Integrated Report2021

The Meiji Group’s Vision

Group Philosophy

Our mission is to widen the world of “Tastiness and Enjoyment”
and meet all expectations regarding “Health and Reassurance.”
Our wish is to be closely in tune with our customers’ feelings
and to always be there to brighten their daily lives.
Our responsibility as “Food and Health” professionals is
to continue finding innovative ways to meet
our customers’ needs, today and tomorrow.

About the Meiji Group

Meiji’s New Group Slogan

From babies to the elderly, at every step,
the Meiji group has been right there,
giving people a reason to smile.
Now we’re gearing up to create even more smiles,
with something everyone can feel good about — a focus on wellness.
After all, people who feel well,with healthy hearts and bodies, have a lot to smile about.
And smiling spreads like a wave of positive energy,
as people envision a brighter future on a healthy planet.
We think you’ll see that sharing healthy ideas is something
we can all do quite naturally.
Starting today, the Meiji group will be sharing
even more good ideas about wellness— ideas that are likely to spread to everyone who wants to feel better.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

1

Editorial Policy
Since 2018, Meiji Holdings Co., Ltd. (the Company) has beenissuing an Integrated Report and will continue to replace theAnnual Report. After celebrating our 100 year anniversary, theMeiji Group will seek further growth. In this report, we havecompiled financial and non-financial information focusing on
the Value Creation Story that has led us to sustainablegrowth.
* Reference: The International Integrated Reporting
Council Framework

Using the Integrated Report 2021
This report is based on the performance results from FY2020(fiscal year ended March 2021). Some content from FY2021(fiscal year ending March 2022) is also included. The content
is compiled based on information that is available at the time
when the Company created the Integrated Report 2021.
Therefore, please note that the actual results may be different
from the Company’s forecast. The information in the report
unless otherwise specified is current as of August 2021.

The Meiji Group’s Information Disclosure
The Integrated Report provides important information to our business and stakeholders. For more detailed information
about the Meiji Group, please refer to our websites.
High
Importance tostakeholders

Integrated Report
Websites

Importance to business

WebsitesHigh

Integrated Report
The Meiji Group works on pursuing sustainableimprovement of corporate value. We describe ourvalue creating efforts in the Integrated Report. We
hope you enjoy our story and deepen understandingof the Meiji Group.
WEB Integrated Reports

Our websites provide detailed and comprehensive information on our corporate profile,financial information, corporate governance, sustainability-related information, the latest
news, etc.

Investors

About the Meiji Grouphttps://www.meiji.com/global/investors/

Please visit our websites for details of the MeijiGroup’s mission and vision, slogan, management
structure, business domains, history, and otherinformation.

● Business Plans● Results and Presentations● Financial Performance● Stock Information● Corporate Governance● Business Risks● Events

WEB Who We Are

Meiji Holdings Co., Ltd.
https://www.meiji.com/global/

Meiji Co., Ltd.

https://www.meiji.co.jp/(Japanese version only)

Sustainability

Meiji Seika Pharma Co., Ltd.

https://www.meiji.com/global/sustainability/● Top Commitment● Sustainability Management● Healthier lives● Caring for the earth● A Richer Society● Sustainable Sourcing● Policies● ESG Data

2

About the Meiji Grouphttps://www.meiji-seika-pharma.co.jp/(Japanese version only)

KM Biologics Co., Ltd.

https://www.kmbiologics.com/en/About the Meiji Group

Contents
About the Meiji Group
1 The Meiji Group’s Vision
2 Editorial Policy /The Meiji Group’s Information Disclosure
3 Contents
4 Achieving Our Goals in 2026 Vision
6 At a Glance
8 Product and Market Presence

Message from the Management
10 Message from CEO
16 Message from CFO
18 Overview of Medium-Term Business Planand Important Issues in Management Strategies

Value Creation Process
22
24
26
28
30

Health Values, the Meiji Group is Seeking
History of Health Value Creation
The Meiji Group’s Process for Value Creation
The Meiji Group Value Chain
Financial and Non-Financial Highlights

Sustainability and Management Foundation
40 Message from CSO
44 Sustainability Strategy
in Medium-Term Business Plan
46 Responses to Climate Change
48 The Meiji Group Sustainability
Healthier Lives
48
Caring for the Earth52
Thriving Communities
56
Sustainable Sourcing
60

Corporate Governance
62 Directors andAudit & Supervisory Board Members
64 Responsibilities of Members of the Board
and Audit & Supervisory Board Members
66 Message from Independent Outside Director
67 Message from Independent Outside
Audit & Supervisory Board Member
68 Corporate Governance
76 Risk Management
79 Compliance(Main Indices)

Financial and Non-Financial Performance
Business Strategy
32 Strategy by Business
Food Segment
32
Pharmaceutical Segment
36

80 Financial and Non-Financial Highlights(11 Years Summary)

82 Non-Financial Performance(Progress on Materiality)

85 Independent Practitioner’s Assurance ofEnergy Consumption Volume,
CO2 Emission Volume& Water Consumption Volume
86 Consolidated Financial Statements
94 Notes to Consolidated Financial Statements
124 Independent Auditor’s ReportCompany Information
130 Operating Bases and Group Companies
132 Company Information / Stock Information
133 Publisher’s Note

Meiji Holdings Co., Ltd.｜Integrated Report 2021

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Achieving Our Goals in 2026 Vision
In FY2018, we created the Meiji Group 2026 Vision as a strategy to maximize the strengths of
the Meiji Group to grow further. We will follow through with this business plan and achieve this vision
successfully. Accordingly, we will improve our corporate value over the medium- and long-terms.

Roadmap to Realize the 2026 Vision
We are formulating three Medium-Term Business Plans to realize the Meiji Group 2026 Vision. The Planin the first stage began in FY2018 and ended in FY2020. We are now in the first fiscal year of the 2023
Medium-Term Business Plan, the second stage.

2023
2020
2018

2026

The 3rd stage

The Meiji Group
2026 Vision
Long-term Vision The Meiji Group’s Ideal
Corporate Identity

The 2nd stage

The 1st stage
Promote the Meiji ROESG®
Management effectively
Address strategic issues
continuously and challenge
for the further growth

Realize both profit growth and sustainability activities

Message from CEO

See page 10 for details

Summary for the 2020
Medium-Term Business Plan

Overview of the 2023
Medium-Term Business Plan

See page 18 for details

See page 20 for details

ImportantOperating Environment
Three social trends are expected to
impact the Meiji Group business on
the path to 2026. The COVID-19 global
pandemic from 2020 has createdenormous uncertainty. However, we will
adapt quickly to the changing businessenvironment and undertake appropriate
management to accomplish the MeijiGroup 2026 Vision and meet stakeholder
expectations.

4

About the Meiji Group

1 Changes in social structure - Ageing• 30% of Japan’s population will be 65 years or older by 2025
• Aging population is a common issue throughout the world

2 Increased health consciousness

and disease prevention• Rise in diseases and disorders due to changes
in lifestyle and dietary habits• Increasing awareness and focus on prevention
and living longer, healthier lives

3 Growth of the global middle class• Rising level of income in emerging countries
such as China and India• Growing demand for non-essential or luxury grocery items
and health related productsAbout the Meiji Group

The Meiji Group 2026 Vision
Long-term Vision - The Meiji Group’s Ideal Corporate Identity
The Meiji Group will combine the strengths, we have cultivated over the past 100 years,
with the latest technology and new findings. Thus we create innovative ways to meet ourcustomers’ needs with food and health and grow in Japan and around the world sustainably.

Operating income Mid to highgrowth rate
single-digit (CAGR)

Key Strategies
1. Secure an overwhelming advantage
in core businesses
2. Establish growth foundationin overseas markets
3. New challenges in the health value domain
4. Social contributions

Overseas
sales ratio

ROE

20%
Maintain 10 % or more
Target at

Structure of the Meiji Group 2026 Vision
To promote;

1. Secure an overwhelming
advantage in core businesses
2. Establish growth foundationin overseas markets
3. New challenges
in the health value domain

4. Social contributions● Healthier Lives● Caring for the Earth● Thriving Communities• Use external resources• Increase productivity significantly

Business
VisionSustainability
VisionManagement
Foundation
Vision• Establish functional, strategic
management system to growsustainably in Japan and globally• Develop work environment,
in-house system, organizational
climate to maximize individual
potential• Enhance the Meiji brand

2023 Medium-Term Business Plan, the 2nd Stage
Concept

See page 20 for details

Promote the Meiji ROESG® Management effectively
Realize both profit growth and sustainability activities

Key Issues

1. Business Strategy

Food
Segment
Pharmaceutical
Segment

Group-wide

1) Recover from the slump in our core business
2) Expand overseas business1) Integrate business operations of
Meiji Seika Pharma and KM Biologics(expand vaccine business)
2) Expand CMO/CDMO
Venture into new domains

2. Improve business management using ROIC effectively
3. Invest to grow business while constructing strong financial base
4. Promote the Meiji Group Sustainability 2026 Vision* ROESG is a registered trademark for a management indicator developed by Kunio Ito, a professor at Hitotsubashi University.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

5

At a Glance
Our corporate group consists of Meiji Co., Ltd. – which runs the Food business, and Meiji Seika
Pharma Co., Ltd. and KM Biologics Co., Ltd. – which run the Pharmaceutical business. Our mission is
to widen the world of Tastiness and Enjoyment and to meet all expectations regarding Health andReassurance by providing a wide range of products that are essential in people’ s lives, such as dairy
products, confectioneries, nutritional products and pharmaceuticals.
Meiji Holdings is a pure holding
company that was established in 2009
after integrating the management for
Meiji Seika Kaisha, Ltd. and Meiji Dairies
Corporation. The Company underwent
business reorganization in 2011, and KM
Biologics joined the Group in July 2018,leading to the current Group structure.

Group Organization(As of March 31, 2021)

Meiji Holdings Co., Ltd.

Food Segment

Pharmaceutical Segment

Meiji Co., Ltd.

Meiji Seika Pharma Co., Ltd.
KM Biologics Co., Ltd.

This segment provides our customers of all ages from infants
to the elderly, with a wide variety of products that include
infant formula, milk and dairy products, confectioneries,
sports nutrition products and enteral formula.

This segment develops our ethical pharmaceuticals
business on a global scale, covering products such as
antibacterial drugs, drugs for central nervous system (CNS)
disorders, generic drugs and vaccines, and it also promotes
our agricultural chemicals and veterinary drugs business.

Results for FY2020 (Fiscal Year Ended March 2021)

Net Sales

Operating Income¥1,191.7billion¥106.0 billion

year on year

year on year

DOWN 4.9 %Pharmaceutical
Segment

Food
Segment

16.2 %

83.8 %

ROE

About the Meiji Group

Pharmaceutical
Segment

17.9 %

Food
Segment

82.1%

Profit Per Share

11.1%¥ 452.52

year on year

year on year

DOWN 1.3pt
6

UP 3.3%DOWN 2.5%

About the Meiji Group

Number of Group Companies and Employees (As of March 31, 2021)
The number of group companies is the number of consolidated companies and entities accounted for by the equity method.
The number of employees includes all consolidated companies.

The U.S.

Europe

3
627

4
330

companies

companies

peoplepeopleAsia / Oceania

25
4,521

companies
peopleOverseas Group Companies

32

Japan

companies

Number of Group Employees

17,832

12,354peoplepeopleDomestic Group Companies

32*

Overseas Sales Ratio (FY2020)
Food Segment

4.9%

year on year

UP 0.3 pt

Pharmaceutical Segment

19.4

%

year on year

DOWN 1.9 pt

companies* Including Meiji, Meiji Seika Pharma,
KM Biologics and Meiji Business Support Co., Ltd.

Recognized for
Outstanding Health Management
for the Fifth Consecutive Year
The Nippon Kenko Kaigi runs a Certified Health &Productivity Management Outstanding Organizations
Recognition Program as part of the Japan
Revitalization Strategy 2016. Meiji Holdings, Meiji,
and Meiji Seika Pharma have been recognized by the
Nippon Kenko Kaigi for the fifth consecutive year as
White 500 organizations in the program’s large
enterprise category. KM Biologics was also
recognized in 2021. This program recognizes andcites organizations for practicing outstanding
healthcare management through health promotion
efforts. At the Meiji Group, we shall continue striving
to create a working environment where employees
can thrive in their work.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

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Product and Market Presence
The Meiji Group has built a strong market position by providing products with unique value
throughout society. In both the Food and Pharmaceutical businesses, we have a number of
products with the leading market share in the categories where we are strong: dairy products,
confectioneries, nutritional products, ethical drugs and agricultural chemicals.

Food Segment

YogurtSince 1950

Chocolate

No.1 in Japan

41.2

No.1 in Japan

24.7

Since 1926%%

Based on INTAGE Inc., SRI (yogurt market)
April 2020–March 2021 market share (money amount)Powdered &Granulated Protein
Since 1980

No.1 in Japan

39.6
Based on Meiji data
as of March 2021

Other ProductsProtein drink formulated with a rapidly
absorbed milk protein processed with
our own unique manufacturing method

Product addressing insufficient protein intake amongpeople today, supplementing protein conveniently
and efficiently while enjoying the taste
8

About the Meiji Group%

Based on INTAGE Inc., SRI (chocolate market)
April 2020–March 2021 market share(money amount)

Camembert
CheeseSince 1999
* Started processedcheese productionin 1932*

No.1 in Japan

49.7

%

Based on INTAGE Inc., SRI (chocolate market)
April 2020–March 2021 market share(money amount)

Chocolate snack launched
in Japan in 1979 and now sold inover 40 countries worldwide
Functional yogurt, create
the market in China and contributeto healthy dietary habits

Nutritional product for easy
and tasty replenishmentof important nutrientsfor the bodyOverseasAbout the Meiji Group

Pharmaceutical Segment

Systemic
Antibacterial
Drugs
Since 1946

No.1 in Japan

19.0

%

Copyright © 2021 IQVIA.
Source: Calculated based on JPM 2021
Mar MAT Market scope as definedby Meiji Seika Pharma* Reprinted with permission

Influenza HA Vaccine
Since 1972

No.1 in Japan

28.8

%

Copyright © 2021 IQVIA.
Source: Calculated based on JPM 2021
Mar MAT Market scope as definedby Meiji Seika Pharma* Reprinted with permission

Rice Blast Preventives(Agricultural Chemicals)

Generic Drugs
Since 1998

Since 1975

No.6 in Japan

4.6

Shipping data of
Rice blast preventives
No.2 in Japan

%

35.0

Source: CRECON RESEARCH& CONSULTING, INC., FY2020%

Source: Based on Handbook of
Agricultural Chemicals -2020-,
Japan Plant Protection Association

Other Products
Anti-allergy drug that is effective in
reducing allergic symptoms, including
pollinosis with less drowsiness and lesseffects on the ability to work.

Environment-friendly insecticide
for rice seedling trays, developedby Meiji and launched in 2020

Atypical antipsychotic drug launched in 2016, Japan’s
first sublingual tablet with proven efficacy and safety

Biological tissue adhesion usedmainly for bonding and closing
wounds during surgery

Poultry vaccine for preventing infection and control
of infection-related decline of egg-laying rates

Meiji Holdings Co., Ltd.｜Integrated Report 2021

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Message from CEO

Kazuo KawamuraCEO
President
and Representative Director

10

Message from the Management

Message from the Management

We will Promote the Meiji ROESG®
Management Effectively to Realize Both
Profit Growth and Sustainability
The Meiji Group’s Purpose is “Contributing to
the Country through Nutrition,”
Our Founding Spirit

The New Slogan “Now ideas for wellness”
Expresses Value Linked Directly
to Our Purpose

While society is rapidly changing, the purpose(meaning of existence) of companies is being
questioned. What immediately comes to mind as the
purpose of the Meiji Group is to “contribute to thecountry through nutrition,” which is part of ourFounding Spirit.
The Meiji Group originated from Meiji Sugar Co., Ltd.
Back then, sugar manufacturing was an advanced
industry with high profitability. Therefore, competitors
focused their managerial resources on manufacturing.
However, while improving sugar manufacturing
efficiency, Meiji Sugar sought a good way to use sugar
and cultivated demand for sugar. The company tried to
expand the business based on the idea of “contributing
to the country through nutrition.” One of these
expansions was a confectionary business. The company
expanded its confectionary business through M&As andenriched people’s dietary habits. The company also
launched a condensed milk business. Sweetenedcondensed milk (with sugar added) is a product toeasily supplement calories and protein. This was how
our predecessor expanded business by “contributing to
the country through nutrition.” The Meiji Group marked
its 100th anniversary in 2016. After more than 100
years, our founding spirit has not lost its brightness
and freshness. Since I joined the Meiji Group, I myself
have felt proud of this spirit and have been motivatedto strive for excellence at my work.

The Meiji Group recently updated our corporate slogan
to “Now ideas for wellness.” Behind this lies our desire
to express the slogan linked to the Meiji founding spirit.
I believe we will face tougher global competition for the
next 100 years. Therefore, we must establish a stronger
corporate identity. Our Group Philosophy states that
we provide Tastiness, Enjoyment, Health andReassurance. Among them, “Health” is our unique anddistinct value as it is directly linked to our purpose.
Through this slogan, we will communicate our efforts
to become a company playing an integral role in thehealth field across the world through the next 100
years.
Using this new slogan, we will create a sense of
togetherness within the Group. The Food andPharmaceutical segments previously had different
slogans, but “Now ideas for wellness” is now being
used for both segments. Under this united slogan, we
will generate novel synergies between food andpharmaceuticals. We chose this slogan by popular voteand an overwhelming majority of employees voted forthis slogan. Employees support this direction, and wewill make it the Meiji Group’s corporate identity.

* ROESG is a registered trademark for a management indicator developedby Kunio Ito, a professor at Hitotsubashi University.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

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Message from CEO

We Are Further Pursuing the Synergies
Between Food and Pharmaceuticals to Create
Health Value Unique to the Meiji Group
Both Food and Pharmaceuticals Ultimately
Provide Health Value
Under the new slogan “Now ideas for wellness,” we will
spread the health value unique to the Meiji Groupthrough the cycle of “Cure, Care and Share.” I would
like to explain the rationale behind this.
When reviewing business from the perspective ofour purpose, I realized that we have cared about
products too much. Let’s look at an example from theFood segment. I believe customers eat our Meiji Probio
Yogurt R-1 for the health value of the product. In otherwords, we are providing health enhanced bylactobacillus, not just a yogurt product. This also
applies to pharmaceuticals. We provide patients withefficacy and safety. Providing health value in our
products is the ultimate goal for both segments.
Therefore, we should conduct business based on
the idea that we provide the value that consumers are
expecting in our products. We will pay close attention
to what customers want and pursue them. Hence, weneed to think about “Cure” and then “Care.”
Additionally, how we “Share” such value is crucial.
From a legal perspective, food and pharmaceuticals areclearly differentiated. However, I believe we can create
health value unique to the Meiji Group. This is thesynergy between food and pharmaceuticals.

factors for anti-aging, such as lifestyles, exercise habits,
and dietary habits. Although we are still in the second
year of the research, we are obtaining interestingfindings. The aging population is an irreversible global
trend not only in Japan but also in advanced countries.
Extending healthy life expectancy will contribute toachieving SDGs. Therefore, our research will lead toresolving social issues.
Also, boosting immune system is important.
Humans have an innate immune system, and it is vitalthat it functions effectively. Of course, vaccines areimportant, but some people are resistant to infection
even in a pandemic, and we are studying why. Some
research indicates that dietary habits and lifestyles
may boost the immune system. The immune system
plays a pivotal in the cancer prevention, development,
and defense as well. The remission rate has recently
been improved by controlling the immune system. Our
research may be applicable to cancer treatment.
We do not yet know whether the output of ourresearch on anti-aging and immunity boosting will bein the form of food or pharmaceuticals. We believe thateither is okay, because seeking health value is our
purpose. Our goal is to make this business profitable by
FY2026. We hope to show early promising results andthe business direction during the 2023 Medium-TermBusiness Plan.

Contribute to Help Solving Social Issues
through Research on Anti-Agingand Immunity Boosting
We are seeking these food-pharmaceutical synergies in
the Co-Creation Center, established directly under Meiji
Holdings. Two research programs are currently
underway: anti-aging and immunity boosting.
Anti-aging is how we extend healthy life expectancy.
We are studying seniors who are playing active roles in
the workplace to find out what will be the critical

12

Message from the Management

The Co-Creation Center was established in April 2019 as a newresearch center that realizes new challenges in the health value
domain. The organization is composed of the Meiji Group
researchers who have various specialties and backgrounds.

