Management Philosophy

At CL GROUP, we pursue the material and intellectual growthof all our employees and will continue to contribute to theadvancement of society through sound business activities.
For the CL Group, our most valuable assets are our people. Our business is people, and it is ourpeople who have supported the growth of the Group.

Integrated Report 2023

Continuing to produce many talented employees makes it possible to create not only valuablebusinesses but also a valuable company.
This leads to a better society.
Everything begins with developing our people. That is the starting point for our philosophy.
That is precisely why we pursue “the material and intellectual growth of all our employees.”
It is because all employees are able to develop their humanity and skills through their daily workand achieve material happiness (economic stability and affluence) and mental happiness (psycho-

Tokyo, Minato Ward, Minami Aoyama 2 chome, 26-1

logical richness as a person—that is, a reason for living and fulfillment), that we are able to pro-

D-LIFE PLACE MINAMIAOYAMA 11f & 12f

vide products and services that delight our customers.

Contact: Corporate Planning Office

We are able to promote sound business activities.

ir@legs.co.jp
We believe that by doing this, we will generate innovation and find solutions to social problems,

https://www.clholdings.co.jp/

which will make the daily lives of all related people happier, even if only slightly, and that we cancontinue to bring a smile to the faces of even more people and create greater pleasure.

Group Policy

We have gathered several strengths
into one strong group.
CONTENTS
Growth and the Future of CL GroupCL Group Strategy
22

Sustainability

25

Corporate Governance27

Compliance28

Dialogue: Engaging in Human
Capital Management in a Bid to
Realize Our Management Philosophy
Directors and Auditors/
Executive Officers
Corporate Outline/Glossary/
Stock Information

1

Our Growth2

At a Glance

4

Top Message

8

Risks, Opportunities, andMaterial Issues

16

Growth Strategy

10

Process of Value Creation

19

Financial Strategies

12

Discussion: The Future of the CL
Group & IP Content Business

20

Financial and Non-Financial
Highlights

14
15

ESG of CL GroupThe Future Created by the
Ex-Tainment BusinessSpecial Feature: Providing customer
experience value in entertainment
through theme cafes

30
32

Printed in Japan

CL Holdings Inc. Integrated Report 2023

O u r G rowth
Prog ress inorgan izationa lca pab ility
Weathering historic trouble (1)Sales/profits increase for
13 consecutive years!

Trouble with an IP* content
collaborative product

The path w e have wa l ke d,re c orde d a s it wa s .

A certain number of products were found tohave strength defects. All products wererecalled, booking a one-time loss. It provided
an opportunity to shift away from operations
centered on individual duties. Part of thistransition included acquiring ISO 9001 (quality
management)
certification.

A JASDAQ l ist i ng ca m e i n 2001 . I t was
l i ke a drea m to b e a pu b l icly t ra ded
co m pa ny. The fou nders’ sent i m ents w ere,
“Even if w e a ren’t g reat gen i uses, w e haveconv ict ion. We got th is fa r by wor ki ng
ha rder tha n the rest.”Thre e peo p l e rente d a n a pa rt m e nt i n Ha raj u k u (To kyo) in 1986 a n d
sta rted th e b us in ess, the n , Uc h i ka wa so le ly esta b l ish ed LEG SCOMPA N Y, LTD . i n 1 9 88. I t wa s a n o ld b u i ld i n g w ith a tinybath ro o m. Alth o u g h the i r ta le nts w e re fa i r ly ave ra ge, th e fou nd ers’
en ergy ma d e th em sta n d o ut.

Going forward, we aimfor 100 billion yen!

The year it happened: 2006.

A ch ieve d

15 b i l l ion yen
in conso l idate dsa l es in 2 01 9 .

A ch ieve d

3 5 b i l l ion yen* IP: intellectual property

in conso l idate dreve nue in 2 02 3 .

re

y he

In 1997 , th e staff ha d q u ickly
rea ch ed 5 0 em p l oyees.
Net sa l es were over

3 b il l io n ye n,n,a p l easa nt su rprise, w ith
ex pa n d ing b us in ess as wel l .

(Billions of yen)

over
d rec

I n 2 02 1 , esta b l is he d LT R. inc
to fu rthe r ex pa nd the the m ecafe b us i n ess

pe

a
V-sh

Net sales

7

CD G Co. , Ltd. be ca m e a n
e qu ity - m ethod affil iate throug ha te nde r offe r in 2 02 0.

6
5
4
3
2
1
0

Weathering historic trouble (2)
1988

1990

1995

2000

2005

After listing, sales and profits decreased for three years.
During this difficult period, the entire company was reformed
around the slogan of “3 Changes” addressing the “market,”“products,” and “management.” A rapid recovery was achieved.

1 98 6

1988

1991

1996

Without any specific techniques,
work is completed with the spiritof “Do it. Can do it. Try.”

LEGS COMPANY, LTD. was established in Tokyo for the purposes of
product planning, development,
manufacturing, and sales.

Established SIP Company, Ltd. inTokyo as a subsidiary for marketing
planning and design.
SIP was founded with three people
in Nakamura SN2 (a two-story
house with rent of 500,000 yen).

Green Building 3F, 1996-98 /50 employees /Sales of 3 billion yen

LEGS was founded in a modest
building, room 201, with rent of
only 168,000 yen.

2001

Three Difficult Years

Public listing on JASDAQ
5 important points discovered before
public listing(1) Principles are
everything(4) Value your wayof thinking(2) Work harderthan others(5) Figures areimportant(3) Make patterns

Esta b l is he d e l CO CO . inc
w ith the a im of deve l op ing
ow n- bra nd products , ma in ly
fig u res a nd p l us h toys , bothdo m est ica l ly a nd ove rsea s .

The years it happened:
2016–2017.

An issue with theme
cafe inventory
Soon after launching the theme
cafe business, issues occurredwith inventory shortages andsurpluses. We adopted a reservation system and strove to continually improve operations, which
gradually optimized inventory
and led to increased sales and abetter profit margin.

2004

J a n ua ry 2 0 0 8

2009

2012

Feb rua ry 20152020

J a n ua ry 2022

A ugust 2022

ISO 14001 (environmental)
certification acquired

ISO 9001 (quality management) certification acquired

Acquired shares of M&I Co.,
Ltd. and made it a subsidiary

CDG Co., Ltd. became an equity-method
affiliate through a tender offer

Established elCOCO.inc, a joint
venture with Design COCO Ltd.

O cto b er 2 0 0 8

2011• CDG Co., Ltd. became a consolidated subsidiary byadoption of International Financial ReportingStandards (IFRS).

2005

Established LEGS (SHANGHAI)
TRADING COMPANY, LTD.
in Shanghai, China

Established LEGS (SHANGHAI)
ADVERTISING COMPANY,
LTD. in Shanghai, China

Established LEGS(SHENZHEN)TRADINGCOMPANY, LTD. in
Shenzhen, China

Listed on the second
section of the Tokyo
Stock Exchange

J u n e 2015

Invested in MEDIAFLAG Inc. a marketing support business for stores

2006
PrivacyMark acquired

CL Holdings Inc.

Liste d on the first se ct ionof the Toky o S tock
Excha ng e in 2 01 5.

Efforts to ta ckle
the overseas
ma r ket sta rtedi n 2008.

Strengthen ing o u r
consu mer b usiness
fo u ndation

I n 2 02 2 , t ra ns it ion e d to aho l d ing co m pa ny st r uctu re

Listed on the first section of the Tokyo Stock
Exchange

2021
Established LTR.inc, a joint venture withTransit General Office Inc.

• LEGS COMPANY, LTD. changed its corporate nameto CL Holdings Inc. and shifted to a holding company structure.

Octob er 2023

Moved to the TSE Standard
marketA pri l 2022
Transitioned to Prime Market in Tokyo Stock
Exchange
CL Holdings Inc. Integrated Report 2023

At a Glance
Products and Services

Markets Targeted by the CL Group

Markets Being Entered Overseas

The Group offers a variety of products and services utilizing IP content. We are currently developing Ex-Tainment
services (product sales and premium services [retail distribution]) and promotion services (premium services [manu-

Advertising market*1

Entertainment content market

Total approx.
7.1 trillion yen/2022

IP content licensing business and product commercialization markets, and other copyright markets*4

Total approx. 2.5 trillion yen/2022

PR market

Corporate sales promotion support market*3

Total approx.
500 billion yen/2022

Products and Services

Ex-Tainment*
marketIP content business product commercialization rights market*5

Total approx.
1.3 trillion yen/2021

Product sales market*1 Quoted from Advertising Expenditures in Japan 2022 (DENTSU INC.).
*2 A coined word that combines the words experience and entertainment and refers to the customer experience value in entertainment.
*3 Under certain assumptions calculated based on in-house research.
*4*5 Quoted from Character Business 2022 (Yano Research Institute Ltd.).

Merchandising

Premium Services(Retail Distribution)

The markets in which the CL Group operates include the advertising, product sales, and entertainment content markets. However, there are twoother markets—the marketing support market (promotional market) and the entertainment merchandising market, which is the goods market for
IP content—and it is the area in which these two markets overlap, which is known as the Ex-Tainment market, that we have defined as the market
that the Group is targeting.
The Ex-Tainment market is the area in which the consumer experience value in entertainment is at its highest, there is the least amount of competition, and the Group’s strengths can be fully demonstrated. We will focus increasingly on going on the offensive in this area over the medium term.
 P.14-18

Trends in Sales Revenue by Product/Service
Promotional Services

Ex-Tainment
Services

45%
8,374

5,791

6,000

8,340
Promotional
Services

5,533

52%

4,990
4,051

3,000

3,513

Ex-Tainment
Services

2,544
1,844

0

MerchandisingFiscal 2022

Fiscal2022

Premium Services(Retail Distribution)

Premium Services(Manufacturers/Food Service)

OEM

BPO

48%

Fiscal2023

Promotional Services

55%

11,397

8,361

This is a B2B2C, B2C or D2C service where products (goods) utilizing IP content
are designed and sold to consumers in stores and e-commerce. Theme cafes
offer food and merchandise with original menus created in collaboration withvarious IP content.

We provide services for sales promotion and customer-attraction campaigns
using prizes (premiums) to our distribution clients. Not only are we capable ofproviding one-stop support for everything from campaign planning and management, to prize (premium) development and production, logistics management, and follow-up services, but we also specialize in services handling IP
content and digital campaigns.

We provide one-stop support for various promotional activities that connect
the products and services of manufacturers and food service clients with consumers, from planning, production, and manufacturing to campaign office
operations. Our strength lies in our nationwide distribution platform, and byproviding more services handling IP content and digital campaigns, we help ourclients create buzz around their products and services, attract customers,
increase sales, and cultivate new customers.

Promotional
Services(Millions of yen)

9,000

Premium Services(Manufacturers/Food Service)

Sales revenue composition ratio

Ex-Tainment Services
12,000Description of Our Products and Services

Entertainment merchandising market
2

Ex-Tainment Services

Marketing support market

facturers/food service], OEM, BPO, and VMD) in Japan and overseas.

OEM

BPO

1,404

VMD

 Fiscal 2023

In the fiscal year ended December 2023, sales revenue from Ex-Tainment services was particularly strong at theme cafes, convenience
stores, drug stores, etc., and product sales steadily expanded. In promotion services, business process outsourcing (BPO), which are recurring promotional services*6, performed well.
Over the medium term, the business structure will continue to change as the Ex-Tainment market expands, and the expectation is that
Ex-Tainment services will account for an even higher percentage of sales revenue.

VMD

These services provide planning, production, quality control, and delivery ofprizes and products to manufacturer clients and copyright holders, among others, using the Group’s supply chain. We specialize in creating prizes and products that win the hearts of fans by employing the worldview of their favorite
artwork and characters.

These services leverage the know-how cultivated in our marketing promotion
services and take on contracts for client marketing operations, as well as planning, procurement, quality control, and other operations and processes for sales
promotion materials. We take on a part of our client’s supply chain on an ongoing basis, so we are responsible for providing solutions for our clients over the
medium to long term.

These services plan and place visually appealing sales promotion displays thatreflect the worldview and brand image of manufacturing clients’ products onsales floors, thereby encouraging consumers to make purchases. We haveearned a high reputation for our VMD planning and design capabilities, including numerous gold and silver awards in the JPM POP Creative Awards, Japan’slargest POP tool contest.

*6 A form of promotion service that enters the customer’s supply chain and is outsourced on a continuous basis.

2

CL Holdings Inc.

CL Holdings Inc. Integrated Report 2023

3

Top Message

A good manager is one that can both satisfy stakeholders
and generate profits. Moreover, a good manager will work tosecure steady shareholder returns while engaging in management that satisfies all stakeholders, including shareholders.
Substantial Growth in Ex-Tainment and BPO Services Amid the Transition to a
Holding Company Structure and Efforts to Optimize the Business Portfolio

President & CEO

The CL Group transitioned to a holding company structure in
January 2022, with CL Holdings Inc. as the parent company
overseeing operating companies such as LEGS COMPANY, LTD.
and CDG Co., Ltd. In part because the founders of LEGS and
CDG originally both studied at Seiwajyuku*, they share a common set of values that has allowed the two companies toundergo a relatively seamless transition to the new management structure. At present, we are advancing integration fromboth a business and organizational approach.
One of the reasons for transforming our management structure
was to address today’s dramatically changing external environment. This includes a shrinking domestic market triggered bychanging demographics, a factor that we recognize demands areorganization of the industry, as well as the COVID-19 pandemic
that ravaged the globe starting 2020. Recognizing these changes
in the external environment as opportunities, we decided toembark on major structural changes that will move us away from a
conventional promotional services-focused company. In otherwords, we determined that an organic approach to sustainablegrowth under existing business models would be difficult.
Traditionally, we have mainly provided contract services such as
promotions, but in the future, we hope to increase the ratio of prospective services that handle product sales to further leverage ourstrengths in the areas of entertainment and distribution.
From a promotional services perspective, we are focused on
developing recurring revenue model BPO services as a countermeasure against the increasingly severe competitive environment
in Japan. As part of these services, we delve into our customers’
supply chains, thereby capturing more orders through services

that we provide in an ongoing manner, and through an approachthat relies on our marketing capabilities and IT technologies. Even
before this move, CDG had begun to see signs of growth in its
BPO services, which is why we determined that we should buildon these endeavors. In fact, BPO service sales have grown remarkably as a result of investing management resources in this area.
We are also turning our attention to overseas markets. The promotional service business is typically dependent on domestic
demand, and is therefore considered an unlikely candidate foroverseas expansion. Leveraging entertainment-related intellectual
property and other rights, however, our Ex-Tainment services holdsufficient potential for overseas expansion. For this reason, we will
embark overseas once fully solidifying our presence in Japan.
Despite the difficulties encountered during the first half of2023, Ex-Tainment services now account for close to 50% of the
CL Group’s sales, whereas promotional services are starting toshift to a focus on recurring revenue model BPO services. We havetransitioned to a holding company structure and worked to optimize the business portfolio since fiscal 2022, and it is now clearthat these efforts are slowly bearing fruit. Having already reached
the bottom from a business performance perspective, we expect
to launch a counteroffensive in fiscal 2024 and beyond. By promoting higher earnings strength as an effort raised in the CL
Group’s medium-term strategy, we will grow the Company basedon sufficient earnings strength. At the same time, we will connect
this strength to economic returns for our stakeholders with theaim of achieving our management philosophy.
* A private school run by Kazuo Inamori, the founder of Kyocera Corporation, thatteaches managers about the philosophy of management.

