400

Net sales

Ordinary profit

148

Number ofpharmacies

250

40

Number of cosmetic
and drug stores

200

Number of
employees

150

10.7

26.1
(0.1)

35.3
1.3

81.3

234.8
15.1

248.1

268.3
20.1

275.5
16.6

15.0

292.6

358.7
297.3

316.2

30

16.8

17.0

16.0
12.6

Fiscal 1995
Dispensing pharmacy business

10

2.8

5

0

Fiscal 1999

Cosmetic and drug store business

Fiscal 2003

Fiscal 2007

Fiscal 2011

Fiscal 2015

Fiscal 2016

Fiscal 2017

Fiscal 2018

Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2022

Fiscal 2023

AIN Group

1997—
Secured top position in dispensing
pharmacy sector by net sales

2015—
Transitioned to holding company
structure

2018—
Further accelerated digital transformation
promotion and went into full swing

Established in 1969 as a company handling contracted
clinical testing. In 1980, the Company launched its drug
store business, the predecessor of its current business, andwent public 14 years later.

Against the backdrop of the financial crisis of 1997, theCompany began a review all of its businesses. Businessrestructuring centered on its pharmacies proved successful,and in 2002, the dispensing pharmacy business achieved
the top net sales in the industry.

The accelerating trend of digitalization across society is also
occurring in the healthcare industry. The Group is working
to improve convenience for patients and customers as well
as operational efficiency through the promotion of digitaltransformation by actively developing apps.

1969

1998

To strengthen its management base for further growth,
the Company transitioned to a holding company
structure in 2015 and accelerated the businessdevelopment including the opening of new pharmacies
and M&As under the dispensing pharmacy business,
which resulted in the total number of pharmacies
reaching 1,000.

Started contracted clinical testing business

1980

Started drug store business

1993

Opened first pharmacy

1994

Established Dispensing Pharmacy Business Division

2002

Opened first cosmetic and drug store

2004

Transferred the operation of the general drug store
outlets to implement a strategic shift to cosmetic anddrug stores

2006

Established WHOLESALE STARS Co., Ltd. and started
generic pharmaceutical wholesales

2009

Listed on 2nd Section of Tokyo Stock Exchange

2015

The Company name changed to AIN HOLDINGS
INC., following the transition to a holding company
structure
Acquired all shares of AYURA LABORATORIES Inc.

2016

Number of Group pharmacies exceeds 1,000

2018

Carried out first online pharmaceutical guidance in Japan

2019

Released official AINZ & TULPE app

2020

Opened AINZ&TULPE WEBSTORE

2022

Transferred to Prime Market, a new market segment ofTokyo Stock Exchange
Launched the official AIN Pharmacy app, Anytime AIN
Pharmacy
Opened first overseas AINZ & TULPE store

INFORMATION

Listed on JASDAQ market
Unified pharmacy name to AIN Pharmacy

Transferred the operation of the contracted clinicaltesting business

SUSTAINABILITY

1969—
Went public 14 years after the startof drug store business

1995

20

15

0.4

0

35

25

11.6

129.3
8.2

Ordinary
profit(¥ billion)

VALUE CREATION STRATEGY

50

7,025
187.9

1,359**The number of part-time employees for the fiscal
year ended April 2003 is calculated based on aneight-hour per day equivalent.

100

Number of
employees

54

10,652

Number of
employees

56

Number of cosmetic
and drug stores

14,147

Number of
employees

AIN GROUP’S VALUE CREATION

Fiscal year endedApril 2003

300

Number of cosmetic
and drug stores

78

Number of cosmetic
and drug stores

1,132

Number ofpharmacies

754

Number ofpharmacies

350

Fiscal year endedApril 2019

Fiscal year endedApril 2015

Net sales(¥ billion)

1,209

Number ofpharmacies

As the environment and values surrounding people’s health and beauty continue to change with the times,
the AIN Group has continued to expand its business by improving the specialist skills of pharmacists anddeveloping pharmacies in highly convenient locations nationwide. We are constantly striving to provide services
that listen to the voices of each patient and customer. Today, we operate a total of more than 1,200 pharmacies
nationwide, and our business continues to grow steadily.

MESSAGE FROM THE PRESIDENT

Fiscal year endedApril 2023

Value Creation History

2023

Started supporting digital drug prescriptions

2010

Reclassified to 1st Section of Tokyo Stock Exchange
Listed on Main Board of Sapporo Securities Exchange

11

12

AIN GROUP’S VALUE CREATIONMESSAGE FROM THE PRESIDENT

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 and beauty
through its business activities. The Group has consistently strived to attain this goal, which is enshrined in the GroupStatement, by taking a sound and ethical approach in all its corporate activities. Going forward, we will seek to grow ina 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.
*A management approach based on the idea that contributing to the sustainable development of society also supports the sustainable development of the company

Super aging society
Dispensing errors
Deregulation /Systemic revision
Outbreak ofinfectious diseases

Primary carepharmacist system
Next-gen pharmacies
through digitaltransformation

Input
Human capital
Diverse, first-class human resources

Business

activities

Create sharedbusiness
Dispensing

value throughactivities
pharmacy business1

Net sales

ROA

Ordinary profit

ROE

Profit attributable toowners of parent

Dividend payout
ratio¥358.7 billion¥17.0 billion

Cosmetic and drug

store business¥9.2 billion

7.5%
Contribute to a sustainable society

22.8%

Contribute to the achievementof SDGs

2

Non-financial factors

Financial capital

E

Sound financial structure

3

Environment

CO2 emissions (GHG) of the Group5
4

Scope 1

Manufactured capital

Scope 2Nationwide network of pharmacies
Network of AINZ & TULPE stores inprime retail locations

Intellectual capital
Contribute to local healthcare
Provide beauty and happiness
Safety, peace of mind and trustProtect the environment and reduce
environmental impact
Ensure sound management base
Cooperate with local communities andbusinesses

Strengthen
capital that
Human resources
respect for human

Accumulated dispensing know-how
Unique store management expertise in
the cosmetic and drug store businessStore development capabilities

Digitalstrategy

management
supports value
strategy andrightsScope 3S

Natural capital, etc.

2

Averagemonthly
overtime per
employee

Ratio of independent
outside directors

8.2%

Sustainably increase
corporate value
Reinforce earnings capabilities
Expand the business

Ratio of female
directors

36.4%

Strengthen management
capital and competitive
advantages
Evaluation by andcommunication withcustomers, business partners,
communities
Improve level of stock market
appraisal
Improve level of external
appraisal etc.

INFORMATION*For fiscal 2023 / as of April 30, 2023
Governance data is as of November 30, 2023

Corporate governance / Risk management / Internal control

Full-time
employeeturnoverratio

Governance

36.4%

Group Statement

Co-creation with stakeholders

2

2,084 5.2 hours

transformation

strategy2SocialNumber ofprimary carepharmacists

G
Financial

1.1 thousand t-CO
18.0 thousand t-CO
667.9 thousand t-CO

SUSTAINABILITY

6

13

4.2%

Aim to be a company that people
welcome to their communities

VALUE CREATION STRATEGY

Materiality

OutcomeFinancial factors

Social capital
Strong customer baseTrusted by customers, patients andmedical institutions

OutputAIN GROUP’S VALUE CREATION

Demands ofsocietySocial issues

and compliance

14

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

Step 1

We also established project teams for each area ofmateriality. The teams devised initiatives and set KPIs,
which were disclosed in May 2021 and we are currently
implementing the initiatives to achieve our targets.

Step 2

Define materiality

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

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

Step 4Create the Group’s
value creation story

Take action to achieve
the materiality goals

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

Form project teams foreach area of materiality to
implement measures, set andwork towards KPIs

Regularly review and adjust

Stakeholders[Patients]
Alleviate concer ns about
health and nursing care

[Shareholders and investors]
Back companies with prospects
for sustainable growth[Employees]
Grow and develop in a stable,
motivating workplace

Dispensing pharmacy
business
CSV[Business partners]
Achieve sustainable growth

S

1

2

Contribute to local
healthcare

Provide beautyand happiness5

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

Key sustainability issues discussed by the
Board of Directors in fiscal 2023
Setting CO2 emission reduction targets anddisclosure based on TCFD recommendations

Management
OfficePromotion
supportSustainability
Management Department

Formulating CSR Procurement Policy andGuidelines
Conducting employee engagement survey
Progress with KPIs and initiatives related tomateriality (mid-term and term-end)

Business processS

SDG preamble Humanrights for all people

Ensure soundmanagement
base

See pages 27-30

4Protect the environmentand reduce
environmental
impactSafety, peace ofmind and trust

Business processE6
See pages 41-43

See pages 23-26
Management base

INFORMATION

Establishing tax policies and anti-bribery/anticorruption policies

PromoteManagement Meetings

3

See pages 23-26

ReportSUSTAINABILITYAIN Group’s sustainability activities and regularly reports
and puts forward proposals on key matters to the Boardof Directors. The committee also utilizes Management
Meetings to promote sustainability throughout the Group.

Supervise

Cooperate with local
communities andbusinessesG

SDG preamble Humanrights for all people

See pages 31-38, 45-50
15

Cosmetic and drug store
CSV
Sbusiness

AIN Group’s six
materiality areas

Board of Directors

Divisions, Businesses,
Group Companies[Local communities]
Create a prosperous society
for future generations[Customers]
Access high-quality services

Sustainability governance
We have formed a Sustainability Committee to establish,
promote and embed a sustainability management
system across the Group. The committee discusses
and determines policies and measures related to thewe will seek to grow 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 andeconomic value.

VALUE CREATION STRATEGY

Explore a wide range ofsocial issues

Step 3

Dedicated to improving the health and happiness of our customers

AIN GROUP’S VALUE CREATIONIn December 2020, we used the following process todefine and disclose the Group’s materiality and the
supporting value creation story.

Our stakeholders and materiality

We have been dedicated to improving the health andhappiness of our customers by supporting their health andbeauty through our business activities. We consistently
strive to attain this goal by taking a sound and ethicalapproach in all our corporate activities. Going forward,

Process for defining materiality and formulating action plans

MESSAGE FROM THE PRESIDENT

Materiality

CSV

Creating Shared ValueE

Environment

S

SocialG

Governance

Local communities
and businesses
SE

See page 44
16

AIN GROUP’S VALUE CREATION

Special Feature

Dialogue with Experts (Held in July 2023)

MESSAGE FROM THE PRESIDENT

Implementing effective sustainability management amid
drastic changes in the business environment

Chief Executive ofSustainability Forum Japan

Co-CEO of SDG Impact
Japan Inc.
Executive of Sustainability
Forum Japan

Representative Senior
Managing Director
Committee Vice Chairmanof Sustainability Committee

Director,
Division Manager of
Personnel

Nobuyuki Takakura

Hideki Fujiwara

Hisashi Yoshioka

Reiko Ueki

Director,
In charge of Risk
Management

Senior Executive Officer,
Division Manager ofOperational Support

Department Manager of
Personnel

Department Manager of
Sustainability Management

operating companies to decide how much disclosureand happiness of its customers. I feel that the story

profit and implements sustainability management areshould be made at their discretion.

will be easier to understand if you go into further

questioned as a single concept.

Mr. Toshihiko Goto (hereinafter referred to as Goto)

been established, companies’ serious efforts will be

In June 2023, the International Sustainability

important going forward.
Ms. Mari Kogiso (hereinafter referred to as Kogiso)

detail on how this value creation story will lead to the
expansion of your business and profit generation.

While your company endorses the TCFD
recommendations, considering that sustainability

It is no exaggeration to say that thestandards are about to be formulated in Japan,

TCFD, which is proposed internationally, is notc ompa n ie s a re a t t h e c usp o f sust a i na b i l i t ymanagement right now.

Goto

related to sustainability in general (IFRS S1)As Mr. Goto has pointed out, we recognize that the

only about risk management, but also a businessand climate change (IFRS S2). In response, themarket is still rocking when it comes to corporate

strategy itself. We have entered an era in which the

Sustainability Standards Board of Japan (SSBJ)

sustainability disclosure. Meanwhile, in Europe,

perspective of how an operating company makes

under the Financial Services Agency is scheduled toamong ESG investments, there are funds called

formulate Japan’s domestic standards by the end of

Article 9 Dark Green funds, which also set the goal of

the year.

creating an impact on society, and are attracting an

SUSTAINABILITY

Gathering opinions from young employees, relayed by upper management

The problem in Japan is that, at present, it is

inflow of cash. In other words, investors are expecting

not clear to what extent information disclosure iscompanies to not only disclose their ESG figures, but

Mizushima

We are aware that the role of companies

the size of the Company has grown, employees haveobligatory. While Europe is moving toward making

also to properly analyze and disclose the impact ofhas come into question at a more fundamental level.

fewer opportunities to interact with the President.

extensive disclosure mandatory, the extent totheir businesses on society.

We did not originally have a company motto or

Therefore, in 2012, we created the Group Statement.

which reporting will become mandatory in JapanTo do so, they will likely need to develop a value

corporate philosophy, but our founder, President

The Group Statement summarizes the ideas, values,

will significantly change the responses of operating

creation story that outlines how their sustainability

Ohtani, has been conveying the importance ofand purpose that are important to the Group,companies in the future. Generally, mandatory

management will lead to profit.

being sincere and humble since the Company’sasserting that employees are the central players todisclosure narrows the range of mandatory disclosureYour company has put forth a value creation

founding, and the employees who were working

the Company becoming a leading corporate groupitems. If the scope is narrow, not only will it not meetstory of being dedicated to improving the health

together naturally absorbed this view. However, asthat continues to evolve for stakeholders. I thought it

INFORMATION

17

Rieko Kimei

the needs of global investors, but it may be difficult for

In any case, as international standards have now

Standards Board (ISSB) announced two standards

Toshihide Mizushima

VALUE CREATION STRATEGY

Please tell us about the global sustainability
a n d E S G t re n d s , a n d h o w t h e y a reincorporated into your business strategies.

Mari Kogiso

AIN GROUP’S VALUE CREATION

Profit-making activities and sustainability management are two core businessactivities

Toshihiko Goto

18

AIN GROUP’S VALUE CREATION

Special Feature: Dialogue with Experts

considerable attention. Shareholders see outside

the path. Another way is to encourage young

Scope 3 emissions volume. Will this method become

to explain and systematize the fact that even without

directors as their spokespersons, and also place

employees to think up multiple paths, and have upper

more widely used going forward?

the President, the Company will keep on going.

importance on what they discuss with upper

management make the final decision.

Goto

It seems that a company with a founder

Fujiwara

What the ISSB is looking for in Scope 3

Goto

In fiscal 2022, we began calculating andemissions is not how emissions are reduced, but

disclosing CO2 emissions with the aim of transitioning

the volume of emissions. That said, if sales increase,long-term goals or plans. In the past few years, more

toward carbon neutrality. As we are a retailer, Scope

Scope 3 emissions may well increase, so I think aa more modern one. For example, I think the word

and more companies have begun formulating long-

3 emissions account for most of our emissions.

good start would be to work with several businesswellbeing could provide wider implications. Wellbeing

term management plans that span over 10 years.

Recently, in calculating Scope 3 emissions, emissions

partners to reduce emissions one by one.

Goto

does not contradict the company motto or corporate

When it comes to planning for more than 10

per unit of production are calculated individuallyphilosophy, so I think pursuing what wellbeing means

years, the goal is not focused on sales. Following onby collecting greenhouse gas emissions for eachto your company will bring you closer to your vision.

from the TCFD, the new ISSB standards, issued in

product from suppliers and reflecting this in theirJune, also stipulate the development of a transition
plan. The current standards call for a transition planunderstand and sympathize with the concept andon climate-related risks and opportunities, but thevalue of sustainability management. We also believe

theme will shift to biodiversity, and then human rights

it is important to incorporate what we understandand human resources. In other words, key ESG

and sympathize with into our own work, and create

themes are shifting from climate change issues toa system that leads to more practical motivation. We

sustainability.

are implementing certain initiatives on this front, but
are aware of the need for further improvements.

In an industry like yours that does not emit much
CO2 through its businesses, I believe that in order for

Human capital means improving the capabilities of human resources
Please tell us how you believe the twot h e m e s o f h u m a n re s o u rc e s t ra t e g y
and respect for human rights should be
addressed, and how you think informationon these initiatives should be shared.

will become central in the social structure, so I think
your company’s approach to human resources will
establish them as the human resources demanded
by society in the 21st century.
We believe that human resources are an

Kimei

In my view, the most important factor in

a company to grow, it needs to formulate a plan andlinking sustainability management to concrete action

disseminate it throughout the company in order toKogisoW h e n i t c o m e s t o h u m a n re s o u rc e

we are working to strengthen our human capital. In

is instilling these ideas and initiatives throughout thecontribute to society.

strategies, the term human capital crops up often

human capital management, what do investors lookGoto

important part of our growth strategies, and as such,company. From the perspective of the sustainability

One way to do this is to use the scenario planning

recently. Human capital is all about how to improveat first, and how should companies set KPIs?

divisions that support this, it is important not only

method. There are multiple paths that can be taken,

the capabilities of human resources. By creating an

Kogisofor divisions to lead the way, but also to have bothbut the key is to involve all employees, from youngenvironment with employee benefits, diversity, andneed to be viewed from a long-term perspective,

managers and employees commit to conducting

employees to senior managers, when creatinga corporate culture that enables each and every

such as five or ten years, a point also understood bysustainability management. This internal penetration

employee to demonstrate their abilities, companies

investors.

seems to be an issue for every company I havecan develop employees that can perform at their

Lately, one thing I feel that is perceived differently

touched base with.

full potential, thereby increasing profitability throughin Japan compared to other countries is the mobility

employee growth.

of human resources. Overseas, companies that sign

I agree with Mr. Goto’s points completely.

The benefits of human capital management

Also, from an investor’s perspective, the message

By incorporating the skills and competencies that

employment contracts when needed with people whofrom the company president is also important, withyour company needs and how you train and hire

have the skills they want are highly rated. In contrast,

survey results showing that in integrated reports,

employees into human capital management, yoursince Japan has a different culture, the mobility ofinvestors pay the most attention to the message

company can create a more strategic story.

human resources is lower than that of overseas. Asfrom the president. It is important for the president

such, companies are required to explain how they

to be able to clearly explain in their own words how

the source of profit is not equipment, but humanare working on human resource development for thethe company ended up with its current businessresources. Therefore, human resources strategies are

growth of the company.

and what they envision 10 years down the line. Of

about how to increase profit.