Message from the Management

Becoming a Corporate Group with a Significant Presencein Sustainability Transformation
Further Strengthen Sustainability Activities
to Meet Stakeholder Expectations
FY2020 was the final year of our 2020 Medium-TermBusiness Plan. The Food business had grown rapidly
until the end of 2017 Medium-Term Business Plan. Our
corporate structure had also improved, and profit had
increased to JPY 80 billion from JPY 20 billion at the
beginning of management integration in 2009. We
formulated the 2020 Medium-Term Business Plan tomaintain such momentum. However, our growthslowed, and we missed our profit target. Meanwhile, we
included enhancement of our management foundationand sustainability activities, in addition to businessgrowth, as important targets in the 2020 Medium-TermBusiness Plan. Accordingly, we decided to invest ininternational businesses, issued sustainability bonds,
and formulated the Meiji Group Long-Term
Environmental Vision.
We formulated the 2023 Medium-Term Business
Plan, which started in FY2021, recognizing drasticchange in business environment. Demands tocompanies by their stakeholders have now changed
significantly when compared to that at the time weformulated the 2020 Medium-Term Business Plan. We
must improve our sustainability activities because
stakeholders are now urging us to resolve social issues,
be sustainable, and be resilient against risks. Of course,
business expansion and profit growth are important,

2023 Medium-Term Business Plan Target
for net sales* and operating profit*
Consolidated net sales

Consolidated operating profit(Billions of yen)
1,200

1,007.1

1,080.0

1,024.0

now, as the level of sustainability (how serious we areto sustainability activities) is directly linked tocorporate evaluations. Realizing both profit growth andsustainability activities is the crucial point in the 2023
Medium-Term Business Plan. Thus, we will achieve the
Meiji Group 2026 Vision.

Pursue Business Opportunities
by Resolving Major Social Issues
During the COVID-19 pandemic, we recognized solvingsocial issues is important. We experienced theconfusion that the COVID-19 pandemic caused in theworld. Infection control has become the biggest matterof interest for society and for sustainability. Facing suchsocial issues seriously and contributing to solving themis an important corporate function. We have learned
from this COVID-19 pandemic that we should addresssocial issues seriously. Otherwise, companies will not
be highly evaluated and we cannot demonstrate ourpresence.
Meanwhile, I believe that resolving social issues will
provide us with a lot of business opportunities. The
COVID-19 pandemic has increased profit in vaccine
companies. Billions of people across the world are
expected to be vaccinated periodically. I believe we cangrow our business by developing and supplying
vaccines to meet such vaccination needs while
contributing to solving social issues to control
infectious diseases. People now consider that thebiggest driver for corporate innovation to be digitaltransformation (DX). However, I believe thatsustainability transformation (SX) will attract muchattention. The Meiji Group should demonstrate a majorpresence in SX.

800

400

106.0
0

FY2020107.5
FY2021

120.0
Targets for FY2023* After applying revenue recognition standards for net sales.
Note: For FY 2020 reference only

Meiji Holdings Co., Ltd.｜Integrated Report 2021

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Message from CEO

We Will Realize Both Improving ROE andEnhancing ESG in Daily Management Decisions
without Causing Conflict Between Them

14

The Meiji ROESG is the Key Management
Indicator with the Highest Priority
in the 2023 Medium-Term Business Plan

Improve Business Management
Using Business Portfolio Management and
ROIC Effectively

The key of the 2023 Medium-Term Business Plan is that
we established the Meiji ROESG as a management
indicator and set it as the highest priority. We selected
five external ESG ratings for KPIs. In addition, we chose
six social issues to focus on. These issues include thevaccination rate for influenza vaccines and the amountof protein intake. We can get bonus points when wemeet the Meiji ROESG targets for these issues. We set
goals adopting a three-layer structure composed of
ROE, ESG evaluations, and extra points from ESG
initiatives unique to Meiji. For some people, it seems
that improving ROE conflicts with enhancing ESG in the
short term. However, we will realize both of them bymaking the right management decisions regularly. The
Meiji ROESG is a good indicator to raise awarenesstowards achieving our goal.
ESG evaluations will be the key to achieving the
Meiji ROESG. We need to significantly improve
evaluations by external rating agencies, and this will bea very difficult obstacle to overcome. However, I would
like to increase awareness among managerial
personnel that the Group is determined to work
seriously on ESG. Moreover, I would also like them tobe aware that social issues can be business
opportunities. During the daily business operations, wetend to focus on near-term business results rather thanlooking 10 years ahead. However, when we look at the
future and try hard to address social issues, we have achance to solve major issues and thus create large
markets. Social issues are a rich source of business
opportunities. We will generate new businesses when
we focus on sustainability.

I will focus on five themes as the Group CEO to realizeboth profit growth and sustainability while operating
the Meiji ROESG Management.
The first theme is to strengthen portfolio
management. The Food segment, which has net salesof JPY 1 trillion, was reorganized into 10 businesscategories while the Pharmaceutical segment, which
has net sales of JPY 200 billion, into nine categories. We
must admit that the number of categories in the
Pharmaceutical segment is too many compared to the
Food segment. Through selection and concentration
we should build a business model with highprofitability based on drug discovery innovation. The
management team led by the CEO conducts constantmonitoring and thus we will enhance portfolio
management across the Group. We introduced returnon invested capital (ROIC) as a management indicator.
We will urge business categories with a low ROIC to
reduce their invested capital while improving operating
profit margin. If needed, we will review our portfolio.
We are focusing on creating a new portfolio to copewith the changing market. In the future, we may
encounter major business opportunities when we
continue working on solving social issues. If we add
new businesses, we should be flexible to reorganize theportfolio.
The second theme is to improve business
management by using ROIC. We have been focusing on
increasing operating profit for each business based on
profit/loss. However, with the balance sheet in mind,
we will shift to capital productivity-oriented business
management. We will use ROIC when making decisions
for capital expenditure and R&D investment.

Message from the Management

Message from the Management

We Will Promote Business Recognizing That
We Must Increase Corporate Values to Survive
Accelerating Open Innovation andStrengthening Group Management Structure
are Also Important
The third theme is accelerating open innovation. We
have been adopting in-house development andkeeping research resources within the Group. However,
we cannot generate innovative ideas if we persist in
pursuing in-house development. Thus, we are sending
our personnel to academia, such as national research
institutions and universities, to keep us up to date. An
open innovation approach improves R&D efficiency
dramatically, and we will accelerate it further. Also, wewill build a collaboration structure with ventures andstartups. Specifically, we have started the Meiji
Accelerator Program. It is a Meiji Group-sponsoredprogram. We post job opportunity announcements in
the Group and select suitable young employees. They
work with external ventures and perform R&D together.
We hope that this program will activate our Group andcan attract outstanding personnel by broadly spreading
the fact that the Meiji Group is promoting open
innovation.
The fourth theme is to strengthen Groupmanagement. When we created the 2023 Medium-TermBusiness Plan, we set up a Group Strategy Committee
composed of the CEO, COO, CFO and CSO. We thendiscussed and completed an effective Plan under theleadership of Meiji Holdings. We changed the
medium-term plan formulation process. The Group
Strategy Committee first determined essential featuresof the Plan, and the operating companies create theirstrategies based on those features. The strategies arethen brought to Meiji Holdings’ Board of Directors forreview, discussion and finalization. This process hashelped to increase the sense of unity between Meiji
Holdings and operating companies. Additionally, we
will strengthen Meiji Holdings’ departments thatoversee the Group’s human resources strategy,
financial strategy, and risk management. Thus we will
strive to create greater corporate value.

Build Sound Governance: Solid Foundation
Supporting Value Creation
The fifth theme is to build sound governance. We havealready implemented succession planning since 2019.
Every year, we review appointing or dismissing thepresidents of Meiji Holdings and the operatingcompanies, Meiji Co., Ltd. and Meiji Seika Pharma Co.,
Ltd., and select potential successors for the presidentsof the three companies. Meanwhile, Outside Directors
have pointed out that we have not yet developed asuccessor talent bench for the three presidents. We will
therefore build a system to pool managers who drive
the Group forward under the leadership of Meiji
Holdings. Meiji Holdings advises operating companies
on career paths for talent development, and nurture
executives. The Compensation Committee determines
remuneration for Directors. In the 2023 Medium-TermBusiness Plan, we will raise the proportion of
performance-based compensation, reflect theachievement of ROIC targets in remuneration, and raise
the proportion of stock compensation.
Companies cannot survive unless they create
corporate value. This is a tough principle in society. We
should build a resilient foundation that supports thecreation of corporate value. For that, we should
develop sound governance and contribute to solvingsocial issues continually. I will drive the Meiji Group sothat the Group can growfurther. Hence, we willachieve the Business
Vision, Sustainability
Vision, and Business
Foundation Vision, threeinterconnected Visions
set in the Meiji Group
2026 Vision.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

15

Message from CFO

Koichiro Shiozaki

CFO
Member of the Board andSenior Managing Executive Officer

We will Improve Management to Create Corporate Value by
Introducing ROESG and ROIC as Performance Indicators
Profit Increases for the 9th Straight Termin FY2020, Reaching New Record HighI became CFO in June 2020. My mission is to achieve theROE target set in the 2023 Medium-Term Business Plan
while understanding the entire Group from a financial
perspective.
In FY2020, we reviewed the financial status of the
Meiji Group and identified what we need in order torealize the Group’s optimum capital structure. We
ultimately set out three policies: maintain our AA credit
rating, set the upper limit on interest-bearing debt, andsecure cash and deposits on hand to prepare for risks.
Moreover, we examined stable fund procurement
methods and reviewed our shareholder return policy.
Thus, we issued sustainability bonds in April 2021.
We set targets for net sales, operating profit (margin),overseas sales, and ROE as performance indictors in the2020 Medium-Term Business Plan. Some indicators
improved in three years, but we were unable to meetsome of our targets. This is due in part to stagnant
growth in yogurt and chocolate. Although sales fell shortof the previous year, operating profit increased for the
ninth straight year in FY2020, the final year of the 202016

Message from the Management

Medium-Term Business Plan, reaching an all-time high.
This was because of our efforts to improve profitability.
We have invested according to our plan, although
cash-out was pushed back due to a delay caused by the
COVID-19 pandemic. We consistently generated cash
flows of over JPY 110 billion from operating activities
every year. Debt-to-equity (D/E) ratio was 0.16 and ourfinancial base was reinforced accordingly. We increased
dividends for seven consecutive years and achieved
steadily returning profits to shareholders.

Cash Flows
Cash flows from operating activities
Net cash used in investing activities(Billions of yen)
120
80
40

108.7

114.1
43.2

44.3
11.8

0
-40

112.1

Free cash flows

-64.3

-70.8
-100.2-80
FY2017FY2018FY2019

123.6

30.5

-93.1
FY2020Message from the Management

Develop Business Management
That Helps Solve Global Social Issues

Invest for Growth While Keeping Sound
Finance and Improving Profits Return

Amid harsh environmental changes due to the COVID-19
pandemic, the Meiji Group will become a company thathelps solve global social issues related to health andnutrition. A major issue for realizing this goal is todevelop a business management structure. Specifically,
the following initiatives will be important:

Under the 2023 Medium-Term Business Plan, we will
generate cash flows of approximately JPY 400 billion
from operating activities in three years. We will makebalanced investment while considering our goal of
realizing both profit growth and sustainability activities.
We set JPY 274 billion for capital expenditure, which ismainly allocated to increase production capacity andimprove product quality as well as expand international
businesses. Of the capital expenditure, JPY 30 billion isset for ESG, such as environment-related investment. We
issued sustainability bonds and appropriated them tothe part of ESG investment. We will actively invest in
future growth maintaining the D/E ratio at less than 0.3.
From a cash inflow perspective, we will reduce ourcross-shareholdings. We will sell 30% of such shares on abook value basis during the 2023 Medium-Term Business
Plan after careful consideration of the appropriatenessand significance of these shareholdings.
We recognize that it is important to return profits toshareholders appropriately. We will increase dividends
and raise the consolidated dividend payout ratio to 40%.
We will consider shares repurchase as necessary,considering optimum capital structure and surplus
funds.
The 2023 Medium-Term Business Plan is the second
stage toward realizing the Meiji Group 2026 Vision.
During this period, we will enhance our Groupmanagement and make investment for the future
growth. Through these initiatives, we will ensure growthin the next stage.

1. Review the business portfolio constantly
2. Focus on allocating management resourcesin growth fields
3. Maintain competitive advantage.
To achieve this, optimize the above
initiatives flexibly and promptly as
the business environment changes.
Therefore, we introduced ROESG and ROIC as new
performance indicators in our 2023 Medium-TermBusiness Plan. We set ROESG as our integrated target.
We will try to maintain and improve ROE while
enhancing sustainability activities, thereby improving
our corporate value. ROIC is very useful to evaluate theperformance of our businesses appropriately regardlessof the business. We set 5% as the least weighted average
cost of capital (WACC). We will accelerate businessreform for businesses with ROIC less than 5%, such as
reducing invested capital and improving operating profit
margin. Through evaluation and management cycles, wewill use ROIC as a standard indicator in the whole Groupand try to continue creating corporate value.

Financial Strategy and Capital Rationing
Breakdown
for capital expenditures(Approved, JPY bn)

Production and quality

Cash flows
from operating
activities
Approx.
JPY 400 bn

Sale of assets(incl. cross-shareholdings)

Capitalexpenditures
JPY 274 bn

120

Domestic and overseas group companies 45

Food

ESG investment

24

Other

51
240

Pharmaceutical

Growthinvestment
Return toshareholders

ESG investment

Depreciation(Total in three years) App. JPY

634

160 bn• Increase dividends and raise the consolidated
dividend payout ratio to 40%• Consider shares repurchase

Meiji Holdings Co., Ltd.｜Integrated Report 2021

17

Overview of Medium-Term Business Plan andImportant Issues in Management Strategies
The 2020 Medium-Term Business Plan started in FY2018.
It was an important step to provide momentum
for realizing the Meiji Group 2026 Vision.

Review of Medium-TermBusiness Plan

Operating profit fell short of the target,
leaving some issues.

Carried out Structural Reform and Sustainability Activities. Need to Improve Profitability Further
In the 2020 Medium-Term Business Plan, we set five key strategies under the basic concept: address strategic issues
continuously and take on challenges for further growth. We achieved results in some strategies, such as implementing
structural reforms, enhancing the Group’s management platform, and promoting sustainability activities. On the other
hand, sales growth for yogurt and chocolate were sluggish and the Pharmaceutical segment struggled in Japan due tothe harsh environment. Consequently, we failed to meet the consolidated operating profit target that was establishedto improve profitability at the beginning of the Plan.

Review of Key Strategies
Key Strategies

Results

Evaluation

1．Expand share and achieve highprofits in core businesses• In the Food segment, the nutrition business grew, while sales of yogurt(including functional yogurt) and chocolate were sluggish• The Pharmaceutical segment entered the vaccine business, while
facing major environmental changes due to the COVID-19 pandemic$

2. Expand aggressively in overseas
markets and establish growth
platform• Decided to invest in construction of new plant and started selling
SAVAS products in China• Formed a business tie-up with Danone and expanded to Europe$

3. Propose new value
in health care domain• Established the Co-Creation Center$4. Continue structural reforms andresolve specific business issues
in each business• Promoted reconstruction of production systems, such as plant
shutdowns, and transfer of non-core businesses• Progressed the structural reform of the drinking milk business$$

5. Enhance Meiji Groupmanagement platform andpromote sustainability• Introduced Chief Officer system• Established an organization to promote sustainability and formulated
a Long-Term Environment Vision$$$$: Good $: Average

Trends in Major Management Indicators
Consolidated Operating Profit

Initial plan

(Billions of yen)
150

CAGR 3.9%

125.0

94.6

98.3

102.7

106.0

FY2017FY2018FY2019FY2020Operating profit margin

7.6%

7.8%

8.2%

8.9%

9.3%

ROE

13.1%

12.2%

12.4%

11.1%

13-14%

Overseas sales

82.9

88.1

91.9

86.8

142.0

Overseas operating profit

5.1

3.3

4.4

5.6

9.5

120
90
60
30
0
(Billions of yen)

Operating cash flows
Cash dividends per share (JPY)
Payout ratio
18

Message from the Management

FY2020

108.7

112.1

114.1

123.6

3-year cumulative
total 400

130

140

150

160

—

30.8%

32.8%

32.3%

35.4%

About 30%

Message from the Management

Formulating the 2023 Medium-Term Business Plan
Formulation Process
The Group Strategy Committee Created the Framework, Group Companies Incorporated It
into Strategies, and the Board of Directors Resolved to Approve
In formulating the 2023 Medium-Term Business Plan,
Discussion &Consideration
approval
the Group Strategy Committee met a total of 11 times
Formulation policy
to discuss the framework of a group-wide plan. The
members of the Committee, including chief officers,
Group
Framework ofBoard of
Strategy2023 Medium-Termshared business environment change that the Meiji
Directors
Business Plan
Committee
Group faces, strengths that the Group could exhibit,
and issues to be overcome. After sharing their2023 Medium-Termunderstanding, the chief officers identified the goals ofBusiness Plan
Operatingthe 2023 Medium-Term Business Plan and discussed
companies
them many times at the Board of Directors, including
outside directors. Outside directors provided feedback and advice from a variety of perspectives according to their own
experience. Based on this framework, operating companies incorporated what was discussed into specific strategies intheir segments. In this way, we formulated the 2023 Medium-Term Business Plan.

Direction of the Meiji Group’s Goal
Introduce ROESG and Become a Company That Can Contribute to Solving Social Issues Globally
Importance to stakeholders

Based on discussions at the Group Strategy
Committee and the Board of Directors, the Meiji Groupdecided its direction that will contribute to help solve
social issues globally. Thus we can realize themateriality for both stakeholders and the Meiji Group
together. It is the guiding principle of our management
strategies. According to this direction, we establisheda specific business strategy, financial strategy, andsustainability strategy for the 2023 Medium-TermBusiness Plan. To realize this direction, we introduced
ROESG that combines ROE with ESG to check andconfirm progress and results.

Materiality inmanagement
strategies

Importance to businessIncorporated
into businessstrategy, financial
strategy, andsustainability strategy
for the 2023
Medium-TermBusiness Plan

See page 21
for key issues
in the 2023 Medium-TermBusiness Plan

See page 41
for materiality
related to social issues

Perceptions of Business Environment
Opportunities

Threats• Growing consciousness on prevention
and health• Growth in overseas emerging
economies and growing middle-class• Aging in Japan• Expanding e-commerce• Growing environmental awareness andethical consumption• Shrinking domestic market due topopulation decline• Growing awareness of deflation among
consumers• Impact of climate change on supply chain• Food shortages due to global population
growth• Transition to digital formats

Impact of COVID-19 pandemic• Increased brand loyalty• Decline in inbound demand• Consumer thriftiness• Workstyle changes(commuting, working from home)• Patient reluctance to visit medical
institutions

Strengths and Weaknesses of the Meiji GroupStrengths• Health-oriented product lines• Sound financial structure• Evidence-based marketing• Expertise, integrating knowledge in food and pharmaceuticals• Library and core technology (lactobacillus, nutritionengineering technology, vaccine development, etc.)

Weaknesses• Disseminating information (Meiji brand, sustainability)• Diversity & inclusion• Developing overseas markets

Meiji Holdings Co., Ltd.｜Integrated Report 2021

19

Overview of Medium-Term Business Plan andImportant Issues in Management Strategies

The 2023 Medium-Term Business Plan started in FY2021.
Under the concept of promoting the Meiji ROESG Management

Overview of Medium-TermBusiness Plan

effectively, we will enhance our corporate value.
To achieve the Plan, we identified four key issues.
We will address and solve these issues.

Concept

Promote the Meiji ROESG® Management
Effectively
Realize both profit growth and sustainability activities

ROESG is a management indicator proposed by Kunio Ito, a professor at Hitotsubashi University. It is the combinationof ROE and ESG. We incorporated indicators unique to the Meiji Group into ROESG and created Meiji ROESG, the new
management indictor. We will grow profit, improve ESG indicators, and achieve sustainability goals.
The Meiji ROESG multiplies ROE, which represents business growth, by the index showing the degree ofachievement of ESG goals. We have also established indicators unique to Meiji. When these indicators meet theirtargets, the Meiji ROESG adds points, calculating total scores.
Through the Meiji ROESG management, we will disclose the status of the Meiji Group’s ESG initiatives to the public.
We will listen to various opinions/demands and communicate with our stakeholders. By engaging and communicatingwith stakeholders, we will generate an effective cycle that enhances our ESG initiatives.

The Meiji
ROESG

ROE

Achieve
ESG goals

Indicators
unique to Meiji* ROESG is a registered trademark for a management indicator developed by Kunio Ito, a professor at Hitotsubashi University.