CDG Also Implements the Management System Developed by LEGS, and Makes
Judgements by Project Based on Operating Income Instead of Gross Profit
Although it possesses outstanding human resources and superior
technology, CDG’s management resources are spread out
because it has more than 400 client companies. In addition to recognizing the strengths possessed by CDG, we have therefore
decided to redistribute its management resources. Despite thefact that its net sales had already exceeded 10 billion yen when it
became a consolidated subsidiary, we took this action because weneeded to better clarify its strengths in order to grow the company. Expansion of BPO services can be considered one of the outcomes of this effort. Although considerable courage was required4

CL Holdings Inc.

to select and concentrate on specific clients and projects, CDG’s
employees ultimately accepted the move because we put forward
a clear management strategy. Moreover, we decided to makejudgements regarding each client and project based on operating
income instead of gross profit as the basis for decision-making. As
a result of CDG also implementing the management systems
established by LEGS, it is now able to visualize the profitability ofeach client. This move has helped CDG select and concentrate on
specific clients and projects. And as with LEGS, CDG has thoroughly pursued the potential to visualize management because

CL Holdings Inc. Integrated Report 2023

5

Top Message

the ability to see more information encourages the greatest
changes in behavior. By opening up management to employees

and engaging with them more directly, CDG has also accelerated
the infusion of policies throughout the company.

Promoting Group-wide Leader Management Education and the Delegation of
Authority While Shifting to Management That Prioritizes the Frontline
Ideas that evolve into businesses are conceived on the frontlines. And
because the frontlines are close to customers, they receive a considerable amount of the latest information, including customers’ needs.
We therefore believe it is important to fully embrace a hands-on
approach to ensure that employees work more effectively. Although
we previously provided leader management education for those inmanagement positions, we now offer leader management education to those at all levels. This is because knowledge on management, including among younger employees, is a prerequisite forcreating an independent organization. In this manner, our goal is tobecome an empowerment-based organization that takes the formof an inverse pyramid, and that draws out the capabilities and vitality
hidden in each employee. An equally important goal is to ensure that
we are the first to capture frontline needs as a means of generating
business. Similarly, we launched the Junior Board System in fiscal
2023 in order to provide more opportunities to young employees.
As the foundation for human resource development, we areadvancing preparations to transform the human resource system into
one that more accurately assesses the efforts of the frontline while
keeping an eye on the engagement score. Although our approachstill tends to value those who produce positive results in terms of business performance, we will reform systems and organizations toensure that those who rise to the top possess the skills to bring people together, to listen to others, and to develop human resources.

Moreover, connecting with people is an important aspect ofmaintaining employee motivation. We occasionally find cases
where departments with low engagement scores face problems
with connecting to people within the organization, for example
those departments that tend to take a top-down approach to
management as in the past. Essentially, superiors must look upon
their employees with a greater sense of affection. Which is why I
believe that we must aspire to an organization in which employees can propose plans on their own initiative under these types ofsuperiors, and make decisions upon gathering collective wisdom.
At the same time, we intend to achieve our management philosophy through the combined strength of the entire team. Reflecting
this desire, we have advanced reforms to organizations andhuman affairs throughout the Company over the past three years.
Yet both the historical context and the values held by people
are starting to change. In the past, only a privileged few were
informed on management and society, and therefore tended tomonopolize information. Today, however, everyone has access tothis information. The coming future will require us to provide evenmore open access to information, and to aspire to a level organizational management playing field if we are to succeed. Although
the answer cannot simply be to have every employee attend executive meetings, to this extent we will endeavor to ensure that
there is no gap in access to information within the Company.

Positioning all LEGS and CDG Executive Officers as Executive Officers of CL Holdings
Thereby Eliminating Individual Corporate Identities and Shifting to Managementfrom a Companywide Perspective
Operating companies under the oversight of holding companies
are necessarily subject to centrifugal forces that drive them tofunction as individual entities. Therefore, our first move was toposition all of the LEGS and CDG executive officers as executive
officers of CL Holdings in an effort to increase centripetal forces.
Our aim here was to shift their strong sense of identity as members of individual companies to a focus on succeeding as agroup, and to foster the capability to chart optimization for theGroup. Although serious effort is involved in administering sucha meeting body, I believe this is an important step for the current
phase. Moreover, we are fully advancing initiatives for coordinating and strengthening business functions in a way that mutuallylinks, coordinates, and streamlines the individual functions andorganizations respectively possessed by LEGS and CDG.

projects. And today we are seeing gradual changes in the awareness of those who participate in those projects that are advanced
through collaboration within the Group. The outcomes of theseprojects then serve to change the awareness of other employees
who recognize that working together leads to success. In one
example of an initiative with a client in the retail field, we leveraged the ability of LEGS to procure intellectual property content
and launched an initiative in cooperation with CDG, ultimately
leading to an order for a large-scale campaign. By applying theevaluation system to the principles of business, I believe theawareness of our employees will also gradually change.
By striving for optimization across the Group in this way, and by
centralizing the know-how and knowledge of individual companies as a Group, we are starting to transform our business modelin significant ways. Accordingly, the skill sets possessed by our
employees must also change. I therefore believe we must avoid
over-focusing on taking action with our current members alone.
Instead, we must also engage in mid-career recruitment efforts
through which we scout and promote general managers in their
30s and 40s, as well as human resources in the executive officerclass, from other companies. The skill sets required at each stage
will change as our sales grow from 10 billion yen to 30 billion yen
and 50 billion yen. The Company will stagnate and our people
will lag behind, however, if we fail to place human resources

suited to the current phase of the Company in the right place. Inline with the business plan, we will therefore consider and work
to recruit the types of human resources that we lack. External
human resources will have accumulated experience along theircareer path, and will have already climbed those mountains
before, meaning they are more likely to choose the best course ofaction. Starting entirely from scratch means our people will lackthe ability to address the risks of unforeseen circumstances,which also means the Company will require more time to grow.
Another important management issue is the succession plan.
I believe that simply ensuring top management are outstanding talent will fail to create an effective company. Instead, theymust all possess truly high motivation, give their all for their colleagues, and be able to make self-sacrifices. Even my friends
from my time at Seiwajyuku failed to succeed when they wereunable to make self-sacrifices. Although some people may succeed at times by prioritizing their own desires, I feel that altruistic individuals maintain their motivation longer, and therefore
succeed in the long run. In order to appoint altruistic individuals
as successors, our Nomination and Compensation Advisory
Committee has also agreed to compare candidates against theconditions for successors as based on the experience of Kazuo
Inamori, a renowned entrepreneur who was known as thefounder of Kyocera Corporation and KDDI Corporation.

The Key Is Balancing Stakeholder Satisfaction and Profit Generation
It is only natural for shareholders and investors, particularly those
who invest in growth companies, to expect returns. The Tokyo
Stock Exchange also presents broad requirements for management to have an awareness of capital costs and stock prices. I
believe this is not a question of choosing either contributions tosociety or growth as a company, however, but of needing to satisfy
both “stakeholder satisfaction” and “profit generation” as we say.
In this regard, a good manager can achieve both. Without profits
we will fail to grow in a sustainable manner, ensure each

employee’s happiness, and give back to society. By enhancing
profitability, increasing the value we create for society, and realizing steady returns for shareholders, we aspire to a management
approach that satisfies our shareholders and other stakeholders.
April 2024

Junichiro Uchikawa
President & CEO

We must ensure that all executive officers fully understand the
management philosophy that outlines why the CL Group exists,
along with the CL Philosophy that serves as the standard for conduct. For this purpose, Group companies must position thesephilosophies at the heart of their guiding principles. Under thisconcept, we drafted the management philosophy and CL
Philosophy through the combined efforts of the Group’s directors
and executive officers. Perhaps several years in the future, centrifugal forces will act to drive apart the individual companies from eachother again depending on the strategy. Even in this case, however, I
believe that by ensuring everyone becomes a member of the CL
Group, the centripetal forces applied by CL Holdings will continue
to act in a way that contributes to the growth of the Group.

Shifting from Assessment on the Basis of Individual Companies to that of the
Entire CL Group, and the Importance of Promoting External Human Resources
The CL Group has identified the “development of humanresources and generation of management personnel” as a longterm policy. While investing in human capital to achieve this policy, one of the challenges faced by the Group today is its

6

CL Holdings Inc.

evaluation system. For example, we still tend to assess individualcompanies with a priority on their profit and loss statements. In
response, we are now starting to shift assessments toward an
approach that includes the degree of contribution by Group-wide

CL Holdings Inc. Integrated Report 2023

7

Risks, Opportunities, and Material Issues
From the perspective of social changes, we analyzed the external environment surrounding CL Group andidentified material issues that have a high degree of importance for stakeholders and will affect the Group’s mediumto long-term value creation, by evaluating both risks and opportunities. We will continue to aim for the sustainable
development and growth of our Group through our efforts to address material issues.

2
Low birthrate andaging society /declining Japanese
population /growing global
population3
Accelerating
digitalization due
to the emergenceof new
technologies

4
Spreadingconsumerawareness ofsustainability

Risks

Consumers, clients,
cooperating companies, copyright holders• Developing products
and services that
respond to changes in
consumer lifestyles andbehavior patterns, aswell as clients’ sales
promotion needs

Fewer opportunities to use
the Company’s products
and services due to adelayed response tochanging consumer andclient needs

Consumers, clients,
cooperating companies, copyright holders,
employees, sharehol­
ders, investors, local
communities• Responding to the riskof contraction of theadvertising and sales
promotion market inJapan• Labor shortages due toa shrinking working-age
population• Developing products
and services thatleverage the latest
digital technologies

Consumers, clients,
cooperating companies, copyright holders,
employees• Digitalizing businessprocesses• Enhancing
cybersecurity• Securing and developing human resourcescompetent in digitaltechnologies

Consumers, clients,
cooperating companies, copyright holders,
employees, sharehol­
ders, investors, local
communities• Responding to greater
resource efficiency andthe transition to a
recycling-oriented
society• Developing products
and services with low
environmental impacts• Promoting CSR
procurement• Constructing asustainable supply
chain

5
Diversifying humanresources and work
styles6
Growing demand
from society tostrengthen corporate governance

Employees

Consumers, clients,
cooperating companies, copyright holders,
employees, sharehol­
ders, investors, local
communities• Securing and developing human resourcesthat align with theGroup’s managementstyle• Establishing anenvironment andintroducing systems
that allow for pleasantand rewarding work

• Ensuring soundness
and transparency ofmanagement• Decrease in sales
promotion/customer
attraction opportunities
and decrease in productsales in Japan• Waning corporate
activities due to difficulties in securing humanresources

Timeframe

Short
MediumMediumLong• Reduction of competitiveness of products andservices• Increase in SG&A andother costs due to lower
productivity

Short
Medium• Information leakage anddamages caused by
security failures• Loss of business opportunities and increased costs
due to the continued
provision of environmentally detrimental products
and services• Loss of business opportunities due to decreasedsocial credibility• Lost business opportunities due to the outflow ofand failure to secure
human resources• Losses caused by lower
social credibility

Creating new revenue
models through thedevelopment of new
products and services
demanded by consumers
and clients• Creating revenue-gene­rating models in newmarkets, both inside andoutside Japan• Achieving stablebusiness growth bysecuring humanresources• Creating new revenue
models through thedevelopment of new
products and services
that leverage the latest
digital technologies• Improving productivity
through digitization ofbusiness processes

Timeframe

Material Issues• Exploring and deepening domestic and overseas platforms*1  P.12-15, 18• Expanding original products and services that leverage IP

Medium• Developing new products and services that leverage digital technology

Higher profitability

MediumContinuous innovation
outputLong

MediumLong• Reducing costs throughenergy efficiency andwaste reduction

Short
MediumDeveloping sustainablebusiness
MediumLong

MediumLong

Short
MediumOngoing recruitment anddevelopment of humanresources• Making ongoing investments with an optimal balance in new businesses,
 P.17, 19
M&As, overseas, and the SDGs
• Optimizing business portfolios (focus on the three business domains) P.16• Creating business synergy within the Group (promotion of Groupsynergy projects)

 P.16• Digitalizing operations through the introduction of RPA, AI, etc.
• Monitoring security• Conducting SDGs awareness programs that use promotional and IP P.22-23
content• Developing products and services that use environmentally friendly
materials and recycled materials

 P.22Long• Increasing corporate
value by fostering social
credibility

Short
MediumStrengthening corporate
governance

Percentage of
inventory disposedof vs product sales(7.3%)• Building a stable supply chain through stronger relationships with coope­rating companies• Providing support for recruitment of and participation by diverse humanresources• Improving the environment and building systems to realize diversity,
equity, and inclusion (DE&I)• Undertaking initiatives to enhance employee engagement*• Strengthening personnel
recruitment competitiveness by realizing
pleasant and rewarding
work environments

EBITDA margin(5.9%)• Reducing inventory disposal by using IP content analysis and a sales
 P.22
forecasting system• Creating a culture that enables human resource development from along-term perspective

Nurturing management
personnel

EBITDA(2.1 billion yen)

Number of businessefficiencies achieved
through the use ofdigital technology(6)2MediumSales revenue(36.3 billion yen)

• Strengthening the ability to procure IP content by reinforcing relation P.17
ships with copyright holders• Improving and integrating digital infrastructure within the Group

Reinforcing and sophisticating internal infrastructureusing digital technology• Achieving a stable supplyof products to themarket• Achieving stablebusiness growth throughongoing humanresource development,
and output of management personnel

 P.12-15, 18• Expanding business support services (BPO) in the marketing domain
 P.5, 16• Developing sustainableproducts and services• Creating business
opportunities by gaining
social credibility

Outcome of theinitiatives

CL Group Initiatives

Short• Continuing safe, secure,stable business• Delayed product delivery
due to supply chain
breakdowns• Sluggish business growth
due to delayed humanresource development

Opportunities

Economic Value

Diversifying
consumer andclient needs

IssuesSocial and Environmental Value

1

Relatedstakeholders

Average annual
hours of training
per employee(43.8 hours)• Building systems to discover and develop human resources that will take P.17, 23-24
responsibility for management in the future

Governance

Changes in Society
Related to the Company• Strengthening management, business, and risk control systems for theGroup globally• Conducting ongoing compliance education including e-learning P.25-27Compliance withrevised Corporate
Governance Code(full compliance*3)

1: A network of stores that a client, such as a distributor, operates in Japan or internationally; a network of consumer contact points.
2: A single engagement analysis tool will be introduced for the Group in FY2023, and scores calculated.
3: As of the end of March 2024.