INFORMATION

In a post-industrial society, it is said that

Goto

SUSTAINABILITY

KogisoVALUE CREATION STRATEGYTo promote sustainability management,

it is important that all employees, including officers,

Takakura

AIN GROUP’S VALUE CREATION

Attention is on whether a company has

your company to make the wording of its vision tohas a clearer vision. It would be a good idea for19

management, and what has changed as a result.

MESSAGE FROM THE PRESIDENT

was also necessary from a sustainability perspective

I think it will be some time before KPI standards forcourse, the bottom-up approach within the company

Again, by discussing their vision and having

human capital management are established. Rather,is important, but the president must encapsulate thisall employees think about what path to take, ainvestors want to know about medium- to long-and convey it in a powerful message.

concrete image of the human resources thatterm strategic human resource polices and human

In addition to the message from the president,

companies are looking for will fall into place. In a

resources strategies themselves.

the message from outside directors is also attracting

post-industrial society, business formats like yours

20

AIN GROUP’S VALUE CREATION

Special Feature: Dialogue with Experts

MESSAGE FROM THE PRESIDENTThe establishment of human rights is the basis for the existence of modern companies
KogisoI highly appreciate the fact that yourcompany is very serious about addressing humanrights issues. Meanwhile, I am looking forward toseeing the results of the initiatives the Group plans to

AIN GROUP’S VALUE CREATION

carry out in earnest going forward.
I would like to point out, in general terms, thatin Japan, human rights efforts tend to be limited
to overseas supply chains. However, there arevarious human rights problems in Japan as well,such as those involving technical intern trainees
and gender issues. I think Japanese people’s
awareness of human rights will be a topic discussed
more frequently going forward. Companies alsoneed to start out by making steady efforts, such as
Goto

I think Ms. Kogiso has just made avery important point. The fact of the matter isJapanese people’s awareness of human rights

is also highly commendable. Investors recognize

is very different from that of the rest of the world.

that the social category of ESG, such as human

Of course, discrimination, sexual harassment,

resources, human rights, and gender issues, will havepower harassment, and LGBTQ issues are humanan even bigger impact on profit than the environment.

rights issues, but fundamental human rights are

Evaluations of social initiatives are also impacting

civil liberties, equality rights, and social rights thatnew graduate recruitment. This is because theLastly, Mr. Goto and Ms. Kogiso, please
give one final message, including yourexpectations and requests for the Company.

If you can put more of that out there and show yourconnection with society in the form of real-life stories,
I think it will get the message across even more. Inthat sense, I have high hopes for your efforts going

Goto

There is no doubt that the market inforward.

were born when civil society was formed. Modern

current generation looks at integrated reports whencompanies have built on these human rights,

choosing companies. Going forward, I think it will be

drastic changes in the industrial structure andtoday. Through this dialogue, we received objective

and joint-stock companies have developed whilea very important perspective to think about how tochanges in social structure caused by the declining

evaluations and advice from you, which has provided

establishing freedom of ownership and labor rights.

present the topic of ESG to gen-Zs to make it morebirthrate and aging population. As you deepen youra valuable opportunity to reaffirm what we need to do

Human rights due diligence is something thatappealing.

relationships with customers, you have big dreams

going forward to be a company that people welcome

must be carried out in order to gain recognition as a

YoshiokaAs part of our human rights due

for the company you wish to become. Also, since

to their communities, as stated in our vision. We

company that respects human rights throughout thediligence, we are working on human rights education

the industry is not yet dominated by a small number

would like to strive to think for ourselves and put

value chain. In Europe and the US, they are working

for our employees. What do you think we shouldof players, I think AIN Group is a company that canthese points into practice.

toward fully mandating human rights due diligence.

focus on to increase employee awareness?

talk of grand dreams achieved via ingenuity and the

Human rights due diligence is especially important if

Kogisoyour company is considering overseas expansion inof the human rights risks to their companies. For

In that sense, I would venture to say that you must

what constitutes an inappropriate remark. Comments

company to grow.

start. Even if these moves are small at first, it isthat were acceptable in the past could become risks

Kogisoimportant to start by thinking about human rightsthat could lead to a decline in stock price.

with the message of being a company that people

With regard to diversity initiatives, yourcompany is discussing employee benefits as an
initiative to utilize human resources, a point I think

INFORMATION

example, with regards to LGBTQ issues, looking at

The AIN Group is connected to society

I think it is also important that the recognition

welcome to their communities, something I think isof gender equality among officers is applied invery wonderful. I think there are many messages fromcompany policies.

customers who receive your services, such as how

Goto

Thank you very much for your timeenhancement of your services.

The key to human rights due diligence is to justissues that cannot be overlooked.

Mizushima

SUSTAINABILITY

I think the key is to make people aware

strengthen your management capabilities for your

Asia and other regions.

21

Management leadership is tested in companies with grand dreams

which your company operates will expand amid

KogisoVALUE CREATION STRATEGY

conducting training on what human rights are.

they view your company based on their experiences.

22

VALUE CREATION STRATEGY

Creating Shared Value through Our Business (CSV)

Aiming to be a pharmacy that
supports local healthcare services

Materiality

Pharmacies and pharmacists are playing an
increasingly important role as part of local
infrastructure, including home-based healthcare,as indicated by the Ministry of Health, Labourand Welfare issuing its vision for patient-focused
dispensing pharmacies in October 2015, andrevising dispensing fees in April 2022. We are actively
working to address home-based healthcare needs,
coordinating with various medical professionals andupgrading our specialist skills so that dispensing
pharmacies and pharmacists can fulfill the roles
required by patients and local residents.

1

5

Contribute to local
healthcare
6¥321.5 billion(13.6%

Segment profit

year on year)¥24.1 billion

Key strategies
Raising quality of dispensing pharmacies and improving specialist
skills of pharmacists
Top-line growth
Strengthening human resources and operational capabilities
Addressing advances in healthcare and technological innovation

year on year)

Amid diversification in the ways patients can receive medication and the shift to digitalization, we are working to respond topatients’ needs and create an environment in which they can continue prescription medication with peace of mind.

The Group is actively working to open pharmacies in highly convenient locations, introduce systems for safe medication use,build training systems, and enhance the specialist skills of pharmacists. We are also actively responding to online eligibility
checks and digital prescriptions promoted by the government.
Selection and

Added value

Safe and
Clear andmedications
Trustworthy

secureunderstandable explanation of

SafetyConsultation with a pharmacist with specialist knowledge
Collaboration closely with medical institutions
Supports home-based healthcare
Offering online pharmaceutical guidanceConsultation on medications and health issues

Various delivery options for medications such as sameday delivery and locker pickup
Supporting digital prescriptions
Information on health issues and pharmacies
Coordination with local governments

1,200 pharmacies in highly convenient locations
nationwide
Opening pharmacies near hospitals, clinics, and otherareas frequented as part of patients’ daily life

Pharmacy management by field managers (FM)Inventory management utilizing digital transformation

Enhancingsupporting

training programs andself-improvement

Fulfilling functions of primary care pharmacists andpharmacies
Certified as pharmacies with specialist functions

Proactive demonstration
Participation in model project for digital prescription

Strengthening human resources and operational
capabilities See page 26
Digital transformation strategy See pages 35-36
Enhancing customer service through training andunderstanding the value of the Group’s existenceOver 60

training programs available

Raising
improvingSee pagequality of dispensing pharmacies andspecialist skills of pharmacists
25

StrengtheningSeehuman resources
pages 33-34

Addressing advances in healthcare and technologicalinnovation See page 26
Official app – Anytime AIN Pharmacy
Provision of information related to medicine and healththrough Ai-chan News Letter

Number of local health events held: 275

INFORMATION

Strengthening human resources
See pages 33-34

Number of primary care pharmacists: 2,084*
Number of specialized medical institution
coordination pharmacies: 23*
Number of community coordination pharmacies:
468*
Number of health support pharmacies: 171*
Number of pharmacies supporting home-based
healthcare: 1,152*
Online pharmaceutical guidance service
available at all pharmacies

SUSTAINABILITY

Expertise

Short waiting times
Good customer service and hospitality
Necessary stock of medications

See page 26

Servicecontinued use of pharmacies

Close to medical institutions
Close to home
In areas frequented as part of daily life

Top-line growth

Our strengths

VALUE CREATION STRATEGYNet sales

Related SDGs

Amid the increasing complexity of prescription drug treatments dueto the aging of the population and the advancement of healthcare,we will contribute to the realization of equal, sustainable, healthy andprosperous lives for local residents

Patients and AIN Pharmacies

Patients’perspective

4

AIN GROUP’S VALUE CREATION

3

Medium-term actions(3.8%

Location2

1

Summary of the fiscal year ended April 2023
As a result of contributions from the addition of roughly 100 new
pharmacies to the Group from Pharmacy Holdings Co. Ltd. in May 2022,
as well as the steady growth of pharmacies opened in the previous fiscal
year, net sales significantly exceeded those of the previous fiscal year.
Going forward, we will continue to strengthen our functions as primarycare pharmacists and pharmacies to ensure that patients can receive
medical care in their familiar local community with peace of mind.

MESSAGE FROM THE PRESIDENT

Dispensing pharmacy business

Improving communication with patients
See page 25
Disaster relief agreement with local government

Raising quality of dispensing pharmacies andimproving specialist skills of pharmacists
See page 25*As of April 30, 2023

23

Contribute to

local healthcare

24

VALUE CREATION STRATEGY

Creating Shared Value through Our Business (CSV)

Dispensing pharmacy business

Pursuing added value to become a pharmacy chosen by patients and contributing to local healthcare services
highly specialized pharmacists and provide safety andsecurity, and a variety of services, thereby contributing tolocal healthcare provision.

Key points to consider when selecting a pharmacy*
(%)

50

51.2

44.8

40

32.4

30

28.0 25.0
24.2 22.7

20
10

Number of pharmacies and EV / EBITDA multiples
Number of pharmacies opened
EV / EBITDA multiples(stores)
250
200
150

4.88

3.74

4.13

29

▲54

▲64

▲52

Fiscal
2019

Fiscal
2020

Fiscal2021

Total number of pharmacies(as of the end of fiscal 2023):

(%)
8
6

141
20

0
-100

3.71

6.55

157

100
50
-50

Number of pharmacies closed and sold

4

49
▲15
Fiscal2022

0▲31
Fiscal2023

1,209

Close to
home

Short
waitingtimes

Trustworthy

Safe andsecureIn areasfrequented
as part ofdaily lifeGood
customer
servicehttps://www.ainj.
co.jp/app/

Online pharmaceutical guidance via our app

AIN Pharmacy’s Aichan News Letter

Key roles of FMs

Maximizevalue delivery

Improve 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

Mitigatebusiness risks

Improve 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

Addressing advances in healthcare and technological innovation
The AIN Group is implementing measures that support
government efforts to create advanced healthcare
services. We are also actively participating in joint researchwith partners in the academic sector. In addition to the trial
prescription drug deliveries using drones integrated with an
online medical examination and pharmaceutical guidanceservices, in which AIN Pharmacy at Asahikawa Medical
University teamed up with the university and Asahikawa
City, we are also actively carrying out initiatives to fulfill our
responsibility as the leading company in the sector and be
a company people welcome to their communities, suchas launching the digital prescription management service,
which became operational on January 26, 2023, at ourpharmacies nationwide.
In addition, we are steadily improving patient services
and strengthening the Group’s competitiveness, ensuring
we are well-placed to respond rapidly and appropriately tothe expected wide-ranging deregulation.

INFORMATION

https://www.ainj.
co.jp/column/

In November 2021, we introduced a field manager (FM)system, whereby around 100 pharmacists were assigned
as FMs who moved away from engaging in pharmacy
work to dedicate themselves solely to management. The
placement of FMs was made possible by our ability tocontinuously recruit a large number of talented personnel
and to generate sufficient profits to absorb allocation costs.
FMs are responsible for supporting pharmacies interms of maximizing value delivery and mitigating businessrisks by improving patient services and ensuring legal
compliance. The introduction of the FM system has alreadyproduced positive results, such as in fields where patientsare increasingly using our pharmacies due to fewer waitingtimes and fewer drug shortages, and in fields where wehave enhanced coordination with local communities
through collaboration with various medical professionals.

SUSTAINABILITY

Anytime AIN
PharmacyStrengthening human resources and operational capabilities
VALUE CREATION STRATEGY

Close tomedicalinstitutions

Improving communication with patients

25

Although we only opened 27 new pharmacies, duepartly to the impact of material shortages, the addition of
Pharmacy Holdings Co. Ltd. (now PHARMACY Co. Ltd.,
based in Hiroshima Prefecture), which operates roughly
100 pharmacies, into the Group through M&A, our total
number of pharmacies nationwide came to 1,209 as of theend of the fiscal year ended April 2023.
Going forward, by carrying out a growth strategy
focused on having stores in prime locations that also
meet investment recovery criteria, we plan to expand thebusiness through 30 new organic pharmacy openings(organic growth) and by acquiring 20 more pharmacies
via M&As in the fiscal year ending April 2024. By also
strengthening our pharmacy network in the Chugoku andShikoku areas through the utilization of PHARMACY Co.
Ltd.’s foundation, we aim to improve operational efficiency
and make further contributions to local communities.

0*AIN Group research; n= 4,200 (multiple answers)

The official AIN Pharmacy app, Anytime AIN Pharmacy,
which launched in February 2022, provides services thatallow patients to send prescriptions directly to pharmacies,
access to online pharmaceutical guidance, and medication
advice services. By connecting patients with pharmacies
and pharmacists in various situations, we are increasing
convenience while also supporting them so that they canaccess prescription medication with peace of mind. In
March 2023, we began distributing information throughthe AIN Pharmacy’s Ai-chan News Letter, which provides
information on medicine and health, based on the concept
of “learning about your health and medicine anytime,
anywhere, right at your fingertips.”
Going forward, we will continue to pursue the provisionof added value that only the AIN Group can provide.

Top-line growth

AIN GROUP’S VALUE CREATION

We will carefully build relationships of trust with every
patient and local resident, and aim to be a company thatpeople welcome to their communities.
The results of our patient questionnaire show that whenchoosing a pharmacy, the key factors they consider are
location (close to medical institutions/close to home/inareas frequented as part of daily life), service (short waitingtimes/good customer service), and trust, safety, andsecurity.
The Group operates a number of pharmacies inprime locations, as identified by patients’ top reasons forselection. By providing courteous customer service andsupport for specialized prescription medication, we aim to
be selected as primary care pharmacists and pharmacies.
In addition to focusing on human resource development,such as hospitality training, customer service training,and support for acquiring highly specialized external
qualifications, we are also actively introducing systems todeliver drugs safely and securely and prevent mistakes.
In order to respond to the needs of each patient who
uses our services on a daily basis, we will strive to train

MESSAGE FROM THE PRESIDENT

Raising quality of dispensing pharmacies and improving specialist skills of pharmacists

Reception machine for digital prescriptions

26

VALUE CREATION STRATEGY

Creating Shared Value through Our Business (CSV)

Aiming to be the one and only
comprehensive beauty outlets

MESSAGE FROM THE PRESIDENT

Cosmetic and drug store business

Materiality
1

At AINZ & TUPLE, each store designs a sales arealayout tailored to customer needs. By speedily
updating them, we provide a sales area that meets
customer expectations for beauty and happinessand brightens up their daily lives.
We will continue to aim to be the one andonly comprehensive beauty outlets that people
welcome to their communities.

2

2
5
4

Provide beautyand happiness
6

Summary of the fiscal year ended April 2023

Medium-term actions
Always provide a place where customers can enjoy choosing newcosmetics and beauty items that enable a lifestyle that allows
them to stay true to themselves¥25.6 billion

Net sales(24.9%
Segment profit

Related SDGs

year on year)

VALUE CREATION STRATEGY

Amid the impact of the COVID-19 pandemic, we re-evaluated our original
brands and optimized costs. This, coupled with robust customer traffic
owing partly to the easing of restrictions helped the business return toprofitability. The Group opened eight AINZ & TULPE stores and closed
eight stores, resulting in a total of 78 cosmetic and drug stores at theend of the fiscal year.

AIN GROUP’S VALUE CREATION3

Key strategies¥1.2 billion

Reinforcing differentiation strategy
Stepping up store openings in semi-urban markets
Moving into the Asia market(Segment loss of ¥1.7 billion in the previous fiscal year)

Customers and AINZ & TULPE
AINZ & TULPE aims to be the most accessible comprehensive beauty outlets for shoppers with an interest in beauty, offering
a place where they can easily drop by and browse freely. We will actively respond to diverse needs and new markets by

opening stores in highly convenient locations and providing a unique merchandise lineup that creates unique encounters andexperiences.

Selection and
Location

Product

A wide variety of products to compare
Feel likely to find a product that suits oneself
Carrying trending products on social media
Carrying exclusive products that can only be found at that store

Want to try products at brick-and-mortar stores after reading reviews and social media ratings
Want to try various products before making a purchase
Want to purchase at a good deal

Setting priority areas and opening flagship stores
mainly in urban areas

Product mixes focused on beauty products
Developing original brands
Conducting sales of exclusive products by increasing awareness of
AINZ & TULPE

Product mixes, development and sales area layouts tailored to the location of each store
Providing information via the official app and social media

Number of prospective store openings

Nationwide

Hokkaido

180

Comparison of product mixes at AINZ & TULPE and general drug
stores

1

1.6%
8.8%

Kansai
Kanto

Kyushu

130

4

Tokai

5

Areas for expanding
new store openings

Stepping up store openings in semi-urban markets
See page 30

1.4%
AINZ &
TULPE*1

12.5%
25.0%
88.2%
34.4%

Generaldrug
stores*2

Number of app users: 1.29 million (as of April 30, 2023)
Official AINZ & TULPE app

AINZ & TULPE WEBSTORE

One-stop platform for loyalty points and coupons. There arealso many useful functions such as purchase history.