Indicators Unique to Meiji

ESG Indicators
Our ESG indicators are the combination of overall ESG
evaluation and environment focused rating. We chose
MSCI ESG Ratings,*1 DJSI,*2 and FTSE4Good*3 because
we need a global perspective for our ESG initiatives as
we aspire to achieve growth in the global market. Theyuse only disclosed information when evaluating ESG.
Therefore, we should boost information disclosure. In
addition to these indicators, we selected two CDP*4
indicators to enhance our initiatives for environmental
issues, whose importance is increasing.

Targets
Evaluation indicator
MSCI ESG Ratings
DJSI
FTSE4Good
CDP（Climate Change）
CDP（Water Security）

FY2020BB
80% (52 pts.)
3.0 pts.
AA-

Target for FY2023
A
90% (75 pts.)
3.5 pts.
A
A*1 MSCI ESG Ratings: ESG ratings calculated by MSCI, an influential financial
service firm in the U.S., based on information disclosed by companies*2 DJSI: An ESG investment index developed by U.S.-based Dow Jones andRobecoSAM, a Swiss investment advisory company*3 FTSE4GOOD: An ESG investment index announced by FTSE International,
a wholly-owned subsidiary of the London Stock Exchange*4 CDP: An international non-profit organization headquartered in London.
It collects, analyzes, and evaluates information on environmental
activities conducted by major companies across the world andannounces their ratings

20

Message from the Management

Shown in the table below are the six indicators the
Meiji Group has established. Five of these indicators
are selected from the social issues that we particularly
focus on under the 2023 Medium-Term Business Plan.
We have an edge in such domains and thus, by working
comprehensively on these five themes, we may
increase our corporate value in the short term. In otherwords, we can realize both profit growth andsustainability in these fields. We chose “employee
engagement” as we consider that human resources are
the driver for both business and ESG.

Targets
Indicator
Extend healthy life expectancy
Amount of protein intake
Vaccination rate for influenza vaccines
Employee engagement score
Sales growth rate for health-conscious
products, nutritional productswith added value, products
for a super-aged society
Success in and supply of vaccine andtherapeutic agent for COVID-19*1 2016 (men 72.14 yrs old/women 74.79 yrs old)
*2 2019 survey: BB

Target+1 year(compared to 2016)*1
75 g/day60%
A*2
At least +10%
(compared to FY2020)
Development
and supply

Message from the Management

Key Issues in the 2023 Medium-Term Business Plan
1. Businessstrategy

Food
Segment
Pharmaceutical
Segment

Group-wide

1) Recover from the slump in our core businessSee page 33 for details

2) Accelerate growth in our business overseas

See page 34 for details

1) Integrate business operations of Meiji Seika Pharmaand KM Biologics (Strengthen vaccine business)

See page 37 for details

2) Expand CMO/CDMO businessSee page 37 for details

Venture into new domains

See pages 12, 35,
and 38 for details

2. Improve business management using ROIC effectively

See page 17 for details

3. Investing to grow business while constructing strong financial baseSee page 17 for details

4. Promote the Meiji Group Sustainability 2026 Vision

See pages 40
and 44 for details

KPIs for 2023 Medium-Term Business Plan*
Indicator

Integrated goal

FY 2020
9 points

13 points

JPY 1,007.1 bn

JPY 1,080.0 bn

JPY 106.0 bn (8.9%)

JPY 120.0 bn (11.1%)

JPY 86.8 bn

JPY 134.5 bn

Meiji ROESG
Consolidated net sales

Growthand Profitability

Consolidated operating profit(profit margin)

Target for FY 2023

Overseas sales

Efficiency and Safety

ROIC

10.0%

≥10%

Returnto shareholders

ROE

11.1%

≥11%

Payout ratio

35.4%

40.0%

* After applying revenue recognition standards for net sales. Note: For FY 2020 reference only

2023 Medium-term Business Plan Target for Sales* and Operating Profit
Food Segment

Pharmaceutical Segment

Consolidated Sales (JPY bn)
1,000
800

826.5

831.1

Consolidated Sales (JPY bn)

874.5

250
200

600

150

400

100

200

50

0

FY2020

FY20210

Target for FY2023

Analysis of Operating Profit (JPY bn)
FY2020Targetfor
FY2023

87.4

102.0

182.1

194.5

209.0

FY2020

FY2021

Target for FY2023

Analysis of Operating Profit (JPY bn)

Growth+30.0
in core business
Increase in-7.0
promotion expenses
Increase in indirect-10.5
manufacturing expenses+2.0 Increase in op. profit
in subsidiaries

FY202019.1-1.1

Decrease due to NHI drug
price revision, launched
new drug, expand existing drugs+1.1

Cost reduction
Increase in SG&A expenses,
while decrease in fixed expenses-0.1 Profit/loss in subsidiaries-0.5

Targetfor
FY202318.5* After applying revenue recognition standards for net sales. Note: For FY 2020 reference only

Meiji Holdings Co., Ltd.｜Integrated Report 2021

21

Health Values, the Meiji Group is Seeking

What Meiji Aims to Do

Under the Slogan “Now ideas for wellness,”
We Will Create Health Value Unique tothe Meiji Group
The Meiji Group has created a lot of products cherished by people over many years and built
customer trust as a familiar brand. In the meantime, there are a multitude of social issues related tohealth in our current environment. Such issues include the worldwide spread of infectious disease,increase in lifestyle-related diseases and population aging in advanced countries, and poverty andundernutrition in developing countries. As the Meiji Group is involved in both Food andPharmaceutical businesses, we believe that contributing to solving these health issues is our mission.
Meiji’s corporate image is familiar, safe, friendly, good quality, and trusted by customers.
Unfortunately, customers do not recognize our role in supporting health. Therefore, we establishedour slogan “Now ideas for wellness” so that everyone recognizes “Meiji brand = health” considering
our relationship with people, society, and the earth. We will incorporate new ideas into the expertisein food and pharmaceuticals that we have accumulated over more than 100 years since our founding.
We will thereby create “health value unique to the Meiji Group” and contribute to realizing
a sustainable society.

What Is Health Value Unique to the Meiji Group?
With a focus on wellness, the MeijiGroup will contribute to customers’
physical and emotional well-being for
all generations, from babies to theelderly. We will support everybody asmuch as and as long as possible.
Consequently, we will bring healthy,
happy smiles and generate a good cycle
where people spread smiles aroundthem. Through a variety of productlines, we will link individual health tothe smiles of people all over the world
by continually moving through the cycleof Cure, Care and Share. This is thehealth value unique to the Meiji Group.

22

Value Creation Process

Value Creation Process

We Will Provide Health Valueto All Stakeholders
The Meiji Group pursues “Now ideas for wellness” and generates the Cure, Care and Sharecycle, thus creating health value unique to the Meiji Group. We will provide such value to all
stakeholders and contribute to creating a better future for people, society and the earth.

Healthy Society· Thriving communities(Partnership with local communities,
social contribution activities)· Sustainable sourcing· Build mutual trust in relationships
with business partners

Shareholders & Investors· Sustainable growth· Sound financial base,enhanced capital efficiency,
and stable profit return

Healthier Lives
for Customers· Live longer, healthier lives· Lead healthy, fulfilling lives· Tastiness and enjoyment· Product safety and reassurance

Health of Employees· Establish a workplace environment
where each employee can demonstrate
their strengths and skills· Establish a workplace environment
where employees can stay healthy bothmentally and physically

Global Environmental
Health· Caring for the earth(environmental conservation,
reduced environmental
burden, biodiversity
conservation)· Sustainable sourcing

Based on Strengths Accumulated over the Meiji Group’s 100-Year History
The foundation for creating health value unique to the Meiji Group is a number of strengths
accumulated over a history of more than 100 years. In the Food segment, we have a wealth ofknowledge obtained through our milk, lactobacillus, and cocoa research, as well as excellent nutritionengineering technology. In the Pharmaceutical segment, based on our advanced pharmacologicalexpertise, we have produced results in research on microbial and bio-pharmaceutical technology. We
will conduct further study in these domains, and through food-pharmaceutical synergies, will provide
new health value that only the Meiji Group can realize.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

23

History of Health Value Creation
The Meiji Group has built more than 100 years of history since our founding. Throughout our history,
we have strived to solve many nutritional and health issues faced by society by promoting
innovations in the food and pharmaceutical domains. We have launched innovative products thatprovide more value, thereby creating new markets. Through food and pharmaceuticals, we willcontinue to create health value unique to the Meiji Group that contributes to help solving social
issues. This is the driving force for our motivation to achieve sustainable growth.

Solving Social Issues through Health Value

1920

1960

1980

1923

The infant formula
Patrogen is created.

Food BusinessSweetened condensed milk was used tosupplement breast milk in the Meiji and Taisho
eras in Japan. However, it did not provide
sufficient nutrition. In 1923, the Food Science
Institute Foundation developed Patrogen—Japan’s first infant formula including vitamin
B1. We obtained the production and marketingrights to this product and introduced it to themarket in 1932. We then launched Soft Curd
Meiji Infant Formula in 1951, Japan’s first soft
curd baby formula. It was produced through theheat treatment of milk protein in our effort tohelp babies’ digestion.

1928

Meiji Milk was launched.
Pasteurization of drinking milk became
mandatory in 1928. We constructed apasteurization plant for raw milk after
obtaining approval under the MilkBusiness Control Regulations. The
production and sale of Meiji Milk started.

1973

Meiji Bulgaria Yogurt
was launched.
In 1971, we launched Meiji Plain
Yogurt, which was developed inorder to make plain yogurt in
Bulgaria, the birthplace of yogurt.
In the following year, the Republicof Bulgaria granted naming rights
to us and launched Meiji Bulgaria
Yogurt in 1973. In 1996, Meiji
Bulgaria Yogurt LB81 Plain
received approval of Food forSpecified Health Use. It helps
achieve a good balance withintestinal bacteria and maintains
sound intestinal conditions.

1980

SAVAS series, sports protein
for athletes, was launched.
SAVAS series was developed andlaunched based on results fromsports nutrition to support
athletes.
According to our research resultson milk protein, we launched
SAVAS Milk in 2015. Milk protein is
contained in drinking milk anddairy products and SAVAS Milk
helps to build physical strength.
Its packaging was designed to beeasy to drink during exercise.

1988

Pharmaceutical Business
24

Genetically modified
hepatitis B vaccine
Bimmugen was launched.

1975
1946

Startedmanufacturing penicillin
We promoted penicillin research during
World War II and started manufacturing
penicillin in 1946 after obtaining
production approval. Later, wedeveloped a number of antibiotics,
including STREPTOMYCIN MEIJI in 1950,
KANAMYCIN MEIJI in 1958, and
PANIMYCIN in 1975. These antibiotics
saved many human lives from thepost-war to high economic growth
period in Japan.

Value Creation Process

The agriculturalchemical product
ORYZEMATE was launched.
ORYZEMATE is safe and effective
rice blast preventative. It has
a novel mechanism of action,inducing disease resistance inrice. It has been greatly
contributed to stable productionof rice since its launch as a basic
rice blast preventative.

Bimmugen is Japan’s first
genetically modified hepatitis B
vaccine developed by applying
genetic recombination
technology. It has been adopted
for regular vaccination since
October 2016.

1989

The benzodiazepine
derivative antianxiety
drug MEILAX
was launched.
As the aging population grows,
we extended our product lines toinclude central nervous system
drugs to improve product mix
beyond just antibiotics.

Value Creation Process

PICK UP

Founding Spirit of “Contributing to the Country
through Nutrition” Passed Down to the Present Day
The Meiji Group originated from the sugar manufacturing business launched by
the Group’s founder, Hanji Soma. Our founder started the business as he wanted
to improve dietary habits in Japan by popularizing sugar, which was a rare foodback then. The Company’s motto was to “contribute to the country throughnutrition.” Many of the Meiji Group’s products were created based on thisfounding spirit and thus have been passed down continuously to the present day.

2000

2020

1995

Although everyone knows milk is nutritious, somepeople don’t like milk very much. We establishedthe Natural Taste Manufacturing Process tominimize sacrificing the flavor of fresh milk. Using
this method, Meiji Oishii Gyunyu has realized thedeliciousness of raw milk right after milking.

The enteral formula
Mei Balance was launched.
Meiji Mei Balance is to substitute meals
at hospitals and nursing homes. The
products pursue nutrition, function andtastiness. It is made mainly from casein,a protein derived from cow’s milk.
Whey, well-balanced amino acids, isadded to the products.

2002 The drinking milk

Chocolate Kouka is seeking the healthvalue of cocoa polyphenol. Consumers
enjoy the strong flavor and taste ofcocoa beans, while gaining healthbenefits. The product is low
carbohydrate and low GI, and blood
sugar levels increase slowly after intakeof the product.

1994

The antibiotic
MEIACT was launched.
When we launched MEIACT, we
promoted its feature, which is potent
antimicrobial activity against
Staphylococcus aureus. Later we foundthat it demonstrates antimicrobialactivity against penicillin-resistant
Streptococcus pneumoniae andbeta-lactamase negative
ampicillin-resistant Haemophilus
influenzae. MEIACT is currently sold in
more than 20 countries and areas.

1999

The antidepressant
DEPROMEL
was launched.
DEPROMEL is Japan’s first selective
serotonin reuptake inhibitor (SSRI).

2020

Meiji TANPACT series
was launched.

Meiji Oishii Gyunyu was launched.
Meiji Probio Yogurt LG21 has created
new health value, thereby expanding
the possibility of lactobacilli andcultivating new markets.

1998

The high cocoa content
chocolate Chocolate
Kouka was launched.

Hanji Soma

2000 Meiji Probio Yogurt LG21 was launched.
2009 Meiji Probio Yogurt R-1 was launched.
2014 Meiji The Chocolate was launched.
Meiji The Chocolate combines cocoa beans fromdifferent producing areas and various processing
methods in order to produce rich flavor. We havebeen supporting cocoa farmers for sustainableproduction of high-quality cocoa beans.

Protein intake among people
today has declined to the levelof the 1950s. The TANPACT
brand contributes to solving
undernutrition, a current social
issue. Consumers can enjoy
delicious protein anytime andanywhere.

2008

Generic drug business
The high blood pressure medication
AMLODIPINE MEIJI was launched.
We entered the generic drugs business, where we provide
convenient, high-quality, low-priced generic drugs based ontechnologies developed through new drug development.

2009

The antidepressant drug
REFLEX was launched.
REFLEX is classified as the only noradrenergicand specific serotonergic antidepressant (NaSSA).

2016

Treatment for schizophrenia
SYCREST was launched.

2020

KM Biologics
promotes developmentof novel coronavirus
and dengue virus vaccines.
Development of vaccines has
become a social issue for many
countries while the world is
exposed to the threat of
COVID-19 and other infectious
diseases. KM Biologics Co., Ltd.
has a wealth of knowledge,
expertise and scientificaccomplishment in this field.
The company is advancing
research and development ofvaccines against COVID-19 anddengue virus.

SYCREST is Japan’s first sublingual atypicalantipsychotic tablet with proven efficacy and safety.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

25

The Meiji Group’s Process for Value Creation
The Meiji Group’s competitive advantage is attributed to our business model. It is based on the variety ofaccumulated capital and its strategic distribution as well as our strong value chain. Through these processes,
we create health value unique to the Meiji Group across the Food and Pharmaceutical segments. Accordingly,
we will contribute to solving various important social issues. When we operate our business, we will realizeboth profit growth and sustainability and increase our corporate value while placing emphasis on ESG.

External Environment and Social Issues
Capital Distribution

Input

Financial
CapitalBusiness Activities(Strategy)2023 Medium-TermBusiness Plan
Promote the Meiji ROESG®
Management effectively

Intellectual
CapitalHuman
CapitalRealize both profit growthand sustainability activities

Business Strategy• Food Segment• Pharmaceutical Segment• Group-wide

Improve business
management
using ROIC effectively

Manufactured
CapitalSocialCapitalNaturalCapitalNow ideas for wellness

Combination of the strengths cultivatedover the Meiji Group’s 100-year history
and the latest technology and findings

Invest in businessfor future growth
while constructing
strong financial basePromote the Meiji Group
Sustainability
2026 Vision
Page 20

Value Chain
Creating Markets with a Strong Value Chain
The Meiji Group’s strength lies in our value chainthat is based on reliable quality.
This value chain creates new value anddelivers products with that value to our customers.

Sourcing
Research andDevelopment

Strengths
and Features ofthe Meiji Group
Page 28

Production
andDistribution

Sales andCommunication
Safe and Reassuring Quality

Corporate Governance

Page 68

Human Resources

Page 56

Description of Capital

26

Financial CapitalIntellectual Capital

Human Capital• Can stably generate cash flows for
growth investment• Sound and robust financial structure• High profitability throughhigh-market share product lines inindustry• Knowledge and expertise
accumulated over a 100-year history• Basic research (lactobacilli, cocoa,
microorganism, fermentation,biotechnology and drug discovery
research)• Patents • Manufacturing technologies• Product commercialization expertise• Personnel who embrace the meiji way

Value Creation Process

WEB Mission and Vision• Employee-friendly workplaceenvironments• Respect diversity

Value Creation Process

Realize the Meiji Group’s Ideal Corporate Identity(the Group Philosophy and Meiji Group 2026 Vision)

OutcomeEnhance Corporate ValueOUTPUT
Valuable Information Related to Food and Health• Features that help
improve health• High quality nutrition• Offer new food culture
and cuisine• Public awareness on
diseases and prevention• Promote proper use ofpharmaceuticals• Scientific data and articles

Food
Business• Sports nutrition• Yogurt• Drinking milk (sports protein)• Enteral formula• Chocolate• Infant formula• CheeseCreate Health Value
Provide all stakeholders withhealth value unique tothe Meiji Group
Page 22

Food–Pharmaceutical
Synergies
PharmaceuticalBusiness• Systemic antibacterial drugs• Vaccines• Antidepressant &atypical antipsychotic drugs• Generic drugs• Blood plasma products• Agricultural chemicals• Veterinary drugs

Strengthen Each Capital

Variety of Products for Improving Health and Nutrition• Sustainable corporate growth• Accumulate financial capital andsteady return to stakeholders• Promote sustainability andcontribute to solvingsocial issues

Manufactured CapitalSocial Capital

Natural Capital• Production and sales bases located inJapan and overseas• Food distribution network designed
to cover all temperature ranges (roomtemperature, chilled and frozen)• Production system that guarantees
stable supply of high-quality
pharmaceuticals• Reliability to the Meiji brand• Strong brand that produces highmarket shares• Relationships with suppliers andbusiness partners• Strong, close relationships with ourcustomers• Engagement with shareholders andinvestors• Rich ingredients (cocoa, raw milk,
microorganisms such as lactobacilli
and actinomycetes)• Energy• Water

Meiji Holdings Co., Ltd.｜Integrated Report 2021

27

The Meiji Group Value Chain
The Meiji Group is enhancing business activities to achieve sustainable growth from both the businessperspective and sustainability perspective in the value chains that underpin its business model.