8

CL Holdings Inc.

CL Holdings Inc. Integrated Report 2023

9

Process of Value Creation
Based on our management philosophy and CL philosophy, and with our human skills (philosophy-based manage-

Through the expansion of the Ex-Tainment (experience + entertainment) market, we will transform everyday lifement) and management system (Management Manual) as the foundation, the Group develops its services with our

into an emotional experience and deliver fun and joy to the world, thereby achieving sustainable enhancement offour strengths as the source of value: IP content procurement and development capabilities, platform deployment

corporate value.

capabilities, premium quality products and services, and digital technology utilization capabilities.
 Qualitative outcomes    Quantitative outcomesType of Capital

Sources of Value

Input (capital details)

Output  P.2-3

Shareholders and investors

Ex-Tainment

Financial• Shareholder’s equity• Interest-bearing debt

ImpactOutcomes (value provided) P.19 Increase in value per share, shareholder returns(Diluted EPS: 50.33 yen; payout ratio: 31.8%)
10-year TSR: 26.2% (2.6% annually)

Services

Effect onsociety

Financial Creditors Financial stability (Equity ratio attributable to owners of the parent 39.0%)

Intellectual<Business Knowledge>• Sales promotion and product planningcapabilities• Quality and production control capabilities• Volume of traffic and data accumulation forservices provided (sales promotion andproduct sales)

Human<Corporate Culture>• Management Manual• The CL philosophy (education in ourphilosophy)(Theme cafes)

Copyright holdersMerchandising*(Retail Distribution)

Morallyproper people
IP content
procurement &deployment
capabilities

Social/Relationship<IP Content Procurement>• Number of copyright holders: Approx. 200
companies or more
<Cooperating companies>• Number of transacting cooperatingcompanies (annual): Approx. 900 or more• Number of cooperating companies withpermanent onsite representatives: 12

Natural• Energy (electricity)• PaperIntellectualPremium
qualityproducts &servicesManagement system(Management Manual)Consumers P.14-15, 18(Retail Distribution)

Employees

Digital Services Creation and nurturing of management human resources (Education in
Management for Leaders, junior board system) Improved employee engagement
 Work style reform and assistance (Remote Working System, Life Event Support
System, Childcare Support System, Flextime System) Promotion of diversity, equity & inclusion (DE&I) (greater ratio of management
positions held by women, introduction of partnership certificates, promotion of
employment of people with disabilities) Promotion of health and productivity management (CDG: Company with
Excellent Health and Productivity Management, Silver Certification)
 Average annual hours of training per employee: 43.8 hours
 Ratio of women in management positions: 17.8%
 Actual number of employees with disabilities: 13 (of which 2 have severe
disabilities Number of representative directors of business subsidiaries in the group: 4

 P.24, 28-29

Digitaltechnology
utilization
capabilities

 P.14, 17-18

 Maximize the value of IP content (increase name recognition and fans) Number of projects involving IP content per year: approx. 4,500
 Products and services that win the hearts of fans, enjoyment of shopping, smiles
and excitement of consumers Annual number of theme cafe visitors: approx. 1.2 million

Premium Services(Philosophy-based
management)

Human P.17, 23-24

We provide “Ex-Tainment(experience + entertainment)”
to transform the everyday life into an
emotional experience anddeliver fun and joy to theworld.

Premium Services(Manufacturers/
Food Service)<Social Credibility>• Acquisition of ISO 14001, ISO 9001, andPrivacyMark<Product and Service Roll Out to Platforms>• Number of transacting clients (annual):approx. 660 (and growing)• Number of retail distribution clients(annual): approx. 100

 P.14 Solve problems by providing promotional services and Ex-Tainment services Number of marketing services provided per year: approx. 10,000 (or more) Number of digital engagements per year: approx. 1,500

capabilities<Licenses>• More than 250 different IP contents usedannually<Human Resources>• Number of Group employees: approx. 650• Creative personnel with expertise in IP
content, logistics, digital technology,
product planning, and supply chain
management

Clients (manufacturers/restaurants/retails)

Merchandising*

Platform
deployment

Employees P.24 Cultivate human skills based on our philosophy

OEM*

Consumers P.14-15, 18

  Provide products that win the hearts of fans, deliver the enjoyment of shopping,and give smiles to consumers Annual number of theme cafe visitors: approx. 1.2 million

The Group’s Medium-termManagement Policy

BPO*

Social/Clients (manufacturers/restaurants/retail distributors)
 P.14
Relationship  Solve problems by providing promotional services and Ex-Tainment services Number of total services provided per year: Approx. 10,000 or more

The Group’s Medium-term Strategy
Group company management strategy

Cooperating companies P.23 Mutual prosperity through ongoing business with quality partners

 P.16

VMD*

CL Philosophy
CL Group Management Philosophy
 P.24

Consumers, clients, cooperating companies, copyright holders,
employees, shareholders/investors, and local communities  P.22

Promotion
Services

Natural Reduction of global environmental impact in business activities(reduction of annual electricity consumption, reduction of paper consumption,use of gifts and displays made with environmentally friendly materials, use ofrecycled materials)
 Number of types of items using environmentally friendly materials per year: 11* See p.33 for terminology details.

10

CL Holdings Inc.

CL Holdings Inc. Integrated Report 2023

11

Discussion
The Future of the CL Group & IP Content Business

Satoshi Yamashita
Director, CL Holdings Inc.
President & CEO, LEGS COMPANY, LTD.

Kazuo Rikukawa
President
CHARACTER DATABANK, Ltd.

Jotaro Tani
Executive Officer, CL Holdings Inc.
President & Representative Director, LTR.inc

Satoshi YamashitaKazuo Rikukawa

Jotaro Tani

Director, CL Holdings Inc.
President & CEO, LEGS COMPANY, LTD.

President
CHARACTER DATABANK, Ltd.

Executive Officer, CL Holdings Inc.
President & Representative Director, LTR.inc

Potential for content business development in Japan
Rikukawa	I run a marketing and consulting company that special-izes in character content. As such, I estimate the scale ofthe character product market each year. In 2022, themarket hit 1.56 trillion yen in Japan, slightly higher thanthe level recorded in 2019 prior to COVID-19. If we add
digital products, the market exceeds 2 trillion yen.
Trends throughout 2023 are also projected to remainrobust and well ahead of the previous year. Despite thepandemic and subsequent shift toward digital content, I
believe this reflects the behavior of character fans, who
are once again seeking the value of experiences that can
only be found in real life, with the gradual removal ofrestrictions on people’s movements from 2022.
Yamashita	
Under the extraordinary circumstances of the pandemic,
the ongoing development of a digital distribution environment and upswing in stay-at-home demand triggereda sudden rush of opportunities to experience various
genres of entertainment videos. As a result, new markets
are emerging, most notably in East Asia and especially inNorth America. Against this backdrop, the status of entertainment developed in Japan, especially character content, is increasing. We, at the CL Group, are involved inboth B2B sales promotion and B2C merchandise sales. Of
these, the B2C theme cafe service has witnessed a consistent increase in the number of visitors since the pandemic

and the experience-based service that combines IP content with food and beverages has attracted a solid fan
base. Looking at our track record to date, we are confident in those businesses that revolve around IP content
and take pride in their strong performance trends.
Tani	Rather than a flash in the pan, I am convinced that thetheme cafe service has firmly established itself as a conduit through which fans can enjoy characters and artworkin the post-COVID-19 period. We currently maintain a network of 16 BOX cafe&space theme cafes nationwide,
which focus on topical themes for a limited period of time.
These experience-based cafes allow visitors to engage inthe one-off consumption of intangible goods. Meanwhile,
we are also developing cafes that adopt a permanent
theme, which we hope will attract an enduring fan base.
In terms of long-lasting popularity, theme parks such as
Disneyland, which have many repeat visitors, are an excellent example. Art museums where visitors enjoy the same
painting on multiple occasions are another example froma more historical perspective. The boundary between theart and entertainment worlds continues to narrow, as evidenced by immersive museums, including teamLab. With
this in mind, I think it is important for customers to feel
immersed and to relive the world of their favorite works.

Prospects for the Ex-Tainment business
Tani	As far as such experience-based facilities as theme cafes,

museums, and zoos are concerned, there are three levels

12

CL Holdings Inc.

of behavior through which customers perceive the valueof each experience. Beginning with a “visual appreciation,”

the value of each experience is further enhanced throughTani	Today, the breadth and depth of each consumer’s experi“interaction” and then completed with a “purchase.”ence of a particular product or service have increased andRecognizing the importance of preserving each experifans are becoming more discerning. Looking ahead, I
ence, undertaking a purchase is necessarily the last of thebelieve that products and services will need to be more
three levels of behavior. In essence, this behavioral flow isauthentic in order to satisfy fans.
considered universal, transcending national boundaries. In Yamashita	Businesses are evolving and changing at an accelerated
pace. Even if a new market is created, that market will
this regard, Ex-Tainment precisely provides the value
quickly deteriorate should it fail to evolve. People’s sensirequired at the “purchase” stage while LTR.inc createsvalue through a multiplier effect using food and beverages.
tivities have also evolved. In addition to expectations surRikukawa	Should customers wish to make a purchase, they can do sorounding convenience and value for money, people arethrough an e-commerce site. Content fans frequent storesincreasingly looking for the story behind each product.
seeking to engage in the one-off consumption of intangiTaking the aforementioned into consideration, our mostble goods, where they shop, eat, and drink while experiimportant concerns are “Who is our customer? What doencing the world of characters. Businesses will therefore
they want?” Rather than adopt a corporate perspective, it
suffer going forward should they fail to provide the necesis therefore important to create a “story-like experience”
sary experiential value that satisfies these needs. For thisthat satisfies customers. This is an extremely challenging
reason, and as was mentioned a moment ago, I believetask. However, as an emerging force, I see this as anthat the concept of an “immersive experience” will become
opportunity to expand the Ex-Tainment market.
key in the Ex-Tainment business. As a result, I sense demandfor deeper immersive experiences will continue to grow.

Essential requirements for the sustainable growth of the CL Group
Rikukawa	To date, the magnitude of domestic content has been

addition to such IP content as animation and characters,
more than sufficient to support business solely in Japan.
Japan has a lot more to offer. I therefore hope to work in
However, as the population continues to decline, it will
collaboration with various other industries.
Tani	Just the other day, we test marketed a boxed lunch conbecome increasingly important to expand business totaining “onigiri” (rice balls) in collaboration with Japanese
the world stage. The so-called “Galapagos” IP content
IP content, which sold out every day of a four-day event.
that has emerged specifically for the Japanese market isThis helped to confirm the definitive need for a theme
now widely known to people overseas through various
cafe that combines Japanese ingredients and Japanese
media, including video, music and other content distrifood with IP content. If we can add experience value, I
bution services as well as SNS, attracting considerable
think the possibilities will further increase.
praise and interest. I am therefore convinced that thisYamashita	As far as the Group as a whole is concerned, we are active
is a genuine opportunity.
Yamashita	Our goal is to change people’s lives for the better throughacross three businesses: Marketing, Ex-Tainment, andour Ex-Tainment (customer experience value in entertainMerchandising. Our goal is to forge a global foothold inment) business. Japan’s birthrate continues to decline. In
each of these business domains. In order to generatecontrast, the younger generation is beginning to drive
mutual synergies in the three business domains and work
economic growth across the rest of the world. Against thisclosely with overseas partners, we hope to compete by
backdrop, I believe there is considerable potential to crefirst focusing on Japanese character content, and by makate a business model that links Japan with the rest of theing good use of various Japanese strengths and attractive
world through exposure to Japanese IP content. In
attributes, including Japanese food.

SatoshiYamashita

Director of CL Holdings, Inc., andPresident & CEO of LEGS COMPANY,
LTD. Joined LEGS in 2002. He has
been engaged in hands-on
sales-related work in our Group formany years and has abundant
experience and knowledge on thefront lines of business. He has
extensive knowledge not only of thesales promotion industry, but alsoof the distribution industry andlicensing business, and has contributed to the development of new
business models, such as PMD
services*.
*P MD service: Promotion &Merchandising service. A service that combines sales promotion and merchandise sales.

Kazuo
Rikukawa

President of CHARACTERDATABANK, Ltd. After working as an
editor and researcher as well as inother capacities for a marketingcompany, established CHARACTERDATABANK, Ltd., a marketing
research and consulting company forlicensing and character businesses.
TV, newspaper, magazine, and othermedia commentator, writer, and lecturer. Author of such works as“Character Marketing Method”(co-author: JMA Management
Center Inc.).