Lineup of highly satisfactory products that are in tune with the latest trends.
Customers can accumulate points and experience great deals.
INFORMATION40

Our strengths

27

Service

In highly convenient locations
In areas frequented as part of daily life

SUSTAINABILITY

Customers’
perspective

continued use of stores

28.1%

https://ainz-tulpe.jp/
app

https://webstore.
ainztulpe.jp

Beauty products
Over-the-counter drugs and sanitary products
Foods and health foods
Daily necessities*1. Data is for the fiscal year ended April 2023
*2. Source: Monthly Report on the Current Survey of Commerce (fiscal 2023), Ministry of Economy,
Trade and Industry

Reinforcing differentiation strategy

See page 29
28

VALUE CREATION STRATEGY

Creating Shared Value through Our Business (CSV)

Cosmetic and drug store business

Stepping up store openings in semi-urban markets
daily basis. We are also harnessing digital transformation
to steadily improve service levels. To this end, we launched
an official app with a point card function, opened the AINZ& TULPE WEBSTORE, and are working to link the app andEC site with physical stores to attract new customers.

Number of openings infiscal 2023

Department stores

Targets

People who seek “inner and outer”
beauty and healthFamilies, overseas visitors

Upper class, including overseas
visitors

Merchandise

B e a u t y p ro d u c t s a c c o u n t f o r
approximately 90% of the lineup

Daily necessities and food accountfor more than 50% of the lineup

Brand products only

PricingMed- to high-price range

Low-price range

High-price range

Sales areas

Customers can personally try
various products in stores

Displays various products

Brands sold through own boutiquestores

Kanto 42

Total number of cosmetic
and drug stores

78

Chugoku 1

Tokai 2

Kyushu 7

Kinki 7

Recently, we have been able to open stores in prime
locations, as our unique store concepts have been highly
appreciated, leading to invitations for tenancy. Goingforward, we will endeavor to continue providing beauty andhappiness by actively opening new stores and refining ourunique store development.

Going forward, we will examine the overseas growthpotential of AINZ & TULPE while utilizing the MarubeniGroup’s experience in overseas joint ventures andknowledge of next-generation business development.

INFORMATION

We established a joint venture with Marubeni Corporationin March 2022, which then opened its first overseas store
in Pavilion Bukit Jalil shopping complex in Kuala Lumpur,
Malaysia in May of the same year. While considering
opening stores in the Asian region, we ultimately decided
to open a new store in Malaysia. The main reasons
include (1) the high amount of spending on cosmetics
and other personal care products per capita, (2) the highpopulation of gen-Y and gen-Z consumers, which AINZ &TULPE targets, (3) the high-affinity consumers for digitaltechnology, and (4) the small number of stores opened
by Japanese rivals. After that, we opened AINZ & TULPE
Sunway Pyramid in November and AINZ & TULPE Mid
Valley Megamall in December of the same year. As of
November 2023, we have three stores in the country.

SUSTAINABILITY

29

Tohoku 1

Moving into the Asia market

A comprehensive beauty outlet that offers beauty and happiness

AINZ & TULPE CELEO KOKUBUNJI

8

Hokkaido 18

VALUE CREATION STRATEGY

Drug stores

Each AINZ & TULPE store is designed to meet the needsof its customers, and no two stores have the same
merchandise lineup or sales area layout. By constantly
updating product mixes and sales area layouts at a rapid
pace, thus offering new products and new sales areas
every time a customer visits our stores, we aim to provide
a space that is always a source of enjoyment.

the number of stores that contribute to profits within a few
months of opening has increased. Going forward, in orderto further raise recognition of the AINZ & TULPE brand, weare considering operating a dominant strategy in our target
areas.
By leveraging the unique store concepts that are astrength of AINZ & TULPE, and by designing stores tailoredto location, customer demographics, and store size, wewill increase awareness and strengthen the brand in target
areas.

Cosmetic and drug store network (as of April 30, 2023)

Differences between AINZ & TULPE and other retail formats
AINZ & TULPE

In the cosmetic and drug store business, earnings forthe fiscal year ended April 2020 through to the fiscal year
ended April 2022, which were significantly impacted by
the COVID-19 pandemic, experienced notable difficulties.
In the fiscal year ended April 2023, we launched a project
dedicated to returning the business to profitability, worked
on a restructuring program, and in addition to revising
the criteria for opening new stores to include not only
urban but also semi-urban areas (in/near stations close toresidential areas), we set detailed targets and worked on
this throughout the entire business division. As a result,

AIN GROUP’S VALUE CREATION

Unlike general drug stores, we carry out store operations
based on a strong lineup of beauty products and a uniquesales area layout designed by staff at each store. Thisdifferentiation strategy is helping to reinforce the AINZ &TULPE brand.
In terms of product mix differentiation, we focus
approximately 90% on beauty products centered onskincare and makeup. The cosmetics lineup ranges fromreasonably priced cosmetics to premium cosmetics suchas consultation-based and therapeutic products. As part ofour differentiation strategy, we are also strengthening ourrange of original brands.
In store operations, we are focusing on creating storesthat always stimulate customers by rapidly procuring andselling new products in tune with the latest trends andupdating merchandise lineups and sales area layouts on a

AINZ & TULPE KOBE MOTOMACHIMESSAGE FROM THE PRESIDENT

Reinforcing differentiation strategy

AINZ & TULPE Sunway Pyramid (Malaysia)

AINZ & TULPE F BEAUTY HOKKAIDO BALLPARK

30

VALUE CREATION STRATEGYStrengthening Management Capital that Supports Value

Creating welcoming workplaces for everyone

Rieko Kimei
Director, Division Manager of Personnel

Empowering female employees
The AIN Group has a large number of female employees, accounting for roughly 80% of the total
workforce (as of April 30, 2023). We have established an environment where female employees cancontinue their careers during changes in their lives, such as marriage and childbirth. In July 2023, wereceived the Platinum Kurumin certification as a company that provides exceptional childcare support.
The Platinum Kurumin is a certification that is awarded to Kurumin-certified companies that provide
childcare support at an even higher standard. We are implementing measures such as introducing training
courses designed to support career advancement with the aim of increasing the ratio of female managers.
As a result, the ratio of female managers was 35.9% (targeting 40% by the end of April 2026).
Support for childcare and nursing care
As of April 30, 2023
Childcare leave
Reduced working hours
for childcare

2

5
3

4

6

Medium-term actions

Promoting diversity and inclusion

25.0%

33.3%

5

Ratio of female
managers*2

35.9%

40.0%

637

*1. AIN HOLDINGS INC.
*2. Subsection chiefs, pharmacy managers, store managers and higher management
gradesEmploying people with disabilities
Employees with disabilities play an active role in various
departments. As of April 30, 2023, the ratio of employeeswith a disability in the Company was 2.5%. We plan towork with Group companies to expand the available roles

and opportunities for people with disabilities, while also
making improvements to the working environment, such as
designing barrier-free offices and taking into account theirneeds.

Post-retirement rehiring scheme
We have set up a rehiring scheme for employees who
are willing to continue working after reaching mandatory
retirement age. The aim is to create an environment where
older employees can continue to use their many yearsof experience and hard-earned skills, while also passing
on their expertise to younger generations. As of April 30,
2023, 131 employees were aged 65 or over.

Recruiting mid-career human resources
We are working to recruit mid-career human resources
with the skills, expertise, and experience we need who
can immediately make a contribution to the AIN Group. In
response to developments in the operating environment,
we are seeking to reinforce the Digital Promotion
Division, the Personnel Division and other management

departments, and hire mid-career personnel with the newly
needed experience and skills for each business. In fiscal
2023, 261 mid-career personnel joined the AIN Group. By
making the most of their diverse careers, we will continue
to drive innovation.

Promoting health and productivity management
Health and productivity management
We promote health and productivity management with theaim of vitalizing our organization by creating workplaces that
help each employee improve their health and play an activerole. Chaired by the President and Representative Directorof AIN HOLDINGS, the Health and Productivity Promotion
Committee is leading the implementation of measures that
resolve health and productivity issues in the AIN Group.
Since 2021, we have expanded employee eligibility forstress testing and reinforced follow-up services provided byoccupational health professionals and nutritionists.
In addition, the Group received certification as an
Outstanding Health and Productivity Management

Organization, which recognizes leading companies in healthand productivity management, for three consecutive years
since 2021.
We believe that creating healthy and supportive
workplaces for all employees will energize our wholeorganization and allow us tofocus our energies on customers
and patients.

INFORMATION

Human capital is at the heart of the Group’s value
creation. Maximizing the full potential of each employee
improves productivity and creates added value. Aiming
to drive innovation by supporting diverse work styles
and career development paths, the AIN Group is actively
promoting diversity by creating working environments andorganizations that are welcoming and motivating for all
employees, regardless of gender, age, nationality, religion,
background, physical ability or sexual orientation.
In addition, as a company with a large number of female
employees, providing more opportunities for women in theworkplace will significantly contribute to the AIN Group’s
growth. We are working to transform employee mindsets
and provide more support for work-life balance in various
ways, such as holding career training for female employees
and managers, offering flexible working hours, andencouraging more male employees to use childcare leave.

31

Ratio of female
directors*1

SUSTAINABILITY

Pass on a corporate culture of sincerity andfairness and strengthen solidarity by sharing value
Create workplace environments that enable each
employee to maximize their full potential
Increase productivity by harnessing the capabilitiesof each employee

Related SDGs

As of April 30, 2026
(target)VALUE CREATION STRATEGY

5

Change workplace culture by embedding theGroup 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

As of April 30, 2023

1,081

Key strategies
1

Ensure soundmanagement
base

648

Nursing care leave
Flexible working hours

Materiality

Ratio of female directors / managers

AIN GROUP’S VALUE CREATIONIn May 2022, we established the Personnel Division to maximize humancapital in the AIN Group, and have been stepping up our reorganization
efforts, such as building a support system that respects diversity
and helps employees to maximize their full potential, and expanding
evaluation systems to support career development.
Amid the ever-diversifying environment and values surrounding ourbusiness, by supporting the development of our people into highly skilledhuman resources who can deliver reliable services to customers, we aim
to provide opportunities to grow and develop, improve the health andhappiness of customers, and drive innovation across the Group.

MESSAGE FROM THE PRESIDENT

Human resources strategy and respect for human rights

AING Group’s Health and Productivity Management Declaration

https://www.ainj.co.jp/corporate/sustainability/social/employees/health-management.html#basic (Japanese only)
32

VALUE CREATION STRATEGYStrengthening Management Capital that Supports Value

Human resources strategy and respect for human rights

Since 2022, we have been conducting an engagement
survey for all full-time employees. Through a crossanalysis of mental health and engagement, we areworking to identify issues for individual employees and ourorganization and reinforce mentality management*.

Human resources training program
We will create an environment that not only ensuresthat each employee is healthy, but also enables themto maximize their full potential and play an active rolein the workplace, thereby reinforcing to ensure soundmanagement base set forth in our materiality initiatives.

*Mentality management: Striking a balanced approach to address both mental health and engagement

In keeping with the Group Statement, our corporate
philosophy, we have established a personnel systemthat promotes employee autonomy and growth andalso supports the active participation of diverse humanresources. We will launch the system in the fiscal year
ending April 2024, and we have also started a new human
All officers and employees
Basic training

Empowering each employee

Fiscal year ended April 2023
8.2%

Staff turnover rate*1
Internal awards*3

18

Internal appointments

60

33

Harassment training
Overseas training

Developing primary care pharmacists

Specialist training

Senior management study seminars
Sustainability management study seminar

Main systems and support
Personnel evaluation system / Employee grade system
Internal appointments system
Internal awards system
Internal scholarship system
Language learning support*1. Turnover rate for full-time employees*2. Average non-statutory working hours (monthly, per person)

carried out annually with the aim of enabling employees toacquire skillsets ranging from basic to specialized skills, in
2022 we also introduced external training (critical thinking
training) where employees can learn through friendly
competition and repeated discussions with employees
from other companies in other industries.

1,018

952

277

999

The Group established the AIN Group Human Rights Policyin December 2021 to fulfill its responsibilities on the basisof respecting the human rights of all people affected by its
business activities and has since been carrying out various
initiatives.
Since 2021, in accordance with the Respect andRemedy principles of the United Nation’s Guiding
Principles on Business and Human Rights, our due
diligence measures focus on “addressing human rights
The AIN Group Human Rights Policy

388

660

613

560
4/20

4/21

Leadership training
OJT instructor training
New store manager training
Store manager conference
Vice store manager conference

risks among employees,” “addressing human rights risks
among customers,” “human rights risks in the supply
chain,” and “creating access to remedies” and arecontinuously implementing due diligence measures. In
November 2022, we established the CSR Procurement
Policy and Guidelines to promote responsible procurementwith our suppliers across the entire supply chain, with due
consideration for human rights.

See page 44

543

Identify andevaluate
risks

400
650

P

D

Prevent andmitigate
negative
impacts

Human Rights Policy

257
4/19

New entrant training (basic etiquette training / specialty
training) / On-the-job training
Follow-up training
Registered salesperson training
Product study seminars, Product merchandising meetings

https://www.ainj.co.jp/upload/humanrights_english_20211201.pdf

Details of the CSR Procurement Policy and Guidelines

1,050

931
339

405

392

Basic training

Respect for human rights

Respect The Company’s human rights responsibilities

Others534

Leadership training

Retail staff

Overview of human rights due diligence

Number of graduates hired

1,000
800
600
400
200
0

*We have established a support system to help acquire
qualifications, such as Training-Certified Pharmacist, Accredited
Pharmacist of Ambulatory Cancer Chemotherapy (APACC), andAccredited Pharmacist of Dementia

FM system

voluntarily embarked on new careers. We also provide
support for employees aiming to acquire specialist
qualifications.

Pharmacists

Seminars on the enhancement of advanced pharmaceuticalmanagement functions
Academic meetings, thesis publication
Support for acquiring external qualifications

Main systems and support*3. 40 nominations(persons)*Provision of tools to support the learning of pharmacists, suchas feedback on pre-avoid activities at pharmacies, distributing of
workbooks (pharmacology, understanding of pathology, dispensingfees) and insurance questions (insurance knowledge), anddistributing drug information, and conducting work knowledge
confirmation tests

4/22

4/23

4/24
(plan)

Remedy Remedy procedures for infringements of human rights

INFORMATIONIn April 2023, a total of 931 new employees joined theGroup, including 543 pharmacists and 346 medical clerical
workers for the dispensing pharmacy business, 36 for thecosmetic and drug store business, and others who joined
other Group companies. Going forward, we will continue
to recruit talented human resources and improve thespecialist skills of our pharmacists to support the Group’s
provision of services to customers and patients as a key
part of local infrastructure.

Leadership (management positions) training

New entrant training (basic etiquette training / medical
clerical work training)
Follow-up training

SUSTAINABILITY

Hiring of new graduates

Basic training

New entrant training (basic etiquette training / basic
competencies training) / On-the-job training
Follow-up training
Distribute learning support content

OJT instructor training New entrant training instructor training
National employee training Supervising pharmacist training
Leadership and followership training
New dispensing pharmacy manager training
Pharmacy manager conference
Field manager (FM) training

Strengthening human resources
For the Group, which continues to actively open new
stores, hiring and developing talented human resources isof the utmost importance. We are also updating our training
programs to further spread the culture of self-learning andto enable each employee to maximize their full potential.
In addition to internal follow-up and grade-based training

Women’s career training

5.2 hours

Overtime*2

Internal appointments system, Career Challenge
We offer job role transfers through an internal appointments
system to provide employees the opportunity to think
about career autonomy and change the course of theircareers. In the fiscal year ended April 2023, 60 employees*Training conducted on a total of eight themes: basic knowledge ofsustainability, corporate philosophy, compliance (corporate ethics),
respect for human rights, information security, employee health(health and productivity management), environment, businesseducation

Senior management training

potential other than assigned positions, we have establishedspecialized career courses, such as professional roles,
and made them known throughout the Company, actively
supporting the diverse careers of employees.

Medical clerical workers

VALUE CREATION STRATEGY

To support the career development of our employees
throughout their lives, employees in the AIN Group have theoption to work from home, choose their working hours andrequest assignments in specific regions. We also started
allowing secondary jobs or concurrent work arrangements,
creating a system that enables employees to tailor work
styles to their specific situations. In addition, in order toincrease employee engagement, we provide opportunities
for one-on-one meetings with superiors and opportunities
to speak directly with officers, in addition to interviews
conducted as part of biannual personnel evaluations.
Through these efforts, we are also focusing on creating anenvironment that enables deeper communication. Moreover,in order to enable talented employees to maximize their fullPharmacists
Basic training

Sustainability training

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 LGBTQ employees.

resources development program. By also linking theskillsets of each employee to grades, and treating thembased on the grade, we are creating a work environmentthat makes it easy for a variety of employees to play anactive role regardless of age or background.

AIN GROUP’S VALUE CREATION

Creating welcoming workplaces
In order to enable each employee, the foundation of ourcompany, to maximize their full potential, we are expanding
our follow-up system that helps employees maintain their
physical and mental health, and carrying out various othermeasures to create a motivating work environment. Going

MESSAGE FROM THE PRESIDENT

Employee engagement survey

Whistleblower line
Complaints process

CSR Procurement Policy

Disclose
information

A

C

Conduct
follow-up
investigations(Compliance hotline, etc.)

34

VALUE CREATION STRATEGYStrengthening Management Capital that Supports Value

Increasing corporate value by promoting
digital transformation

Toshiya Wada
Senior Executive Officer,
Division Manager of Digital Promotion

Related SDGs

Materiality
1

We have begun upgrading our core systems to enable
us to make flexible management decisions. We arecontinuously hiring about 10 digital transformation
personnel per year, and working to develop an environment
for promoting digital transformation.