Research andDevelopment
Strengths andFeatures ofthe Meiji Group• Accumulated expertise obtained through basic research(lactobacilli, cocoa, microbial fermentation, biotechnology and drug
discovery research)• Collection of microorganisms (lactobacilli and actinomycetes)• Chemical library (synthetic compounds and microbial metabolites)• Excellent R&D capability, product commercialization expertise,manufacturing technologies and related patents

Business-related• Stably source high-quality raw milk in China• Build global supply chains for bulk drugs and raw materials• Audit and improve quality of bulk drug and raw material
suppliers (education and guidance from dedicateddepartment)

Contribute to healthy eating habits

Dialogue with stakeholders• Conduct supplier audits

Stable sourcing

Measures against infectious diseases• Develop novel pharmaceuticals and vaccines for infectious disease• Superior quality management of clinical trials and clinical data

Sustainability-related

Initiatives to Enhance Strengths• Develop new value(use evidence-based ingredients and technologies)• Discover and develop novel pharmaceuticals• Establish evidence through clinical development and post-marketingsurveillance• Use open innovation and industry-academia alliances• Implement new R&D approaches in our Co-Creation Center• Develop health-conscious products• Develop nutritional products with added value• Develop products for a super-aged society

Main Challenges andFuture Initiatives
Value Creation Process• Network with dairy farmers• Cooperation with cocoa farmers• Network with related organizations• Cost-competitive and stable sourcing of drugs using
a global supply chain• Create new markets• Merge expertise in Food and• Cultivate a corporate culture that Pharmaceutical businesses
encourages taking on challenges

Reduce environmental impact• Develop environment-friendly agricultural chemicals

Stable sourcing• Physical and chemical analysis and development of new testing
techniques to stably source premium quality raw milk

Reduce CO2 emissions• Technical support and livelihood support for cocoa farmers• Farm management support program for dairy farmers in Japan• Secure bulk drug suppliers and have multiple suppliers

Responsible sourcing of raw materials (paying
attention to human rights and the environment)• Source based on Procurement Policies and Guidelines• Support for cocoa farmers(increase amounts of sustainable cocoa beans)• Promote the use of 100% RSPO-certified palm oil• Promote the use of environment-friendly paper• Support farm management for dairy farmers in Japan

Protect local biodiversity• Support the TCFD and join the Consortium

Reduce environmental impact

28

Sourcing• Activities to protect forests• Biodiversity conservation• Reduce industrial waste• Expand use of bioplastics and recycled plastics• Use lighter and thinner plastic container packaging and switch toalternative materials (paper, etc.)• Cut food loss through efficient production and distribution
management

Promote diversity and develop human resources• Maximize the Meiji Group synergies• Create unique value that will extend healthy life expectancy• Combat drug-resistant bacteria• Source raw materials paying attention to human rights
and the environment (cocoa, palm oil, paper, raw milk,
bulk drugs)• Continue to support cocoa farmers and farmmanagement for dairy farmers in Japan• Disseminate the Meiji Group’ s new slogan,“Now ideas for wellness”• Enhance employee engagement• Promote diversity & inclusion• Secure and develop human resources• Increase the ratio of female managers• Increase the ratio of employees with disabilities(above the statutory employment quota)• Respect diversity• Create a safe and healthy workplace environment

Value Creation Process

Initiatives to Enhance Strengths
Sustainability-related

Healthier Lives

Caring for the Earth

Thriving Communities

Sustainable Sourcing

Production andDistribution

Sales andCommunication• Quality control system (ensure product quality and safety)• Distribution network designed to cover all temperature ranges(room temperature, chilled and frozen)• Unique manufacturing methods to ensure tastiness• Superior drug production technologies and many advanced drug
formulation technologies• Respond to a super-aged society and contribute to maintaining the
National Health Insurance Systems• Reliability to the Meiji brand and brand strength• High market share• Two-way communication and strong, close relationships withbusiness partners and customers• Drug product lines covering prevention and treatment, as well ascomprehensive customer support• Educate about drug-resistant bacteria• Provide health value from prevention to cure
• Product lines that cover the entire life cycle from infants to the elderly• Build supply chains with consideration for social expectations andthe environment• Increase production capacity for value-added products• Develop high-quality, efficient production systems globally(low-cost, high-mix, high-volume production at overseas subsidiaries
that use Japan’s robust quality management systems)• Optimize production and distribution systems in Japan and overseas• Examine establishing the technology for manufacturing bulk drugs for
Key Drugs (subsidy to support the stable supply of pharmaceuticalproducts)• Improve distribution efficiency and reduce costs by consolidating
distribution sites• Run marketing campaigns and sales promotions to provide
information on product features• Provide complete information from prevention to treatment(dedicated medical representatives)• Enhance network of the Meiji Group and medical specialists(pediatrics, ENT, internal medicine, psychiatry, hematology)• Expand the Meiji Group’s drug sales networks established in
Asia and Europe (Thailand, Indonesia, China, U.K., Spain)

Ensure product quality and safety

Contribute to healthy eating habits

Stable supply of pharmaceuticals

Improving nutrition in developing countries• Efforts to obtain Global Food Safety Initiative certification• Disseminate information to promote health and nutrition• Ensure the sustainable supply of pharmaceuticals(important antibiotics, etc.)• Ensure stable supplies of agricultural chemicals and veterinary drugs

Reduce CO2 emissions• Promote renewable energy• Introduce green electricity• Invest in energy-efficient equipment

Eliminate the use of specified fluorocarbons• Promote replacement with CFC substitutes and natural refrigerants

Secure water resources• Reduce water usage• Improve access to nutrition in developing countries• Support famine relief in developing countries• Offer new food culture and cuisine• Improve access to medicine (mainly in China and Southeast Asia)

Ensuring product quality and safety• Educate about drug-resistant bacteria• Provide hygiene education• Provide infection control expertise to agriculture and livestockindustries• Appropriate Water Management
and Water Risk Management

Employee-friendly workplaces• Employee-friendly workplace environments(encourage health and productivity management)• Enhance employee engagement

Promote philanthropic activities• Contribute to society through community activities,
emergency aid and support in affected areas, and our products

Respect and promote human rights• Conduct human rights training• Implement human rights due diligence• Increase production capacity for high health value products• Pursue the value and benefits of protein and increase protein intake• Reduce the environmental impacts resulting from productdevelopment through to disposal• Plan and implement energy-saving and water risk programs• Ensure stable supply of environment-friendly agricultural chemicals• Promote food and health value through e-commerce channels• Successfully penetrate overseas markets through Meiji quality
and unique value• Introduce a new food culture into overseas markets• Increase sales of drugs manufactured at overseas plants in theJapan market• Expand environment-friendly agricultural chemicals globally• Expand vaccines overseas, especially to Asia

• Contribute to society through community activities, emergency aid andsupport, and our products

Meiji Holdings Co., Ltd.｜Integrated Report 2021

29

Financial and Non-Financial Highlights (Main Indices)
Net Sales(Billions of yen)
1,400
1,242.4

Operating Profit / Operating Profit Margin
1,240.8

1,254.3

1,252.7

1,200(Billions of yen)120

1,191.7

90

1,000
800

60

600
400

88.3

7.1

94.6

102.7

98.3

106.0
8.9

7.6

(%)
12

9

8.2

7.8

6

3

30

200
0

FY2016FY2017FY2018FY20190

FY2020FY2016FY2017FY2018FY2019FY20200Operating profit (Left scale)Operating profit margin (Right scale)Profit Attributable to Owners of Parent / ROE(Billions of yen)
80

60.7
60

14.2

Shareholders’ Equity / Shareholders’ Equity Ratio
(%)

61.2
13.1

61.8

12.2

67.3

18

(Billions of yen)
700

65.6

12.4

11.1

448.9
12

40

(%)

500

50.8

487.3
52.5

527.3
52.5

562.7

621.4

70

58.2
56.3

50

300

30

100

10

6
20

0

FY2016FY2017FY2018FY2019FY202000Profit attributable to owners of parent (Left scale)ROE (Right scale)

FY2016FY2017FY2018FY2019FY20200

Shareholders’ equity (Left scale)
Shareholders’ equity ratio (Right scale)

Cash Flows(Billions of yen)
140
120
100
81.8
80
60
37.5
40
20
0
-20
-44.2
-40
-60
-80
-100

FY2016

Payout Ratio / Dividends on Equity (DOE)
108.7

112.1

114.1

123.6

(%)

(%)

50

15

40

43.2

44.3
11.8

30.5

30
20

-64.3

-70.8
-100.2FY2017FY2018Cash flows from operating activities
Net cash used in investing activities

FY2019-93.1
FY2020Free cash flows

10
0

26.6

30.8

32.8

32.3

35.4

10

5

3.8

4.0

4.0

4.0

3.9

FY2016FY2017FY2018FY2019FY20200

Payout ratio (Left scale)
Dividends on equity (DOE/Right scale)*1 Applies to the Meiji Group (the domestic Meiji Group and 12 overseas production plants <13 plants in FY2020>).
The per production unit is calculated from the consolidated sales.
The Kumamoto Plant of KM Biologics Co., Ltd. was included in the calculation from FY2018, and all of the company’s sites were included from FY2019.
Past data has been revised.
*2 Applies to the domestic Meiji Group. The per production units are calculated from domestic consolidated sales.
The Kumamoto Plant of KM Biologics Co., Ltd. was included in the calculation from FY2018, and all of the company’s sites were included from FY2019.
*3 Applies to the domestic Meiji Group. The per production units are calculated from domestic consolidated sales.
The global data; applies to the Meiji Group (the domestic Meiji Group and 12 overseas production plants <13 plants in FY2020>). The per production unit iscalculated from the consolidated sales.
The Kumamoto Plant of KM Biologics Co., Ltd. was included in the calculation from FY2018, and all of the company’s production plants were included from FY2019.
From FY2018, only industrial waste generated from production sites was included in the waste volume.
Past data has been revised.

30

Value Creation Process

Value Creation Process

CO2 Emission Volume (Scope 1, 2) /CO2 Emission Volume per Unit of Sales *1

Energy Consumption Volume /Energy Consumption Volume per Unit of Sales *2(10,000 t-CO2)
80(Fuel oil conversion: 10,000 kl)
30

65.0

(t-CO2/100 million yen)
100

62.9

62.3

24.5

60.4

56.3

60

80
60

40

52.4

50.6

49.7

20

60

40

10

20

FY2016FY2017FY2018FY2019FY202000CO2 emission volume (Scope 1, 2) (Left scale)CO2 emission volume per unit of sales (Right scale)(t/100 million yen)

(10,000 t)

2

2.8

2.4

2.4

3.1

2.5
2.3

2.5

20.7

21.1

22.4

FY2016FY2017FY2018FY20193.0 Overseas

20,0002.5

15,0000.4

322,056 21,979

23,4830

FY2018FY2019FY2020FY2019Japan

Japan 1
2.5

5,000

0

0

FY2020

6

1.89

1.89

1.86

FY2018 FY2019 FY2020

Global1.87

FY2018FY20190Overseas 1.82
Japan 0.86
Overseas 1.52
Japan 0.86

1.2

3.4

3.7

1.14

1.0
0.8

2.6

0.86

0.6

2.1

0.4
1

0

FY20202

Lost Time Injury Frequency Rate (LTIFR) *5

4

2

1.84

4

Global

(%)

3.1

Japan
20,513

Water consumption volume (Left scale)
Water consumption volume per unit of sales (Right scale)

Ratio of Female Managers *4

3

Japan
21,979

1.87

Japan

Waste volume (Left scale)
Waste volume per unit of sales (Right scale)

23,397

Japan
22,056

2
Japan
2.8

0

10
21,895
Overseas Overseas
Overseas
1,427
1,418
1,382
8

20,513

10,0001

FY2020(1,000 m3/100 million yen)

(1,000 m3)
25,000Overseas
0.4

21.0

30

Water Consumption Volume /Water Consumption Volume per Unit of Sales *3

4

4

2.8

22.5

Energy consumption volume (Left scale)
Energy consumption volume per unit of sales (Right scale)

Waste Volume / Waste Volume per Unit of Sales *3

3

24.8

47.2

48.2

20

0

26.0

24.6

24.0

(kl/100 million yen)
90

0.69

0.71

FY2016FY2017FY2018Japan

Global

1.03
0.86

0.47

0.2
FY2016FY2017FY2018FY2019FY20200.0

FY2019FY2020*4 Applies to Meiji Holdings Co., Ltd., Meiji Co., Ltd., Meiji Seika Pharma Co., Ltd. and KM Biologics Co., Ltd.
KM Biologics Co., Ltd. was added and included in the calculation from FY2018.
*5 For FY2016 through FY2018, applies to all plants and research laboratories in the Meiji Group in Japan including consolidated subsidiaries (but excluding
KM Biologics Co., Ltd., Meiji Feed Co., Ltd., OHKURA Pharmaceutical Co., Ltd. and Okinawa Meiji Milk Products Co., Ltd.).
The Meiji Group in Japan including consolidated subsidiaries, Okinawa Meiji Milk Products Co., Ltd., and all the operating sites of overseas Group production
companies have been included in the calculation since FY2019.
Lost Time Injury Frequency Rate: Number of casualties ÷ Total working hours × 1 million

Meiji Holdings Co., Ltd.｜Integrated Report 2021

31Strategy by Business | Food Segment

Katsunari Matsuda
COO (Food Segment)
Member of the Board and Executive Officer
Meiji Holdings Co., Ltd.
President and Representative Director
Meiji Co., Ltd.

Under the Banner of the “Meiji Nutrition Statement,”
We Will Create Unique Value with Our Original Technologies
Promoted Structural Reform and Establisheda Growth Foundation for Business in China
Under the 2020 Medium-Term Business Plan
One of the major achievements of the 2020 Medium-TermBusiness Plan is structural reform. We liquidated groupcompanies in non-core businesses, shutdown the Hokuriku
and Okayama Plants, and discontinued unprofitableproducts. We are also working on organizational reform andremoving internal barriers. We have integrated the sales
departments in branches across Japan, which wereorganized by products, and restructured them by distribution
channel. We have also reorganized the head office divisions
based on functions such as development, marketing, andsales. We have integrated separate research laboratories in2020 to build a R&D system that create new products throughsynergy across business areas, rather than simple addition.
In overseas business, we established a solid growth
foundation for sales expansion in China. In 2019, weestablished Meiji (China) Investment Co., Ltd. as a managing
company to optimize business strategies and strengthen
management in China. In 2020, we invested in AustAsia
Investment Holdings Pte LTD., which operates dairy farms in
China, to ensure the quantity and quality of raw milk wesource. Furthermore, we have decided to invest in building
new plants in Tianjin, Guangzhou and Shanghai.

32

Business Strategy

Meanwhile, in the 2020 Medium-Term Business Plan, thegrowth of sales and profit slowed down and remained stable.
In FY2020, the final year of the 2020 Medium-Term Business
Plan, the impact of the COVID-19 pandemic was significant,and sales of mainstay products such as Meiji Probio Yogurt R-1
and chocolate were sluggish. Recovering from the slump inthese core businesses is one of our major challenges for the
future.
(Billions of yen)

FY2019Results

FY2020Results

YoY Change

Net sales

1,049.5

999.6

−4.8%
-49.8

87.3

87.4

+0.1%
+0.1

Operating profit

Breakdown of Consolidated Op. Profit (Billions of yen)
FY201987.3-7.9

Decrease in sales of confectionery, anddiscontinued sales of some drinking milk products+7.6

Cost improvement (improved production yield),
impact of change in cost accounting method (+6.9)*

+6.8
-7.2
+0.8
FY202087.4

Decrease in promotion expenses
Increase in SG&A, decrease in indirect
manufacturing expenses, impact of change
in cost accounting method (-6.9) *Profit/loss in subsidiaries, decrease incorporate expenses* Recorded the cost of purchased goods from Group companies, divided into
direct manufacturing costs and indirect manufacturing costs

Business Strategy

Provide Society with Products That
Meet “Now ideas for wellness” andthe “Meiji Nutrition Statement”
Due to the COVID-19 pandemic, people are becoming more
health-conscious, and consequently new demand focusing
on health is increasing. Contribution to health will help solve
social issues, and a lot of food manufacturers are entering
this promising area. If competition works well, the market
will expand greatly, which will have a positive impact on us.
In response to this, we have been focusing on products thatmaintain good health and increase protein intake in recent
years. I believe that the key to success is creating uniquevalue in the future.
To clarify our direction, we have formulated the “Meiji
Nutrition Statement.” The Statement is to incorporate thespirit of the Meiji Group’s new slogan, “Now ideas forwellness,” into the Food segment. The Meiji Founding Spirit is“Contributing to the Country through Nutrition.”
Consequently, we have strived to create products over theyears that contribute to people’s healthier lives. We createdthis Statement to seek a sustainable business by contributing
to people’s healthier lives. I believe that we should only
launch products that conform to “Now ideas for wellness”
and the “Meiji Nutrition Statement.”

Meiji Nutrition Statement

Meiji continuously evaluates
the potential of Nutrition.
We always have. We always will.
Mind

01

Mind

02

Mind

03

Providing Nutrition that supports daily
health through natural ingredientssuch as milk and cocoa.
Providing heartwarming Nutrition
through various forms of+1 (Plus One) value.
Using nutrition to help enrich the lives ofpeople in various countries and regions.

WEB Meiji Nutrition Statement (Japanese version only)

Expand the Market by Promoting
the Unique Health Value of Our Products
One of the key business strategies in the 2023 Medium-TermBusiness Plan is to “Recover from the slump in our corebusiness.” We should enhance and promote the unique valueof our yogurt and functional yogurt to grow them. For
example, demand for Meiji Probio Yogurt R-1 used to growsignificantly during the flu season. However, it contributes toa healthy life and maintains good health when you drink it
every day. We will promote its value more to society andexpand the market.
Meanwhile, using our unique technologies and expertise,
we will develop new products that are superior in the market.
With new lactobacillus, we are developing a functional
yogurt that shows a positive impact for us. We are also
considering its potential for “Foods with Function Claims”
and hope to spread its value to the world.
In the Nutrition business, sales of sports protein are
growing steadily due to the increased health awareness.
Sales of SAVAS powder have grown significantly because
consumers recognize its quality, reaching JPY 21 billion in
FY2020. Sales of SAVAS Milk have doubled, close to the scaleof SAVAS powder. The advantage of SAVAS Milk is that the milk
protein does not coagulate under acidic condition in thestomach and is thus absorbed quickly. This is our unique
technology and a major competitive advantage.
To expand the Nutrition business, including sports
protein, we will focus on marketing. We will target different
products according to age groups, such as SAVAS for those
aged 15 to 50, TANPACT for those in their 50s and 60s, and Mei
Balance for the elderly. Considering beyond the 2023
Medium-Term Business Plan, we will review our brandstrategy to clarify brand identity.

Net Sales in Core Businesses*
Chocolate

Nutrition

Yogurt and functional yogurt(Billions of yen)

CAGR 4.1%

96.0

100.7

116.0

123.9

196.3

197.7

FY2020

FY2021

107.6
131.0
221.7
‥

Target for FY2023* Before applying revenue recognition standards

Meiji Holdings Co., Ltd.｜Integrated Report 2021

33

Strategy by Business | Food Segment

Changing Our Ideas and Pursuing New Growth
Chocolate, which is one of our core businesses, is currently
sluggish. To break through this, we should change our idea
about the chocolate business to the cocoa business. We
should offer chilled and frozen chocolate products and cocoa
drinks to our customers in addition to conventional
chocolate products. Our unique strength is that we candevelop and market products at three serving
temperatures—room temperature, chilled, and frozen. Using
this to our advantage, we will promote Meiji’s unique value
and develop new markets.
In the near future, all of the cocoa beans we source will
be sustainable cocoa beans. This means that we will be
involved in the entire cocoa bean supply chain and support
sustainable cocoa production. When we think of the entire
cocoa bean supply chain, there will be many interesting
business opportunities. Cocoa beans were originallyconsumed by middle and south Americans for nutritional
enhancement. I believe we can develop products that offer
the health value of cocoa beans and create a completely newmarket. By changing our ideas and expanding ourperspective from chocolate to cocoa, I believe we can achieve
further growth.

Increase Investment to Expand Business in
China. Develop Strategies that Fit Markets in
Europe, the U.S. and Southeast Asia
Accelerating overseas business is our key business strategy inthe 2023 Medium-Term Business Plan. We will expand ourbusiness in China, Southeast Asia, Europe and the U.S. In
China, we will build four plants in the three years of the 2023
Medium-Term Business Plan to boost our production
capacity immediately. We will thereby achieve great results inthe next 2026 Medium-Term Business Plan. In addition, we
started to sell Meiji Probio yogurt R-1 and LG-21, functional
yogurt, in Shanghai in April 2021. Currently, the products are
sold exclusively in upscale supermarkets and sales are
increasing steadily. As the functional yogurt production line
at the local plant was expanded in July 2021, we will increase
the supply to encourage market growth. We will introduce a
dedicated production line for functional yogurt in the Tianjin
Plant in 2023 and eventually the Plant will be our main
production base.
In Southeast Asia, we will expand the confectionery
business. We will invest in expanding production lines andpromote high value-added Meiji products according to local
purchasing trends. In the U.S., we are currently producing
and selling only confectionery, but we are considering otherproducts such as yogurt. In Europe, we have entered abusiness partnership with Danone and started production of
cube-type infant formula. The product is sold at Boots, adrugstore chain in the U.K., and the sales are favorable.

34

Business Strategy

Eventually, we will expand to other European countries.
Meanwhile, we will continue our structural reforms underthe 2023 Medium-Term Business Plan. We have almost
finished transferring group companies that have littlesynergy in terms of facilities, technology, and humanresources. During the 2020 Medium-Term Business Plan, we
transferred our shares in Meiji Kenko Ham, Asahi Broiler, Meiji
Rice Delica, Fresh Logistics, and others to companies that will
increase their business value. We introduced ROIC as amanagement indicator and set targets to improve eachbusiness in the 2023 Medium-Term Business Plan. Also, if thebusinesses do not meet the Meiji Nutrition Statement, we will
replace the products with ones that have the Meiji uniquewellness value.