JotaroTani

Executive Officer of CL Holdings, Inc.
and President & Representative
Director of LTR.inc. He joined LEGS in
1998. After working overseas(Shanghai and Singapore), he
returned to Japan and became
involved in the licensing business ofJapanese anime works and characters, and became responsible for the
food entertainment business. In
2021, he formed a joint venture with
TRANSIT GENERAL OFFICE INC., withwhom he had an alliance in recipedevelopment, etc., and was
appointed as the representative
director when LTR was established.

CL Holdings Inc. Integrated Report 2023

13

The Future Created by the Ex-Tainment BusinessSpecial Feature: Providing customer experience value inentertainment through theme cafes

1.What is Ex-Tainment?

In the Ex-Tainment business promoted by the Group, theme cafes have become an iconic service that provides

The term was coined by combining the words “experience” and “entertainment,” referring to the experiential value felt by

customer experience value in entertainment through the combination of food and entertainment.

consumers when consuming entertainment. In addition, in terms of positioning, the Ex-Tainment market includes potential
areas across other markets, such as the markets for advertising and sales promotion, the product sales market, and theentertainment content market.

2.Ex-Tainment market potential

Customer experience value in entertainment being provided to fans
Theme cafe services, which are provided through small

creating stores that will make fans smile by means of, fortheme park-like cafes that combine the world views of intel-

example, spaces where they can relive the worldviews andConsumer behavior has become polarized. One pole is from the demand for “rational shopping,” which is the desire tolectual property (IP) content with space, food and drink as

decorations of the artworks that will make them sponta-

make purchases quickly and easily. The other pole is from the demand for the experimental value of fun when shopping.

well as performance and other attractions, are continuing toneously want to take commemorative photos.

With the advancement of digitalization, e-commerce’s absorption of demand for quick shopping is expected to accelerate

steadily expand as places to enjoy extraordinary experienceseven further. On the other hand, the demand for so-called “fun shopping,” or the desire for intangible goods consumption

up close. Fans who visit are able to enjoy IP content from

customers by offering great-tasting and photogenic foodand experiential value, is also steadily increasing.

new perspectives through an exciting dining experience thatand drinks that are safe, environmentally friendly, andis beautiful to behold, delicious to eat, and fun to experience.

healthy. In addition, limited-edition original goods can cap-

access content due to advances in streaming technology and other factors, content fans are looking for contact points for those

Fans’ ability to immerse themselves in the world views ofture fans’ hearts and allow them to enjoy the special feel-contents. However, the commercialization of creating contact points that provide consumers with an enjoyable shopping experi-

their favorite IP content is also being highly praised. We are

Currently, new content is being created one after another by copyright holders. In addition, with the increase in opportunities to

Our stores have been gaining a reputation among manyings that can only be found at our theme cafes.

ence using entertainment content is still in its infancy, and this leaves a large gap that makes the potential market very considerable.

Customer experience value in entertainment provided through theme cafe services

3.Expanding from Japan to the world
CL Group is approaching this potential market with three services: promotion merchandising service (PMD service)*, theGroup’s core original service; limited distribution service*; and theme cafe service* and is making strides in unlocking andfostering the Ex-Tainment market. Japan is an advanced country in terms of entertainment shopping and, we are a com-

Great-tasting and photogenic
food and drinks

Special feelings from limited-edition
original theme cafe goods
that have captured fans’ hearts

Immersive experiences in
the worldviews of artworks

pany that excels at making an entertaining shopping experience. We will continue to pioneer the future in the Ex-Tainment
business and provide fun shopping to consumers and fans not only in Japan, but around the world.
miffy café tokyo opened in November 2023

* See p.32 for terminology details.

Expand entertainment content

Entertainment Content
Anime

Manga

Video
games

Mascotcharacters

Creators

Films

TV
programcontent

BrandsMusiclabelsIllustrations Dick Bruna © copyright Mercis bv, 1953-2023 www.miffy.com

Artists

Theme cafe as device to encourage clicks on “like”
Expand products and services

PMD service
Limited distribution service
Theme cafe service

Convenience stores 55,000 stores

Through the customer experience value in entertainment pro-increased. As a device to encourage clicks on “like,” our theme

vided through our theme cafes, fans will “like” the IP content

cafes have steadily increased their numbers of visitors. In 2025,

even more. Moreover, as fans have shared their “likes” with fam-

we aim to have attracted two million people and continue to

ily and friends, the number of customers attracted has steadily

increase the number of people who “like” our theme cafes.

Other distribution & EC 9,000 stores

Expand platforms

Massive distribution platform
Post offices
24,000 offices

Fan
feedback

Everyone’s customer service skills were also
great. I was on my own, but wanted to eat avariety of things, so the sizes of the portions
were just right, and I’ll definitely come back!

(Thousands of people)
200
150

GMS* 1,000 stores* GMS: General merchandise store

By connecting various entertainment content to a huge retailer platform, we
will spread the value of Ex-Tainment to the world.

The atmosphere inside the cafe and eventhe menu was overflowing with the worldviews of the characters, and both my childand I were immensely satisfied.

140

120

0

(FY)

2018

1,200
1,060

870 120

630

70

180

170

160

Amusement 1,000 stores

Food service 9,000 restaurants

CL Holdings Inc.

(No. of events)
210

Drug stores
4,800 stores
It was so cute, and I’m glad I came! The bread and financier cakes were so cute that I wasn’t sure whether to eat
them, even though I’d ordered them.
(When I did finally try them, they were really delicious.)

14

Number of theme cafes held and number ofcustomers attracted

660

2019

2020

 Number of theme cafes held (left axis)  

100

700
50

2021

2022

2023

0

Number of customers attracted (right axis)

CL Holdings Inc. Integrated Report 2023

15

Growth Strategy
In order to realize the Group’s management philosophy, we are focused on strengthening profitability over the
medium term. In this regard, we will transform the earnings structure and enhance productivity in order to strengthen
earning power, which will entail advancing structural reforms and optimizing the business portfolio. At the same time,
we will achieve sustained business growth over the medium- to long-term by accelerating expansion of the Ex-Tainment
market, which offers the greatest degree of opportunity over the medium- to long-term both in Japan and overseas.

CL Group’s Medium-Term Strategy and Key Points
The Group has advanced its medium-term strategy underserves as the capital for growth and endurance. We there-

the goal of expanding the Ex-Tainment market and with anfore established “strengthen profitability” as the medi-

emphasis on business growth. In order to realize theum-term strategy. Moreover, we will focus on four key

Group’s management philosophy anew, however, we rec-points in order to prioritize efforts to strengthen earningognized the need to first strengthen profitability, whichpower.

CL Group’s Medium-Term Strategy

Strengthen Profitability

In order to realize the management philosophy,
we will enhance profitability over the medium term.
For this purpose, we will achieve the following four key points.

operations. Going forward, we will work to further enhance
productivity by investigating optimal approaches to operations, including the effective use of external resources.

1. Strengthen human capital

Medium-Term Group
Strategy

Four Key
PointsHuman capital Refers to the qualities andcapabilities possessed by the individuals
that constitute companies, and serves as
the origin from which corporate value
emergesOptimize investments (continuous investment with

1. New business ect basis, and target commercialization

 nhance productivity (improve the efficiency of busiE
ness operations)
Since fiscal 2023, we have promoted four Group synergy
projects intended to create business synergy within theGroup, centralize common operations, and promote
greater operational efficiency. From a productivity
improvement perspective, we are steadily advancing avariety of steps, including efforts to standardize and sharebusiness operations, including those that involve rules
and systems, and to review processes. In particular, significant progress was made in the platform project andmanagement infrastructure project during fiscal 2023.
In terms of the front line, we are reviewing operations
and eliminating unreasonable, wasteful, and irregular workas part of steady, ongoing efforts to streamline internal

16

CL Holdings Inc.

2. Strengthen intellectual property
Intellectual property Refers to personnel,
technologies, organizational capabilities,
customer networks, brands, and other invisible assets possessed by companies, andserves as a source of competitiveness Enhance copyrights, trademark rights, patents,and other forms of intellectual property Enhance know-how, brands, business models,and other forms of intellectual property forwhich rights are not acquired Enhance beneficial relationships and networks
between clients, partners, and copyright holders (shift away from reliance on people)

3. Strengthen technological assets
Technological assets Refers to the information assets regarding technology, as
separate from engineers, possessed bycompanies, and serves as a source ofcompetitiveness Build assets using campaigns (B2B) andproducts/services (B2C) traffic (volume ofcustomer experience)

Optimize investments (continuous investment with an optimal balance)
Engage in numerous hypothetical options and reviews on a proj-

We have identified four areas of investment necessary

2. M&A

Make ongoing investments according to the M&A investment
policyfor the Group’s growth: new businesses, M&As, overseas,

3. Overseas

Gradually grow business as an extension of platform expansion

4. SDGs

Make ongoing investments according to the Holdings sustainability policy and business growthand SDGs, and will continue to make investments inthese areas in a balanced manner.

Conceptualization of the Group’s Growth and Business Portfolio

Key Points
 ptimize the business portfolio (focus on the threeObusiness domains)
In regard to the marketing support, entertainment merchandising, and the Ex-Tainment markets which are thethree markets the Group is targeting (see p. 2), we areworking to optimize resources and formulate strategies
suited to each market. Similarly, we have established threebusiness domains and seven business segments to execute
these strategies. Under an officer responsible for each business domain, we will establish key points for profitability
improvement, and steadily execute these improvements.

 Strengthen the qualities (ways of thinking,passion) and capabilities (knowledge, technology, skill) possessed by individuals Construct systems and mechanisms thatdevelop (invest in) human resources thatcan create value Enhance stress-free work environments for
employees

Strengthen
intangible assets (human capital, intellectual property, technological assets)
In order to accumulate and bolster the Group’s strengths asassets, we will promote efforts to boost human capital, intellectual property, and technological assets. Amid an external
environment in which demographics are changing, in particular, we recognize that human resources are the source of theGroup’s competitiveness, and are therefore focusing investments on human capital. For example, we are advancing initiatives to develop management personnel, as well as
visualizing internal information, encouraging independentaction among employees, and creating empowerment-basedorganizations. Moreover, we are shoring up all manner ofintellectual property, including the IP content procurement
pipeline, and will utilize the Group’s experience in large-scalecampaigns and product sales traffic as technological assets.

an optimal balance)

 ptimize the business portfolio (focus on the three business domains)OEnhance productivity (improve the efficiency of business)
Strengthen intangible assets (human capital, intellectual property,
technological assets)
Optimize investments (continuous investment with an optimalbalance)Strengthen intangible assets(human capital, intellectual property, technological assets)

The three business domains laid out by the Group overlap
Optimize the business portfolio (focus on the three business domains)
MarketingSupport Market

Entertainment mer-

Ex-Tainment Market (most important market) chandising market

in part, where focusing on the Ex-Tainment business

Conceptualization of CL Group Growthdomain, which offers the greatest degree of opportunity,
will generate synergy with the other business domains. In
this way, we have illustrated a concept for overall growthMarketing Services
Business Domain

Promotion business
BPO (business support)
business

Ex-Tainment BusinessDomainRetail entertainment businessEntertainment
Merchandising
Business Domain

for the Group that builds through the expansion of each of

Prize business

tered on marketing services to one centered on Ex-Tainment

Event & merchandising businessthese business domains. Moreover, we intend to have mademajor progress in the shift from a business portfolio cenand entertainment merchandising services by 2026.

Food entertainment business
MD/OEM businessEntertainment Merchandising Business Domain

1. Advance the four Group synergy
projects

Review business processes
Systematize operations (including
RPA and AI use)
Platform projectEnhance skills
Digital development projectUtilize data (including database
IP content projectManagement infrastructure project development)
2. Streamline internal operations(pursue stress-free work)

Eliminate unreasonable, wasteful,and irregular work

3. Effectively use external resources(BPO use)

Consider optimal combinations ofinternal and external production
from the standpoints of productivity and profitability

40

30

Ex-Tainment Business Domain
20

10Marketing Services Business Domain
2023

Enhance productivity (improve the efficiency of business operations)

Sales revenue(Billions of yen)
50

2024

0
2026

2025

Conceptualization of Sales Share by CL Group Business Domain
Entertainment
merchandisingMarketing services

49%

16%

Entertainment
merchandising

Fiscal41%

Fiscal2023

2026(projected)(actual)Ex-Tainment

Marketing services

19%

Ex-Tainment

35%

40%

Sales revenue:

36.3 billion yen

Sales revenue:

50 billion yen

CL Holdings Inc. Integrated Report 2023

17

Financial Strategies

Growth Strategy

Case Study: Transforming the earnings structure through business portfolio optimization
CASE

In January 2022, the Group shifted to a holding company
structure. In the same month, we began the voluntary useof International Financial Reporting Standards (IFRS) andmade CDG Co., Ltd. a consolidated subsidiary in conjunction
with this change. As we transition to a holding company
structure, we are promoting the strengthening of our Groupmanagement system to further accelerate business growth.
To achieve medium- to long-term growth, our policy
involves optimizing our business portfolio, improving productivity, strengthening intangible assets, and actively

1 Ex-Tainment business domain expansion

Diversifying the theme cafe brand (food entertainment business)
As a joint venture specialized in theme cafes, LTR is diversifying its theme
cafes. In one approach, it is expanding long-term and permanent theme
cafes. In this respect, it is accelerating openings, including miffy café
tokyo, which follows upon the opening of Harry Potter Cafe. In anotherapproach, it is deploying new businesses that combine IP content anddifferent business formats. By partnering with large-scale commercial
facilities and major developers, LTR is participating in community development concepts that convert entire streets into theme parks from thestarting point of theme cafes, as well as developing theme cafes in hotels.

CASE

WIZARDING WORLD characters,
names, and related indicia are © & ™
Warner Bros. Entertainment Inc.
Publishing Rights © JKR. (s22)Illustrations Dick Bruna ©
copyright Mercis bv,
1953-2023 www.miffy.com

To implement our medium-term strategy of strengthening
profitability (see p. 16), we will be proceeding with investment optimization, which is one of the key points in the strategy’s execution. Specifically, our policy is to continue to makewell-balanced investments in four categories: new businesses,
M&A, overseas business, and SDGs. First, in new businesses,
we will start small on a project-by-project basis and aim tocommercialize them by repeated theory and verification processes. In the case of M&A, we will divide our investments
into two main categories: business and function investments.
In business investments, we will aim to reap greater revenues
through larger, more risk-on investments in the two areas ofplatforms and products and services. In function investments,

2 Ex-Tainment business domain expansion

In fiscal 2023, we launched an event & merchandising service as a new offering. Recognizing the growing
demand for experience consumption among fans of IP content at events, these services combine limited item
product sales with events involving uncompromising exhibits and decorations that faithfully reproduce theworldview of the IP content. In the summer of 2023, we held a collaborative event and limited product sales
with hololive, a popular VTuber agency, and Tokyo Dome City Attractions, which drew significant attention.
© 2016 COVER Corp.