Reinforce the management baseIn order to secure a stable management base in the rapidly
growing pharmacy business, we have introduced scalable
inventory order and accounting systems. In order to utilize

5

Respond to deregulation
Since the requirements for online pharmaceutical guidancewere relaxed in April 2022, the number of patients whowant to receive online pharmaceutical guidance may wellincrease in the future. As such, our official AIN Pharmacy

We will pursue the provision of added value through digitaltransformation, such as reducing waiting times through theuse of the official AIN Pharmacy app, enhancing safety and56

Ensure soundmanagement
base

Three key aims of the AIN Group’s digital transformation strategy
Revisions to dispensing fees
Revisions to dispensing fees
Shift from an emphasis on dispensing drugs
to one-on-one communication with patients
Wider use of generic drugs
Classification of pharmacies based on functions

Deregulation
Online pharmaceutical guidance
Online eligibility checks

Technological innovation
Deliveries using drones and robots
Use of AI and big data

(online checks of health insurance cards)

Digital prescriptions
Repeat prescriptions

Dispensing pharmacy business

Official AIN Pharmacy app – Anytime AIN Pharmacy

We updated our core system for dispensing drugs. This
enables all stores to mutually gauge inventory in real-time,
and we also expect this to enhance the functionality of
our automatic order system in 2024, thereby leading tofurther improvements in operational efficiency. This has
also enabled the smooth introduction of our systems at thestores that have joined the Group through M&As, enabling
us to swiftly grasp store conditions.

We developed and launched an official app in February
2022 that allows patients to access pharmaceuticalguidance online as well as at our dispensing pharmacies’
physical locations.
In addition to online pharmaceutical guidance, theapp also helps improve patient services, such as giving
them the ability to message or video call pharmacists foradvice and to send prescriptions directly to pharmacies,
reducing waiting times. We are working to further improve
convenience by linking our app with the LINE MINI App,launched in October 2023.

Cosmetic and drug store businessRespond to deregulation

Provide added value

Dispensing pharmacy business
Use automation to increase efficiency ofdispensing operations and ordering and work
shift planning
Upgrade core IT system for dispensing
Distribute pharmacist learning content
Groupwide
Digitize business processes / Introduce
business intelligence (BI) tools
Strengthen security / Reinforce networks
Utilize smart devices
Strengthen internal- and external-facing callcenters (AI + people)

Dispensing pharmacy business
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

Dispensing pharmacy business
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
Cosmetic and drug store business
Leverage official AINZ & TULPE app / Link
to e-commerce channels
Enhance last mile logistics

Branding / Strengthen competitivenessWith the aim of making communication smoother andreducing costs, we introduced cloud-based communication
services linking the head office of the cosmetic and drug
store business and each retail store. This has enabledsmooth communication and spurred information sharing
among stores.
We are also proceeding with the introduction of
automated payment machines and self-checkout registers
at all stores by 2025, and are building a system to enhance
the functionality of our automatic order system.
Groupwide
In addition to overhauling our communication tools andstrengthening security, we introduced a talent management
system by creating a database containing personnel
information.
We are also working to replace our accounting system
in 2024 with the goal of making more flexible management
decisions by having real-time visibility of the cash available.

Official AINZ & TULPE app
In addition to managing the loyalty points and coupons thatcan be used at AINZ & TULPE stores, the app provides
information on sales events and cosmetics, and can also
be linked with the AINZ & TULPE WEBSTORE, thereby
improving customer convenience.
Field manager (FM) system

INFORMATION

Reinforce the management base

Improved service

SUSTAINABILITY

Operating environment

security via the integrated management of patient data,and preventing drug shortages through an automatic ordersystem that utilizes AI.

Concrete results

Improved operational efficiency

Three key aims of the AIN Group’s digitaltransformation strategy

app also supports online pharmaceutical guidance.
We are also quickly responding to progress with digitaltransformation in healthcare, such as digital prescriptions
and online eligibility checks.

4

Contribute to local
healthcare

35

data, a management resource, in real-time, we will step up
digital transformation initiatives by utilizing smart devices
with robust security.

VALUE CREATION STRATEGY

1

Improve profitability

As the themes of digital transformation strategy aimed
at improving operational efficiency and providing added
value, we have set forth “reinforce the management base,”“respond to deregulation,” and “provide added value.”

Provide added value

2

3

Increase corporate value

AIN GROUP’S VALUE CREATIONAs the shift toward digitalization accelerates throughout society, digitaltransformation is also being promoted in the healthcare industry, such as
the introduction of digital prescriptions and online eligibility checks.
In order to respond to the changing needs of our patients andcustomers, the AIN Group will continue to enhance corporate value byfacilitating smooth communication through our app and other means, aswell as improving the operational efficiency of our pharmacies and stores.

MESSAGE FROM THE PRESIDENT

Digital transformation strategy

Following the introduction of the FM system, we
have developed a dashboard dedicated to each FM.
By checking the dashboard, FMs can monitor the
performance of their respective pharmacies in real-time.
This enables them to respond swiftly, thus contributing
meaningfully to the efficiency of pharmacy operations andthe improvement of patient services.

36

VALUE CREATION STRATEGYStrengthening Management Capital that Supports ValueMESSAGE FROM THE PRESIDENT

Financial strategy

Expenditure

Operating cash flows

Digitaltransformation
Shareholder Reinforcing the investments, such
returnfinancial base as strengthening the

Growth investments, such as store openings and M&As
AIN GROUP’S VALUE CREATION

Aiming to enhance corporate
value over the long term by
reinforcing the financial base

IncomeCash allocation

management base andproviding new value

Hideki Fujiwara
Senior Executive Officer, Division
Manager of Operational Support

Related SDGs

Materiality
1

2

5
3

Ensure soundmanagement
base

4

6

Using ample internal reserves to makeaggressive investments

The challenge we face in terms of finance isincreasing both profit margins and ROE while making
upfront investments. In the fiscal year ended April
2023, return on sales came to 2.6% and ROE to
7.5%. Going forward, we aim to increase returnon sales to 3.1 to 4.1% and ROE to around 9 to
12% over the medium term while also focusing onsustainable business continuity, and have also set along-term ROE target of 15%.
N e w s t o re o p e n i n g s c o u p l e d w i t h d i g i t a ltransformation investments that lead to theenhancement of store operations are vital toachieving sustainable growth of the Company. Thesemoves contribute significantly to the provision of
new value to customers, such as through our official
apps, as well as to the visualization of management
indicators in pharmacy and store management, andthe improvement of operational efficiency. Throughdigital transformation promotion, we are also working
to create systems that generate sustainable profits
and reinforce the functions of the head office geared
toward efficiently supporting the growth of humanresources. With regard to digital transformation
investments, rather than seeking short-term results,
we want to improve profitability with an eye on thelong term.
In the Group’s dispensing pharmacy business,in addition to investments in growth strategies,

Medium- to long-term ROE targets

23/4
performance

Medium-termtargets

Long-term
targets

ROE

7.5%

9-12%

15%

(Profitability)
Return on sales

2.6%

3.1-4.1%

4.1%(Asset efficiency)
Total asset
turnover

1.6

1.6

1.6

Financialleverage

1.8x

1.8x

2.3x

INFORMATION

37

Investments for sustainable growthrather than short-term profit

SUSTAINABILITY

The AIN Group’s vision is to be a company thatpeople welcome to their communities. To realize thisvision, AIN Pharmacy needs to be closely connectedto patients as part of local infrastructure, and AINZ& TULPE stores need to be in highly convenient
locations. This means that our store opening
strategies are one of our most important issues.
We have two store opening strategies: organic
openings and the use of M&As. In each strategy,
we are working to reduce the debt risk posed byinvestments by setting clear criteria for opening newstores.
For organic openings, while we have set a target
number of new store openings, the decision to open
a new pharmacy or store is contingent on meetingthe opening criteria, with particular importanceplaced on the period for return on investments. We
regularly hold store strategy meetings attended by
the President and Representative Director, store
development managers, and other persons in charge
to carefully examine targets for new store openings.

In terms of using M&A, in the dispensing pharmacy
business, we have set investment criteria to be apharmacy management company of at least a certain
size that can achieve stable and sustainable operationand to be able to contribute to profits from the fiscal
year following the acquisition using the EV/EBITDA
multiple as an indicator. We are also aggressively
expanding our cosmetic and drug store business. We
invest in retail businesses that have a high affinity withAINZ & TULPE stores and generate a certain level ofsales.
Due to acquisition prices, market trends, andother factors, it is not always possible to reacha mutual agreement on every deal. On the other
hand, while calling for a shareholders’ equity ratioof around 40% as our basic strategy, for the time
being, we are working to secure internal reserves by
setting a shareholders’ equity ratio of at least 50%
as one of our management indicators to enable us tomake immediate and flexible decisions on strategic
investment projects. Thus, creating a solid financialbase.
For company-wide investments, our basic policy
is to make investments within the scope of operating
cash flow. With our operating cash flow at roughly¥20 billion in the fiscal year ended April 2023, wehave been actively making investments geared
toward future growth, including M&As and digitaltransformation initiatives.
Acquiring many companies through M&As iswhat has enabled us to become the Company wesuch as new pharmacy openings and M&As, andin providing new value, it is also important to makeinvestments with a view to ensuring safety, an integral
part of our business. Previously, we also actively
invested in systems that enable the safe delivery ofdrugs to patients. Based on the business foundation
established through these investments, we will fostera corporate culture where field managers (FM), who
are dedicated management personnel, and pharmacy
staff take the initiative and take on new challenges.
This will facilitate the creation of new ideas andinitiatives, giving the AIN Group a competitive edge.
The operating environment for the dispensing
pharmacy business is changing dramatically at
an accelerating pace, fueled by deregulation andthe declining birthrate and aging population. Whilemaintaining healthy finances as a company, we willcontinue to open new stores to respond to thesechanges and enhance store operating capabilities,
thereby fulfilling the role required of pharmacies aspart of local infrastructure. We believe that achieving
continuous and stable business operations will leadto the realization of the Group vision.

VALUE CREATION STRATEGY

5

are today. Post-Merger Integration (PMI) is also an
important indicator used to maximize the synergy
effects of joining the Group. We thus carry out
the integration of head office operations such as
pharmacy operations, sales offices, accounting,administration, and personnel, while effectively
maintaining good communication with them. In
particular, we believe that the integration of systems
is extremely important in improving operational
efficiency.

38

SUSTAINABILITYIn May 2021, to promote sustainability management, the AIN Group disclosed key initiatives, KPIs and targets
for the fiscal year ending April 30, 2026 in each area of materiality. Officers were also assigned to each projectto lead the roll out of measures to achieve the targets.

Key measures

KPI

1. Contribute to local
healthcare
Operate pharmacies that
contribute to healthcarethat treats and supports
people throughout the local
community

We will fulfill the roles
requested and expectedof pharmacies to realize
the proper use of
medicines, and take theinitiative in creating new
mechanisms required bysociety.

Number of certified pharmacies*1• Specialized medical institution
coordination pharmacy• Community coordination
pharmacy
Number of health support
pharmacies*2<Project leader>
Susumu Watanabe

Senior Executive Officer, Deputy
Division Manager of Dispensing
Pharmacy Operations Management

All pharmacies to obtain either
one of the two certifications

Specialized medical institution
coordination pharmacies: 23
Community coordination
pharmacies: 468

Disclose human rights policy
Test rate: 100%
Correct answer rate: 100%

Formulated and disclosed
the human rights policy inDecember 2021
98.2%
87.7%

<Project leader>
Toshihide Mizushima

Promote diversity andinclusion by hiring diverse
personnel and effectively
deploying humanresources.

Kurumin / Platinum
Kurumin certification*9 andEruboshi / Platinum Eruboshi
certification*10
Ratio of female managers*11
Formulate LGBT declaration

Maintain Platinum Kurumin,
Platinum Eruboshi
certification, etc.
Female manager ratio: 40%
Disclose LGBT declaration

Received Kurumin certification /Platinum Kurumin certification /received Eruboshi certification(third level)
35.9%Internal rules on personal
appearance unified for men andwomen

Step up efforts to improve
employee health.

All items needed to receive
outstanding health andproductivity management
organization certification*12

Secure certification (White
500*11)

Received certification as
an Outstanding Health andProductivity Management
Organization for 2023 (large
enterprise category)

Reinforce systems
to protect corporate
information assets andincrease system security;
also establish regulations
and standards andoverhaul the management
framework to ensure
secure system operation.

Number of security incidents

Major security incidents: 0

1*13

Deepen engagementwith various stakeholders
and continually reinforce
board oversight functions.

Board of Directors evaluation
pointsRatio of outside directors
Ratio of female directors

Board of Directors evaluation
pointsAt least 4 or 5 points for all
categories
At least two-fifths of board
At least one-third of board

An average of 4.4 out of 5
points for all categories

Number of community eventsheld

At least four each year at allpharmacies

Held 275 community events

Formulate CSR Procurement
Policy and Guidelines, raiseawareness and implement
them.

Disclose CSR Procurement
Policy and Guidelines
Hold briefings for companies
in supply chain and monitor
implementation

Formulated and disclosed
them in November 2022
Held briefings for companies insupply chain in July 2023

Number of pharmaceuticaldeliveries at participating
pharmacies

Implement at 500 pharmacies
Reduce CO2 emissions fromdeliveries by 75% by cutting
number of deliveries
Reduce delivery inspection
time by 75% by cutting
number of deliveries

Implemented at 49 pharmacies
Achieved reduction of CO2
emissions by 75%

Representative Senior Managing
Director, in charge of Operations
Management, Operational Supportand Digital Promotion

Rieko Kimei

Director, Division Manager of
Personnel
Senior Executive Officer, Division
Manager of Operational Support

Contribute to thesustainability of thesocial security system
by controlling medical
costs through efficientpharmaceutical usage
and healthcare provision.

Number of primary carepharmacists

Deploy primary carepharmacists to all pharmacies

Toshiya Wada

Generic drug usage rate

Maintain usage rate at 85%
or higher at all pharmacies

Deployed primary carepharmacists to 86.2% ofpharmacies
Maintained usage rate at
70.8% of pharmacies

Protect the lives andhealth of employees
and ensure thecontinued provision ofpharmaceuticals andhealthcare services, evenduring natural disasters,
pandemics and othermajor events.

Continually improve BCP
and strengthen execution
capabilities
Ratio of disaster base hospital
pharmacies with emergency
stockpiles

Achieve 100% response rate
for safety verification drills*3
Ensure all pharmacies
supporting disaster basehospitals have stockpiles

Open stores with productranges aligned withretail trends, consumer
needs and local areas toempower people throughbeauty.

Use app to connect withusers and offer more buying
opportunities

Official AINZ & TULPE app

Official AINZ & TULPE app• Number of active users1• Number of active users• Number of page views1.5• Number of page views

50% of manufactured
products

4.6%

original products that help
customers create theirown unique lifestyles.

million / month
million / month

Number of manufactured
clean beauty*4 original brandproducts

Hideki Fujiwara

Senior Executive Officer, Division
Manager of Digital Promotion

95.8%*Conducted in March 2023
[Created evacuation training
manual (stores and head officedivisions)][Conducted evacuation training
in all pharmacies]

331 thousand / month
585 thousand / month

Contribute to society
6. Cooperate with local
through wellness activities
communities andand other initiatives tobusinesses
build mutually beneficial
Promote the creation of a healthy partnerships with local
society and the implementation communities.
sustainability activities together Promote sustainability
with local communities and the across the entire supply
chain by implementing
supply chain
14
CSR procurement* .

Number of issues raised inpharmacy chain*5: 0
All stores*5 with outstanding
ratings*5

Issues raised at 52.2% ofpharmacies
70.0% of stores withoutstanding ratings<Project leader>
Toshihide Mizushima

Representative Senior Managing
Director, in charge of Operations
Management, Operational Supportand Digital Promotion

Work with pharmaceuticalwholesalers to build
systems that reduce
environmental impact.

Susumu Watanabe

Senior Executive Officer, Deputy
Division Manager of Dispensing
Pharmacy Operations Management

Senior Executive Officer, Deputy
Division Manager of Dispensing
Pharmacy Operations Management

4. Protect the environment Identify and reducegas
and reduce environmental greenhouseemissions.
impact<2030 Targets>
Scope 1 and 2*6 CO2emissions
Reduction rate of 30%
compared to the reference
year (fiscal year ending April
2022)

Scope 1: 1.1 (t-CO2, thousand)Scope 2: 18.0 (t-CO2, thousand)Scope 3: 667.9 (t-CO2, thousand)
Reduction rate
• Total: 9.0%
• Emissions per unit ofproduction*7: 19.4%

Pharmaceutical disposal rate

Disposal rate of less than
0.02%

0.06%

Achieved reduction of delivery
inspection time by 75%

Generation; companies with general employer action plans that meet certain standards with respect
to progress versus targets are certified as Parenting Support Companies.
Furthermore, Kurumin-certified companies that implement more far-reaching initiatives receive special
Platinum status from the Minister of Health, Labour and Welfare.
*10 Eruboshi / Platinum Eruboshi certification: A certification system developed by the Ministry of
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 with respect 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
can receive special Platinum status.
*11 Managers: Persons in Subsection Chief, Pharmacy Manager, Store Manager, or higher level positions*12 Outstanding health and productivity management organization: A program administered by 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 andproductivity management are included in the White 500.
*13 We discovered an occurrence of some personal information leakage due to an unauthorized accessto a subsidiary’s website. We are carrying out thorough measures to improve security and working as
a Group to further enhance our monitoring system and prevent reoccurrences.
See the following page for details.
https://www.ainj.co.jp/corporate/assets/upload/news/20230105_newsrelease.pdf (Japanese only)*14 CSR procurement: Responsible, socially- and environmentally-friendly procurement initiatives
conducted by companies in collaboration with their suppliers (business partners and members of the
supply chain)

INFORMATION

Protect the environment
by reducing industrial
waste.