Expanding Production Capacity in China

Meiji Dairies(Tianjin)
Meiji Dairies(Suzhou)

Meiji Seika Food Industry(Shanghai)

Meiji Shokuhin(Guangzhou)

Production capacity at the end of FY 2023
(Based on monetary amount, compare to FY 2020)

Yogurt4

About times(Expand capacity in Suzhou*1,
New factory in Tianjin*2,
Guangzhou*3)

Confectionery About 2 times(New factory in Guangzhou*3)

Ice cream*1 FY 2021

2

About times(New factory in Shanghai*3)*2 FY 2022

*3 FY 2023

Business Strategy

Bring out the Potential of Diverse
Human Resources and Venture into
New Domains. Also, Build New Business
Models using Digital Transformation (DX)We will strive to “Venture into new domains,” set in the 2023
Medium-Term Business Plan. The key is human resources. We
have started the “Accelerator Program” to encourage
employees’ motivation and bring out potential. About 20
projects have already been launched, including external
collaboration. We are creating a system that allows
employees to concentrate on these projects away from theircurrent duties. Through these projects, we hope to foster a
corporate culture that encourages employees to take onchallenges individually. To support that, we will improve thepersonnel system, and clarify the evaluation criteria so that
good results will be rewarded and lead directly to promotion.
We will also promote diversity and inclusion in ourhuman resources. From 2021, Meiji Co., Ltd. is implementing
the “DIAMOND Project” under the direct control of the
President. The project is to create an environment where
women, people with disabilities, and foreign employees canplay a more active role at work. To increase female
managers, we will recruit experienced women from outside
as managers as well as develop competent personnel
in-house. We want to raise the awareness and inspire young
female employees and vitalize the company by providing rolemodels of female managers.
It is essential for us to use digital technology to “Venture
into new domains.” One example of Digital Transformation(DX) is the use of the membership database of the Hohoemi
Club, a website that we operate. On this website we support
child rearing mothers before and after childbirth, and handle
various health-related consultations for about one million
users. Handling personal information with the utmost care,
we analyze the database and are considering a new businessmodel. We will provide necessary nutritional information andproducts to child rearing mothers according to personalneeds.
As DX progresses, our business may change dramatically.
For example, instead of just selling yogurt, we can create a
new business model to provide novel lactobacilli.
Collaborating with various companies, we may offer aninnovative service that provides fully optimal yogurt every
day made from lactobacilli and Meiji Oishii Gyunyu, ourdrinking milk, based on the individual health conditions. We
should think boldly, see things from new angles andperspectives, and create new value unique to Meiji using DX.

小林

We Will Continue to Create New Categories
and New Demand
The DNA of the Meiji Founding Spirit “Contributing to theCountry through Nutrition” has been passed down to thepresent day. Looking back on the past, we have been
continually launching products that contributes to people’s
health. Meanwhile, we provide food, and food must taste
good. It might be true that “We don’t eat to live but we live toeat delicious food,” so in that sense, we should eat tasty foodmore often. Therefore, the products unique to Meiji should betasty and make customers healthy.
As always, we will continue to create new categories andnew demand, as well as stimulate the market. Rather thanentering business areas that other companies havecultivated, we will further boost our business strength andcreate new markets in their surrounding areas. To achieve
this goal, we will commit ourselves to creating unique value
using Meiji’s original technologies and expertise.
Related information in“History of Health Value Creation” (page 24)

Meiji Holdings Co., Ltd.｜Integrated Report 2021

35

Strategy by Business | Pharmaceutical Segment

Daikichiro Kobayashi
COO (Pharmaceutical Segment)
Member of the Board and Executive Officer
Meiji Holdings Co., Ltd.
President and Representative Director
Meiji Seika Pharma Co., Ltd.

We Will Build a Platform for Infection Control by
Focusing Management Resources on Businesses
that Help to Solve Social Issues
A Record-High Profit in FY2020
Thanks to Significant Growth in
the Vaccine and Overseas Businesses
One of the major achievements of the 2020 Medium-TermBusiness Plan was that we entered into the vaccine business
as KM Biologics, the No. 1 vaccine company in Japan, joined
the Group. As a result, we have built a stable foundation forbusiness growth. Also, we acquired Medreich Ltd. in India in
2014. We succeeded in putting Medreich on a growth track
during the 2020 Medium-Term Business Plan. I believe theoverseas CMO/CDMO* business is worth entering tocomplement and improve the domestic generic business,
which is another foundation for major growth in the future.
On the other hand, some new drug candidates failed tomeet primary endpoints in clinical studies, and we couldn’t
achieve the targets to develop drugs discovered in-house. In
FY2020, the spread of COVID-19 had a significant impact on
our business. Demand for antibacterial drugs, our main
product, has been stagnant because people’s efforts toprevent infectious diseases resulted in a drastic decline in
infections. In addition, the number of outpatients visiting
medical institutions decreased significantly. Accordingly, theJapanese pharmaceutical market shrunk.
In the second half of FY2020, production yield of influenza
vaccines in KM Biologics was good, achieving the record-high36

Business Strategy

production of 10 million vials. As we started selling our
products earlier than competitors, we could secure sales andprofits. Ultimately, thanks to the great contribution of KM
Biologics and Medreich, the Pharmaceutical segment achieveda record-high profit in FY2020.
* CMO: Contract Manufacturing Organization
CDMO: Contract Development and Manufacturing Organization(Billions of yen)

FY2019Results

FY2020Results

YoY Change

Net sales

204.3

193.6

−5.2％
-10.6

Operating profit

15.9

19.1

+19.5％+3.1

Breakdown of Consolidated Op. Profit (Billions of yen)
15.9

FY2019-1.9

Decreased due to impact
of NHI drug price revisions

-5.8
+2.0
+2.7

FY2020

Sales of antibacterial drugs decreased
significantly*, human vaccines increased,
and royalty and lump-sum income increased

Cost reduction
Decreased due to cost controls
and restrictions on MR activities+0.1 Decreased R&D expenses
Increased profit+6.0
from KM Biologics, etc.

19.1

* This was because the number of outpatients visiting to medical
institutions decreased due to the COVID-19 pandemic

Business Strategy

Our Urgent Task is to Develop InactivatedVaccines against COVID-19
During the COVID-19 pandemic, I have reconfirmed that our
greatest mission is to develop and supply vaccines andpharmaceuticals against emerging and re-emerging
infectious diseases that seriously impact society, as well as
antibacterial drugs against drug-resistant bacteria. The stablesupply of high-quality pharmaceuticals at a reasonable priceis also an important responsibility for us. In the 2023
Medium-Term Business Plan, we will focus our management
resources on these business areas and clarify our portfolio.
We will also build a platform for infection control in Japan.
To fulfill this mission, we must work urgently on
developing a vaccine against COVID-19. KM Biologics is incharge of the formulation of AstraZeneca's vaccines. We haveestablished a system to supply formulated vaccines using thecold chain built for our seasonal influenza vaccine.
In the meantime, KM Biologics has been developing
inactivated vaccines domestically with the government's
support, and phase I/II trials are underway. Many inactivatedinfluenza vaccines were developed, approved, and theirsafety data has been accumulated. We believe thatinactivated vaccines against COVID-19 are essential. Successin vaccine development will be a big step toward periodic
vaccination, just like flu vaccines.
Furthermore, we have experience in developing
prototype vaccines* for pandemic influenza. Application ofthis experience to novel coronavirus will enable easier
response to variants and prompt manufacture and supply ofa desired pandemic vaccine. We have to secure vaccines for
120 million Japanese and this will be a big challenge for us.
Moreover, we are developing vaccines using newtechnologies to respond quickly to unknown infection risks.

Expanding Medreich's CMO/CDMO Business toContribute to Improving Access to Drugs for
People around the World
Expansion of the overseas CMO/CDMO business is also one of
the key strategies of the 2023 Medium-Term Business Plan.
The world's population is growing rapidly, and consequently,
access to drugs is becoming a major social issue, mainly in
Asia and Africa. The CMO/CDMO business at Medreich willcontribute to help solving this issue. The future growth rateof the CMO/CDMO business is expected to be higher than the
average growth rate of the pharmaceutical industry, which isvery promising for us. To accelerate this growth, we need tomake further major investment, such as the capacity
expansion of existing facilities and new plant construction in
Medreich. We will review the portfolio in the Pharmaceuticalsegment and invest management resources efficiently in the
CMO/CDMO business to promote growth.
We will use ROIC as an indicator to manage our businessportfolio from the 2023 Medium-Term Business Plan. We
should develop innovative new drugs, including vaccines.
Specifically, the development of biopharmaceuticals requires
huge upfront investment, so we cannot to afford to fail. We
want to recover this upfront investment and reachbreak-even point during the 2023 Medium-Term Business
Plan. The new drugs will be the growth engines, providing
value and a strong foundation for future growth, for the 2026
Medium-Term Business Plan and beyond. To realize this, weneed to understand the current status of new drug
development in the value chain and make management
decisions considering ROIC.

* A vaccine developed against a family of viruses. They could be quickly
modified to protect against specific virus within the family that posed a
serious health risk to the world.

Headquarters andKumamoto Production
Center of KM Biologics
Co., Ltd. The mainbuilding, blood plasma
fractionation productionbuilding, vaccine
production building, etc.
are located on a site ofabout 147,000 m2.

WEB
KM Biologics Co., Ltd.

Medreich in India joined the Meiji Group in 2015. The company
is playing a leading role in the CMO/CDMO business. It
established a structure to manufacture high quality andlow-cost generic drug that meets Japanese standard.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

37

Strategy by Business | Pharmaceutical Segment

Sending Human Resources Outside
the Company to Promote Open Innovation
for Innovative Drug Discovery
Human resource management is extremely important for
further growth in the future. The Pharmaceutical segment isfacing a situation we never experienced before. To get out
from such difficulties we should use external resources andmake up for the lack of cutting-edge knowledge. We will
recruit excellent researchers from academia andconsequently, develop a personnel evaluation system thattreats outstanding employees appropriately.
Meanwhile, we send young employees to external
institutions to develop them. For example, we have sent
researchers to the Office of Pharmaceutical Industry
Research, a research institute of the Japan Pharmaceutical
Manufacturers Association (JPMA), for three consecutive
years to promote research on the utilization of big data andartificial intelligence (AI). In addition, a researcher studying
antibiotics against resistant bacteria was hired by the Cabinet
Secretariat's Coordination Office of Measures on Emerging
Infectious Diseases through open recruitment in 2021. We arealso collaborating with academia in the digitaltransformation (DX) field. We have started joint research with
Dr. Shigeto Yamawaki, a professor of “Kansei Brain Science”
at Hiroshima University, to implement DX for preventing
depression in society.
We are collaborating on drug development for
autoimmune diseases with Dr. Tasuku Honjo at Foundationfor Biomedical Research and Innovation at Kobe (FBRI), andon drugs for hematopoietic tumors with Dr. Norio Komatsu at
Juntendo University. In addition, we are working with Dr.
Satoshi Omura at Kitasato University to develop a COVID-19
therapeutic agent derived from Ivermectin analogue, thenext-generation derivative, with support from AMED (Japan
Agency for Medical Research and Development). Innovative
drug discovery is a major theme during the 2023
Medium-Term Business Plan and we strive to achieve ourtargets through open innovation.

Signed a joint research agreement on “Depression Prevention
DX and Social Implementation Using Kansei Brain Science.”
From left, Professor Shigeto Yamawaki, Professor (Special
Appointment) of Hiroshima University; Mitsuo Ochi, Presidentof Hiroshima University; President Kobayashi of Meiji Seika
Pharma; President Hara of Macnica Inc.

38

Business Strategy

Creating Health Value Unique tothe Meiji Group in Immunological Field by
Collaborating with Food segment
Another important theme of the 2023 Medium-Term Business
Plan is to “Venture into new domains” by collaborating with
Food segment. Although the business structures of
Pharmaceutical and Food segments are different, they have
one thing in common: they contribute to extending healthy
life expectancy when consumed. The pharmaceuticalindustry is now exploring “Beyond the Pill” and addressing
the entire diseases, including nutritional status and lifestyle.
In the Meiji Group, various elements in Pharmaceutical andFood segments are connecting each other.
A good example is to develop supplements for patients.
These supplements are a part of treatment and to provide
necessary nutrients that will decrease due to diseases andscience based treatment. Such supplements are classified asfood according to Food Sanitation Law. If the Meiji Group can
provide both pharmaceuticals and supplements for patients,
we can provide treatment and nutritional management in an
integrated manner, or CURE and CARE. This will create healthvalue unique to the Meiji Group, which is what we pursue in
our new slogan, “Now ideas for wellness.” For both food andpharmaceutical products, our goal is to create health value
unique to the Meiji Group in immunity. The immune system
protects us from infection in various ways. In the
Pharmaceutical segment we will practice “Now ideas forwellness” in the field of immunology.
We should become a company that leads the industry insolving social issues through infection control. As an
R&D-oriented company, we will continually launch newpharmaceuticals to market. Accordingly, we should enhance
the management foundation and rebuild our businessportfolio. The 2023 Medium-Term Business Plan is an
important period during which we have to achieve thesegoals. Achieving these goals will be a big challenge for us but
we need to do it quickly. We should accelerate further growthby accomplishing these goals.

Business Strategy

List of New Products Under Development
FY2021

Products
Infectious diseases

ME1100 Arbekacin inhalation[HABP/VABP] ●OP0595 Nacubactam[ꞵ-lactamase inhibitor] ●CNS disorders

ME2112 Ziprasidone[Antipsychotic]

Phase Ib
Phase I

with ꞵ-Lactams

Phase III

HBI-8000 Tusidinostat
HBI-8000 Tusidinostat

Approved
AppliedApprove

Ethical pharmaceuticals

OthersSP-02L Darinaparsin

Applied[Relapsed or refractory peripheral T-cell lymphoma (PTCL)]

DMB-3111 Trastuzumab biosimilar[Breast cancer, Gastric cancer]

Approve(Phase I finished)

DMB-3115 Ustekinumab biosimilar

Phase III

[Plaque psoriasis, Psoriatic arthritis, Crohn’s disease,
Ulcerative colitis]

ME3208 Belumosudil

Phase I

KD-370Phase III

[Chronic Graft Versus Host Disease]

Human vaccines[Pentavalent vaccine against diphtheria, tetanus,
pertussis, polio, and haemophilus influenza type b] ●KD-382 [Quadrivalent vaccine against dengue fever] ●KD-404[Egg-derived inactivated whole virus influenza vaccine]

Apply

Phase I

(Overseas)

Phase I/II
Phase II/III

Blood plasma products[Indication expansion for microscopic polyangiitis(MPA) (orphan drug)]

Phase IIIKD2-305

Phase II/III

Agricultural chemicals

Approved

Licensing agreement with BASF
Discovered in a research collaboration between
Meiji Seika Pharma Co., Ltd. and The Kitasato Institute

Approved

ANM-138 [Insecticide/Flometoquin] ●Joint development with Nippon Kayaku

Approved

ME5223 [Fungicide/Fenpicoxamid] ●Approved

ME4136 [Injectable antibacterial drugs]

Approved

ME4137 [Injectable antibacterial drugs]

AppliedJoint development with Corteva Agriscience

Apply

Approve

Extension study

ME5382 [Insecticide/Flupyrimin] ●ME5343 [Insecticide/Afidopyropen] ●Approve

Phase I/II

KD-414[Suppression of bleeding tendency in patients with blood
coagulation factor VIII or factor IX deficiency who havecoagulation factor inhibitors] ●(Overseas)

Phase II

[Inactivated vaccine against COVID-19] ●KD-371

FY2023(Overseas)[Relapsed or refractory Adult T-cellleukemia/lymphoma (ATLL)][Relapsed or refractory peripheral T-cell lymphoma (PTCL)]

FY2022

Approved(Overseas)(Overseas)(Overseas)(Overseas)

Approve

Veterinary drugs

ME4406 [Feed Additive] ●ME4204 [Oral Anthelmintic] Expanded indication ●ApplyApproved

ME4618 [Anesthetic injection]

Applied

ME4624 [Vaccine]

Approved

KD-395 [Vaccine for swine use] ●KD-386 [Vaccine for swine use] ●● : compounds discovered in-house

Approved

Approve

AppliedApplied* Out-licensed substances. Please refer to our website for details of the companies and areas out-licensed to.
* The above information is current as of August 2021

Approve

WEB R&D Pipeline

Meiji Holdings Co., Ltd.｜Integrated Report 2021

39

Message from CSO

Jun Furuta

CSO
Member of the Board
and Senior Executive Officer

Toward the Next 100 Years, We Will Design a Future
Where Everyone Around the World is Happy and Healthy
The Meiji Group Will Continue to Grow by
Solving Social Issues Through Our Business
The Meiji Group engages in the Food and Pharmaceuticalbusinesses. They both are closely connected to sustainability.
Although it seems that pursuing profit conflicts withsustainability, the Meiji Group has grown by solving social
issues through our business and contributed to brightening
customers’ daily lives.
A recent example of such contribution is launching
TANPACT brand products in the Food segment. Protein intake
among people today is insufficient. To increase people’s
protein consumption, we have developed products across
our product categories, such as dairy products,
confectionary, and frozen food. We also work together withother companies. Yonekyu Corporation and Yamazaki Baking
Co., Ltd. agree to launch TANPACT brand products which are
not included in our product line. We will further expand ourefforts.
In the Pharmaceutical segment, KM Biologics Co., Ltd. isdeveloping a COVID-19 vaccine, which is an urgent issue. We

40

Sustainability and Management Foundation

may launch the vaccine in FY2022 if everything goes well.
Even if COVID-19 is successfully controlled, there is still a riskthat new infectious diseases will threaten society. The fightagainst infectious disease is likely to continue forever. We
hope to develop both vaccines and therapeutic drugs andbuild a platform for controlling infections, thereby
contributing to society. Pharmaceutical companies that can
provide both vaccines and therapeutic drugs are limited,
whether overseas or in Japan. We therefore believe that ourbusiness is meaningful.
Thus, our businesses are closely connected tosustainability. Companies can no longer improve theircorporate value unless they manage business withsustainability in mind. We will incorporate this idea in our2023 Medium-Term Business Plan, and integrate business
management and sustainability through the Meiji ROESG®*Management.
* ROESG is a registered trademark for a management indicator developedby Kunio Ito, a professor at Hitotsubashi University.

Sustainability and Management Foundation

Achieved Significant Progress on our Initiatives for
Human Rights and the Environment Issues throughout
the Supply Chain in the 2020 Medium-Term Business Plan
Formulate the Meiji Group Long-Term
Environmental Vision and Make Efforts
toward Ambitious Goals
We made significant progress in our sustainability activities
under the 2020 Medium-Term Business Plan. We successfully
achieved most of the materiality and KPIs. I believe this is thefirst major step toward achieving the Meiji Group 2026 Vision.
However, requirements have gotten higher over the past
several years. We should further improve our efforts andcontinue to work hard.
We achieved three major progresses in the 2020
Medium-Term Business Plan. Firstly, we addressed to humanrights and the environment issues, not only within the Groupbut also throughout our supply chain. We established theSupplier Code of Conduct, identifying issues throughdialogue with suppliers and striving to solve them together.
To understand the current situation, we have alreadyconducted a survey with 74 primary suppliers in Japan forour major operating companies.* These suppliers account for
approximately 80% of our cost of raw materials and goods. In
2021 and 2022, we will approach the remaining primary
suppliers and suppliers for group companies in Japan andoverseas. We will promote our efforts for human rights andenvironment issues.
Secondly, we formulated and announced the Meiji Group
Long-Term Environmental Vision: Meiji Green Engagement for2050. In this Vision, we set four activity domains; “Climate
Change,” “Water,” “Circular Economy,” and “Pollution
Prevention.” They impact on conserving biodiversity andmaintaining ecosystems. In the Climate Change domain, we
set the goal to realize carbon neutrality throughout our entire
supply chain by 2050. It is quite a challenging goal, but weshould set difficult goals and make efforts toward them.
Thirdly, we made significant progress on water risks. We
had not checked water risks at our domestic and overseas

operating sites yet, especially the plants. Therefore, we
analyzed and accessed possible risks for flood, water
shortages, and water quality. From a business continuity
planning perspective, we prioritized these risks andimplemented both physical and non-physical measures.