3 Ex-Tainment business domain expansion

Expanding the overseas platform (event & merchandising business)

To maximize the Group’s corporate value, our Group has set
sales revenue of 100 billion yen and operating income of 10
billion yen as long-term policy targets. Similarly, under our
medium-term management policy we have adopted theachievement of sales revenue of 50 billion yen and EBITDA of
5 billion yen* in the fiscal year ending December 2026. We
are also aiming to achieve a return on equity (ROE) attributable to owners of the parent of 8% by the fiscal year ending
December 2026 and to exceed that level as soon as possible.
For the fiscal year ended December 2023, the Group
recorded sales revenue of 36.34 billion yen (up 13.4% year
on year), operating income of 1.79 billion yen (up 39.0%
year on year), EBITDA of 2.13 billion yen, and ROE of 6.3%.
We recognize that returning profits to shareholders is an
important management issue, and from the perspective of© Gege Akutami/Shueisha,
JUJUTSU KAISEN Project

4 Entertainment merchandising business domain expansion

Planning, developing, and selling our own brand products and prizes (prize business)
Leveraging popular IP content, we are working to plan,develop, and sell figures and plush toys under our own brandas part of our expansion into the domestic prize market andthe overseas product sales market.

we will conduct cooperative, risk-off, and diversified investments in the three areas of IP content and licensing, digitaltechnologies, and QCD (quality, cost, and delivery). In overseas business, as an extension of our platform expansion wewill also leverage the strengths of our Group and move forward with expansion targeting Asia, including China, andNorth America. With regard to the SDGs, we will make investments that are in line with both the CL Holdings Sustainability
Policy and the Group’s business growth.
In addition to optimizing our investments by means of
the aforementioned policies, we intend to resolutely seize
investment opportunities by generating operating cash
flow and building an ample cash position.

Details and Explanations of Financial KPIs

Leveraging the strengths of the Group and customizing business models that have been successful in Japan, we areworking to horizontally deploy our Ex-Tainment services overseas. In fiscal 2023, we held event product sales, eventtype pop-up shops, theme cafes, and other events in collaboration with the popular anime Jujutsu Kaisen, which garnered a major response. These events were centered on Shanghai, China, but also took place in Chengdu, Nanjing,
and Chongqing. Going forward, we plan to expand this platform beyond China with a primary focus on Asia.

CASE

investing in, for example, new businesses and M&A.
Recognizing the necessity for ample cash to achieve thispolicy, the Group constantly strives to maintain a soundfinancial position and generate stable operating cash flows.
With regard to the sources of financial capital and liquidityof funds in the Group, we recognize that the Group is in asound financial position with the balance of cash and cash
equivalents at the end of the fiscal year ended December 31,
2023 totaling 5.17 billion yen and the equity ratio attributableto owners of parent at 39.0%, ensuring sufficient liquidity.

Investment Policy

Launching event & merchandising services (event & merchandising business)

CASE

Financial Policy©WFS Developed by WRIGHT FLYER STUDIOS ©VISUAL ARTS/KeyGroup management, our approach takes into account theconsolidated dividend payout ratio. Our policy is to pay dividends according to business performance while securing theinternal reserves necessary to strengthen our business foundation and develop future business. Accordingly, our profit
distribution is conducted with a consolidated dividend payout
ratio of 30% or higher. Positioning the acquisition of treasury
stock as an important shareholder return policy, the Company
will continue to carry out this policy in a flexible manner while
taking into consideration its capital needs and stock market
trends. Although TSR underperformed both the TOPIX and
TOPIX Services indices, we will continue to make steadyreturns to shareholders while striving to improve shareholder
value to achieve ROE that is higher than the cost of capital.
* EBITDA is simply calculated as operating income plus depreciation and amortization.

Total Shareholder Return (TSR) (Data on closing price at the end of December 2013 = 100)
Key Points of Group Growth
In order to measure the progress of the CL Group’s medium-term strategy, we have identified sales revenue,
EBITDA*1, and EBITDA margin*2 as the three indicators forstrengthening earning power.
In regard to fiscal 2024, we foresee growth and improvement in all three indicators as a result of the changes in ourearnings structure and improved productivity resulting
from our efforts to transform our business portfolio.
*1: Simply calculated as operating income plus depreciation and amortization.
*2: EBITDA margin = EBITDA/Sales revenue(Billions of yen)
60.0
9.0
50.0

(%)
12

50.0

7.5

40.0

6.0

30.0

4.5

20.0

3.0

10.0

1.5

0

0

8.6

2.7

5.9

5.2

2021

2022

2023

 Sales Revenue (left axis)  EBITDA (left axis)

18

CL Holdings Inc.

5.0

3.0

2024

(Forecast)

8

4

2.1

1.7

(FY)

7.3

2026

(Forecast)

EBITDA margin (right axis)

400.0

300.0

10.0

41.5

36.3

32.1

32.0

Investment period

1 yearCumulative/
Annual rate
+10.3%

Cumulative

Annual rate

Cumulative

Annual rate

Cumulative

Annual rate

-48.0%-19.6%

+5.4%

+1.1%

+26.2%

+2.6%

TOPIX

+28.3%+41.1%+12.1%+78.9%+12.3%+127.8%+9.6%

TOPIX Services+17.9%+11.1%+3.6%+61.8%+10.1%+151.3%+10.8%

500.0

Sales Revenue/EBITDA/EBITDA Margin0

CL Holdings

3 years

5 years

10 years

CL Holding
TOPIX
TOPIX Services

200.0

100.0

0
(year/month) 2013/12

2014/122015/122016/122017/122018/122019/122020/122021/122022/122023/12

Total Shareholder Return (TSR): Total return on investment including capital gains and dividends.
TSR for CL Holdings Inc. is calculated based on cumulative dividends and stock price fluctuations, and for TOPIX and TOPIX Services are calculated based on a stock price index
including dividends (prepared by the Company based on data from Bloomberg and others).
The values in the graph are indexed TSR market values, with the closing price data on the last day of December 2013 equaling 100 (with a holding period until the end of December 2023).

CL Holdings Inc. Integrated Report 2023

19

Financial and Non-Financial Highlights
Financial Highlights

Non-Financial Highlights* The Group has adopted International Financial Reporting Standards (IFRS) from the first quarter of the fiscal year ended December 2022. For the fiscal year ended December
2021, indicators and other figures are those after retroactive application of these accounting standards.

Net sales/Sales Revenue

EBITDA(Millions of yen)
40,00036,344
31,991

32,055(Millions of yen)
3,000

2,744
2,133

2,000

20,00016,522

1,166

2019

(FY)

2020

2021

2022

2023

Cafe merchandising (including food and beverage sales), BPO for Internet service customers, and OEMs for entertainment customers having performed
well, revenue for the fiscal year ended December 2023 increased 13.4% year
on year to 36,344 million yen.

Diluted EPS
(Yen)
120

109.55117.44

IFRS
(FY)

2019

2020

2021

2022

0
2023

60

50.33

900

2020

2021

2022

* Diluted EPS: Net income attributable to owners of the parent / Average number ofshares outstanding during the period after deduction of treasury stock

0

2023

18.0

124

120

16.3

16.1

0

(%)
25

133

129

17.3

17.8

(FY)

2019

2020

2021

2022

2023

ROE for the fiscal year ended December 2023 increased 1.8 points YoY to6.3% as a result of an increase in profit attributable to owners of the parent.
* Return on equity up to 2020.

10

49

49

Free cash flow
951

1,097

(FY)

20

2

0.0

2019

2020

23

23

0
2021

2022

2023

5
0

4.7
233

240

2020

2022

2023

44.5
33.9

43.8

0

(FY)

11

16

2019

2020

47

37

51

2021

2022

2023

2
0

* Figures for 2019 and 2020 are the total for CL Holdings and LEGS, and figures for2021 and beyond are the total for CL Holdings, LEGS, and CDG.

Childcare leave take-up rate*
(%)
120

114.3

90

32.6
26.6

0

57.1

(FY)

2019

2020

2021

2022

2023

Calculation method: Total training hours for the fiscal year under review / Number of
employees at the end of the fiscal year
Total training hours per year = Total of each training program (program hours x number of trainees x number of training sessions)* Free cash flow = Net cash provided by operating activities + Net cash used in investing activities

With a view to instilling our management philosophy throughout the organization while strengthening management capabilities, the Group is focused on
conducting effective employee training. To enhance personal and management capabilities as well as to achieve continued growth, we revise our training methods and systems on a case-by-case basis while working to provide
effective training and ensure sufficient training time.
* Figures for 2019 and 2020 are the total for CL Holdings and LEGS, and figures for2021 and beyond are the total for CL Holdings, LEGS, and CDG.

100.0

100.0

(FY)

57.9

58.8

63.0

Total for three companies

33.3

37.5

30
0

111.1

75.0

60

Cash flows provided by operating activities were 386 million yen, while cash
flows provided by investing activities amounted to 454 million yen due to proceeds from the sale of other financial assets. This resulted in a free cash flow*of 841 million yen.

CL Holdings Inc.

4

120

IFRS
2021

6

268

Having adopted a philosophy-based management approach, the Group conducts
recruitment activities that emphasize the hiring of human resources who share thevalues of the organization. The Group is also promoting diverse work styles and creating environments in which employees can play active roles over long periods of time.

10

20

360

From the perspective of diversity, equity and inclusion (DE&I), the Group is creating environments in which diverse human resources can fully demonstrate their abilities. Having set thetarget of increasing the proportion of women in management positions in the Group to 20%
or more by 2025, we are continually implementing such initiatives as changing awarenessthroughout the Company, actively developing female employees, and promoting diverse
work styles. As a result, the ratio of women in management positions is steadily increasing.

Total for three companies

2019

8

6.0

20

(FY)

9.1

497
7.4

480

Calculation method: Number of regular employees who left the Company in the fiscal
year under review / Number of regular employees at the beginning of the fiscal year30

-2,363

(%)
10

562

9.1

Calculation method: Number of female managers at the end of the fiscal year / total
number of managers at the end of the fiscal year40

-3,000

The Group is promoting efforts designed to reduce inventory disposal in its
merchandise sales through such efforts as improving operations at theme
cafes and utilizing an IP content demand forecasting model.

 Number of people at the beginning of the fiscal year   Number of people who left the Company  
Turnover841-1,50002023

 Number of managers    Number of female managers  
Percentage of female employees in management positions(Hours)
50

0

411
2022

Total for three companies

Average annual hours of training per employee*
1,444

2021

2.5

633

Calculation method: Inventory write-down / merchandise sales (only merchandise
sales involving inventory)

Total for three companies

4.1

30
0

20
15

60

6.3

381

361
2020

514

90

10

5

 Merchandise sales (excluding food and drink sales)  
Percentage of inventory disposed of (right axis)
 Inventory write-downs  (Number of employees)
600

18.6

7.5

* Figures for 2019 and 2020 are the total for CL Holdings and LEGS, and figures for2021 and beyond are the total for CL Holdings, LEGS, and CDG.

* Figures for 2019 and 2020 are the total for CL Holdings and LEGS, and figures for2021 and beyond are the total for CL Holdings, LEGS, and CDG.

(Millions of yen)
1,500

278
2019

(FY)

Turnover*IFRS

Profit attributable to owners of the parent for the fiscal year ended December
2023 increased 40.2% YoY to 510 million yen due to an increase in operating
income. This resulted in a diluted EPS* (earnings per share) of 50.33 yen, an
increase of 15.06 yen YoY.

2022

7.3
6.3

Total for three companies(Number of employees)
150

4.5

2023

2021

6,540

5.3

4,353

Percentage of female employees in management positions*

IFRS
2019

2020

7,194

2,500

* The period covered by the measurement is the 11-month period excluding June ofeach year.
* Figures for 2019 and 2020 are the total for CL Holdings and LEGS, and figures for2021 and beyond are the total for CL Holdings, LEGS, and CDG.

5

(FY)

2019

6.7
5,384

5,000
Total for three companies

(FY)

6.4

Return on equity*/Return on equity attributable toowners of parent (ROE)

35.27
30

7,500

779

(%)
10

8,629

The Group is continually working to make effective use of energy. As part ofthese efforts, we are reducing the amount of electricity used.

15

90

1,000

1,114

EBITDA for the fiscal year ended December 2023 increased 28.1% year on year to
2,133 million yen. Although selling, general and administrative expenses, largely
comprising personnel expenses to strengthen human capital, increased, that
increase was absorbed by increased revenue. From a profit perspective, EBITDA
increased owing to upswings in operating income as well as depreciation expenses
on the back of the growth in theme cafe service stores and other factors.
* EBITDA is simply calculated as operating income plus depreciation and amortization.

(%)
20

120.73

1,126

500

500
0

(Millions of yen)
10,000

1,292

1,000
IFRS

Inventory disposed of as a percentage of sales of merchandise*

1,315

1,665

1,500

17,12910,000

0

(kw)
1,500

2,500

30,0000Annual electricity consumption per employee*

0.0

0.0

2019

2020

10.0

12.5

2021

2022

2023

Childcare leave take-up rate (total of men and women)  
Male take-up rate   
Female take-up rate
Calculation method: Number of employees who commenced childcare leave in the fiscal
year under review / Number of employees who gave birth in the fiscal year under review(For men, the number whose spouses gave birth)

Our Group is introducing a range of systems and improving working environments torealize diverse work styles. The percentage of women taking childcare leave remains at
a high level, and the percentage of men taking childcare leave is also steadily increasing.
* Since some employees commenced childcare leave in a different fiscal year than the one
in which they gave birth, the childcare leave take-up rate in 2020 and 2021 exceeds 100%.
* Figures for 2019 and 2020 are the total for CL Holdings and LEGS, and figures for2021 and beyond are the total for CL Holdings, LEGS, and CDG.