Build processes to ascertain
the Group’s greenhouse gas
emissions*1 Certified pharmacies (specialized medical institution coordination pharmacy / community coordination
pharmacy): A new function-based pharmacy certification system started in August 2021 as part ofrevisions to the Pharmaceuticals and Medical Devices Act.
*2 Health support pharmacies: Pharmacies that meet certain standards set out by the Minister of
Health, Labour and Welfare; pharmacies with basic primary care pharmacists and functions that also
actively help people in the local community to independently maintain and improve their health.
*3 Safety verification drills: Training to confirm the safety of employees and their families and safe
conditions at pharmacies/stores as a matter of priority and to assess support systems to ensure thecontinued viability of medical service provision.
*4 Clean beauty: Safe products that contain ingredients that are kind on the body and skin (mildformulas) and beauty items that contain natural or naturally derived ingredients (organic) andenvironmental ingredients (eco-friendly, cruelty-free).
*5 All pharmacies: All pharmacies in the dispensing pharmacy businessAll stores: Stores in the cosmetic and drug store business
Outstanding stores: Stores with three or fewer categories flagged in internal audits.
*6 Scope 1: Direct greenhouse gas emissions by an enterprise
Scope 2: Indirect emissions from electricity, heat, and steam provided by other companies*7 Calculated in terms of Scope 1 + 2 emissions (t-CO2) / consolidated net sales (¥100 million)*8 Awareness checklist: A checklist administered to all Group officers and employees during
sustainability training conducted once per year. We implemented tests under themes such as
business education, compliance (corporate ethics), human rights, health of employees (health andproductivity management), information security, the environment, etc.
*9 Kurumin / Platinum Kurumin certification: A certification system developed by the Ministry of Health,Labour and Welfare based on the Act for Measures to Support the Development of the Next

One third of board (4 out of 12
members)
One quarter of board (3 out of
12 members)[Conducted employee engagement
survey in August 2022]

SUSTAINABILITY

Internal audit performance<Project leader>
Susumu Watanabe

39

Formulate human rights policy
Develop awareness checklist*8
and set benchmarks for test
rate and correct answer rate

Conducted at 85.2% ofpharmacies

Deliver safety, peace of mind, systems to reinforce
and trust through our day-to- product quality andsafety.
day operations

Senior Executive Officer, Division
Manager of Operational Support

Implement human rights
initiatives.

Number of home-based
services

3. Safety, peace of mind and Continually improve
quality assurance andtrust
safety management<Project leader>
Hideki Fujiwara

5. Ensure soundmanagement baseReinforce soundmanagement base

Health support pharmacies:
171

Executive Officer, Division Manager of
Cosmetic and Drug Store Businessof AIN PHARMACIEZ INC.

Contribute to environmental
protection and reducing
environmental impact

Reports for the fiscal
year ended April 2023

More than 50% of pharmacies
to be certified as healthsupport pharmacies
All pharmacies to conduct atleast 24 cases per year

Provide beauty andhappiness for people toenjoy every day of their lives
Develop innovative andin modern society<Project leader>Tamami Maki

Reports for the fiscal
year ended April 2023

Targets for the fiscal
year ending April 2026

VALUE CREATION STRATEGY

2. Provide beauty andhappiness

Targets for the fiscal
year ending April 2026

KPI

AIN GROUP’S VALUE CREATION

Materiality

Key measures

Materiality

MESSAGE FROM THE PRESIDENT

Materiality Initiatives (Progress vs. KPIs)

40

SUSTAINABILITY

Protecting the environment and reducing environmental impact is one of the AIN Group’s areas of materiality.
To help realize a sustainable society, the Group is actively implementing initiatives related to protecting theenvironment and reducing environmental impact with stakeholders.

Responding to climate change issues

Our Group’s business operations include the operation ofpharmacies and cosmetic and drug stores, generic drug
wholesaling, sales of cosmetics, and operation of retailshops. Of these, all domestic pharmacies in the dispensing
pharmacy business which account for 90% of the Group’s
overall net sales, and all domestic AINZ & TULPE stores in
the cosmetic and drug store business were targeted, and*1 Task Force on Climate-Related Financial Disclosures, establishedby the Financial Stability Board (FSB) at the request of the G20
finance ministers and central bank governors; the task force
published its recommendations in its final report in June 2017.

Scenarios

based on multiple scenarios such as those envisioned by
the Intergovernmental Panel on Climate Change (IPCC)*2,
a broad range of potential climate change-related transitionand physical risks and opportunities were considered. We
have begun analyzing the impact of particularly material
risks and opportunities.

2°C scenario

4°C scenario

SSP1 RCP2.6
IEA SDS

SSP5 RCP8.5
IEA STEPSScope

AIN HOLDINGS INC. and consolidated subsidiaries(All pharmacies in Japan of our dispensing pharmacy business and all AINZ & TULPE stores in Japan of our cosmetic anddrug store business)

Disclosure based on the TCFD recommendations

Period2030 / 2050

Governance*2 An organization established by the World Meteorological Organization (WMO) and the United Nations Environment Programme (UNEP). It is comprised of 195 countries and regions.
The IPCC aims to provide scientific bases to the climate change-related policies of individual countries. It creates reports that summarize the latest scientific findings (published papers)
regarding climate change.

to promote sustainability management across all Group
companies. The committee consists of the President
and Representative Director, who serves as its chair, top
management, the presidents of core Group companies,
and officers in charge of individual divisions. It reports
the contents of its deliberations to the Board of Directors(at least once per year). The Board of Directors decides
on material issues and supervises the activities of thecommittee.

Risk management
The contents of the risk assessment and management
led by the Climate Change Response Team are reported
to the Sustainability Committee, which engages in further
discussion and deliberation, recognizing the report of theteam as the shared understanding of the entire Group.

Strategy
Identified material risks and opportunities
Climate change risks and opportunities may include thoseclassified into transition risks and opportunities arisingfrom the shift to a low-carbon society, and physical risks
and opportunities arising from increasingly severe extreme
climate change events and increases in their frequency,

Policy, regulatory, legal

Transition risks andopportunities

Shifts in markets and technologies
Evaluation

Physical risks andopportunities

UrgentChronic

Details of material risks and opportunities
Increased restrictions on greenhouse gas (GHG) emissions
Other tighter restrictions on energy and resources
Promote energy-saving initiatives and renewable energy programs
Stakeholders (Expectations and concerns about responsible actions)
Changes in attitudes and behavior of customers and patients

In the 2030 +2°C scenario, the promotion of low-carbon
and decarbonization efforts may increase the transition
risks, especially those related to increased restrictions on
greenhouse gas emissions (primarily in the form of carbon
taxes, emissions trading systems, etc.).
Much of the Group’s CO2 (GHG) emissions (Scope 1
and 2) are derived from electricity consumption. Therefore,
additional costs may be incurred from power usage
volume, as well as prices and CO2 emission coefficient,etc. during procurement. However, we have confirmed that
we can prevent such costs from having a major impact on
our finances, business strategies, etc., by minimizing theimpact of carbon taxes and reducing power usage throughenergy saving measures and renewable energy usage.
In the 2030 +4°C scenario, increasingly severe
abnormal weather conditions and changes in climate
patterns (resulting in disasters affecting stores and offices,pandemics, etc.) may create increased physical risks.
We recognize that the role that our Group is expected
to and called on is to protect the lives and health of
its employees and to serve as part of the community’s
infrastructure by providing pharmaceuticals and healthcare
services, no matter what the circumstances. To live up tothese roles, as part of our disaster response measures,
we are enhancing our BCP and making improvements
on an ongoing basis, and carrying out climate change
adaptation measures such as safety reporting drills for all
employees and their family members, evacuation drills andreinforcement of the Group’s logistics. Going forward, we
will continue to further analyze regions and stores at highrisk, and deliberate what further disaster countermeasures
we should take.

If there are epidemics of infectious diseases caused byclimate change, they may affect the dispensing pharmacy
business in areas such as the prescription volume. As
with our natural disaster response measures, we will alsoenhance our systems for providing healthcare services.
In this manner, we believe that we can thereby prevent
such risks from having a major impact on our finances,business strategies, etc., by implementing measuresthat anticipate increased risks. At the same time, we
believe that striving to further strengthen and enhance ourresilience will enable us to continuously provide the medicalcare that is needed by patients, customers, and membersof the community. This will contribute significantly to thedevelopment of our business.

INFORMATION

Key items

rising sea levels, and other long-term changes in climate
patterns. After all of the risks and opportunities related to
the Group were identified, those with particularly significant
impacts were categorized as shown below.

Business impact assessment

SUSTAINABILITYThe Climate Change Response Team, which was createdas a subsidiary body of the Sustainability Committee,
engages in discussions with related divisions and identifies
Group-wide risks (risk assessment) (at least once per year).
The Climate Change Response Team also coordinateswith related divisions to achieve targets by appropriately
managing initiatives, KPIs, progress, and other matters(risk management).

VALUE CREATION STRATEGYWith respect to the climate change issues, to manage
risks, formulate strategies, set targets, and deal withother matters related to the issue of climate change, wehave established a Climate Change Response Team
under the Sustainability Committee. The team’s duties
include gathering and tabulating data and formulating
drafts. The Sustainability Committee then deliberates andfinalizes these drafts. The Sustainability Committee wasestablished with the approval of the Board of Directors

41

Scenario analysis

AIN GROUP’S VALUE CREATION

The issue of climate change is growing more serious each year, and webelieve that it is a material issue that needs to be addressed to realize asustainable society. In April 2022, we announced our endorsement of the
final report of the TCFD*1 (TCFD recommendations) and joined the TCFD
Consortium. We aim to achieve sustainable growth as a company andcontribute to the realization of a sustainable society by identifying risks
and opportunities related to the issue of climate change, evaluating theirimpact on our business through scenario analysis, and implementing
countermeasures.

MESSAGE FROM THE PRESIDENT

Initiatives to Tackle Environmental Issues

Increasingly severe abnormal weather events (Typhoons, torrential rain,other damaging wind and rain)
Pandemics caused by climate change
Changes in rainfall and weather patterns (Increase in averagetemperatures, rising sea levels)
42

SUSTAINABILITY

Indicators and targets
project to reduce the number of pharmaceutical deliveries
to pharmacies.
Going forward, we will continue to enhance ourinformation disclosure based on TCFD recommendations,and formulate business strategies and implement climatechange mitigation and adaptation measures to respond tochanges such as the formulation of climate change-related
policies and legal regulations. We will seek to grow in asustainable way and practice sustainability managementthat creates social, environmental and economic value by
meeting the expectations and requests of our stakeholders
through appropriate responses to climate change issues.

Indicators

6. Cooperate withlocal communities
and businesses
Related SDGs

(Formulated on November 1, 2022)

Trial project to reduce the number of pharmaceutical deliveries to pharmacies
significantly reducing CO 2 emissions derived from fuelusage of delivery vehicles.
Going forward, we will continue to carry out initiatives forestablishing a new sustainable pharmaceutical distribution
model, thereby contributing to the entire healthcare andwholesaling industries.
Outcomes
Conducted at 49 pharmacies

Details of the measures*5

Outcomes

Air conditioner adjustment (optimizing
temperature settings)

Reduced power consumption by
797,454 kWh

Shortening hours when signs are lit

Turning off lighting on some productdisplay racks

Reduced CO2 emissions by 1,456 t-CO2

Eco-friendly driving of company
vehiclesPosting of posters encouraging
employees to conserve power*5 The details of the measures varied depending on the office/store

Since July 2022, we have used blood-pressure gauges
with electrocardiographs to perform measurements for
those who requested it in pharmacies and community event
sites in the Kanto region. Analysis results produced by aspecialized app together with check sheets filled out bypharmacists are used to confirm the risk of atrial fibrillation.
We provide recommendations for further examinations andfeedback to local doctors, etc. as necessary.

“Healthy Heart Day” and “Healthy Heart Week 2023” awareness-raising activities tohelp prevent heart disease and strokes
Use of spaced lighting in
the Head office

Equivalent to the annual
CO2 absorption of roughly
105,000 Japanese cedars

See pages 59-60

https://www.ainj.co.jp/corporate/english/sustainability.html (Information partially available in English)

Between July 29 and August 10, 2023, all AIN Group
pharmacies took part in activities for raising awarenessregarding the prevention of heart disease and strokes.
Awareness-raising posters were put up in pharmacies, andas part of our “Check Your Blood Pressure Campaign,”
pharmacists used check sheets to provide advice
regarding blood pressure according to attributes, andwhen necessary, to recommend medical examinations.
The AIN Group will continue to hold medical andhealth awareness-raising activities and to contribute tomaintaining and improving community health.

INFORMATIONLighting power savings (spacing or
turning off all lights)

Related SDGs

Early stage detection of atrial fibrillation toprevent strokes

SUSTAINABILITY

6. Cooperate withlocal communities
and businesses

shortages in Japan. We further reinforced our own energy
conservation efforts to actively implement energy-saving
and power-saving measures.

1. We will conduct procurement operations based on compliance withapplicable laws and regulations.
2. We will strive to secure and enhance our levels of quality and safety.
3. We will respect human rights and strive to appropriately manage
occupational health and safety.
4. We will maintain the confidentiality of information regarding business partners
learned through the course of our procurement activities, and appropriately
manage and protect the intellectual property of our business partners.
5. We engage in environmentally-friendly procurement activities such asprotecting the global environment and reducing our environmental impact.
6. We consider our business partners to be valuable partners andrespond to them sincerely, and conduct fair, equitable, and transparent
transactions. We build relationships of mutual understanding and trustand strive to create a sustainable society.

Health activities for maintaining and promoting the health of communities
Materiality

Reduce CO2 emissions by 75% by cutting
number of deliveries

Fiscal 2023 winter energy-saving and power-saving activities
Over the four month period from December 1, 2022 toMarch 31, 2023, the national government and powercompanies called for cooperation in reducing energy
consumption against the backdrop of power supply

https://www.ainj.co.jp/corporate/
sustainability/social/business-partners.
html (Japanese only)

AIN Group CSR Procurement Policy

VALUE CREATION STRATEGYThe Policy sets out our clear stance on
promoting CSR procurement across theGroup’s entire supply chain.
The goal of this policy is to foster
greater understanding and adoption of
CSR procurement within the Group and its
business partners to achieve sustainableprocurement.

Initiatives to protect the environment and reduce environmental impact

To reduce the greenhouse gas emissions of othercompanies associated with our Group’s business activities(Scope 3), we are collaborating in a project with othercompanies.
In this trial project, we are leveraging the strengthsof our Group to perform optimized inventory control
for each individual pharmacy with the aim of improving
the operational efficiency of our pharmacies and ourpharmaceutical wholesalers, thereby improving laborproductivity and motivating employees. In addition, weare giving consideration to the global environment by also

In November 2022, based on our Group Code of Conduct and our Human Rights Policy, weformulated the AIN Group CSR Procurement Policy and the AIN Group CSR Procurement Guidelines.
In July 2023, we held briefings for our business partners, requesting their understanding of the needfor a supply chain management and cooperation of the establishment thereof, including our Group’s
sustainability management together with respect for human rights and fair business dealings, whichhave become even more important in recent years. We believe that in bringing about a sustainable
society, it is important to engage in efforts throughout our entire supply chain, not just within the own
Group. We will continue to promote sustainability activities together with our business partners.

AIN Group CSR Procurement Policy
30%*4*3 Reduction rate compared to the reference year (fiscal 2022)*4 Rate of conversion of energy consumption to renewable sources to total power consumed compared to the reference year (fiscal 2022)

43

Materiality

Reduce Scope 1 and 2 CO2 (GHG) emissions
by 30%*3

Appropriately set targets and implement initiatives for achieving carbon neutrality
Rate of conversion of energy consumption to renewable sources

Environmental initiatives

Formulating the CSR Procurement Policy and Guidelines, and holding briefings for business partners

Our vision: Fiscal 2031 targets

Assess Group-wide CO2 (GHG) emissions and establish an operation system capable ofappropriate management and supervision
Scope 1 and 2 CO2 (GHG) emissions
Scope 3 CO2 (GHG) emissions

ESG data (greenhouse gas (CO2) emissions)

The AIN Group is creating social value through its 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 theevent of natural disasters and co-working with local governments and other partners.

AIN GROUP’S VALUE CREATION

We have decided to work actively toward the realization ofcarbon neutrality (net-zero CO2 (GHG) emissions (Scope 1
and 2) from our own business activities) by 2050. To thisend, we have selected CO2 (GHG) emissions and the rateof conversion of energy consumption to renewable sources
as evaluation indicators of our climate change response
measures. Furthermore, we have set as our targets for2030 a 30% reduction in CO2 (GHG) emissions (Scope 1
and 2) compared to fiscal 2022 and a rate of conversionof energy consumption to renewable sources of 30%.
With respect to reducing Scope 3 emissions, the Group is
working with pharmaceutical wholesale partners on a trial

MESSAGE FROM THE PRESIDENT

Initiatives to Tackle Social Issues

44

SUSTAINABILITY

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

Outside directors and outside corporate auditors
The Board of Directors is comprised of eleven members,
including four outside directors. Two of the Company’s
three corporate auditors are outside corporate auditors.

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.

Name

Noriko Endo
OutsideTo achieve that, we adopted the corporate auditor
system to oversee major business decisions andbusiness execution, as well as all other areas of corporate
management.

Number of directors
Chairman of the Board of
Corporate Auditors
Number of corporate auditors
Board of Directors meetings(Attendance of outside directors)
Board of Corporate Auditors
meetings (Attendance of outside
corporate auditors)
Voluntary advisory committee of
the Board of Directors
Executive officer system

Corporate Auditor System
Kiichi Ohtani (President andRepresentative Director)
11 (including 4 outside directors)*1
Standing corporate auditor Koichi
Kawamura
3 (including 2 outside corporate
auditors)*1
Number of meetings: 11 (92.5%)*2
Number of meetings: 12 (100 %)*2

Ratio of independent
outside directors on the
Board of Directors

Ratio of female directors
on the Board of Directors

36%

36%

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

Ratio of outside directors
on the Nomination andRemuneration Committee

Hideki Kuriyama

67%

Name

Suggestion

Appointment / Dismissal

Nomination andRemuneration Committee

Board of Corporate
Auditors

Appointment / Dismissal

Representative Directors

Reporting
Audit

Divisions

Reporting
Audit

Group Companies

45

Business execution

Internal Audit Office

Reporting

Guidance

Mr. Muramatsu possesses abundant specialist knowledge regarding financial affairs gained from his
experience as a director of a major securities firm. He 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, financial affairs, and important matters in the cosmetic and drug store business.

Selection and dismissal of directors, nomination of corporate auditors

Cooperation

ReportingManagement Meeting

Mr. Ibayashi possesses abundant specialist knowledge regarding financial affairs gained from his experience
as a director of a financial institution and a corporate auditor. He 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, financial affairs and important matters related to legal affairs and risk
management.