Establish the ESG Advisory Board to
Further Strengthen the Sustainability
Promotion System
Our remarkable progress in sustainability under the 2020
Medium-Term Business Plan was largely attributable to theadvanced Meiji Group’s sustainability promotion system wehave improved. In October 2019, we established theSustainability Management Department in Meiji Holdings.
This helped broaden the scope of our initiatives, enhance thequality of output, and accelerate the strategy execution. As
secretariat, the Sustainability Management Department
holds meetings for each initiative, and promotes strategy incollaboration with operating companies that implement theinitiatives in their business.
In addition, we have been working on two new initiatives
since FY2021 to strengthen our promotion system. One is tocreate a company culture that every employee has a sense ofownership over sustainability activities. In April, we
appointed approximately 820 employees as Meiji Brand
Promotion Leaders in major operating companies. These
leaders work to increase employees’ awareness ofsustainability through meetings at work.
The other initiative is to establish the ESG Advisory
Board. We have invited external experts every year andengaged in dialogue to receive advice on our activities. We
will hold the ESG Advisory Board twice a year, regularly fromFY2021.
* Meiji Co., Ltd., Meiji Seika Pharma Co., Ltd., KM Biologics Co., Ltd.

Identifying Materiality
Based on dialogue with external experts, we identified materiality in social issues when formulating the Meiji Group 2026 Vision.
Since then, we have been updating the materiality based on changes in the business environment and the progress of activities.
The table below covers up to FY2023.
Themes

Domains

Social Issues
Contribute to healthy diets

HealthierLivesCaringfor the Earth

Health andNutrition

Respond to a super-aged societyCountermeasures against emerging
and re-emerging infectious diseases

Climate Change

Reduce CO2 emissions

Circular Economy

Reduce environmental impact

Water

Secure water resources

ThemesThriving
Communities

Domains

Social Issues

Human
Resources

Promote diversity and inclusion,and provide training to employees

Society

Respect and promote human rights

Sustainable Sourcing

Source raw materials withconsideration toward human rights
and the environment

See pages 48 to 61 and page 82 for the progress of initiatives

Meiji Holdings Co., Ltd.｜Integrated Report 2021

41

Message from CSO

We Will Focus on Realizing a Circular Economy,
in Addition to Climate Change and Water
Disseminating Information andLeading a Society Where Sustainability
Is Required for Business
The Board of Directors spends a lot of time discussing
sustainability more deeply than before. Independent Outside
Directors pointed out essential issues and we reflected themto improve our measures. We engaged in dialogue withan external expert, Takeshi Mizuguchi, a professor at Takasaki
City University of Economics in FY2020, and we received
advice from him. He said, “There are a lot of things the MeijiGroup should do to achieve SDGs in the Food andPharmaceutical business. I would like you to exhibit
leadership in the business.” While the professor gave positive
evaluations for our materiality, he pointed out that some
initiatives were not well specified and that we should review
some of the KPIs. We will address these issues promptly.
The keywords for the Meiji Group’s future sustainability
activities are “Environment” and “Human Rights.” For theEnvironment, we will focus on a circular economy, along withclimate change and water. We will reduce resources used inour business activities as much as possible and build reusing
and recycling systems. For example, our Food segment will
use lighter and thinner plastic container packaging, switch topaper materials, and promote reuse and recycling using
shipping pallets, etc. For Human Rights, as mentioned earlier,
we will respect human rights throughout our supply chain.
Communication with stakeholders is becoming more
important. Just explaining our measures may not be
sufficient. I believe it is my duty as CSO to communicate the
Meiji Group’s mission (philosophy) and its concept andensure that they are recognized by society. Communicating
this information will also increase employees’ awareness.
Moreover, as a corporate group that handles food, thiscommunication will contribute to creating a trend towardethical consumption. Through our products andcommunication, we would like to take the lead in creatinga society where sustainability is a requisite for business.

Promoting Diversity and Inclusion, andBecoming a Corporate Group Where Diverse
Human Resources Actively Participate
The promotion of diversity and inclusion is included inmateriality under the 2020 Medium-Term Business Plan.
Unfortunately, we failed to produce sufficient results.
Independent Outside Directors have pointed out that weshould address these issues. Accordingly, we will strive tocreate a workplace where diverse human resources canactively participate as quickly as possible. Such efforts
include to raise the ratio of female managers. Meiji Co., Ltd.
has launched the DIAMOND Project Team headed by thepresident, and the Team is working on internal reforms.
To assess employee engagement, which is the premisefor diversity and inclusion, we will conduct an opinion survey
to all group employees every year. We will enhance our
employee engagement based on result analysis.
See “The Meiji Group Sustainability: Thriving Communities”
on page 56 for related information

Meiji Group Long-Term Environmental Vision: Meiji Green Engagement for 2050
We formulated the Meiji Group Long-Term Environmental Vision:
Meiji Green Engagement for 2050. It is based on the concept of reducing
environmental impact associated with business for coexisting with nature
into the future.

Three Engagements
1. Dialogue
2. Promises
3. Desire tocontributeWEB

42

Sustainability and Management Foundation

Aim for ‘A Healthy Future. For people. For the Earth’

Dialogue with global environment
Promise to maintain a healthy global environment
Contribute to realization of sustainable global environment

Employees voluntarily engage in activities

Environmental Management

Sustainability and Management Foundation

Becoming the World’s Leading Company
in Sustainability Activities When
Achieving the Meiji Group 2026 Vision
Allocating Budget for ESG Investment andDevelop Appropriate Decision-Making Systems
for Sustainability
We will actively invest in ESG-related capital expenditure.
During the daily operation, frontline workers are reluctant toinvest in CO2 reduction as it increases cost. We have therefore
created a system that facilitates ESG-related capital
expenditure by allocating budget for ESG investment
separate from other investments. In corporate management,
it is important to develop appropriate decision-making
systems. This applies to sustainability activities. To procure
funds, we will issue sustainability bonds that can be used forbroader purposes than green bonds.

Integrating Management Strategy andSustainability Strategy andFulfilling Our Mission for the Future
We hope to become Japan’s leading company insustainability initiatives by the end of the 2023 Medium-TermBusiness Plan. Also, when we fully achieve the Meiji Group
2026 Vision, we will become one of the world’s leading
companies; this may not be just a dream. To accomplish this,
we must integrate business management and sustainability.
The world’s most valuable companies have successfully
integrated their management strategies and sustainability
strategies. We have yet to fully address this issue, so we will

accelerate such integration by promoting the Meiji ROESGManagement set in the 2023 Medium-Term Business Plan.
We have established 2026 and 2030 targets, and 2050
targets for environment issues. Although we are highly
motivated, we don’t have a roadmap or an action plan toachieve these targets. The gap analyses between our desire
and current technologies/infrastructure isn’t sufficient. We
should find clear path to achieve the targets. Once thedirection is determined, all employees in the Meiji Group canwork together and generate great power. I will fulfill my duty
as CSO to lead the Group.
The Meiji Group recognizes that nothing is more
important than sustainability toward the next 100 years.
Therefore, we set out the mission, “designing a future where
everyone around the world is happy and healthy.” We would
like to realize a society where people stay healthy and live
happy lives with smiles on their faces. We will pursue
sustainability activities that aim for such a society.

Four Activity Domains and Target by 2050

ClimateChangeBecome carbon neutral

Perpetual use of limited water resources• Eliminate CO2 and other greenhouse gas
emissions throughout our entire supply
chain• Use 100% renewable energy in facilities• Reduce water use intensity per unit of sales
by 50% compared with FY2017• Restore 100% of the water used as raw material
for products (Water Neutrality)• Address to reduce water risks in and aroundfacilities and where we procure raw materials

Water

Transition to a circular economy

Circular
Economy• Achieve zero waste in the manufacturing
process• Use recycled materials in containers andpackaging to minimize the use of natural
capitalAchieve zero pollution
throughout our business activities
Pollution
Prevention• Strive to achieve zero pollution due to chemical
substances originating from our businessactivities• Strive to resolve environmental
pollution-related issues throughout our supply
chain

Meiji Holdings Co., Ltd.｜Integrated Report 2021

43

Sustainability Strategy in Medium-Term Business Plan
The Meiji Group’s Mission in Sustainability Activities

Toward the Meiji Group’s Next 100 Years,
Designing a Future Where Everyone
Around the World is Happy and Healthy
The Meiji Group will mark the 110th anniversary of our founding in 2026. We must reconstruct our
foundations with a view to the next 100 years to further enhance the Group’s corporate value. Currently,
society is at a major turning point. Companies are required to not only expand their business scale but also
contribute to solving social issues through their business activities. We will once again review thesignificance and role of our business activities in society and strengthen activities unique to the Meiji Group
that originated from the idea of solving social issues.

The Meiji Group Sustainability 2026 Vision

As Food and Health Professionals, We Contribute to Addressing Social Issues
through Our Business Activities, and to Realizing a Sustainable Society
for People to Live Healthy, Peaceful Lives.
Outline of Vision
The Meiji Group Sustainability 2026 Vision
is broken down into three themes:
Healthier Lives, Caring for the Earth andThriving Communities, plus the shared
theme: Sustainable Sourcing. Here, we
identify and set materiality issues andKPIs*. Based on this framework, shown in
the figure, we promote specificsustainability activities and address social
issues.

Healthier Lives

Caring for
the Earth
Climate Change

Health andNutrition

Circular Economy

Quality and
SafetyBiodiversity

Water

Thriving
Communities
Human
Resources
Society

Areas of
Activity

Domains

Sustainable Sourcing

Collaboration with UN agencies and relevant organizations
Engagement in SDGs

* KPI: Key Performance Indicator

Approach Toward SDGs
The Sustainable Development Goals(SDGs) are a collection of the 17 goals
adopted by the United Nations in 2015 forthe year 2030. In our endeavors, we haveidentified 13 primary goals that willcontribute to society in the Meiji Group’sbusiness activities. Recognizing thatFY2021 marks the beginning of “theDecade of Action”* to address the SDGs,
we are working to achieve the SDGs
through the Meiji Group Sustainability
2026 Vision.
* In January 2020, the United Nations defined the decade up
to 2030—the deadline for the achievement of the SDGs
—as “the Decade of Action” and called for countries aroundthe world to accelerate and expand their initiatives.

44

Sustainability and Management Foundation

Major SDGs
that the Meiji Groupaims to achieve

EconomySociety

Environment

Society is formed based on the environment, and the economy is createdbased on society. It is essential to work comprehensively on these three fields.

Sustainability and Management Foundation

Approach to Sustainability Activities under the 2023 Medium-Term Business Plan
The 2023 Medium-Term Business Plan sets out the concept of realizing both profit growth and sustainability
activities. The significance of sustainability has thus increased in business management. We will strengthen
our activities so that by FY2023, the Meiji Group will become a company that is highly evaluated internally andexternally as an advanced sustainability company in Japan.
Outline of Activity Plan
1 Provide products and services unique to Meiji that address social issues
2 Strengthen initiatives to realize a decarbonized society

Promotethe Meiji Group
Sustainability
2026 Vision• Obtain Science Based Targets (SBT) certification, promote the use of renewableenergy, eliminate the use of specified fluorocarbons

3 Promote sustainable sourcing activities• Achieve 100% sourcing of environmentally friendly paper, certified palm oil,and sustainable cocoa beans• Develop a responsible supply chain

1 Improve ESG evaluations in line with the Meiji ROESG Management

Integrate
sustainability andbusiness management

2 Encourage employees to have a sense of ownership over sustainability
through the establishment of a Meiji Brand Promotion Leader system
3 Operate a framework for ESG investing (30 billion yen/3 years)

Structure of the Meiji Group’s Sustainability Activities
There is a wide range of sustainability activities. We have organized them into initiatives that exhibit the MeijiGroup’s uniqueness and initiatives that form the foundation of corporate activities. In particular, we consider
that the domain unique to the Meiji Group is centered on “Healthier Lives.” Japan faces the issues ofa declining population and aging society with a decreasing birthrate, and extending healthy life expectancy isa critical social issue. The Meiji Group aims to contribute to solving these social issues with our Food andPharmaceutical businesses and to realize both economic value and social value.
Activity structure

Examples of initiatives
Integration of sustainability
and business

Activities uniqueto MeijiHealthierLives

Contribute to solving social issues
through businessRealize both social value andeconomic value• Promote the creation of products andservices for healthier lives unique to Meiji

Foundationof corporate
activities

Sustainable
Sourcing
Thriving
Communities

Caring for
the Earth

Corporate Governance• Realize sustainability of raw materials• Diversity & inclusion• Respect for human rights(throughout our supply chain)• Reduce CO2 (carbon neutral)• Secure water resources• Recycle plastic resource• Combine sustainability activities andbusiness management
Meiji Holdings Co., Ltd.｜Integrated Report 2021

45

Responses to Climate Change

Analyzing Climate Change-RelatedLong-Term Risks and Opportunities andReflecting Them in Business Activities
The Meiji Group expressed support for the Task Forceon Climate-related Financial Disclosures (TCFD) in FY2019,advancing analysis in line with the Recommendationsof the Task Force on Climate-related Financial Disclosures.

Corporate Governance and Risk Management
We consider climate change-related long-term risks andopportunities and measures to address them at the Group TCFD
Committee. The results of the consideration are deliberated on at
the Executive Committee, and then reported to and overseen by
the Board of Directors. Since the participation of the Risk
Management Department in FY2021, which was newly establishedin Meiji Holdings, we have established a system to recognize andrespond to the impact of climate change as a major risk for theGroup as a whole.

Climate Change-relatedGroup Sustainability Promotion System
Board of Directors
Executive Committee
Group Sustainability Committee
Group Sustainability Secretariat Committee

Group TCFD Committee

Relevant divisions from Meiji Holdings, Meiji,
Meiji Seika Pharma and KM Biologics

Results in Scenario (Strategy) Analysis

In FY2020, we analyzed the medium- to long-term impact of climate change and examined countermeasures for the domainsof dairy ingredients, cocoa, antimicrobials (five domestic Key Drugs*1), and vaccines. In the analysis, we established two
scenarios (a 2-degree scenario and a 4-degree scenario) based on the information of IPCC*2, IEA*3, etc. and set 2030 and 2050 as
the base years.
The analysis for these domains revealed that major impacts (opportunities and risks) expected from climate change have
many common features irrespective of the business domain. We also found that these impacts would occur in each process ofthe supply chain, from sourcing to manufacturing, logistics, and sale.
*1 Five of the antimicrobials designated as Key Drugs by four associations (the Japanese Society of Chemotherapy, Japanese Association for Infectious Diseases,
the Japanese Society for Clinical Microbiology, and the Japanese Society for Infection Prevention and Control, etc.) are manufactured by Meiji Seika Pharma.
*2 Intergovernmental Panel on Climate Change (IPCC): Shared Socioeconomic Pathways, etc.
*3 International Energy Agency (IEA): Sustainable Development Scenario, New Policies Scenario, etc.

Major impact in the 4-degree scenario

Physicalrisks*1

Opportunities

Impact on Meiji Group

Change related to climate change

Major impacts

Change in growth environment of biologicalresources due to changes in temperature,
precipitation, etc.

Decrease in yield of
raw materials

Sourcing

Increase in severity and frequency oftyphoons, torrential rains, etc.

Opportunity loss
from flood damage

Sourcing
Manufacturing and logistics

Opportunity loss due to site shutdowns, etc.

Change in lifestyle due to risingatmospheric temperatures

Change in demand
due to global warming

Sales

Increase in demand for products for thirstquenching, heat stroke prevention, etc.

Change in lifestyle due to new infectious
diseases or increased risk of infectious
diseases

Change in demand
due to avoidance of
infectious disease risk

Sales

Increase in demand for vaccines andimmune-activation products

Supply chain

Specific impact
Impact on raw materials sourcing cost

Major impact in the 2-degree scenario
Change related to climate change

Transition
risks
*2

Opportunities

Major impacts

Reinforcement of the government's
environmental regulations

Introduction ofcarbon pricing

Expansion of investment in power facilities
due to increase in renewable energy

Increase in amount ofelectricity purchased

Change in lifestyle due to improvement ofenvironmental awareness

Expansion of ethicalconsumption

Impact on Meiji Group
Supply chain

Specific impact

Manufacturing

Increase in carbon pricing cost to be borneby the Company

Sourcing and logistics

Increase in cost of carbon pricing complianceto be borne by farmers and suppliers

Manufacturing

Increase in cost of purchasing renewableenergy derived electricity

Manufacturing

Increase in normal electricity purchase cost

*1 Physical risk: Damage from disasters, etc. caused by climate change*2 Transition risk: Risk arising in transition to a decarbonized society for mitigating climate change

46

Sustainability and Management Foundation

Sales

Increase in demand for environmentallyfriendly products

Sustainability and Management Foundation

Major risk matrix in the 4-degree scenario

Major risk matrix in the 2-degree scenario

Probability of occurrence
Low

MediumProbability of occurrence
High

Low

Water sourcing cost
due to deterioration of
in-house water quality

Fuel cost of
the supply chain

Amount ofelectricity purchasedby the Company

Carbon pricing of
packaging materials
Carbon pricing oflogistics

Small

Small

Cost of fuelfor in-house use

In-house
carbon pricing

MediumCocoa beanssourcing cost

Degree of impact on Meiji GroupFresh milk anddairy ingredientssourcing costHigh

Carbon pricing of fresh milk
and dairy ingredients

Large

Flood damage
to the supply chain
MediumDegree of impact on Meiji Group

Large

Flood damage
to the Company

MediumCarbon pricing of
cocoa beans

Clarify the prioritization of major impacts based on the degreeand probability of impacts on the Meiji Group

Response to Major Impacts with High Priority[Major Impacts in the Areas where Meiji Group can Respond Proactively]
4-degree scenario
Risks

Assume opportunity loss, such as site shutdowns, resulting from flood damage• Identify areas with high flood risk by evaluating water risk at the in-house production bases of Meiji Group in FY2020

Responses(Non-structural measures)• Prepare an emergency action manualwith top priority on saving lives• Conduct evacuation drills in ordinary times(Structural measures)• Risk reduction by decentralizing production bases• Mitigate flood damage by reinforcing waterproofing equipment,such as waterstops and waterproof walls ** See “Caring for the Earth” (pages 52 to 55) for countermeasures

2-degree scenario
Risks

Responses

Risks
Responses

Assume the application of carbon pricing to in-house direct emissions (Scope 1) and indirect emissions due topurchase of electricity, etc. (Scope 2) in CO2 emission volume resulting from the business activities of Meiji Group• Establish a long-term target of realizing carbon
neutrality by 2050
• Promote reduction of CO2 emission volume
through energy saving activities, energy creation
activity by solar power generation, purchaseof renewable energy derived electricity, etc.
• Consider acquisition of SBT certificationand introduction of internal carbon pricing• Proactively consider introduction of newtechnologies, next-generation energy, etc.

Effect of introducing carbon pricing(Unit: hundred million yen)

4-degree scenario 2-degree scenario
2030

2050

2030

2050

When taking no measures
to reduce CO2 emission volume
When implementing countermeasures
to reduce CO2 emission volume

7

11

33

46

4

5

24

32

Effect of countermeasures to reduce impact

3

6

9

14

Assume increases in the amount of electricity purchased due to the purchasing of renewable energy derived electricity• Reduce amount of electricity purchased by expanding energy saving and energy creation[Impacts of Concern in Raw Material Sourcing]
Impact of climate change on agricultural and livestock products is assumed in both 4-degree and 2-degree scenarios
Risks

Responses

4-degreescenario

Yield decrease in raw materials, such as fresh milk, dairy ingredients, and cocoa
beans, due to changes in air temperature, precipitation, etc., implementationof summer heat countermeasures, etc. might affect sourcing cost

2-degreescenario

Assume introductionof carbon pricing forraw materials

Product-related
response• Promote added value enhancement to improve the competitive edge in the market• Optimize product portfolio

Response to maintainstable sourcing• Strengthen our relationship with farmers for stable sourcing of raw materials throughMeiji Group’s unique initiatives (Meiji Cocoa Support and Meiji Dairy Advisory)

Response to reduce
CO2 emission volume• Study of low carbon dairy farming• Cooperation with dairy farmers for realizing low carbon dairy farming
Meiji Holdings Co., Ltd.｜Integrated Report 2021

47

The Meiji Group Sustainability

Healthier Lives
One of the Meiji Group’s missions is to improve the health of people through our business.
We promote nutrition with various information and increase public awareness to createa society where all generations from infants to the elderly live a healthier and richer
lifestyle in both Mind and Body.

Materialities

Health and Nutrition
Social Issues

SDGs forHealth and Nutrition

Contribute to healthy diets

The Meiji Group is developing and providing new products that contribute to customer health using its
unique nutrition-related research and product design expertise. We are also providing people of all
generations with information about diet and food cultures and works to increase their interest and awareness.