CL Holdings Inc. Integrated Report 2023

21

Sustainability
To advance social sustainability, the Group aims to enhance its ability to provide services by pursuing innovationand enhancing the quality of sustainability throughout its entire business value chain. At the same time, we strive
to generate profits and improve corporate value by solving an array of social issues.

The CL Holdings Sustainability Policy

Efforts to create social value
Underpinned by its management philosophy, the Group

in our human capital and believe that maximizing the capa-

recognizes that human resources are the wellspring of its

bilities of our human resources will allow us to provide safe,

competitiveness. Positioning “continuously recruiting andreliable, high-quality products and services. We will con-developing human resources” and “nurturing managementtinue to engage in creating social value in a variety of ways,

personnel” as material issues, we are focused on investing

including investing in human capital.

CL Holdings helps to realize a sustainable society by adhering to its management philosophy.
Major Initiatives and Dialogue Methods
The Group formulated the CL Holdings Sustainability Policy as

and appointed a dedicated executive officer responsible fora basic guideline for creating and promoting sustainability-re-sustainability. At the same time, we established committees

lated initiatives. In accordance with this policy, we establishedintended to promote the SDGs at each of our major subsid-

an organization to promote sustainability within the Group,iaries, through which we are advancing specific initiatives.

taking various approaches as part of an ongoing effort dothreaten the sustainability of society and the world aredecarbonize and reduce our environmental impact, includ-

important management issues. We therefore included “sus-ing through the use of digital technologies.

 Improve human resources systems(remote working system, life event support
system, childcare support system, flextime
system) Promote diversity, equity and inclusion(DE&I) (increase the ratio of women in
managerial positions, introduce partnership certificates, and promote employmentof persons with disabilities) Improve the environment so that challenges can be taken without worry(career support program, compensationlevel optimization)

tainable business development” as a material issue, and are

Major Initiatives and Dialogue
Methods

Stakeholders

Stakeholder
Expectations/Demands

Initiatives for Creating
Environmental Value Have new employees engage in ISO
activities Engage in clean-up activities inneighboring areas

Efforts to createsocial value

Environment Clients Local communities Participate in the Resource-Recycling
Platform Participation in social
contribution activities Promotion of decarbonization and a lower
environmental impact Reduce inventory disposal using IPDB
(IP content analysis and sales forecasting system) Shareholders
and investors Promotion of DE&I
 Improved employee
engagement
 Maintenance andenhancement of corporate
value

Partnership, Coexistence, andCoprosperity Implement SDG awareness programs using
IP content*3 Copyrightholders Localcommunities Cooperation toward solutions to the problems
faced by local communities Consumers Consumers Clients Copyright holders Shareholders andinvestors Environmentallyfriendly goods and gifts

Products and Services Promotion of decarbonization and a lower
environmental impact ISO14001

 Clients ISO9001
 PrivacyMark Cooperatingcompanies Provision of safe, reliable,
high-quality products andservices Copyrightholders Maintenance and enhancement of corporate value Shareholders
and investors*3: Initiatives intended to stimulate interest in the SDGs through the planning and execution of interactive events using IP content.
*4: Initiatives in which the Group collaborates with local governments to guide customers to, and encourage movement around, well-known sites and facilities through digitalstamp rallies using mobile game apps.

Introducing Environmentally-friendly Products (goods and gifts)

Topic

CHRO Council

The Group promotes sustainability- and SDGs-related initiatives throughthe development of goods and gifts that consider the global environment.

Serving as the secretariat, the Group administers regularly held study meetings that primarily attract volunteers from among human[Major Products]

information and shares challenges, this effort contributes to finding solutions to problems

resource executives at listed companies in a way that overcomes the barriers between companies. As each company exchanges

Coffee cups, teacups, and saucers made from recycled porcelain
clay: These are produced from recycled porcelain clay, which is made by mix-

faced by individual companies, and serves to polish the skills of personnel aiming for CHRO.
Members discuss the common challenges faced by each company that are raised during

ing clay and other ingredients with finely crushed chips generated during theceramics-making process.

hearings with the participants, including nurturing future generations of executives, train-

Recycled PP file folders: These are produced from ecological plastic materials,

ing for management positions, and creating organizations and cultures. Along with deep-

which are made by recycling cuttings generated during the PP sheet forming process.

Bioplastic straws: These are produced from a formulation containing

bio-polyethylene (derived from plants and lacking biodegradability), and areused at all BOX cafe&space establishments.

22 Employees Promote health management Plan and propose regional revitalization
measures*4*1: FSC-certified paper is made from wood harvested from forests that are strictly managed for the purpose of protecting forest resources. Paper that is certified under a systemdeveloped and managed by the Forest Stewardship Council, an international non-profit organization.
*2: New materials that can be molded for use as alternatives to plastics. These are primarily made from paper powder, which reduces environmental impact, mixed with polyolefin resin.

Topic Realization of diverse
work styles

 Build mechanisms to cultivate human talent(Philosophy Study Meeting, philosophy
education, leader management education,
Junior Board System, CHRO committee)

Products and Services Use environmentally-friendly as well as
recycled materials (gifts and displays
made using FSC-certified paper*1 and
MAPKA plastic*2, goods made using
recycled porcelain clay, etc.)

Stakeholder
Expectations/Demands

Human capital

Initiatives for Creating Environmental ValueThe Group recognizes that environmental issues that

Stakeholders

CL Holdings Inc.

Recycled porcelainclay coffee cup

Recycled PP file folders

ening learning among the participants, the meetings serve as an arena to acquire hints forsolving the challenges faced by their respective companies. As such, the Council has garnered high praise from participants.

A CHRO Council meeting

CL Holdings Inc. Integrated Report 2023

23

Corporate Governance

Sustainability

Pick Up: Fostering Future Generations of Management

CL Holdings regards corporate governance as an important management issue and has focused on ensuring sound,

Having recognized human resource capabilities underpinned by the management philosophy as the source of ourcompetitiveness, the Group included “continuously recruiting and developing human resources” and “nurturing
management personnel” as material issues, and is therefore actively investing in human resource development.

Challenges Faced by the Grouptransparent, and speedy management. Moreover, under the Group Management Philosophy, we have established abasic policy for internal control and are promoting the understanding of our management philosophy, which aligns
with ethical values, among all employees. We will continue to strive to realize an effective corporate governance system and to continuously enhance our corporate value, both by fostering ethical values and by creating a framework.

Corporate Governance Structure• Aligning the mental vectors of all employees• Early training targeting management personnel who will take responsibility for future generations
With the aim of sustainable growth for the CL Group as we strive to realize ourShareholders’ Meeting

In order to ensure the Group grows in a continuous manner, every employee
must align their mental vector toward realizing the management philosophy,
and must possess the shared beliefs required to act in unison. The CL Philosophy
is a code of conduct that is shared throughout the Group, and was formulated
to create a common language among employees and to serve as a signpost for

Aligning Mental Vectors

CL Philosophy(standards for making decisions about actions that
employees take to actualize the management philosophy)

employees when unsure how to proceed as they perform their daily work.

Instilling the CL Philosophy
Each organization regularly holds its own Philosophy Study Meetings in which participants read the management philosophy andthrough these study meetings, which helps spread the Group’s approaches and philosophies to every corner of the organization.
In this way, this initiative serves to align the mental vectors of every employee.

Advisory
Recommendation

Directors and Board of Directors

Advisory

Compliance andGovernance Committee

Recommendation
Collaboration
Internal Audit Office

Collaboration

Accounting
auditors

they learned to their team members. Participants acquire the ability to talk about the management philosophy and CL Philosophy

Nominating andCompensation Advisory
Committee

Appointment/dismissal

Supervision

Reports

President & CEO
Advisory

Audit

Collaboration

CL Philosophy in turn and hold discussions to expand their understanding of these, as well as to ensure they put them to use in
their daily work. After attending lectures on each of the tenets of the philosophy from the president, managers then pass on what

Appointment/dismissal

Appointment/
dismissal

What is the CL Philosophy?

(universal beliefs, thoughts,
values, philosophies)

Audit and Supervisory Board
members and Audit &Supervisory Board

The CL Philosophy and Initiatives to Put It into PracticeManagement
Philosophy

Appointment/
dismissal

management philosophy, we are working to promote these two areas.

Audit
Collaboration

Reports

Board of Executive Officers
Instructions

Reports

Business execution divisions of the Company and Group companies

Audit

Consultation
Collaboration

AdviceGeneral Counsel(As of March 29, 2024)

Initiatives to Nurture Management Personnel
Junior Board System

Board of Directors

enhance our corporate governance system, we have estab-

Our Board of Directors consists of one President & CEO andlished a Nominating and Compensation Advisory Committee as

seven other directors (including three outside directors), anda voluntary advisory body to the Board of Directors. The com-in addition to regular monthly meetings, extraordinary meet-mittee is chaired by an outside auditor and consists of threeings are held as necessary. The term of office for directors is

auditors (of which two are outside auditors) and three outside

one year, and by appointing outside directors who havedirectors. The committee responds to inquiries from the Board

excellent insight into all aspects of management, we areof Directors regarding the appointment and dismissal of direc-

Leader Management Education

working to ensure that management supervision is strength-

tors, auditors, and executive officers; the succession plan for the• This system is held for the leader class and aims to develop leaders who excel both in terms of skills and personalities. Through discussions

ened by the incorporation of neutral and outside perspec-

Chief Executive Officer; director and auditor compensation lim-

among leaders and lectures conducted by outside experts, participants acquire the knowledge and ways of thinking required of leaders.

tives and ensure that management is transparent and fair.

its to be discussed at the Shareholders’ Meeting; and compensa-• This system was launched in fiscal 2023 for the purpose of developing future generations of manager candidates. Members
selected from among young and mid-career employees perform the entire cycle of identifying management issues, formulating solutions, implementing them, and verifying the results in order to acquire experience in improving management.
• This system invites managers from the Group and corporate managers from other companies to provide lectures and conduct
discussions on management. In addition, participants analyze each business within the Group, and investigate and execute
various measures targeting solutions to management issues, including improving customer satisfaction and productivity.

tion amounts for individual directors and executive officers.

Audit and Supervisory Board
ColumnImpressions upon participating in the Junior Board System (member feedback)• This system gave me an excellent opportunity to directly hear about the president’s thoughts regarding the management philosophy and strategies, for example, and to even ask questions.
• I was able to actually investigate management issues based on various types of
information and data from my company and other Group companies, and waseven able to experience taking action, which I felt helped me grow.
• Each of the Junior Board members learned how to think in ways that link theirown area of expertise, whether it be planning, design, or sales, for example, tomanagement. The system also increased my interest in the profitability and productivity of my affiliated department, and I felt it also deepened communication
within my own department.

24

CL Holdings Inc.

CL Holdings employs an Audit and Supervisory Board System ofCompliance and Governance Committee

one full-time and two part-time outside auditors. The Audit and

A Compliance and Governance Committee has been establishedSupervisory Board meets once a month to discuss important

as a voluntary advisory body to the Board of Directors in order to

audit-related matters and exchange information. Each auditor

maintain and improve the maintenance, operation, and evaluation

also participates in meetings of the Board of Directors, while theof a sound compliance system and a transparent corporate gover-full-time auditor attends other important meetings, such as thenance system. The committee is chaired by an outside director andBoard of Executive Officers Meeting, to monitor the execution

consists of five outside directors and three internal directors. Theof duties by directors and the Board of Executive Officers.

committee responds to inquiries from the Board of Directors
regarding the formulation of basic policies for the promotion of

Fiscal 2023 Junior Board members

Nominating and Compensation Advisory Committee

compliance and governance, the formulation of countermeasures

To ensure the transparency and objectivity of procedures related

and improvement measures when incidents occur, and recommen-to the nominating and compensation of directors and to further

dations for improvement to the relevant departments and others.
CL Holdings Inc. Integrated Report 2023

25

Corporate GovernanceEvaluation of the Effectiveness of the Board of Directors

Skills Matrix of the Board of Directors

In order to continuously improve the effectiveness of theorganization analyze and evaluate the results. After receiv-

Board of Directors, the Company conducts a questionnaire

ing a report on the results, the Board of Directors discusses

of all officers (directors and auditors) participating in the

future issues related to the effectiveness of the Board of

Board of Directors meetings and has a third-party

Directors as a whole.

Improvements and Continuing Issues for FY2023
1. Discussions and initiatives related to governance and risk management

Observed
Improvements

2. Discussions and initiatives regarding the appointment and dismissal of members of the management teamwith appropriate involvement and advice from the Nominating and Compensation Advisory Committee

Skills that can be specifically utilized in the expertise we require

Name

Junichiro Uchikawa
Makoto Yoneyama
Satoshi Yamashita
Hideo Konishi
Mitsuru Ishimura
Director Hiroshi Sonobe
OutsideOutsideContinuing
IssuesIndependent

3. Deeper understanding of matters raised by executives themselves

Sachiyo Yasuda

1. Ensuring the diversity of the executives’ backgrounds

Hajime Kusuda
Hiroshi Magaribuchi

2. Providing appropriate training opportunities for executives

Auditor1. Difference in information between outside directors and other directors and improvement of that situation
2. Stimulating communication between outside directors

OutsideIndependent

Legal &
Governance







Independent

Human
Resources/
Human
ESG/SDGs
Resource
Development



































Overseas
Business

Sales &
Marketing

Production
Engineering/
Quality
Control







DX/IT

Content
Business

New
Business
Development











Independent

Motoo Kobayashi
Outside

Finance &Accounting

Independent

Takashi Watanabe
OutsideDivergent
Evaluations

Management


































Policy on Constructive Dialogue with Shareholders and Investors

3. Discussions and initiatives on sustainability and intangible assets

Executive Remuneration System

In order to promote constructive dialogue with sharehold-investors, the Group holds biannual business results brief-

ers and investors in Japan and abroad, the CL Holdings

ings and publishes an annual integrated report. The Group

Group conducts IR activities led by the President & CEO andalso explains its businesses to investors in a timely manner.