When appointing directors, the Board of Directors
endeavors to give due consideration to diversity bytaking into account a broad range of factors, such as theindividual’s balance of capabilities covering each function
and business of the Group, and the need to have the right
person in the right position to ensure accurate and rapid
decision-making.
To enhance fairness, transparency and objectivity inprocedures for appointing and dismissing directors andfor deciding on executive remuneration, the Company
has established the Nomination and Remuneration
Committee as an advisory body for the Board of Directors.
This committee discusses succession plans, executive
remuneration system, and other matters. Over half ofthe members of the Nomination and Remuneration
Committee are independent outside directors to ensure theindependence of the committee and enable it to provide
accurate advice and recommendations.
Corporate auditor candidates are nominated basedon 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 expertise in 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, with the consent of the Board of Corporate
Auditors.

INFORMATION

Sustainability
Committee

Board of Managing
Directors

Independent

Activities / Reason for the appointment

Audit

Executive Officers
Compliance
Committee

Independent

Osamu Muramatsu
OutsideAccounting Auditors

Audit

Outside Directors
Appointment

Mr. Kuriyama possesses broad knowledge in organizational governance and human resources development,
having served as the manager of a professional baseball team and Japan’s national team, as well as aprofessor in the economics faculty of a university. He proficiently fulfills his role in the effective supervision of
the Group’s business by actively providing opinions and recommendations from a professional perspective
regarding important matters related to legal affairs, risk management, and sustainability management.

SUSTAINABILITY

General Meeting of Shareholders

Appointment

Akira Ibayashi
OutsideBoard of Directors

Independent

Mr. Yamazoe has abundant knowledge on management based on his experience as the director of a major
trading company. He also has expertise knowledge gained from his experience as a CEO in charge of electricand plant of said company group, and is also well-versed in overseas management. He proficiently fulfills hisrole in the effective supervision of the Group’s business by actively providing opinions and recommendations
from a professional perspective regarding business strategy, financial affairs and important matters in thecosmetic and drug store business. As a member of the Nomination and Remuneration Committee, he is also
involved in discussions regarding officer development and the scope of executive remuneration, and provides
appropriate supervision of the Group’s corporate governance.

Outside corporate auditor activities and reason for the appointment

67%

Corporate governance structure

Appointment

Outside[78% (7/9)]

Mr. Ito has abundant knowledge on management as a representative director of a major retailer, and on ESG(Environment, Social and Governance) and Sustainability as a Chief Sustainability Officer of the retailer incharge of promoting sustainability throughout the entire value chain. He also has broad knowledge regarding
risk management, accounting and finance, social marketing, and 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 mattersin the cosmetic and drug store business.

*Fiscal year ended April 2023

As of November 30, 2023

Appointment /Dismissal

Independent[100% (9/9)]*2 Fiscal year ended April 2023

Appointment / Dismissal

Independent

Shigeru Yamazoe
OutsideNomination and Remuneration
Committee
Yes*1 As of November 30, 2023

OutsideMs. Endo has extensive knowledge gained from experience in the editing department of an economics
magazine in charge of various fields including retail and distribution sectors. She is also well-versed inenergy and environmental issues, having conducted public policy research on energy policy. In addition, shepossesses deep knowledge of corporate management in telecommunications, railroad, department store andother businesses from her experience as an outside director at other listed companies, and proficiently fulfills
her role in the effective supervision of the Group’s business by actively providing opinions and suggestions
from different perspectives in discussions about business strategy, board resolutions and other topics. Asa member of the Nomination and Remuneration Committee, she is also involved in discussions regarding
officer development and the scope of executive remuneration, and provides appropriate supervision of theGroup’s corporate governance.

VALUE CREATION STRATEGY

Chairman of the Board

Junro Ito[91% (10/11)]

Outline of corporate governanceCorporate governance structure

Independent[100% (11/11)]

Activities / Reason for the appointment

AIN GROUP’S VALUE CREATION

https://www.ainj.co.jp/corporate/assets/upload/20231128_corporategovernance_english.pdf

As a Group that operates pharmacy business and a chainof cosmetic and 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 the highest priority on compliance.

There are no conflicts of interest between the Company
and its outside directors and outside corporate auditors.
The activities of the outside officers and the reasons fortheir appointment are indicated below.

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

Please see here for more details about our Corporate Governance Report.

Basic policy on corporate governance

MESSAGE FROM THE PRESIDENT

Corporate Governance46

SUSTAINABILITY

Skill matrix

MESSAGE FROM THE PRESIDENT

Remuneration for directors and corporate auditors
Main skills

GenderName

Position /Responsibilities

Attributes Management
experience

Finance

Legal affair
and riskmanagement

Sustainable
management

Dispensing
pharmacybusiness

Cosmetic anddrug store
business

Male

Shoichi Shudo

Representative Senior
Managing Director

MaleToshihide Mizushima Managing Director

FemaleMiya Oishi

Representative Senior
Managing Director

FemaleRieko Kimei

Director

Male

Nobuyuki Takakura

Director

Newly
appointed

FemaleKaori Ishikawa

Director

Newly
appointed

FemaleNoriko Endo

Director

Outside /Independent

Policy for determining monthly remuneration

Representative Senior

Junro Ito

Director

Male

Shigeru Yamazoe

Director

Outside /Independent

Male

Hideki Kuriyama

Director

Outside /Independent

Male

Koichi Kawamura

Corporate Auditor

Male

Akira Ibayashi

Corporate Auditor

Outside /Independent

Male

Osamu Muramatsu

Corporate Auditor

Outside /Independent

Monetary remuneration (remuneration other than thoselinked to earnings performance and non-monetarycompensation) consists of fixed monthly basic remuneration.
The amount of basic remuneration is determined based ona number of criteria, including the position, responsibilities,
and tenure of the individual, as well as the balance ofcompensation relative to employee remuneration, trends atother companies in the industry and past remuneration.

Policy for determining bonuses

Evaluating the effectiveness of the Board of Directors“3. Average” in all categories. The results show that theCompany’s Board of Directors is generally fulfilling its duties
in an effective manner. However, the survey identified theneed for further improvement in some areas of discussion,
such as more detailed explanations about businessstrategies and on-site efforts to improve the Company’sbusiness value, as well as supplementary information
about the industry operating environment and other topics.

Non-monetary compensation for directors is restricted
stock. Each year up to a total of ¥50 million in monetarycompensation claims may be granted to directors inaccordance with standard amounts determined by their

Policy for determining details of individual compensation
The Nomination and Remuneration Committee prepares
proposals on the amount of compensation for eachindividual, including the range of monthly compensation foreach position, details of earnings performance and otherevaluation metrics for bonuses, and the amount of nonmonetary compensation for each position. After approvalby the Board of Directors, the President is responsible formaking final decisions on compensation within the scope ofthe details approved by the Board.
To enhance fairness, transparency and objectivity inprocesses for determining remuneration for directors, amajority of Nomination and Remuneration Committee
members are independent outside directors and thecommittee adheres to the above policies governing
remuneration for directors and other personnel.
Remuneration by category of director and corporate auditor(fiscal 2023)

Category

Total
remuneration(¥ million)

Remuneration by type (¥ million)
Basic
remuneration

Bonus

Nonmonetary
remuneration

Numberof eligible
individuals

Directors (excluding
outside directors)

214

151

41

21

8

Corporate Auditors(excluding outside
corporate auditors)

7

7

0

—

1

Outside directors

19

19

—

—

5

Outside corporate
auditors

12

12

—

—

2

Cross-shareholdings, etc.

Succession plans
experience through roles in corporate management andbusiness operations as directors or executive officers in the
Company itself or in Group companies.
Candidates are evaluated based on the requirementsof the position, and then the outside directors on the
Nomination and Remuneration Committee conduct
interviews as appropriate to get a better picture of
the candidates. The Human Resources Development
Committee discusses regarding the candidates, and whennecessary, revises requirements and processes and adds
or drops candidates. The Nomination and Remuneration
Committee discusses final candidates and reports to theBoard of Directors.

The Company holds shares for reasons other than pureinvestment purposes (cross-shareholdings). Crossshareholdings include the stocks of companies that offer
potential mutual benefits, such as business alliances related
to the Company’s operations or business relationships thatneed to be maintained and reinforced, and the stocks ofcompanies that the Company requires to maintain links withlocal communities.
In principle, the Company seeks to keep the value ofcross-shareholdings at less than 5% of total assets on
the consolidated balance sheets. If the value of crossshareholdings 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 for holding the shares is appropriate, whether
benefits and risks are commensurate with the cost ofcapital, and if there are more effective uses of funds, which

informs decisions on whether to continue holding the sharesor reduce holdings through share disposals or other means.
With respect to the exercise of voting rights for crossshareholdings, the Company emphasizes dialogue withinvestees 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.

INFORMATIONThe Nomination and Remuneration Committee engages
in discussions regarding the required character of the nextpresident. The Human Resources Development Committee
then selects candidates and formulates and implements
development plans. The Nomination and Remuneration
Committee supervises and evaluates the status of thecandidate development.
The required characteristics of the next president
include focusing on realizing the enhancement of businessvalue over the medium and long term, possessing
business operation abilities and experience, possessing
deep knowledge regarding areas such as finance, andhaving a sincere personality. Multiple candidates are
selected and trained by providing them with concrete

Policy for determining non-monetary 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, theoperating environment, and trends at other companies.
Outside directors receive only monthly remuneration.

SUSTAINABILITY

To improve the effectiveness of the Board of the Directors,
the board asks each director to participate in an annual
self-appraisal survey that assesses board performance in
17 categories on a scale of one to five (5: Highly positive,
4: Slightly positive, 3: Average, 2: Slightly negative, and 1:
Highly negative), and asks all corporate auditors to provide
their own evaluations, using the same question surveys. In
the fiscal 2023 survey, inside directors, outside directors
and all corporate auditors gave the board marks above

Bonuses are determined based on a range of factors,
including consolidated operating profit and ROE foreach fiscal year, the individual’s contribution to tacklingenvironmental and social issues for each fiscal year andother value that does not directly appear in financial metrics,
as well as dividends, the balance of bonuses relative tothose paid to employees, trends at other companies in theindustry and previous bonus payments.

Breakdown of compensation

VALUE CREATION STRATEGY

Male

Outside /Independent

position and level of responsibility. Common stock isallocated to the claims as contributions in kind. The numberof shares of common stock to be allocated as restricted
stock compensation shall not exceed 50,000 each year.

AIN GROUP’S VALUE CREATION

Kiichi Ohtani

President andRepresentative Director /Chairman of the Boardof Directors / Chairmanof the Nomination andRemuneration Committee

To ensure the Group fulfills its social role and responsibilities
by contributing to local healthcare 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 fixedmonthly remuneration component in accordance with eachrole and its responsibilities, a bonus linked to earnings
performance to enhance the transparency and objectivity of
the remuneration determination process and to provide work
incentives, and a non-monetary compensation component
to foster greater awareness of sustainable growth from theperspective of shareholders.
However, the remuneration system for outside directors
is set up to reflect their role and responsibilities in overseeing
the Company’s management from an independent andobjective standpoint.

Male

47

Basic policy

Number of company stocks held and consolidated balance
sheet value (As of April 30, 2023)
Number ofcompanies

Total value on consolidated balance
sheets (¥ million)

Unlisted

17

1,243

Listed8568

Category

48

SUSTAINABILITY

Internal Control / Compliance

Risk management promotion system
The Internal Audit Office conducts field audits to check
whether risk management rules are being strictly observed
and to assess the effectiveness of risk management
systems.
In addition, to ensure the AIN Group continues tooperate during times of crisis, we have formulated aGroup business continuity plan (BCP), which is actively
disseminated to officers and employees.

In accordance with the AIN Group’s Code of Conduct, our 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 that they 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 andregulations, the Articles of Incorporation, and internal rules.
As an independent body, the Company’s Board of Corporate Auditors is responsible for establishing andoperating the internal 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 with laws, regulations, and the Articles of Incorporation by the Group’s officers and employees.

AIN GROUP’S VALUE CREATIONThe AIN Group has formulated Risk Management
Regulations and Risk Management Guidelines that
establish the risk management framework for the wholeGroup. Departments are assigned to manage eachcategory of risk, ensuring a comprehensive and exhaustive
approach to risk management.
The Risk Management Office is in charge of risk mattersand is responsible for issues and measures related to theimplementation of risk management across the Group.

MESSAGE FROM THE PRESIDENT

Risk Management

Business Continuity Management (BCM) drill
Whistleblowing system
Furthermore, separate evacuation manuals wereprepared for specific models, based on the tsunami
occurrences resulting from the geographical conditionsat individual stores. In November 2022, model-specificevacuation drills were conducted in all stores other thanthose located within commercial facilities.
Going forward, we will continue to conduct training
on a regular basis to live up to our role as part of theinfrastructure of local communities by ensuring business
continuity even in the event of a disaster, while also
securing the safety of our employees.

Laws andregulations

Dispensing
pharmacy openingsand demand trends

Formulate investment standards that reflect trends inother companies
Reinforce coordination with medical institutions

Roughly a month after completely addressing
the issue, a check is performed to confirm that
there has been no retaliation

Promote Groupwide digital transformation, including
healthcare digital transformation
Reinforce information security

Securing humanresources

Shortages of personnel such as pharmacists that are essential forbusiness strategies

Risks of lossof trust in the
Company

Medical accidents due to dispensing errors
Accidents such as leaks of personal information

Actively hire and train new pharmacist graduates
Establish a training system for the high-levelprofessional personnel
Introduction of flexible working hours
Create in-house dispensing operation manuals andimplement ongoing training system
Introduce dispensing error prevention system
Establish Safety Policy Office dedicated to dispensing
error prevention measures
Reinforce personal information protection system andperform thorough employee training

Reception policy
Whistleblower confidentiality
Even if whistleblowers report under their real name, their requests forprivacy are strictly observed.

Management Office
Report results

Compliance Committee (investigates and considers responses)

Reporting of results and follow-up regarding retaliation
The results of the investigation are reported to the whistleblower, androughly a month after completely addressing the issue, the whistleblower
will be contacted to confirm that there has been no retaliation.

Corruption prevention activities
Bribery and corruption in corporate activities not only
impede fair business dealings but can also serve as sourcesof funding for antisocial forces. Therefore, regulations inboth Japan and overseas are being strengthened in recent
years against bribery and corruption. To further strengthensuch bribery and corruption prevention activities, we haveformulated the AIN Group Anti-Bribery and Anti-Corruption
Policy, which applies to all Group companies.

Furthermore, every year we conduct compliancetraining, including anti-corruption training, for all officers
and employees.
We will continue to strive to maintain high ethicalstandards and engage in sensible and ethical corporate
activities.

INFORMATION

Changes in business environment due to rapid digitalization
Leakage of sensitive information due to cybercrime, etc.

Insufficient returns on investments from M&A deals
Fluctuations in interest rates and other trends in financial markets
Reduction in prescription volume and customer footfall due tospread of infectious diseases resulting in stay-at-home requests
Changes in customer activity areas and trends in purchasing
behavior
Human harm and physical damage caused by large-scale natural
disasters
Increase in costs due to addressing transitions to a low-carbon society
Human harm and physical damage caused by increasingly frequentand intense wind and flood damage resulting from climate change

Report investigation
results and company
responses

ReportReportDigital transformationand information
security

Climate change

Report results

SUSTAINABILITY

Our response policies
Prepare systems and implement training to ensure
thorough compliance with laws and regulations onpharmaceutical affairs
Increase pharmacy capabilities by training higher-level
personnel

Thorough sharing of information in order to understandreasons for revisions and respond appropriately
Train personnel that can appropriately execute
pharmacy functions

Natural disasters

49

Details of risks
Orders from the authorities to halt business activities or the
revocation of operating licenses, etc. due to legal or regulatory
violations
Deregulation of pharmaceutical sales, leading to market entrants
from other industries, etc.
Success or failure of the dispensing pharmacy opening strategy
including M&A, and trends in dispensing pharmacy openings atcompetitors
Trends in prescriptions from medical institutions which are hard toforecast, and the temporary closure or exit of medical institutions
from the market
Changes in prescription volume due to seasonal epidemic situation
Changes in earnings structure due to revisions to the medical
treatment fee system, etc.

Outbreak ofinfectious diseases

Whistleblower (AIN Group employee)

Third-party reception of whistleblowing reports

Revisions to the
medical insurance
systemInterest rate risks

harassment. To protect the privacy of whistleblowers andto make it easier for people to report issues, we haveentrusted the operation of the whistleblower contact point
to an external third-party organization.

AIN Group compliance hotline

Report issues

Key risks and countermeasures

Key risks

We have set up a whistleblower contact point (compliancehotline) that employees can make reports if they discoverany violations of laws, regulations, contracts, or our Codeof Conduct, or if they experience or witness workplace

VALUE CREATION STRATEGYIn June 2023, we conducted a disaster response
headquarters drill for the massive earthquake scenario
assumed by the national government. Teams in theGroup-wide disaster response headquarters at the head
office and the local disaster response headquarters in
the affected location (the local site office) confirmed theactions necessary for checking the safety of employees,
injured persons, and disaster damage conditions instores, implementing measures for restoring operations,securing routes for supplying necessary supplies andpharmaceuticals to disaster-struck areas, and dispatchingsupport personnel to disaster-stricken areas.

Invest within cash flow boundaries
Thoroughly implement measures to prevent the
spread of infection and continue to perform ourdispensing operations as our social responsibility
Reinforce and make ongoing improvements to BCP
Reinforce BCP and perform training on an ongoingbasis
Enhance efforts to deal with climate change issues
50

SUSTAINABILITY

As the company of choice forthe society

Looking toward the future evolutionof the AIN Group

Noriko Endo

Junro Ito

Independent Outside Director
Member of the Nomination andRemuneration Committee

Independent Outside Director

The effectiveness and transparency
that the society demands of ourgovernanceThe business environment is expected to undergo
continued dramatic changes in the future. In theface of these changes, we must make even moreagile business decisions and maintain even more
effectiveness and transparency in our governance. To
leverage the strengths of the AIN Group and for us tocontinue to be the company of choice for the society,I will provide recommendations and advice based on
my own experience and insights.