Contributing to Healthy Diets in China Through Lactobacilli
Proposing Health Value to the Market
and Creating a New Yogurt Culture
In April 2021, the Meiji Group started selling MEIJI Probio Yogurt R-1 and Meiji Probio
Yogurt LG21 in China. This marks our first launch of these products in an overseas
market.
We have been engaged in the drinking milk and yogurt business in China since2013, using the technology and expertise developed in Japan. The Meiji brand’s
image of safety, reassurance and quality is already present in China. This has
enabled us to earn the trust of a wide range of customers in Shanghai and otherareas in Eastern China.
The Chinese government has been promoting the health of the Chinese people
under the Healthy China 2030 Plan released in 2016. The yogurt market is expanding
in the country with the growth in health awareness. An increasing number of people
are also paying attention to lactobacilli as a solution to their own health challenges
that they can easily continue to implement.

Expanding Yogurt Market
in China(Source: Euromonitor
International’s Passport)

3,812.6(Billions of yen)

2,546.8
1,418.7
2015

2020

2025

[Forecast]* Calculated at a rate of 16.9 yen to
the yuan (as of June 30, 2021)

Disseminating and Promoting Awareness of Characteristicsof the Lactobacilli R-1 and LG21
We have accumulated findings obtained from many years of research on lactobacilli.
As a result of this research, we selected the lactobacilli R-1 and LG21. R-1 has thecatchphrase “lactobacillus that unlocks your human potential”*1 and LG21 is known
as “lactobacillus that works in the stomach.”*2 We use these lactobacilli in our MEIJI
Probio Yogurt R-1 and Meiji Probio Yogurt LG21, and have contributed to the healthy
diets of Japanese consumers through these products. We will also work on
developing a functional (probiotics*3) yogurt market in China by promoting
awareness of the characteristics of these lactobacilli with information that is basedon scientific evidence. Our slogan is “创享酸奶新理念(Creating a New Philosophy
for Yogurt).” We will promote the new habit of selecting yogurt based on thecharacteristics of lactobacilli and contribute to the healthy diets of Chinese
customers.
*1 “Human potential” expresses our universal desire to live a healthy life.
*2 “Works” expresses the characteristic of staying alive in the stomach and propagating better there.
*3 “Probiotics” is the term that contrasts with antibiotics. It is defined as a food or bacterial component
containing living microorganisms that favorably affect health.

48

Sustainability and Management Foundation

Probio Yogurt section at the
Lincos Wuxi Suning Plaza store(Maruetsu Inc.)

The sale of MEIJI Probio Yogurt
R-1 (left) and Meiji Probio Yogurt
LG21 (right) starts in China

Sustainability and Management Foundation

Promoting Nutrition Education Activities and Online Nutrition Education
More than 1 Million Students at 10,000 Elementary andJunior High Schools Participate in Our Fun Interactive Classes!

See page 82 for details on progress

Meiji Co., Ltd. started nutrition education activities in 2006 after the Basic Act on
Shokuiku (Food and Nutrition Education) was enacted in 2005. The activities aredesigned to help increase understanding of food, including the efforts of producers,
manufacturing process, and nutritional value, using milk and cocoa beans as themes.
We undertake these activities with the aim of fostering the appeal of and gratitude
toward food and contributing to customers’ healthier lives through understanding offood.
We have established specialized organizations at the head office and seven bases*
across Japan, and approximately 60 personnel engage in nutrition education
activities. As a part of these activities, we started fun interactive classes forelementary and junior high schools in 2006. More than 1 million students at a total of
10,000 schools have participated in the program to FY2020.
In recent years, we have focused on programs tailored to each generation. We
hold seminars specifically for senior high schools and colleges, companies, andelderly people to target a wide range of generations. Among these programs is one on
health and productivity management targeted at corporate employees. This program
has been particularly well received as the theme has been attracting much attention
recently.
In FY2020, we started nutrition education seminars online amid COVID-19. The
online seminars have helped prevent the spread of infection and expanded
participating areas to include areas where our seminars were not previously available,
such as remote islands. Going forward, we will further enhance our programs andexpand our activities to include even more generations, from children to the elderly.

[Results of fun interactiveclasses for elementary andjunior high schools]• FY2020
77,403 students
at 775 schools• Total from FY2006 to FY2020
1 million students
at around 10,000 schools* Both figures are cumulative

Online nutrition education seminars
have helped pave the way for newopportunities, such as expanded
participating areas.

* Sapporo, Sendai, Tokyo, Nagoya, Osaka, Hiroshima and Fukuoka

Social Issues

Nutrition improvement in developing countries

Malnutrition is a serious issue in developing countries. The Meiji Group is implementing a number of
initiatives globally to address this issue. We increase awareness of eating habits by providing information on
nutrition and promoting appropriate products in cooperation with the Japan International Cooperation
Agency (JICA), which works on nutrition improvement.

Nutrition Improvement Program for Female Factory Workers in Vietnam
Providing 650,000 female factory workers
with nutrition education by 2030
In recent years, malnutrition among women has become a social issue in Vietnam.
Pregnant women, nursing mothers, and female workers in particular face the issue of
their nutrition improvement. To contribute to solving this issue, we are working on a
program to improve nutrition among female factory workers. The program is aimed at
improving the nutritional conditions of women working at factories by nutritionists
from MEIJI FOOD VIETNAM CO., LTD. providing them with nutrition education andnutritionally-fortified milk. Up to this point, we have conducted several nutrition
improvement seminars at factories of two major Japanese manufacturers, attracting
the participation of a total of 370 female workers.
The nutrition research that we conducted in collaboration with Hanoi Medical
University has proved that nutrition education and dietary guidance help improvehealth conditions, including increasing levels of iron, zinc, and calcium in the blood.
The research results were presented by Nguyen Thuy Linh, a Doctor of Nutrition at
Hanoi Medical University, at an international symposium marking the university’s
60th anniversary. In the future, we will expand our nutrition improvement initiative
based on this evidence. Our aim is to provide nutrition education to 650,000 female
factory workers by 2030.

Nutrition improvement seminarconducted by a MEIJI FOOD VIETNAM
CO., LTD. nutritionist

Thenutritionally-fortified
milk MEILIFE
provided along witha nutrition
improvement
seminarMeiji Holdings Co., Ltd.｜Integrated Report 2021

49

The Meiji Group Sustainability

Social Issues

Healthier Lives

Materialities

Countermeasures against Emerging
and Re-emerging Infectious Diseases

With more than one year having passed since the emergence of COVID-19, we have renewed our recognition thatcountermeasures against emerging and re-emerging infectious diseases is a significant social issue. Meiji Seika
Pharma and KM Biologics are actively working on the development, production, and distribution of vaccines andtherapeutic drugs. They are also proactively providing patients and medical institutions with information that
promotes the appropriate use of antibiotics.

Initiatives for Development and Provision of a COVID-19 Vaccine
Promoting Development of a Domestically Produced Inactivated Vaccine
KM Biologics is developing an inactivated vaccine (KD-414)*1 against the COVID-19, leveraging the expertise
acquired over the years of developing vaccines. The development is being conducted in collaboration with the
National Institute of Infectious Diseases, the Institute of Medical Science, the University of Tokyo, and the National
Institutes of Biomedical Innovation, Health and Nutrition.
In March 2021, the company started clinical studies in healthy adults and elderly people, investigating thesafety and immunogenicity of the vaccine (Phase I and II clinical studies). KM Biologics is the first company
conducting clinical studies for an inactivated COVID-19 vaccine in Japan.
KM Biologics has already obtained approval for production and sale of a prototype vaccine*2 against novel
influenza, which may cause a pandemic like COVID-19. We have thus developed a system that enables the vaccine
to be produced expeditiously and provided at the time of emergence of pandemic influenza. A new virus could
cause a pandemic in the future. Therefore, we will scientifically investigate whether it is also possible to apply for
approval for production and sale of the inactivated vaccine being currently developed as a prototype vaccine.
Vaccines developed earlier overseas have been provided in Japan. However, the development of domestically
produced vaccines is vital for early containment of COVID-19. We will accelerate our development so that we canprovide a vaccine produced in Japan as soon as possible. In doing so, we will strive to realize a society where
people can live with peace of mind.
*1 A vaccine produced from pathogens or their components obtained by collecting virus particles or bacterial cells from a virus
or bacterium cultured in large quantities, refining them, and removing their infectivity and toxicity using chemicals, etc.
*2 A mock-up vaccine produced and developed using the model virus for vaccine production before the occurrence ofa pandemic on the premise that the vaccine strain produced at the time of a pandemic is changed as needed

Japan’s first clinical study for an inactivatedvaccine started in March 2021

Inactivated vaccine against COVID-19 being
developed by KM Biologics

Developing a domestically produced
vaccine is an urgent issue. Development isunderway, aiming for the fastest possible
completion

Business Agreement on Supply of the AstraZeneca Vaccine in Japan
Meiji Seika Pharma and KM Biologics respectively concluded an agreement with AstraZeneca to supply
VAXZEVRIA TM Intramuscular Injection*3, a COVID-19 vaccine, in Japan. AstraZeneca was granted a Special Approval
by MHLW in May 2021 for manufacturing and marketing this vaccine in Japan.
In accordance with the agreements, KM Biologics receive the vaccine bulk in March 2021 and undertook theformulation and packaging. Meiji Seika Pharma takes over storage, shipping and collection of safety informationof the AstraZeneca vaccine, by using its own vaccine distribution and supply system. It started domestic
operations for distribution of the vaccine in August 2021.
*3 The vaccine jointly developed by AstraZeneca and Oxford University

50

Sustainability and Management Foundation

Sustainability and Management Foundation

Initiative to Develop Therapeutic Drugs for COVID-19
To control COVID-19, it is necessary to expand the testing system and develop effective therapeutic drugs as well
as development of vaccines. Meiji Seika Pharma has already launched Check MR-COV19, an antigen test kit asa tool for expanding the testing system, in June 2021. As for therapeutic drugs, the company is developing a low
molecular weight therapeutic agent and therapeutic antibodies.

Creating Ground-breaking Therapeutics by Using Next-generation
Ivermectin Derivatives and Building a Foundation
for Antiviral Drugs*1
Preventing severe cases of COVID-19 has also become a major challenge. This has
increased demand for the development of safe and highly effective therapeutic drugs.
In May 2021, Meiji Seika Pharma started joint research and development with theKitasato Institute, which is known its history and track records of research on
infectious disease. The joint work is aimed at creating therapeutic drugs using
next-generation derivatives of ivermectin and building a foundation for antiviraldrugs. Ivermectin derivatives may be used for treatment of COVID-19 and preventionof the after effects (of the disease), as they have both anti-inflammatory andimmune-regulatory effects in addition to antiviral effects. Through this research anddevelopment, we aim to create ground-breaking therapeutic drugs for various
infectious diseases.

Research and Development of Therapeutic Antibodies for COVID-19 *2
Meiji Seika Pharma is also working on research and development of therapeutic
antibodies for COVID-19. Antibody therapy is considered to be highly effective for
COVID-19. We plan to analyze human monoclonal antibodies*3, select ones that are
effective for COVID-19, determine therapeutic antibodies, and consider production
methods for the investigational drug used in non-clinical and clinical studies.

Meiji Seika Pharma President Daikichiro
Kobayashi (left) and Distinguished
Emeritus Professor of Kitasato
University Satoshi Omura (right) at
a press conference on joint researchand development*1 Selected as a project under the Cyclic
Innovation for Clinical Empowerment(CiCLE) program of the Japan Agency for
Medical Research and Development(AMED)*2 Selected as a project under the Research
Program on Emerging and Re-emerging
Infectious Diseases of AMED
*3 Antibodies with a single amino acidsequence that react with only one typeof antigenic determinant (epitope)

KM Biologics’ Factory Tours and Activities to Increase Awareness ofPrevention of Infectious Disease
Conducting Factory Tours for Students to Learn About Influenza Vaccine Production Process
KM Biologics conducts factory tours for students to help them learn about the production process for influenza
vaccines. Due to the spread of COVID-19, the number of tours decreased in FY2020. We plan to gradually resume
tours when the current pandemic settles down.
As we were unable to provide plant tours, we started offering fun interactive classes for elementary and juniorhigh schools to increase awareness of preventing infectious disease.

Providing Fun Interactive Classes for Elementary andJunior High Schools to Communicate the Importance of HealthWith the spread of COVID-19, health awareness is growing. KM Biologics provides fun
interactive classes that communicate the importance of health. The classes are aimed atincreasing knowledge and consciousness of infectious disease and raising awareness of
prevention of infectious disease by teaching basic knowledge of immunity and methods
to prevent infectious disease in an easy-to-understand manner. The company conducted
the classes at five elementary schools and one junior high school in Kumamoto
prefecture in FY2020 (a total of 2,232 students participated). After participating in theclasses, students gave us comments, such as “I realized that I need to take thoroughprevention measures, such as hand washing and getting vaccinated, in order avoid
being infected with COVID-19.” Teachers also gave feedback, stating, “The program wasso great, offering something that teachers alone would not have been able to provide.
Thank you very much.”
Infectious disease is not limited to COVID-19. We do not know what type of new
infectious diseases will appear and when such diseases will cause a pandemic. For thisreason, it is necessary for each and every one of us to acquire knowledge on infectious
disease and take preventive measures. We will further expand this activity andcontribute to realizing a healthy, fulfilling future.

Fun interactive class provided by a KM
Biologics employee. It is conducted
online during the COVID-19 pandemic.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

51

The Meiji Group Sustainability

Caring for the EarthWe, the Meiji Group, in recognition of the fact that our business operations originate fromthe bounty of nature, will contribute to the creation of a sustainable society.
Under the Meiji Group Environmental Policy, we strive to reduce environmental impact
generated from business activities. We also practice corporate management that seeks
harmonization with the environment and coexistence with nature.
Materialities

Climate Change
Social Issues

SDGs forClimate Change

Reduce CO2 emissions

In our Meiji Group Long-Term Environmental Vision, we have set the goal of “eliminating all CO2 and othergreenhouse gas emissions throughout our entire supply chain by 2050 (carbon neutral).” We plan to join
the international initiative “RE100” and will further promote use of renewable energy. To implement
steadily these initiatives, we also aim to obtain Science Based Target (SBT) certification as early as possible.

Energy-Saving Measures
See page 82 for details on progress

Saving Energy by Introducing
Highly Energy-Efficient Equipment
We are working to save energy in all stages of our businessactivities. We reduced CO2 emissions (Scope 1 and Scope 2)
by approximately 24.1% in FY2020 compared to FY2015. We
are continually introducing highly energy-efficientequipment in our production sites. For example, webrought two co-generation systems (with an output of
3,200 kW each) into operation at Tokachi Plant in Hokkaido
in April 2021. These systems helped reduce CO2 emissions
by approximately 510 tons in one month from the start ofoperation. Operating sites arealso working to save energy
by adopting energy-efficientequipment and reducing
operating time throughimproved operational
efficiency of equipment.
Co-generation system
at Tokachi Plant of Meiji Co., Ltd.

Promoting Use of Renewable Energy
See page 82 for details on progress

Using Renewable Power at 3 Major Operating Sites

Energy Consumption Volume
and CO2 Emission Volume for FY2020
Energyconsumption volume
Scope 1
Scope 2
Scope 3

Sustainability and Management Foundation

Overseas

9,766 TJ

1,674 TJ

215 thousand
tons-CO
254 thousand
tons-CO
2,949 thousand
tons-CO *24 thousand
tons-CO
70 thousand
tons-CO
187 thousand
tons-COCO2 emission volume

2
2
2

2
2
2

* Category 1: Including 2,261 thousand tons-CO

2(Domestic)

The scope of the consumption volume that are included is noted on p.85.
The energy consumption volume is calculated based on the Act on the
Rational Use, etc. of Energy (Energy Conservation Act).
Scopes 1 and 2 are calculated based on the Act on Promotion of Global
Warming Countermeasures.
Scope 3 is calculated based on the Basic Guidelines on Accounting forGreenhouse Gas Emissions throughout the Supply Chain.
Scope 3 Categories included in calculation: 1. Purchased Goods and Services,
2. Capital Goods, 3. Fuel- and Energy-Related Activities Not Included in Scope 1
or Scope 2, 4. Upstream transportation and distribution, 5. Waste Generated in
Operations, 6. Business Travel, 7. Employee Commuting, 9. Downstream
transportation and distribution, 12. End-of-Life Treatment of Sold Products
Category 1: Calculated by multiplying Emissions Unit Values* by the purchaseprice for main raw materials and packaging materials (paper, plastic,
cardboard, steel, aluminum and glass bottles) used in the food andpharmaceutical businesses.
* Database of Emissions Unit Values for Calculation of Greenhouse Gas
Emissions, etc., by Organizations Throughout the Supply Chain (Ver. 3.1)

(Overseas)

13 overseas production plants are included in the calculation. The energy
consumption volume is calculated based on the Act on the Rational Use, etc. ofEnergy (Energy Conservation Act). Scope 1 uses the emission factors fromthe Act on Promotion of Global Warming Countermeasures and Scope 2 uses
the emission factors from the IEA, Emissions from Fuel Combustion.
The numerical data indicated withan independent practitioner.

The Meiji Group has set the goal of increasing the share of renewable energy to100% of power usage at company sites by 2050. At present, we use renewable
power at three operating sites in Japan and overseas (see the table on the right).
To achieve our goal, we will continue to expand the use of renewable energy whilestrengthening our energy creation activities.
52

Domestic

have been assured bySites Using Renewable Energy
Site name
Aichi Plant
Medreich Limited
Medreich plc

AddressJapan
India
United Kingdom

Sustainability and Management Foundation

Installing and Using Solar Power Generation
and Other Renewable Energy Facilities
We are installing and using renewable energy facilities, including solar power
generation equipment, to reduce CO2 emissions. We have already introduced solar
power generation equipment at 10 sites in Japan and overseas. In March 2021,
Tokai Meiji Co., Ltd. installed solar power generation equipment with a capacity of
262 kW. It expects to reduce CO2 emissions by approximately 190 tons-CO2 peryear. Meanwhile, Meiji Oils and Fats Co., Ltd. increased its use of solar power toaccount for about 7% of its total power usage (approximately 250,000 kWh peryear in FY2020). This initiative was recognized by the Kita-Osaka Chamber ofCommerce and Industry which granted an Environmental Improvement Special
Award. Some of our other plants are using methane gas resulting from methane
fermentation processing as fuel for boilers.

Circular Economy
Social Issues

Solar power generation equipment
at Tokai Meiji Co., Ltd.

SDGs fora Circular Economy

Reduce environmental impact

The Meiji Group aims to utilize limited natural capital as effectively as possible. Based on the idea ofa circular economy, we are taking on the challenge of almost eliminating environmental impact from ourbusiness activities. We are strengthening our initiatives for plastic resources, in particular. We establishedthe Meiji Group Plastic Policy in June 2020, addressing issues of marine pollution caused by plastic garbage
contamination.

Reducing Plastic Usage
Shifting to Bioplastics for Packaging and Straws

See page 83 for details on progress

In accordance with the Meiji Group Plastic Policy, we have set the target of reducing
plastic usage, including packaging, by at least 25% compared to FY2017 by FY2030.
Based on the Design for the Environment (DfE) approach, we are reviewing our
product designs to reduce plastic usage as much as possible. We also intend toincrease use of bioplastics going forward. We have already been replacing plastic cups
used for the SAVAS series with packaging that uses bioplastics, starting from products
produced in January 2021. Such replacement is taking place for the 650 million straws
we use annually. We have been replacing them with straws using bioplastics since
February 2021.

Examples of beverages
that come with a straw

Initiatives to Reduce Food Loss and Waste
Reducing Food Loss and Waste ThroughYear-Month Expiration Labels and Extension of Expiration Dates

See page 83 for details on progress

Since February 2020, the Meiji Group has been changing food expiration labels formore than 120 products from year-month-date to year-month formats. This is
expected to help reduce food loss and waste in the Group’s entire supply chain, fromproduction to distribution and marketing. We are also extending the expiration dates
of products after confirming that the extension will not affect their quality. For
example, we have recently extended the expiration date of Meiji Hohoemi Raku Raku
Milk from 14 months to 18 months. We also support the Japan Association for
the World Food Programme’s Zero Hunger Challenge, and are actively working withorganizations seeking to reduce food loss and waste.

Meiji Hohoemi Raku Raku Milk

Meiji Holdings Co., Ltd.｜Integrated Report 2021

53

The Meiji Group Sustainability

Caring for the EarthMaterialities

Water
Social Issues

SDGs for
Water

Secure water resources

With the increase in population and economic growth, demand forwater is surging across the globe. The Meiji Group recognizes that
securing water resources is a key social issue. Water resources areindispensable for our business activities. We therefore work to use
water resources efficiently and manage wastewater appropriately.
The Meiji Group established the Meiji Group Water Resources Policyin September 2020. We aim to halve our water consumption volume
per unit of sales by 2050 and achieve water neutrality*.
* Initiative to return the same amount of water used as a raw material for products
to nature through water recharge activities

Water Consumption Volume for FY2020
Domestic

20,513

Overseas
thousandm3(Domestic)

1,382

thousandm3

The scope of the water consumption volume that is included isnoted on p.85.
The numerical data indicated withhave been assured by anindependent practitioner.