CL Holdings’ executive remuneration system is based on theCommittee is consulted on compensation proposals based onin close cooperation with the responsible directors, theThe valuable opinions received from shareholders andprinciple that remuneration is linked to medium- and long-the compensation table established by the Board of Directors,

department in charge of IR, and departments involved ininvestors are promptly reported to the management execu-

term improvements in corporate value and the achievement

and the committee verifies and reports on the appropriate-accounting, finance, legal, and general affairs, among oth-tives and Board of Directors in an effort to help improveof management targets. Directors’ compensation consists ofness of the proposals by incorporating data from executive

ers. Along with actively responding to interviews withmanagement.

monthly compensation, which is fixed compensation, andcompensation surveys conducted by external organizations.

bonuses, restricted stock compensation, and stock options,Performance-linked compensation

which are performance-linked compensation, where 1)

Compliancefixed compensation and 2) performance-linked compensa-

Bonuses, restricted stock compensation, and stock options,

As stated in our management philosophy, “we will continue toCommittee, consisting mainly of outside directors, which for-tion are each determined based on independent criteria.

which are performance-linked compensation, are deter-

contribute to the advancement of society through sound busi-

mulates and reviews various policies and systems, and prepares

mined in accordance with the Company’s performance andness activities.” We recognize that compliance is an essential

measures to respond to and remedy problems when theyeach director’s contribution to management, with the aim ofpart of our corporate activities and that maintaining soundoccur. This committee also investigates compliance measures

Monthly compensation, which is fixed compensation, ismaking the linkage to performance clearer and increasing

management is indispensable for long-term enhancement ofintended to prevent misconduct before it occurs and to pre-determined according to position and responsibility, taking

the motivation to contribute to improving performance andcorporate value.

vent its recurrence, and monitors the status of implementation.

into consideration social conditions, the Company’s businessincreasing corporate value. Specifically, payment amounts

environment, and the standards of other companies in theare determined based on the year-on-year growth rate ofpromoting various types of education that are founded on

approaches of ethics (individual) and systems (organizational),

same industry. The Nomination and Compensation Advisory

EBITDA and operating income.

education regarding our management and other philosophies.

which includes conducting compliance training for all directors

We also established the Compliance and Governanceand employees on an ongoing basis.

Fixed compensation

We will improve the integrity of each and every employee by

We are also working to strengthen compliance from the two

Total amount of compensation for directors and Audit and Supervisory Board Members (FY2023)
Executive classification

Directors(outside directors)
Audit and Supervisory Board
members(outside Audit & Supervisory
Board members)

Total amount of compensation by type (thousands of yen)
Total amount of comNumber of directors
pensation, etc.
and auditors covered
Performance-linked Non-monetary comRestricted Stock
Basic compensation(thousands of yen)by the plancompensation
pensation, etc.
Compensation Plan

78,039(19,806)

71,182(19,806)

3,895
(―)

2,184
(―)

778
(―)

8
(3)

20,100(9,600)20,100(9,600)

―
(―)

―
(―)

―
(―)

3
(2)

* Stock acquisition rights are granted to directors in the form of stock options as non-monetary compensations, etc.

Training for Directors

26

For internal directors and Audit and Supervisory Board

provide support for the cost of such training. In addition,members, we provide opportunities for external training,

the Company provides financial support to individual direc-

such as executive coaching to ensure that they fully under-

tors and Audit and Supervisory Board members, including

stand the roles and responsibilities expected of them as

outside directors and auditors, who voluntarily undergo

directors and corporate auditors when they take office, andstudy or training.

CL Holdings Inc.

Specific Initiatives
Philosophy
Education

The president himself serves as instructor for the program, which is open to all Group employees. The purpose of the program is to share
our management philosophy and the CL Philosophy to promote the growth of employees’ humanity based on those philosophies andto develop the ability to approach work from a manager’s viewpoint. By learning about our management philosophy and the CL
Philosophy and having employees incorporate them into their daily activities, we aim to get employees’ thinking and acting going in thesame direction, which in turn will lead to the self-realization of each employee and the achievement of the company’s goals.

Philosophy
Study Meeting

To deepen understanding of our management philosophy and the CL Philosophy and link them to daily actions, meetings are held
regularly by department to read them by turns and discuss them. By enabling each employee to talk about them, the Group’s thinking and philosophy are spread to all corners of the organization, leading to the cultivation of a corporate culture.

Compliance
Education

In addition to basic knowledge of compliance, we provide ongoing training via e-learning and other means to deepen
understanding of laws and regulations (Act against Unjustifiable Premiums and Misleading Representations, Subcontract
Act, and intellectual property such as trademarks and copyrights) that we face in our daily work.

Whistleblowing The Group has established and is operating a whistleblowing system for all employees, including directors, for the purposeof preventing and detecting organizational or individual violations of laws and regulations and misconduct at an early stage,
Systemand improving the agility of the self-cleansing process. To ensure that whistleblowers are not treated unfairly, an appropriate
reporting system is in place with the full-time auditor or an outside attorney as the contact point.

CL Holdings Inc. Integrated Report 2023

27

Corporate Governance ialogue: Engaging in Human Capital Management in a Bid to Realize
D
Our Management Philosophy
President & CEO, CL Holdings Inc.

Junichiro Uchikawa

Akio Ishida

Senior Partner, Vice Chairman
Nippon Sangyo Suishin Kiko Ltd.

right to do as a person, and have the ability to judge rightfrom wrong as the basis for conduct.
Uchikawa	I myself currently aim to build an empowerment-based organization founded on the concept of philosophy-based management. I am therefore working to create independent-mindedorganizations in which employees see themselves in the leadrole, and are able to engage in their work with vitality. And as thefoundation for supporting the growth of this kind of Group, I
believe that all Group employees must have a shared belief andact upon a philosophy that serves as the basis for judging conduct.

Philosophy-Based Management at CL Holdings
Uchikawa LEGS COMPANY, LTD., and CDG Co., Ltd. form the core of theJunichiro Uchikawa
President & CEO, CL Holdings Inc.

Akio Ishida
Senior Partner, Vice Chairman
Nippon Sangyo Suishin Kiko Ltd.

From Our First Encounter with Philosophy-Based Management to Today

on my desire to create an environment in which promising
CL Group. Yet LEGS and CDG initially had their own respecyoung employees can play an ever-greater role.
Ishida	That is truly wonderful. The origin of philosophy-based
tive action guidelines. Under the desire to present one set ofmanagement lies in focusing our energies on expanding
action guidelines for the Group, however, together with our
employees I revised these two guidelines into the new CL
our network of colleagues. Conversely, this can also somePhilosophy based on the philosophy taught by Mr. Inamori.
times mean we must ask employees whose values do not
Today, we have published this CL Philosophy as a handbook
match those of the company to leave. As I mentioned athat all Group employees keep with them, reading in turnmoment ago, if there is even one person who rows theand in unison. The CL Philosophy also contains an article
boat backwards, the rowers cannot align their strength.
Uchikawa I see our employees as colleagues with whom I strive, andtitled transparent management. I believe it is important fortherefore intend to build the organization and company
companies to open up internal information to their employees if they are to maximize their potential. And as a result of
together with them. This was also my way ofmaking profit and loss statements, overtime hours, enterthinking when I founded LEGS and built its
tainment expenses, and all manner of information fromorganization, which is exactly why I feel thoseeach department public, even our younger employees havearound me have kept apace. Company management might really be entirely aboutbecome aware of problems, and have started to state theirincreasing our network of colleagues.
opinions more and more. Upon seeing this change takeplace, we launched the Junior Board System last year based

Uchikawa	We first met after I entered Seiwajyuku, which means wewill enjoy their work and become even more capable.
have known each other for more than 20 years now. You Uchikawa	I am sure you have heard the phrase “believing is power.”
I have in fact seen countless examples where even comstill often give me advice, and I truly appreciate everything
pletely ordinary people have changed in every respect
you have done for me. As a current member of a management committee for a fund established to provide manafter encountering Mr. Inamori, coming to believe in theagement assistance, you have led investments in a variety
philosophy-based management he advocated, andof small- and medium-sized enterprises, and haveengaging in their work based on that concept. I myself
provided practical management assistance. Whenknew almost nothing about management and had noyou were employed at Merrill Lynch Japanidea what to believe regarding the development of peoSecurities, however, you were involved in every US
ple and organizations, so the philosophy-based manageexpansion and M&A project undertaken by Kyocera
ment taught by Mr. Inamori was truly a ray of light for me.
Ishida	Although thinking about what is right to do as a person
Corporation under the leadership of Mr. Inamori.
Ishida	I first met Mr. Inamori nearly 50 years ago when Kyocera
can seem simple, it is in fact the most difficult, yet extremely
was working to enter the US market. Mr. Inamori originally
important, thing to do. When looking at the recent problems of fraud that have been discovered time and time
conceived philosophy-based management in response to aagain at large companies, it reminds me of the phrase “thedozen or so young employees who threatened to quit thepath to hell is paved with good intentions.” Something ancompany if he did not meet their demands for a pay raise.
employee does under the belief that it might be good forThis was just around the time he founded Kyocera. Afterthe company can as a result end up betraying the comspending three days and three nights successfully working
pany—and violating the law. One of the most noble things
to convince them to stay, Mr. Inamori began thinking
about Mr. Inamori is that he clearly indicated that acting
about how he could lead the many employees that madeupon the foundation of what is right to do as a person willup the company. Ultimately, he came to the conclusion
reduce errors in judgement, and that even small efforts, forthat all employees must strive in the same direction (alignexample, hold major significance. For example, when Mr.
their mental vectors). Mr. Inamori likened this concept to a
Inamori was involved in reorganizing the management offour-person boat, often saying that if even one person
Japan Airlines Co., Ltd., he commended a young female
rowed in the opposite direction, the boat would not travel
office worker who devised her own changes that generforward in a straight line. In other words, everyone needs
ated 2,000 yen in profit each month, even though there
to move in the same direction. At the same time, companies must ensure that employees understand the signifiwere also general managers who had generated hundredsof millions of yen in profit. Companies that become stroncance of their work. If a person knows why they are
ger are those that employ multiple individuals who recogworking and understands who they are helping, they will
nize themselves as managers, constantly consider what is
engage in their work with all of their effort. As a result, they28

CL Holdings Inc.

Human Resource Development and Organization Building in Support of Sustainable Growth
Ishida We must also commend and evaluate human resources inmore ways than just recognizing the strength of their talents.
For example, highly capable individuals might have the ability to point out problems, but in practice they also tend to failto take action. Which is why it seems that, in most cases, success only arises when we place those who can actually takeaction—who have the ability to drive forward—in leadership
positions within the Group, and position highly capable people at their sides. In other words, both types of humanresources are essential to driving organizations forward.
Uchikawa It is far from easy to place a diverse range of human resources on
the same boat and get it moving. So, I am honest during

recruitment activities, often saying that I only want those who
sympathize with the Group’s philosophy to join the company.
Although it is only natural for individuals to have differing value
sets in this era of diversity, all I am saying is that I want their values to align with those of the organization. Despite the fact that
this approach might also narrow the gateway to the organization, I believe it is a necessary part of preventing mismatches.
Ishida	If managers cannot understand the concept of philosophy-based management in their own terms and convey
it to those around them, they will not be able to leadeveryone in the same direction. I think you have done
an amazing job at putting this approach into practice.

What are the qualities required of successors?
Uchikawa	Governance and compliance are the absolute minimum for

Ishida I believe a necessary quality for managers is first and foremost
ensuring companies exist as entities upon which society relies
strict self-discipline. Without strict self-discipline, managers canover the long term. And it is upon these which we must instill
not have confidence in their speech and actions. Moreover, I
integrity as part of the corporate culture. For this purpose, I
would also hope my successor fully considers why they are doing
this job, and whether the company’s businesses truly offer benebelieve managers must take the initiative and speak of the phifits to society. And I hope they are fully committed to management.
losophy on a regular basis, and must demonstrate this philosoUchikawa	I feel exactly the same. And I must also ask myself in all honesty
phy through concrete action. Moreover, it is my hope that mywhether I am constantly following the same straight line in mansuccessor can give their all for their colleagues, and stand as anindividual that is trusted and loved by their colleagues. A person
agement. On the other hand, along with teaching future generwho has talent built on virtue is the perfect fit for ensuring theations within the company about what I have learned to date, I
organization maintains integrity while steadily generating profits
also want to convey to them the dream and possibility that if I
could do it, so can they.
as an operating company.

Akio Ishida

Senior Partner and Vice Chairman of Nippon Sangyo Suishin Kiko Ltd. In 2001, he served as vice-chairman of Merrill Lynch Japan Securities Co., Ltd. In 2006, he served as
vice-chairman of TPG Capital (Japan), Ltd. He established Nippon Sangyo Suishin Kiko Ltd. in 2014, and was appointed vice-chairman. In July 1992, he entered Seiwajyuku
where he studied under Kazuo Inamori. From April 2016 to March 2018, he served as principal representative of Seiwajyuku, Tokyo.

CL Holdings Inc. Integrated Report 2023

29

Directors and Auditors

Junichiro Uchikawa
President & CEO

1988 March	Founded LEGS COMPANY, LTD. (currently, CL HoldingsInc.), Representative Director
1991 March	Founded SIP Company, Ltd. (currently, REET Inc.),
Representative Director
1994 February	President & CEO, LEGS COMPANY, LTD. (to present)
2009 July	Director, M&I Co., Ltd.
2014 July	Outside Director, Oreno Corporation
2016 February	Director, JU Co., Ltd. (to present)2017 May	Auditor, Asia Leaders Association (to present)
2020 July	Chairman, LEGS (SHANGHAI) TRADING COMPANY,
LTD. (to present)
2020 July	Chairman, LEGS (SHANGHAI) CULTURAL AND
CREATIVE COMPANY, LTD. (to present)
2021 June	Chairman & Representative Director, CDG Co., Ltd. (topresent)
2021 August	LEGS COMPANY, LTD. established, President & CEO,LEGS COMPANY, LTD.
2021 September	Chairman, LEGS (SHENZHEN) TRADING COMPANY,
LTD. (to present)
2023 January	Chairman, LEGS COMPANY, LTD. (to present)

Hideo Konishi
Director

1996 April	Joined CDG Co., Ltd.
2019 April	CEO, CDG Co., Ltd. (to present)
2021 January	Director, CL Holdings Inc. (to present)
2024 February Director, Gifu Create Corporation (to present)

Takashi Watanabe
Outside Director

1989 April	Joined Temporary Center Inc. (currently, Pasona Inc.)
1997 April	Representative Director and President, Pasona career
assets Inc. (currently, Pasona Inc.)2018 August	Executive Officer and Vice President, Pasona Group Inc.
2022 March	Outside Director, CL Holdings Inc. (to present)
2022 March	Outside Director, CARTA HOLDINGS, Inc. (to present)

Hiroshi Magaribuchi
Outside Auditor

1984 April	Joined SHINKO ELECTRIC INDUSTRIES CO., LTD.
1992 September	Joined Mio Certified Public Accountant Office
1995 December	Established Hiroshi Magaribuchi Certified Public Tax
Accountant Office, Head (to present)2008 December	Outside Auditor, GLOBALPOWER Inc. (to present)
2009 May	Outside Auditor, Kofu Soko Co., Ltd. (to present)2014 March	Outside Audit & Supervisory Board Member, CL
Holdings Inc. (to present)2015 June	Outside Auditor, Youji Corporation (to present)30

CL Holdings Inc.