Further increasing the corporate valueof the AIN GroupIn the digitalized society, which was further
accelerated by the COVID-19 pandemic, it has
become clear that managing risks related to
information assets is an important foundation ofsustainable corporate growth. I have actively provided
input and recommendations based on the knowledge
and experience I have acquired through my work
as an economics magazine editor and my public
policy research, especially those on energy policies
and risk & security governance. Going forward, I willcontinue to strive to supervise appropriate decisionmaking and business execution to further increase
the corporate value of the AIN Group.

I have experience in a great number of retail sites,
both in Japan and overseas, as the representative
director of a global retailer. This year marks my fifth
year as an outside director in the Company since myappointment in July 2019. On the Board of Directors,
each director appropriately fulfills their own respectiveroles under the powerful leadership of President
Ohtani. We outside directors also actively participate
in Board discussions. We also rapidly deal withissues identified in evaluations of the effectiveness of
the Board of Directors. Even amidst the COVID-19
pandemic, we steadily made progress in identifying
material issues and addressing compliance with
the Corporate Governance Code. We have thereby
achieved steadfast, continuous evolution in a truly
short amount of time.
The AIN Group also has many female directors.
The fact that one third of our directors are womenhelps motivate many of our female employees, andI believe that this is a wonderful achievement fromthe perspective of diversity and inclusion, as well.
We have also publicly disclosed our Human Rights
Policy, and while placing great confidence in the
Board as a representative of our shareholders, I havebeen providing appropriate input and advice in thediscussions of the Board of Directors during the past
four years.

Exploring various alliances in a quest
for further growth
I expect that alliances with members of the
distribution industry such as us will be effective
going forward for the AIN Group to achieve further
growth. The pharmacy industry is one with many
restrictions, but I would like the Group to explore thepossibilities of new partnerships to differentiate itself
from competitors while maintaining its position as anindustry-leading company.

Offering the training programs
required of a retailer
I have always insisted to those around me that oneof the valuable assets of a retailer are employees thatgive their all for customers. In 2012, the AIN Group
formulated its corporate philosophy as the GroupStatement and issued every employee a copy of
the AIN BOOK, which contains the Group’s various
guidelines. It is my wish that we expand the bordersof our business while further establishing the GroupSlogan “Holding beautiful will,” which is set forth in
the Group Statement. I am confident that this will
provide a foundation that will support the future of the
AIN Group.

INFORMATION

Five years have passed since I was appointed an
outside director. Our Board of Directors consists
of officers with highly varied backgrounds, and
we engage in vigorous discussions led by outside
directors and outside corporate auditors. The
Nomination and Remuneration Committee, to which
I was appointed as a member last year, has also
discussed how to enhance our human capital andwhat approach to take in our successor plans.
The behavioral changes in society brought
about by the spread of COVID-19 have also had aprofound impact on the AIN Group’s business. The
Board of Directors system is structured in a mannerthat ensures each of its execution and supervisionfunctions operate effectively, so that we can makeagile business decisions to respond promptly tochanges in the business environment. We havealso made changes to our store operation system
to reinforce our existing business by introducing afield manager system. We have employed digitaltransformation, such as app development, forboth our dispensing pharmacy and cosmetic anddrug store businesses. One of the features of ourgovernance is that these measures are reported
as appropriate to the Board of Directors andadjustments can be made to our orientation anddirection, as necessary.
The expansion of our cosmetic and drug store
business into the Malaysian market was a highly
challenging project due to the country’s uniqueregulations. However, the Board of Directors engaged

Steadily evolving governance

SUSTAINABILITY

in thorough discussions regarding risks and measuresin advance, and we continued to receive detailed
reports after entering this new market.

VALUE CREATION STRATEGY

A Board of Directors that engages invigorous discussions led by outside
directors

AIN GROUP’S VALUE CREATION51

MESSAGE FROM THE PRESIDENT

Message from Outside Directors

52

SUSTAINABILITY

Board of Directors and Corporate Auditors (As of November 30, 2023)

Rieko Kimei

Noriko Endo

President and Representative
Director
3,238 thousand shares

Director,
Division Manager of Personnel
6 thousand shares

Director
0 thousand shares

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)

December 1995 Joined Daiichi Medical Testing Laboratories Co.,
Ltd., Sapporo (now AIN HOLDINGS INC.)
May 2003
Department Manager of Merchandise, Cosmetic
and Drug Store Business of the Company
May 2004
Department Manager of Personnel, Administration Division
May 2009
Division Manager of Cosmetic and Drug Store Business and Department Manager
of Merchandise
August 2009
Executive Officer
May 2013
Responsible for Personnel
July 2014
Director (current post)
September 2015 Vice President and Representative Director of AYURA LABORATORIES 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)

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)
April 2020
Specially Appointed Professor of Keio University Global Research Institute(current post)
Outside Director of Techpoint, Inc. (current post)
March 2021
June 2021
Outside Director of Japan Elevator Service Holdings Co., Ltd. (current post)
June 2022
Outside Member of the Board of NIPPON TELEGRAPH AND TELEPHONECORPORATION (current post)

Shoichi Shudo
Representative Senior Managing
Directorin charge of Store Development
9 thousand shares

Toshihide Mizushima
Representative Senior Managing
Directorin charge of Operations Management,
Operational Support and Digital
Promotion
27 thousand shares

Miya Oishi
Representative Senior Managing
Director
7 thousand shares*Figures marked with

October 1985

OutsideIndependent

Joined Seven-Eleven Japan Co., Ltd.
Director, Executive Officer and Senior Officer of the
Corporate Development Department of Seven andi Holdings Co., Ltd.
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 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.
July 2019
Outside Director of the Company (current post)
April 2023
Senior Managing Executive Officer, Representative Director (current post), Chief
Sustainability Officer, General Manager of the ESG Development Division andSupervising Officer of Superstore operation (current post) of Seven and i Holdings
Co., Ltd.
August 1990
May 2009

Shigeru Yamazoe
Kaori Ishikawa
Director,
Division Manager of Cosmetic andDrug Store Operations Management
1 thousand shares Newly appointed
February 2007 Joined the Company
November 2015 Department Manager of Cosmetic and Drug Store Operating, Operations
Management Division
Division Manager of Cosmetic and Drug Store Business of AIN PHARMACIEZ INC.
May 2018
Executive Officer of the Company
Director of AIN PHARMACIEZ INC. (current post)
May 2019
Division Manager of Cosmetic and Drug Store Operations Management of theCompany (current post)
May 2022
President and Representative Director of AYURA LABORATORIES INC.
(current post)
July 2023
Director of the Company (current post)

Director- thousand shares
April 1978
April 2006
April 2009

June 2010
April 2012
April 2015
April 2018
June 2018
April 2019
April 2020
August 2020
July 2022

July 1997
April 2000
May 2003
April 2005
July 2012

Joined Daiichi Medical Testing Laboratories Co.,
Ltd., Sapporo (now AIN HOLDINGS INC.)
Deputy Department Manager of Accounting of theCompany
Corporate Auditor
Managing Director and Department Manager of Accounting of AIN MEDICALSYSTEMS 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)

Akira Ibayashi
Corporate Auditor- thousand shares Outside

Junro Ito
Director- thousand shares

May 1995

OutsideIndependent

Joined Marubeni Corporation
Executive Officer and COO of Power Projects
DivisionManaging 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, and Chief Executive Officer
of Power Projects & Plant Group
Vice Chairman and Member of the Board
Outside Director of Fujitec Co., Ltd.
Outside Audit & Supervisory Committee Member of Mizuho Capital Partners Co.,
Ltd. (now MCP Partners Co., Ltd.)
Chairman of Marubeni Power & Infrastructure Systems Corporation
Outside Director and Audit and Supervisory Committee Member of Bewith, Inc.
(current post)
Outside Director of the Company (current post)

April 1968
June 1992
April 1995
June 1995
June 1999
June 2000
June 2001
June 2003
June 2003
June 2005
June 2009
June 2011
July 2012

Independent

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

Osamu Muramatsu
Corporate Auditor- thousand shares Outside

Independent

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- thousand shares

OutsideINFORMATION

Director of DAICHIKU Co., Ltd. (current post)
Managing Director
President and Representative Director
Vice President and Representative Director of AIN MEDICAL SYSTEMS Inc.
(now AIN HOLDINGS INC.)
February 2012 President and Representative Director
July 2012
Director and Deputy Department Manager of Dispensing Pharmacy Business of theCompany
July 2014
Managing Director
November 2015 Division Manager of Operations Management
President and Representative Director of AIN PHARMACIEZ INC.
May 2019
In charge of Dispensing Pharmacy Operations Management of the Company
July 2021
Division Manager of Dispensing Pharmacy Operations Management
May 2023
Director of AIN PHARMACIEZ INC. (current post)
July 2023
Representative Senior Managing Director of the Company (current post)
July 1993
May 2007
July 2008
April 2011

Joined Ministry of Health and Welfare (now Ministryof Health, Labour and Welfare)
July 2009
Deputy Assistant Minister for International Affairs, Minister’s Secretariat of Ministryof Health, Labour and Welfare
July 2010
Deputy Director General, Minister’s Secretariat of Ministry of Internal Affairs andCommunications (In charge of Public Enterprise)
July 2011
Assistant Commissioner of the Fire and Disaster Management Agency
September 2012 Councilor for Pension Service, Minister’s Secretariat of Ministry of Health, Labourand Welfare
July 2013
Retired from Ministry of Health, Labour and Welfare
October 2013
Senior Adviser of TEIJIN LIMITED
April 2014
Teijin Group Corporate Officer, Deputy Chief Social Responsibility Officer
April 2016
Teijin Group Corporate Officer, Chief Social Responsibility Officer, responsible for
Corporate Auditing Department, and responsible for utilization of factory sites
April 2017
Teijin Group Corporate Officer, in charge of CSR, and responsible for Corporate
Auditing Department
April 2019
Senior Adviser (part-time)
April 2020
Adviser of the Company
July 2020
Senior Managing Director of AIN PHARMACIEZ INC. (current post)
July 2023
Director in charge of Risk Management of the Company (current post)
April 1981

Corporate Auditor
5 thousand shares

SUSTAINABILITY

Joined Ohtani Corporation (now AIN HOLDINGS INC.)
Department Manager of Drug Store, Cosmetic and Drug Store Business of theCompany
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 chargeof Operations Management and Operational Support
July 2018
In charge of Operations Management, Operational Support and Information
Technology Management
May 2020
In charge of Operations Management, Operational Support and Digital Promotion(current post)
April 1986
May 2000

Directorin charge of Risk Management
1 thousand shares Newly appointed

Independent

VALUE CREATION STRATEGY

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)
November 2023 President and Representative Director of AIN PHARMACIEZ INC. (current post)
March 1982

Nobuyuki Takakura

OutsideKoichi Kawamura

AIN GROUP’S VALUE CREATION

Kiichi Ohtani

July 1980

53

Corporate Auditor

MESSAGE FROM THE PRESIDENT

Board of Directors

Independent

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
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)show the number of AIN HOLDINGS shares held as of April 30, 2023.

54

INFORMATION

Differences in national healthcare policy and other factors mean Japan’s pharmacies are different to pharmacies
in the US and other countries. The following is the main characteristics of Japan’s pharmacies.

Operating environment
A range of measures to reform and deregulate thepharmacy 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.

Market size
market remains fragmented, with the top five companies
accounting for a combined market share of only 14.4%.
While the market has matured, deregulation such as online
pharmaceutical guidance and a new pharmacy certification
scheme are likely to lead to wider gaps in performance
between dispensing pharmacy companies. The AIN Groupaims to increase market share by responding to thesechanges in the operating environment.

2020

2021

Pharmacy market value (left scale)Non-hospital dispensing ratio (right scale)

Ratio of elderly people (right scale)

April 2020

September 2020

Conditions eased temporarily
as part of response to
COVID-19

76.6%

Digital drug prescriptions

April 2021

January 2023~

October 2021
Start of full
implementation
phase

Start of digital drug prescriptions
Patient medication notebook app is linked to
My Number ID portal

Repeat prescriptions
80

April 2022

29.0%

20.8%

11.5%
11.0%

40

20

1989 1990

1995

2000

2005

2010

2015

2020

2022 (April to 0
March
year)

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

Market structure
Top 5
major
companies

14.4%

Reception

51 or more healthinsurance pharmacies

10 or fewer healthinsurance
pharmacies

33.6%

52.4%

33.6%

Others accountfor 66% of
the market

11-50 healthinsurance pharmacies*Top 5 major companies: The AIN Group, NIHON CHOUZAI Co., Ltd., WELCIAHOLDINGS CO., LTD., SAKURA PHARMACY GROUP,
MatsukiyoCocokara & Co.
Source: DRUG Magazine (August 2023) and Trends in Dispensing Pharmaceutical
Expenditure released by the Ministry of Health, Labour and Welfare.

Source: AIN HOLDINGS estimates

Small andmedium size
pharmacies
account for
52% ofthe market

14.0%

Single pharmacy
Prescription
inspection

If outside contracting
becomes possible

Drug gathering andunit-dose packaging

Final
inspection

Pharmaceuticalguidance

Final

Pharmaceuticalguidance

Patients

Outside contracting of drug dispensing
by pharmacy
Reduce personnel costs by improving
labor efficiency, integration with online
pharmaceutical guidance services outside
pharmacies, etc.

Process for requesting pharmacy

Prescription
inspection
Convey prescription contents,
Drug gathering andrequest drug gathering andunit-dose packaging
Reception

unit-dose packaging

Top 50major
companies

66.4%

Current state

Outside contracting

Send back to requesting pharmacy inspection

Confirmation of drugs(performed by machines)

Delivery instructions for customer

Patients

The growing role of pharmacies
The role of pharmacies is shifting from a focus ondispensing drugs to one-on-one communication withpatients. They are also being asked to play a greater role inlocal healthcare. The provision of high-quality services andcloser coordination with medical institutions, in line with the

SUSTAINABILITY

OthersCurrently, a single pharmacy is responsible for providing their customers with everything from reception operations,
including gathering prescribed drugs and separating them into unit-dose packages, to pharmaceutical guidance.
If outside contracting becomes possible, requesting pharmacies will no longer need to handle the gathering ofprescribed drugs and the packing of drugs in unit-dose packages, thereby allowing reduction of personnel costs andminimization of inventory sizes for requesting pharmacies.

VALUE CREATION STRATEGY

60

4.75

0.47

vision for patient-focused pharmacies being promoted by
the Ministry of Health, Labour and Welfare, is expected tomitigate dispensing risks and lead to better collaboration inadvanced healthcare services.

Vision for patient-focused pharmacies
Health support functions

Advanced pharmaceutical management functions

Disease prevention and health support

Responding to advanced pharmaceutical management needs

Primary care pharmacists and pharmacies

Continuous checking of side-effects and efficacy
Prevention of over-prescription, double medicationand drug interactions

Japan

US

Medical insurance (patient cost)

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

76.6% (fiscal 2023: April 2022 to March 2023)

100%

Drug prescriptions

RepeatRepeatDrug prices

Set by the government (revised regularly)

hard copy / patient data

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

24-hour services and home-based
healthcare

INFORMATION

Integrated, continuous monitoring of drug
usage data

Difference between Japan and US

55

Online eligibility checks

Introduced with medical
treatment fees revisions

56.0%

6

0

Revisions to Pharmaceuticals
and Medical Devices Act
allows online pharmaceuticalguidance regardless oftreatment or medication type

7.88

8

2

Future possibilities

100

10

4

2023

April 2022

Revisions to Pharmaceuticals
and Medical Devices Act
allowed patients to receive
pharmaceutical guidance via
video phone, etc.

Start of preimplementation
phase

(%)

12

2022

Online pharmaceutical guidance services

Market size(¥ trillion)

In the face of these developments, we will continue toprovide high-quality services by actively promoting digitaltransformation.

AIN GROUP’S VALUE CREATION

Barriers to entry are high in Japan’s 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 pharmacy market was worth roughly ¥7.9
trillion in fiscal 2023 (April 2022 to March 2023), but the

MESSAGE FROM THE PRESIDENT

Characteristics of Japan’s Pharmacy Sector

Nighttime, public holiday and home-based healthcare

Advice about medications and health
Recommendation for receiving treatments in medical
institutions

Dispensing drugs

56

INFORMATIONBusiness environment surrounding the
AIN Group

Dispensing pharmacy business

Other businesses

We are striving to provide the functions of primary carepharmacists and pharmacies by coordinating with medical
institutions, using patient medication notebooks and thelike to centrally and continuously manage prescription
information, and providing home-based healthcare.
Through these efforts, we are enabling patients to receive
medical care in their familiar local community with peace ofmind.
In advance of the launch of the digital drug prescription
management service by the Ministry of Health, Labourand Welfare (MHLW) in January 2023, the AIN Groupparticipated in the MHLW-led digital drug prescription
model project, which started at the end of October 2022,with the aim of establishing its own operation processes
and implementing pioneering measures, collecting
successful case examples, and formulating guidelines.
The Group is currently making gradual improvements to its
operating environment to support the use of digital drugprescriptions in all of the Group’s pharmacies nationwide.
Going forward, we will continue to respond to changes
in the environment and work to ensure that customers
feel secure and will always be able to continue receivingprescription drug treatment.
With respect to business development, new pharmacy
openings and the growth of pharmacies opened during
the previous fiscal year, including the acquisition in May
2022 of the approximately 100 pharmacies operated by
Pharmacy Holdings Co. Ltd., contributed to the Group’s
consolidated business results for the fiscal year underreview. The Group will continue to target further businessexpansion through a pharmacy opening strategy ofNet sales from other businesses declined 9.0% year on
year to ¥11,540 million, and reported segment profit of¥282 million, compared with a segment loss of ¥146
million in the previous fiscal year.

Financial position
The balance of total assets at the end of the fiscal year
under review increased ¥19,288 million from the end of
the previous fiscal year to ¥231,750 million. This mainlyreflected increases in goodwill and merchandise, etc. dueto new pharmacy and store openings, including M&As.
The balance of liabilities at the end of the fiscal year
under review increased by ¥11,753 million to ¥105,204
million.
The balance of short- term and long-term borrowings
increased by ¥233 million to ¥8,691 million.
Total net assets increased by ¥7,535 million to¥126,546 million and the shareholders’ equity ratio
decreased 1.4 percentage points to 54.6%. Also, return on
assets (ROA) rose by 0.8 percentage points to 4.2% fromthe previous fiscal year, while return on equity (ROE) roseby 1.5 percentage point to 7.5%.

Basic policies for profit distribution

Cash flows
In the fiscal year under review, cash and cash equivalents
decreased ¥13,252 million year on year to ¥46,217 million.
Cash flows from each category and their relevant
factors are as follows.

Cash flows from operating activities
Net cash provided by operating activities was ¥20,267
million, compared with net cash provided of ¥26,156
million in the previous fiscal year.
The main items that were positive for cash flow were
profit before income taxes of ¥15,882 million, as well as
depreciation of ¥5,529 million and amortization of goodwillof ¥4,310 million related to business expansion throughnew store openings and M&A.
The main items negative for cash flow was income
taxes paid of ¥7,897 million and increase in inventories of¥4,948 million.

Cash flows from investing activities
Net cash used in investing activities was ¥22,292 million,
compared with net cash used of ¥13,943 million in theprevious fiscal year.
This mainly reflected payments of ¥14,614 million forpurchases of shares in subsidiaries resulting in change inscope of consolidation related to shares acquired in ninecompanies through M&A deals, and ¥9,549 million forpurchases of property, plant and equipment related to the
opening of new cosmetic and drug stores and pharmacies.

Cash flows from financing activities

INFORMATION

57

Although the effects of the COVID-19 pandemic continue,
the Group reviewed its original brands and promoted
efforts to optimize costs. Activity restrictions were eased
during the fiscal year under review, leading to a steadyrise in customer numbers, and cost optimization efforts
proved successful. Through these efforts, the Group wasable to restore the cosmetic and drug store business to
profitability.
As a result, for the fiscal year under review, the cosmetic
and drug store business reported net sales of ¥25,685
million, up 24.9% year on year, and segment profit of¥1,214 million, compared with a segment loss of ¥1,764
million in the previous fiscal year.
During the fiscal year under review, the Group opened
eight AINZ & TULPE stores and closed eight stores,
resulting in a total of 78 cosmetic and drug stores at theend of the fiscal year.

SUSTAINABILITY

During the fiscal year under review (May 1, 2022 to April
30, 2023), the COVID-19 pandemic continued to have an
impact on the Japanese economy, but there were signs ofa moderate pickup due to an easing in mobility restrictions
and other factors. However, the outlook remains uncertain
amid rising prices and fluctuations in financial and capital
markets.
In this economic environment, the Group rigorously
implemented measures to prevent the spread of COVID-19
and worked to provide healthcare and retail services.
To help solve various social issues through its businessactivities, AIN HOLDINGS aims to be a company that“people welcome to their communities.”
We have identified six issues material to the AIN Group(materiality): “Contribute to local healthcare,” “Provide
beauty and happiness,” “Safety, peace of mind and trust,”“Protect the environment and reduce environmental
impact,” “Ensure sound management base,” and“Cooperate with local communities and businesses.” We
have also publicly disclosed KPIs and fiscal 2026 targets
for initiatives in each area of materiality.
In July 2022, the Group organized and set four disclosure
items recommended by the final report of the TCFD anddisclosed them on its website. In September 2022, as partof efforts to enhance communication with stakeholders, theGroup published a new Integrated Report with information
on measures to increase value over the medium and longterm, including specific measures for materiality, human

Cosmetic and drug store businessbasic policy is to repay investors proportionately to profits
generated, and to maintain payments at stable levels.
Internal reserves are held to strengthen the corporate
structure and in preparation for new store openings andfuture development of the business. We will make effective
use of these funds to generate profits to be returned toshareholders 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
dividend of ¥60 per share, equating to a dividend payout
ratio of 22.8% (down 4.5 percentage points from theprevious fiscal year). For the fiscal year ending April 30,
2024, the Company intends to pay a full-year dividend of¥60 per share.

VALUE CREATION STRATEGYBusiness overview for the fiscal year

Business results by segment

actively opening large pharmacies and using M&A deals
that emphasize investment returns, while also improving
pharmacy operating efficiency.
As a result, for the fiscal year under review, thedispensing pharmacy business reported net sales of¥321,577 million, up 13.6% year on year, and segment
profit of ¥24,135 million, down 3.8%.
During the fiscal year, the Group opened a total of
141 pharmacies, closed 24 pharmacies and sold sevenpharmacies, resulting in a total of 1,209 pharmacies.

AIN GROUP’S VALUE CREATIONThe core business of the AIN Group (the Group) is thedispensing pharmacy business that includes preparing
and dispensing drugs based on prescriptions. Earnings at
pharmacies are largely determined by dispensing fees anddrug 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
and pharmacies with advanced primary care functions will
be certified as community coordination pharmacies. The
gap in performance between companies in the sector iswidening due to this new certification system, as well asother developments in the operating environment such asa relaxation of the criteria governing online pharmaceuticalguidance.
Seeing these developments as an opportunity, theGroup has been making preparations to adapt to any
changes ahead, aiming to ensure sustained growth while
also helping to solve issues faced by society.

resources strategies and digital transformation strategies.
In November 2022, the Group formulated the CSR
Procurement Policy and Guidelines in order to “Cooperatewith local communities and businesses.” The Group also
signed the United Nations Global Compact and joined the
UN Global Compact Network Japan.
In March 2023, for the third consecutive year since2021, the Group received certification as an Outstanding
Health and Productivity Management Organization for2023 (large enterprise category) under a program run by
Nippon Kenko Kaigi that recognizes leading companies inhealth and productivity management. From the standpointof human capital management, and also as part of ourefforts to “Ensure sound management base,” we will
work to improve the health of employees to reduce thestaff turnover rate and lift productivity by harnessing theperformance of every employee.
Going forward, by implementing a range of measures,
the Group will work to realize sustainability management
in order to generate sustainable growth and create social,environment and economic value.
For the fiscal year under review, net sales rose 13.4%
year on year to ¥358,742 million, operating profit increased
5.7% to ¥16,004 million, ordinary profit increased 6.4% to¥17,064 million and profit attributable to owners of parent
increased 30.2% year on year to ¥9,234 million.

MESSAGE FROM THE PRESIDENTManagement’s Discussion and Analysis of Financial
Condition and Results of Operations

Net cash used in financing activities was ¥11,237 million,
compared with net cash used in ¥7,753 million in theprevious fiscal year.
The main items were net repayment of ¥9,038 million
from short-term and long-term borrowings repayment andproceeds, and ¥1,932 million for cash dividends paid.

T h e C o m p a n y c o n s i d e r s t h e re t u r n o f p ro f i t s t oshareholders as an important management issue. Our

58

INFORMATION(¥ million)

4/20134/20144/20154/20164/20174/20184/20194/20204/20214/2022

4/2023

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

358,742
37,69416,004
17,064
9,234
14,756
5,529

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

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

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

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

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

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

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

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

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

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

126,450
126,546
231,750
35,130,024
1,209

61

59

56

52

52

48

54

63

69

78

78

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

262.873,599.47
60.0

4,765

4,495

4,245

5,340

7,720

7,300

8,840

6,030

6,070

5,840

5,640

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

4.5
2.6
4.2
7.5
54.6

Note:
Amounts of less than one million yen wererounded down.
*1: Equity capital =Total net assets – Non-controlling interests*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 impact of thestock 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

VALUE CREATION STRATEGY

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

AIN GROUP’S VALUE CREATION

For the year:
Net sales
Selling, general and administrative expenses
Operating profit
Ordinary profit
Profit attributable to owners of parent
Capital expenditures
Depreciation
At the end of the year:
Equity capital*1
Total net assets
Total assets
Number of shares outstanding (shares)
Number of pharmacies: Dispensing pharmacy business
Number of AINZ & TULPE stores: Cosmetic and drug store
business
Per share information (¥):
Earnings*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

MESSAGE FROM THE PRESIDENT

11-year Financial and Non-financial Summary

ESG Data
4/20214/20234/2021

https://www.ainj.co.jp/corporate/sustainability/environment/protection.html#policy
—
0
0

—
—
—
—
—
—
—

21.1
1.0
20.0
556.7
399.1
373.9
6.0

19.2
1.1
18.0
667.9
426.9
402.1
3.7

—

670

540

—

0.05

0.06

https://www.ainj.co.jp/upload/humanrights_english_20211201.pdf
13,0652,448
10,617
5,477
70
1,018
613
33.5
5.2
4.5
60.8

13,0092,467
10,542
5,768
36
999
660
33.6
6.9
5.7
82.4

14,147
2,671
11,476
6,331
39
931
543
36.2
8.2
7.0
57.6

81.4
32.6
27.3
14.3

82.5
34.0
26.3
19.2

81.7
35.9
21.7
17.6

SocialEmployees using maternity/paternity leave
Employees using childcare leave
Employees with reduced hours for childcare
Average training hours per full-time employee (hours)
Average training cost per full-time employee (¥)
Health and Productivity Management
Health and Productivity Management Declaration
Yes (Japanese only)
Average monthly overtime per employee (hours)
Occupational accident frequency rate (%)
Other
Full-time employee average annual compensation (¥ thousand)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 Auditors
Number of corporate auditors
Outside corporate auditors
Number of meetings
Average attendance for outside corporate auditors (%)
Executive Remuneration
Director and corporate auditor remuneration (¥million)
Inside directors (¥million)
Inside corporate auditors (¥million)
Outside directors (¥million)
Outside corporate auditors (¥million)
Nomination and Remuneration Committee
Number of meetings (Average attendance %)Sustainability Committee
Number of meetings (Average attendance %)4/2022
351
640
875
—
—

4/2023
432
657
1,008
26
13,126

396
648
1,081
22
34,127https://www.ainj.co.jp/corporate/sustainability/social/employees/health-management.html#basic
3.9
4.7
5.2
—
0.37
0.00
4,484

4,398

4,409

12
4
3
25
11
100
100

12
4
3
25
11
97.7
100

12
4
3
25
11
92.5
100

3
2
13
100

3
2
13
100

3
2
12
100

213
175
7
18
12

218
180
7
18
12

253
214
7
19
12

2 (100)4 (100)3 (100)3 (98.1)

3 (91.2)

2 (97.2)

INFORMATION

59

4/2022SUSTAINABILITY

Environment
Environmental protection action plan Yes (Japanese only)
Number of environmental infringements
Environmental data
CO2 emissions
Scope 1 and 2 (t-CO2, thousand)Scope 1 (t-CO2, thousand)Scope 2 (t-CO2, thousand)Scope 3 (t-CO2, thousand)Total energy use (TJ)
Electricity use (TJ)
Hot and cold water use (TJ)
CO2 emissions per unit of production (Scope 1 + Scope 2)(t / million yen *net sales)
Other
Pharmaceutical disposal rate (%)
SocialHuman Rights Policy
Yes
Employment: Human resources activity
Total employees
MaleFemalePharmacists
Non-Japanese employees
Number of graduates hired
Pharmacists
Full-time employees average age
Full-time employees turnover rate (%)
Pharmacists (%)
Proportion of employees continuing work after mandatory retirement age (%)
Human resources utilization / training
Eruboshi certification
Yes Third level – highest level of certification
Platinum Kurumin certification Yes
Ratio of female graduate recruitment (%)
Ratio of female managers (%)
Executive officers (%)
Directors (%)

60

AIN
GROUP’S APPROACH
INFORMATION

External Evaluations

Investor Information (As of April 30, 2023)

Corporate nameHead office

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

EstablishedGroup Statement

August 1969

Number of shares outstanding

Mizuho Trust & Banking Co., Ltd.

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

35,428,212 shares(including treasury stock)

Number of shareholders
16,221

Securities code number

Selected for inclusion in an index composed of Japanese companies that
demonstrate outstanding environmental, social and governance (ESG)
performance in their respective sectors*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
an evaluation by independent assessors. The FTSE Blossom Japan Sector Relative Index is widely used to create andevaluate sustainable investment funds and other financial products.

• MSCI Japan Empowering Women (WIN) Select Index

9627

Selected for empowering women and scoring highly for gender diversity fromconstituents of the MSCI Japan IMI Top 500 Index

Fiscal year
May 1 to April 30 of the following year

Ordinarymeeting ofare happy and motivated.
We
are committed
to ensuring
ourgeneralemployees¥21,894,970
thousandshareholders
WeNumberwantofthe
AIN Group to Julybe a workplace where employees seek
employees
14,147
recordout
new challenges
to grow Date
andofdevelop,
dedicating themselves to(consolidated)(including part-timers)
April 30
improving
the health and happinesscustomers.
(The Company willof
announceother
Business lines
dates
as
and
when
required.)
Planning, management andOurgoal is to be a leading corporate group that constantly embraces
operation of the corporate Group,
Major shareholders
focused on pharmacy and cosmeticchange.

A company that can take pride and joy in this statement is what the AIN Group endeavors to be.
Like Audrey Hepburn, who captivated the world as an actress, lived as a mother and an independent woman, anddevoted her later years to being a Goodwill Ambassador for the United Nations International Children’s Emergency
Fund (UNICEF).
We aspire to be a company where each employee holds a beautiful will, supporting people withNumber
love andhope.
ofShareholders

shares held
(thousandshares)Shareholding
ratio (%)

First, we must be a company that values its employees. And be a rewarding place to work.
Only when these requirements are met can we do our best for our customers.
The Master
Trust Bankfirst”
of Japan.
Ltd ultimate(Trust account)
3,411
9.71
Our management philosophy holds that “putting
employees
is theform of “putting customers
first.”
Kiichi
Ohtani3,238
9.22
This message expresses our strong will to aim and continuously live up to the name and reality of being a leading
Seven
&
i
Holdings
Co.,
Ltd.
2,750
7.83
group for our customers, employees, and all stakeholders.
1,743

4.96

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

1,594

4.54

The Hokkaido Bank, Ltd.

1,472

4.19

Custody Bank of Japan, Ltd. (Trust account)

1,257

3.58

STATE STREET BANK AND TRUST COMPANY 505103

1,168

3.33

JP MORGAN CHASE BANK 385151

978

2.79

THE BANK OF NEW YORK MELLON 140044

713

2.03

*Morningstar, Inc., and/or its affiliated companies (individually and collectively, “Morningstar”) have authorized AIN
HOLDINGS INC. to use the Morningstar Japan ex-REIT Gender Diversity Tilt Logo (“Logo”) to reflect the fact that, forthe designated ranking year, AIN HOLDINGS INC. ranks in the top quintile of companies comprising the Morningstar
Japan ex-REIT Gender Diversity Tilt Index (“Index”) on the issue of gender diversity in the workplace. Morningstar
has authorized the use of the Logo by AIN HOLDINGS INC. solely for the purposes of providing information. AINHOLDINGS INC.’s use of the Logo should not be interpreted as an endorsement by Morningstar of AIN HOLDINGS
INC. or as a recommendation, offer or solicitation to purchase, sell or underwrite any security associated with AINHOLDINGS INC. Although the Index is designed to reflect gender diversity in the workplace in Japan, Morningstar
does not guarantee the accuracy, completeness or timeliness of the Index or any data included therein. Morningstar
makes no express or implied warranties regarding the Index or the Logo, and expressly disclaim all warranties ofmerchantability or fitness for a particular purpose or use with respect to the Index, any data included therein or the
Logo. Without limiting any of the foregoing, in no event shall Morningstar or any of its third party content providers have
any liability for any damage (whether direct or indirect), arising from use or reliance on the Index or the Logo by any
party concerned, even if Morningstar is notified of the possibility of such damage. The Morningstar’s name, Index nameand the Logo are the trademarks or services marks of Morningstar, Inc. Past performance is no guarantee of future
results.

Evaluation of Health and Productivity Management, Diversity, etc.
• Health and Productivity Management

Selected as an Outstanding Health and Productivity Management Organizationfor 2023• Eruboshi Certification

Certified at the third level (highest level) for outstanding support for women’s
participation and career advancement in the workplace• Platinum Kurumin Certification

Received the Platinum Kurumin Certification as a company that provides
exceptional childcare support. The Platinum Kurumin is a certification that isawarded to Kurumin certified companies that provide childcare support at aneven higher standard.

Participation in the initiative• United Nations Global Compact

The world’s largest initiative for establishing a healthy global society. Signatorycompanies and organizations are required to affirm its Ten Principles related toprotecting human rights, eliminating unfair labour, responses to the environment,
and anti-corruption, and to continuously strive to practice these principles. The
Group has signed the United Nations Global Compact.

INFORMATION

Notes:1. Shareholding ratios are calculated excluding 298,188 treasury shares.
2. Shares held in the Retirement Benefit Trust managed by Mizuho Trust & Banking Co., Ltd. (Marubeni Corporationaccount) are part of Marubeni Corporation’s retirement benefit trust.
3. Large shareholding reports (change reports) available for public inspection as of March 9, 2023, indicated that
Sprucegrove Investment Management Ltd. held 4,060 thousand shares (11.46% stock ownership) as of March
6, 2023. However, as the Company was unable to confirm the number of shares actually held as of the endof the fiscal year under review, the above information regarding major shareholders is based on the number ofshares indicated in the shareholder registry.

Selected as a company that has strong gender diversity policies embedded
in its corporate culture and that ensures equal opportunities to employees,
irrespective of their gender.

SUSTAINABILITY

North Pacific Bank, Ltd.

• Morningstar Japan ex-REIT Gender Diversity Tilt Index

VALUE CREATION STRATEGY

and drug store operations, genericdrug wholesaling, sales of cosmetics,
and operationof retailand and feelings of all the people we encounter.
Connecting
closely
with shops,
the thoughts
the Group’s other businesses*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 orservice marks of MSCI or its affiliates.

AIN GROUP’S VALUE CREATION

Paid-in capital• FTSE Blossom Japan Sector Relative Index

Transfer agent

Holding beautiful will.
AIN HOLDINGS INC.

Inclusion in ESG indexes

Stock information

MESSAGE FROM THE PRESIDENT

Group Slogan
Corporatedata• TCFD

Endorsed the final report of the TCFD (TCFD recommendations) and joined the
TCFD Consortium

0161

62