Makoto Yoneyama
Director

1980 March	Joined Kyoto Ceramic Co., Ltd. (currently KYOCERA
Corporation)2008 April	Managing Director, KYOCERA MITA JAPAN Corporation(currently, KYOCERA Document Solutions Japan, Inc.)
2012 April	Managing Executive Officer, Corporate Control
Division, Japan Airlines Co., Ltd.
2015 April	Senior Managing Director & General Manager,
Administration Division, KYOCERA Communication
Systems Co., Ltd.
2016 March	Joined LEGS COMPANY, LTD. (currently, CL Holdings Inc.)
2017 March	Representative Director, SIP Company, Ltd. (currently,
REET Inc.)
2020 June	Director, CDG Co., Ltd. (to present)
2020 July	Director, LEGS (SHANGHAI) TRADING COMPANY, LTD.
(to present)
2020 July	Director, LEGS (SHANGHAI) CULTURAL AND CREATIVECOMPANY, LTD. (to present)
2021 September	Director, LEGS (SHENZHEN) TRADING COMPANY, LTD.
(to present)
2022 March	Director in charge of Business Administration, CL
Holdings Inc. (to present)
2022 March	Director in charge of Business Administration, LEGSCOMPANY, LTD. (to present)

Mitsuru Ishimura
Director

1983 April	Joined The Bank of Tokyo, Ltd. (currently MUFG Bank,Ltd.), International Division, BOT Lease Co., Ltd.
1988 January	Joined Paribas Capital Markets (currently BNP Paribas
Securities (Japan) Limited)
2000 April	Managing Director in charge of Investment Banking
Division, HSBC Securities (Japan) Limited
2013 May	Executive Director, Japan Association for Securities
Learning (to present)2015 June	Outside Director, MARUHAN Corporation
2016 April	Independent Outside Director, SATHAPANA Bank PLC.
2019 January	Advisor, Kanie JAPAN Co., Ltd. (to present)
2021 March	Director, CL Holdings Inc. (to present)
2022 June	Advisor, ESG, Ltd. (to present)

Sachiyo Yasuda
Outside Director

1992 April	Joined Recruit Co., Ltd. (currently, Recruit Holdings
Co., Ltd.)2014 April	Executive Officer in charge of New-graduates
Recruiting Operation Division, Recruit Career Co., Ltd.
(currently, Recruit Co., Ltd.)
2019 May	Joined ExaWizards Inc., Executive Officer
2021 May	Director, ExaWizards Inc., Practical AI & DX ResearchCenter (to present)
2022 March	Outside Director, CL Holdings Inc. (to present)
2022 November	Business Development Manager, LegalOn
Technologies, Inc. (to present)
2023 February	Advisor, Shinnihonseiyaku Co., Ltd. (to present)
2023 December	Outside Director, Shinnihonseiyaku Co., Ltd. (topresent)

Motoo Kobayashi

Executive Officers

Satoshi Yamashita
Director

2002 April	Joined LEGS COMPANY, LTD. (currently, CL Holdings Inc.)
2020 July	Director, LEGS (SHANGHAI) TRADING COMPANY, LTD.
(to present)
2020 July	Director, LEGS (SHANGHAI) CULTURAL AND CREATIVECOMPANY, LTD. (to present)
2022 January	Director, CL Holdings Inc. (to present)
2023 January	President & CEO, LEGS COMPANY, LTD. (to present)
2023 October President & CEO, elCOCO.inc (to present)

Kiyoyuki Ichikawa

Jotaro Tani

Naoki Noda

Executive Officer

Executive Officer

Executive Officer

Concurrently serving as Executive Officer, LEGSCOMPANY, LTD. and Director, CDG Co., Ltd.

Concurrently serving as Executive Officer, LEGSCOMPANY, LTD. and Representative Director, LTR.inc

Concurrently serving as Executive Officer, LEGSCOMPANY, LTD., Representative Director, REET Inc.,
Executive Officer, CDG Co., Ltd., Director, LTR.inc. andDirector, elCOCO.inc

Yasuhiro Furuse

Go Kuwata

Satoshi Nishijima

Executive Officer

Executive Officer

Executive Officer

Concurrently serving as Executive Officer, LEGSCOMPANY, LTD. and Executive Officer, CDG Co., Ltd.

Concurrently serving as Executive Officer, LEGSCOMPANY, LTD.

Concurrently serving as Executive Officer, LEGSCOMPANY, LTD., Director, LEGS (SHANGHAI)
CULTURAL AND CREATIVE COMPANY, LTD., andDirector, LEGS (SHANGHAI) TRADING COMPANY, LTD.

Hiroshi Sonobe
Outside Director

1992 April	Entered the Legal Training and Research Institute of
the Supreme Court of Japan
1994 April	Joined Kiyoshi Suda Law Office
2001 October	Established Hayashi, Sonobe & Fujigasaki Law Office(currently HS & Co.), Representative Attorney-at-Law(to present)2016 March	Outside Director, PALTEK CORPORATION
2016 March	Outside Director, Japan Property Management Center
Co., Ltd. (Audit and Supervisory Committee Member)2016 June	Outside Director, Tokyo Tekko Co., Ltd. (Audit andSupervisory Committee Member) (to present)2017 March	Outside Director, CL Holdings Inc. (to present)
2022 June	Outside Director, Care Service Co., Ltd. (to present)

Hajime Kusuda

Full-time Corporate Auditor

1988 April	Joined LEGS COMPANY, LTD. (currently CL Holdings Inc.)
2012 March	Director, LEGS (SHENZHEN) TRADING COMPANY, LTD.
2014 March	Representative Director, SIP Company, Ltd. (currently,
REET Inc.)
2020 April	Director and Deputy General Manager, Sales Division,
BONMAX CO., LTD.
2021 March	Auditor, LEGS COMPANY, LTD. (to present)
2021 March	Auditor, REET Inc. (to present)
2021 August	Auditor, LEGS COMPANY, LTD. (to present)
2021 September	Auditor, LEGS (SHANGHAI) TRADING COMPANY, LTD.
(to present)
2021 September	Auditor, LEGS (SHANGHAI) CULTURAL AND CREATIVECOMPANY, LTD. (to present)
2021 September	Auditor, LEGS (SHENZHEN) TRADING COMPANY, LTD.
(to present)
2022 June	Auditor, CDG Co., Ltd. (to present)

Kaname Sato

Takuto Yamakawa

Hideyuki Yasujima

Executive Officer

Executive Officer

Executive Officer

Concurrently serving as Executive Officer, LEGSCOMPANY, LTD.

Hiroaki Watanabe
Executive Officer
Concurrently serving as Executive Officer, CDG Co., Ltd.

Concurrently serving as Executive Officer, LEGSCOMPANY, LTD. and Director, CDG Co., Ltd.

Masaya Ueno
Executive Officer
Concurrently serving as Executive Officer, LEGSCOMPANY, LTD. and Executive Officer, CDG Co., Ltd.

Concurrently serving as Executive Officer, LEGSCOMPANY, LTD and Director, CDG Co., Ltd.

Miwa Takahashi
Executive Officer
Concurrently serving as Executive Officer, LEGSCOMPANY, LTD. and Executive Officer, CDG Co., Ltd.

Taketo Isoda
Executive Officer
Concurrently serving as Executive Officer, CDG Co., Ltd.

Outside Auditor

1978 April	Joined KYOCERA Corporation
2008 April	President & Representative Director, KYOCERA
Communication Systems Co., Ltd.
2015 December	Retired as Chairman & Representative Director,
KYOCERA Communication Systems Co., Ltd.
2018 March	Outside Auditor, CL Holdings Inc. (to present)

CL Holdings Inc. Integrated Report 2023

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Corporate Outline

Stock information

Corporate name

CL Holdings Inc.

Representative

President & CEO

Head office

Tokyo, Minato Ward, Minami Aoyama 2 chome, 26-1

Junichiro Uchikawa

D-LIFE PLACE MINAMIAOYAMA 11f & 12f

Fiscal Year

From January 1 to December 31

Ordinary General
Meeting of Shareholders

March

Shares(As of December 31, 2023)

Total number of authorized shares

39,200,000

Total number of shares issued

10,840,000 (includes 683,150 shares of treasury stock)*Establishment date of LEGS COMPANY, LTD. before changing its corporate name to CL Holdings Inc. (January 1, 2022)

Number of shareholders

5,513

Capital

350 million yen

Stock exchange listingStandard Market of the Tokyo Stock Exchange

Business field

Managing of group companies and activities related to the above

Stock trading unit

100 shares

EstablishedMarch 1988*

Major Subsidiaries

Major Shareholders

Corporate nameBusiness field

LEGS COMPANY, LTD.

Planning, development, and production for promotional services and the entertainment business

CDG Co., Ltd.

Offering of marketing communication plans, planning and implementation of promotional marketing solutions, planning and implementation of client’s overall business operation solutions

LTR.inc

Theme cafe planning and production, and store development and operation

elCOCO.inc

Planning, development, manufacturing, and sales of sundries that include figures and soft toys

LEGS (SHANGHAI) CULTURAL AND
CREATIVE COMPANY, LTD.

Entertainment production, new business construction support

LEGS (SHANGHAI) TRADINGCOMPANY, LTD.

Planning and implementation of various campaign types, development, production andsales of premium and OEM products

LEGS (SHENZHEN) TRADINGCOMPANY, LTD.

Quality control and production management for a range of goods and OEM products,
product planning and sales for the Chinese domestic market

REET Inc.

Promotion planning, development, and implementation

Glossary
Meaning

Term

Meaning

IPIntellectual Property.

Ex-Tainment

A term coined by combining the words “expe-

1
2
3
4
5
6
7
8
9
10

JU Co., Ltd.
CL Holdings Inc. Employees’ Stockholding Association
The Master Trust Bank of Japan, Ltd. (Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)
Junichiro Uchikawa
Kofu Soko Co., Ltd.
Norio Kabasawa
SMBC Nikko Securities Inc.
Masashi Hasegawa
Toshikazu Kobayashi

Content

Animation, games, movies, characters, artists, etc.

Premiums

Premium goods, premium prizes, and give-

Share Distribution by Shareholder Financial institutions
 Financial instruments firms
 Other domestic corporations Individuals and others (including treasury
stock)
 Foreign corporations, etc. (including foreign
individuals)
Total

experiential value felt by consumers when
consuming entertainment.

PMD service

Visual Merchandising. A sales method thatemphasizes the visual impression of products. It

Limited distribution service

Theme cafe
serviceduction of a product under the client’s brand,under the client’s brand.

outside specialist.

CL Holdings Inc.

Event productsales

Platform

Editorial Policy

an original menu and limited-run merchandise.

The purpose of this report is to convey to our wide variety of stakeholders, but primarily
shareholders and investors, in an easy-to-understand manner, the philosophy-based
management that our Group advocates, as well as Ex-Tainment business and other initiatives aimed at increasing our corporate value over the medium to long term. Financial
and non-financial information, conversations, etc. are used to convey this information.

A service that provides planning for events

Forward-Looking Statementswith decorations, etc., utilizing IP content andThis integrated report contains statements regarding our future plans, strategies, andperformance. These statements are not historical facts, but rather represent theCompany’s judgments based on the information currently available to CL Group.
Actual future results may be affected by economic trends, industry competition, currency exchange rates, taxes, and other regulatory developments. For these reasons,these forward-looking statements are subject to potential risks and uncertainties.

A service that provides experiential value by wayof a cafe that makes use of IP content, as well as

sales of limited-edition goods.

Business Process Outsourcing. Outsourcing ofa company’s own business processes to an

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4,321,200
737,400
479,600
341,400
299,000
224,000
213,000
197,300
116,300
60,900

42.54
7.26
4.72
3.36
2.94
2.21
2.10
1.94
1.15
0.60

Number ofshares held

Breakdown ofshareholders by type

Networks of stores in Japan and overseas run
by retail distribution clients.

874,500
319,500
4,638,300
4,957,500

8.07%
2.95%
42.80%
45.75%

46,1000.43%

10,835,900

100%* Excluding 4,100 shares which are held in various accounts but in each account are less than one unit

goods demand and intangible goods consumplimited time, limited area, and limited product.

display, and POP to make products look better.

or a manufacturer that produces a productA distribution service that creates intangibletion by offering limited edition services, such as

involves comprehensive planning of store design,

Original Equipment Manufacturing. The pro-

Promotion & Merchandising service. A service thatcombines sales promotion and merchandise sales.

aways offered in promotional activities.

BPO

Percentage of
total number ofshares issued (%)* The Company owns 683,150 shares of treasury stock.
* JU Co., Ltd. is an asset management company owned by a relative of CL Holdings Inc.’s President & CEO Junichiro Uchikawa.

rience” and “entertainment,” referring to theOEM

Number ofshares held

Major shareholders (Top 10)

Ownership Status

Term

VMD

* As of December 31, 2023

Period Covered: Fiscal year 2023 (January 1 –December 31, 2023)(Where necessary, however, references are madeto dates before and after the period under review.)

Date of Publication: May 2024
Referenced Guidelines, etc.

International Integrated Reporting Frameworkfrom the IFRS Foundation
CL Group Website

Our website provides various kinds of information
on CL Group, including IR information and Group
Sustainability. Please peruse it alongside this report.

https://www.clholdings.co.jp/en

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