(Overseas)

13 overseas production plants are included in the calculation.

Initiatives for Efficient Use of Water
Reducing and Reusing Water at Plants

See page 83 for details on progress

We have established a target of reducing the water consumption volume (per unit of sales) of the entire
Meiji Group, including overseas sites, by at least 20% by FY2030 and at least 50% by FY2050 compared with
the FY2017 baseline. As a result of advancing our initiatives to reduce and reuse water, we achieved a 5.3%
reduction in usage per unit of sales in FY2020 compared to the FY2017 baseline. For example, to reducewater usage, we have optimized the amount of water used for the internal cooling coils of process air
dehumidifier systems used in the incubation process at Gifu Plant. This is expected to help reduce well
water usage at the plant by 450,000 m3 per year (equivalent to approximately 17%). We are also introducing
water-saving hoses and nozzles and using rainwater for toilets. As an initiative to reuse water, we arepromoting circular use of water used in the cooling process.

Initiatives Related to Quality of Wastewater
Treating Wastewater in Accordance with Strict Self-Control Standards
To control the quality of wastewater, we have established self-control standards
stricter than the laws and regulations of relevant countries. We use an activatedsludge treatment method to treat wastewater. For liquid waste with a large drainage
load, we adopt a two-step treatment approach, adding a methane fermentation
treatment to the normal drainage process. PT. Meiji Indonesian PharmaceuticalIndustries actively invests to strengthen its treatment facilities, thereby ensuring
compliance with the wastewater control standards.

PT. Meiji Indonesian
Pharmaceutical Industries’
activated sludge treatment system

Measures Against Flooding
Establishing BCP and Gradually Introducing Facilities to Minimize Flood Damage
We implement both physical and non-physical measures to address flooding risks. As
a non-physical measure, we are formulating BCP* in consideration of the water risk ofeach business site. As a physical measure, we calculate an estimated amount ofdamage from the occurrence of risks. We then implement necessary measures at sites
in order of estimated amount of damage, starting with the largest. At Odawara Plant,
we have already introduced provisional water stops, installed waterproof banks to thetransformer substation, and introduced backup boards for the outdoor units of air
conditioners. We are also preparing flood procedure manuals for each area while
conducting comprehensive drills for flooding.
* Business Continuity Plan

54

Sustainability and Management Foundation

A drill to set up provisional water
stops held at Meiji Seika PharmaCo., Ltd.’s Odawara Plant

Sustainability and Management Foundation

SDGs forProcurement

Biodiversity
Social Issues

Protection of local biodiversity

As the businesses of the Meiji Group depend on the abundant gifts of nature,
we recognize that loss of biodiversity is a significant social issue. Accordingly,
the Meiji Group established the Biodiversity Conservation Activity Policy in
October 2020 to maintain the biodiversity of our entire supply chain. We also
participate in Japan Business Initiative for Biodiversity (JBIB) and work withother member companies to solve social issues related to biodiversity.

Please visit our website
to see the diagram for“Relationship between
Our Business Activities
and Biodiversity.”

Assessment of Biodiversity Risk in Meiji Group Sites
Research and Assessment
in Key Biodiversity Conservation Areas

See page 83 for details on progress

The main causes of damage to biodiversity are human activities. Among them, corporate activities inparticular have a huge impact. We thus conducted research in areas within a 10 km radius of the businesssites of the Meiji Group using IBAT*1 to assess biodiversity risks posed by our business activities.
The research revealed that the production plants of the Meiji Group are close to key biodiversity
conservation areas, such as nature reserves and KBA*2. We also found that endangered species on the Red
List live in some of these areas. Up to this point, we have not confirmed cases where our businesses havedirectly damaged biodiversity. Based on this assessment, we will make further efforts toward coexistencewith nature.
*1 Integrated Biodiversity Assessment Tool
*2 Key Biodiversity Area

Activities in Meiji Group Sites
Conducting Research on the Natural Environment to Improve Biodiversity
To conserve biodiversity at Meiji Group sites, we conducted research on thenatural environment in the Meiji Group Nature Conservation Area Kumamoto
Sunlight Forest in 2020. The area is located within KM Biologics Co., Ltd.’s Kikuchi
Research Center. The research revealed that Kumamoto Sunlight Forest isa secondary forest with places where Satoyama-like natural environment has beenpreserved. We also confirmed the existence of endangered wild plants andanimals, including clusters of Golden orchid and Gin-ran and Jewel beetle, which
are listed in the Red Lists of threatened species published by the Japanese
government and Kumamoto Prefecture. Furthermore, we found that the forest
served as an important biotope, a green corridor, for the region, with rich
ecosystems being preserved. We will endeavor to enhance biodiversity bypromoting the recovery of forested lands that have been partially wasted. We will
also work with local communities to solve ecosystem issues.

Gin-ran found in
Kumamoto Sunlight
ForestSupply Chain Activities
Conserving Biodiversity ThroughEnvironment-Friendly Procurement Activities

See page 84 for details on progress

In procuring cocoa beans, palm oil and paper, which are major raw materials of the Meiji Group, we takehuman rights and the environment into account. This has contributed to conserving biodiversity.
See “Sustainable Sourcing” on page 60 for related information
Meiji Holdings Co., Ltd.｜Integrated Report 2021

55

The Meiji Group Sustainability

Thriving Communities
The Meiji Group is involved in the Food and Health business and recognizes the importance of this
responsibility. We will develop our business in a healthy way to fulfill our social responsibilities.
We respect and promote human rights for everyone involved with our business activities. We shallcomply with the laws and regulations of all related countries and regions and run our businesses
while being respectful of the different cultures and customs. In addition, we will interact with local
communities as good corporate citizens and contribute to society.
Materialities

Human Resources
Social Issues

SDGs for
Sourcing

Promote diversity and develop human resources

On an organizational and individual level, we believe embracing diversity and maximizing the skills andpotential of each employee will help ensure sustainable growth for the Meiji Group. Therefore, we focus ondeveloping human resources and improving the workplace environment to support this approach.

Reinvigorating Group Human Resources to Achieve Sustainable GrowthEstablished the Group HR Strategy Department in April 2021
We established the Group HR Strategy Department within Meiji Holdings to help realize the Meiji Group 2026
Vision. The department aims to make the most of our human resources, who are vital management resources for
the Group. We will incorporate group management and business optimization perspectives when recruiting anddeveloping human resources and deploying personnel. We will also promote corporate culture reform to enhance
employee engagement and increase medium- to long-term corporate value.

Enhancing Employee Engagement as a Management Issue
Values in the labor market are changing, due in part to the diversification of workstyles.
Companies are now seeking to build a relationship of mutual choice with their employees.
Thus, it is vital to create an environment where employees understand and empathize with
their companies’ visions and can devote themselves passionately to their work to achievesustainable growth. With this in mind, we set out employee engagement as a key
management issue in our 2023 Medium-Term Business Plan. We also established an
engagement score* as a target that is linked to remuneration for Directors (and other officers).
We will improve management’s communication of the Group’s vision and promote dialogue
at workplace meetings. Through these initiatives, we will proactively create a corporate
culture in which the Group and employees unite as one to pursue growth. We will also
conduct an engagement survey once a year to understand the status of employees’
engagement and perform improvement activities at an early stage.

Workplace meeting (General Affairs
Dept. of Meiji Seika Pharma)* An indicator that measures employees’ empathy for the company

Improving Corporate Capability by
Each and Every Employee Exhibiting Their Individuality
Promoting diversity and inclusion is an important issue for the Meiji Group.
Respecting the diversity of individuals, including differences in gender, age,
language and values, as well as creating value by integrating diverse humanresources is vital to enhancing corporate competitiveness. This is why Meiji
Co., Ltd. started the “DIAMOND* Project” in April 2021. The project focuses on
initiatives for female empowerment, people with disabilities, seniors, LGBTQ+,
and global human resources as key domains. We will plan and execute a
variety of measures to address these issues.
* Stands for Diversity & Inclusion Activities—Meiji’s Open & New Directions

56

Sustainability and Management Foundation

DIAMOND Project
FemaleEmpowerment

GlobalHuman Resources

All Employees
People with
LGBTQ+Disabilities (Values, Experience, Skills)

Seniors

Sustainability and Management Foundation

Interview on DIAMOND Project

Hoping to See Each and Every Employee at Meiji Co., Ltd. Shine Like a Diamond
I was transferred back to the Human Resources Department for the first time in 10
years. After starting to work here again, I came to feel that even though Meiji Co., Ltd.
has many outstanding employees, it hasn’t been able to completely draw out theirpotential. I identified the company’s issues as a person responsible for D&I*1 promotion.
I found that it had not fully addressed female empowerment, people with disabilities,
seniors, LGBTQ+, and global human resources. Around the same time, I heard that the
Olympics and Paralympics Promotion Department was advancing activities to help D&I
become a part of corporate culture as a reminder of the Tokyo 2020 Games. I strongly
believed that this was an issue that needed to be addressed by the entire company
across organizational boundaries. Therefore, I launched a project for D&I promotion
and received support from related divisions and departments.
The project name “DIAMOND”*2 expresses various wishes. Each and every
employee is a treasure, a stone that will shine if polished. Their talent will sparkle
anywhere in the world, enabling them to succeed in the workplace. Also, in the same
way that even small diamonds dazzle when put together, the integration of diverse
human resources will generate major innovation.
The values of customers and society are diversifying. This can be seen in words like
“VUCA”*3 and “new normal.” Through this DIAMOND Project, we will break free fromhomogenization within the company. We will build a corporate culture that enables us
to make the most of diverse human resources. I believe this will lead to innovations
that can meet the expectations of various stakeholders.
*1 Stands for Diversity & Inclusion*2 Comes from the initial letters of Diversity & Inclusion Activities—Meiji’s Open & New Directions*3 Comes from the initial letters of Volatility, Uncertainty, Complexity, Ambiguity

Social Issues

Sayaka Sueyoshi
Personnel Team
Human Resources Department
Meiji Co., Ltd.

Members launching the Diamond
Project

Employee-friendly workplaces

We consider creating a safe and healthy workplace environment to be a corporate responsibility. We arepromoting health management, advancing workstyle reforms, and strengthening occupational health andsafety to create such an environment.

Promoting Health Management and Turning Employees’ Healthinto a Driving Force for Growth
Taking Responsibility for Employees’ Health as a Company Promoting “Now ideas for wellness”
We aim to continue growing as a corporate group that represents “Now ideas for wellness.” The driving force
behind growth is the healthier lives of employees. The Meiji Group has published the Pledge of Health andProductivity Management as our policy on promotion of health management. We have also established the Group
Personal Health Management Committee, comprised of Group companies and the Meiji Group Health InsuranceSociety. We determine key targets and initiatives for health management through discussions inthis committee, and work accordingly.
Meiji Holdings, Meiji Co., Ltd., and Meiji Seika Pharma have been designated as Certified Health & Productivity
Management Outstanding Organizations (White 500 organizations) for five consecutive years since 2017 inrecognition of ongoing initiatives for employees’ health. These are designations under the Certified Health &Productivity Management Outstanding Organizations Recognition Program operated by the Ministry of Economy,
Trade and Industry. KM Biologics was also recognized as a White 500 organization in 2021.
WEB Pledge of Health and Productivity Management

Health Issues and Key Targets
We have established key targets for healthmanagement and implemented initiatives. The
establishment of these targets has helped toincrease employees’ understanding of healthmanagement and change their ways of thinking.

See “At a Glance” on page 7 for related information[Key Targets and Results]• Achieve a regular health checkup participation rate of 100%
(Achieved for four consecutive years from FY2017 to FY2020)• Maintain a secondary health checkup coverage rate of 100%
(Achieved for two consecutive years in FY2019 and FY2020)• Achieve a participation rate of 70% by FY2023 in a walking
campaign designed to encourage regular exercise(The result for FY2020 was 59.8%)
Meiji Holdings Co., Ltd.｜Integrated Report 2021

57

The Meiji Group Sustainability

Thriving Communities

Materialities

SocietySocial Issues

SDGs forSociety

Respect and promote human rights

It is our fundamental duty to ensure human rights are promoted and respected. Therefore, the Meiji Group
cares strongly about the human rights of all stakeholders when managing its businesses.

The Meiji Group’s Initiatives and System for Promoting Respect for Human Rights
Identify Issues at the Group Human Rights Meeting
and Reflect Them in Business Activities
The Meiji Group has declared respect for human rights in our
Corporate Behavior Charter. We engage in corporate activities basedon the strong belief that all people are inherently free and deserve
equal respect and rights. We launched the Group Human Rights
Meeting in July 2019 and have been promoting human rights due
diligence. Subcommittees address salient human rights issues,
working to understand the present situation and implementing
initiatives for remediation. We report these activities to the Group
Sustainability Committee twice a year. We also discuss them at the
Executive Committee and Board of Directors as necessary so thatthese activities are linked to business management. We will
promote respect for human rights throughout the Group and fulfill
the Group’s responsibilities.

Past Activities
2016• Established the Meiji Group Policyon Human Rights

2019• Joined the UN Global Compact• Established the Group Human Rights
Meeting and began human rights
due diligence

2020• Revised the Meiji Group Policyon Human Rights• Established the Meiji Group Supplier Codeof Conduct• Began sustainable sourcing surveys
for major suppliers• Announced UK Modern Slavery Act
Statement

Promotion of Human Rights Education to Employees
Disseminate Human Rights Policy
to All Group Employees through E-learning

See page 84 for details on progress

In FY2020, we provided e-learning on business and human rights toapproximately 9,000 employees in Japan. We will provide humanrights education to employees of group companies in Japan andoverseas starting in FY2021. Through these activities, we will
disseminate the Meiji Group Policy on Human Rights and increase
employees’ awareness of human rights risks in daily operations.

We provide
opportunities for
employees to learn
about human rightsfrom many different
perspectives. The
document on the left
is part of the materials
we have createdInitiatives for Foreign Workers
Understanding Foreign Workers at Directly-owned Plants in JapanIn February 2020, we conducted a survey about foreign workers and their work status at domestic directly-owned
plants and research institutes of Meiji Co., Ltd. and Meiji Seika Pharma. We confirmed that there were no
problems with employment contracts concluded with directly-employed foreign workers and their labor
management. We plan to confirm workers’ proficiency in Japanese, the presence of technical intern trainees, andthe details of duties and the chain of command at 12 operating sites that accept dispatched foreign workers.

Conducting Follow-up Interviews with Domestic Group Companies
We are conducting interviews with group companies hiring foreign workers based on the results of a survey on
foreign workers conducted in FY2019. Due to the impact of COVID-19, we were only able to interview one
company. In FY2021, we plan to interview an additional six companies while using the online meeting format.

58

Sustainability and Management Foundation

Sustainability and Management Foundation

Human Rights Initiatives Implemented Overseas
Announcement of the Modern Slavery Act Statement
In August 2020, the Meiji Group released a statement describing the human rights initiatives taken in the Group’sbusiness activities and supply chain. This statement was based on the Modern Slavery Act 2015*1 established in
the UK to addressing modern slavery issues.
We also conducted a simplified assessment on COVID-19 and human rights at domestic operating companies
and major group companies overseas. We evaluated the risk of modern slavery under the effects of COVID-19 inlight of the UK government’s demands in relation to the Modern Slavery Act 2015. We confirmed that, while
infections occurred across countries, necessary measures had been taken. Such measures include thedevelopment of a working environment for ensuring the health and safety of employees, the protection of privacy
and other considerations for those infected with COVID-19, as well as understanding of risks related to suppliers.
In FY2021, we plan to use an assessment system provided by EcoVadis*2 and conduct assessments of thesustainability of major Group companies overseas from a broader perspective. We will also conduct assessmentsof each Group company’s suppliers in stages.
*1

PDF

Modern Slavery Act Transparency Statement 2019

*2 A provider of sustainability ratings for supply chains

Initiatives to Develop a Responsible Supply Chain
Continuing to Engage in Dialogue with Suppliersand Seeking Sustainable Sourcing

See page 84 for details on progress

In recent years, there have been international demands for fair and free competition, fair transactions, andresponsible sourcing. The Meiji Group will fulfill our corporate social responsibility by addressing social issues,
such as child labor, forced labor, and environmental destruction, throughout the supply chain as well as in theGroup. To this end, we established the Meiji Group Supplier Code of Conduct in June 2020. This code shows our
vision toward achieving sustainable sourcing based on the Meiji Group Procurement Policy. We take into accountour social responsibility, including human rights and the environment, together with our business partners, while
always keeping in mind fairness, transparency, anti-corruption, and compliance with laws and regulations.
Moreover, in October 2020, we started conducting sustainable sourcing survey for the Meiji Group’s 1st-tiersuppliers. Through the surveys, we work to identify issues related to human rights and the environment in our
supply chain. If there is an issue, the Meiji Group will work to improve the situation together with the business
partners.
Since April 2021, we have been giving feedback on the analysis of survey results to our business partners. If
there is something that needs to be improved, we collaborate and engage in dialogue to solve the issue. We will
also expand the scope of our dialogue with business partners and endeavor to build an even more robust andresponsible supply chain.

FY2020 Initiatives
June 2020

October 2020

Established the Meiji Group Supplier Code of Conduct

Distributed Code of Conduct brochures to 563 business partners of Meiji Co., Ltd.,
Meiji Seika Pharma, and KM Biologics

Held a supplier briefing before conducting sustainable sourcing surveys(Participant companies: 74)

Conducted sustainable sourcing surveys of 74 business partners of
Meiji Co., Ltd., Meiji Seika Pharma, and KM Biologics[Breakdown of companies responding
to sustainable sourcing surveys]
Companies responding to EcoVadis surveys: 35
Companies responding to Meiji’s own surveys: 39
January to
March 2021

Analyzed survey responses

Meiji Holdings Co., Ltd.｜Integrated Report 2021

59

The Meiji Group Sustainability

Sustainable Sourcing
When procuring raw materials and basic ingredients for our corporate activities, the Meiji Group has
established the Meiji Group Procurement Policy in order to provide our customers with safe andreassuring high-quality products.
Based on this Procurement Policy, we always consider fairness, transparency and compliance withlaws and regulations, and take into account our corporate social responsibility, including humanrights and the environment.
Materialities

Sourcing
Social Issues

SDGs for
Sourcing

Responsible sourcing of raw materials
toward human rights and the environment

The Meiji Group implements unique initiatives to support sustainable production activities for raw milk andcocoa, which are important raw materials for the Group’s business. We also consider human rights and theenvironment when we buy raw milk, cocoa, palm oil, and paper and perform supplier audits.

Cocoa Sourcing
Sourcing 100% Sustainable Cocoa Beans

See page 84 for details on progress

The Meiji Group conducts Meiji Cocoa Support—a unique activity for supporting farmers—
to help realize sustainable production of cocoa beans. We have also joined the World
Cocoa Foundation. We provide support to increase cocoa farmers’ incomes and work on
activities to reduce deforestation in cocoa-producing countries through the foundation’s
Cocoa & Forests Initiative. We have set increasing the sourcing ratio of sustainable cocoa
beans* to 100% by FY2026 as a KPI. Under this KPI, we will improve the sourcing of cocoa
beans produced while considering the prevention of deforestation and child labor inparticular.

Constructed well with a cistern* Cocoa beans produced in regions where we provided support to farmers

Palm Oil Sourcing
See page 84 for details on progress

Promoting 100% Use of RSPO-certified Palm Oil and Basing Sourcing on NDPE Policies
The Meiji Group has set using 100% certified palm oil globally by FY2023 as a KPI. We have proceeded with thereplacement with RSPO-certified palm oil. We also incorporated support for NDPE (No Deforestation, No Peat and
No Exploitation) policies into our Palm Oil Procurement Guidelines when we revised them in January 2021.

Paper Sourcing
Aiming for 100% Use of Eco-friendly Paper by FY2023

See page 84 for details on progress

The Meiji Group has set using paper raw materials with 100% forest certified (FSC®, PEFC) and/or
recycled paper as a KPI and has been working toward that target. We sponsored the FSC® Award in
FY2020, and Meiji Co., Ltd. obtained a COC certification* (license No.: FSC®-C159538). We will keep
expanding the scope of our initiative to include overseas group companies and work towards
100% replacement of paper raw materials with eco-friendly paper.
* Chain of Custody (COC) certification is a certification system that ensures products are appropriately managed
and processed during processing and distribution. It includes products using Forest Management (FM) certified
wood from forests and other raw materials that lead to appropriate use of forest resources.

60

Sustainability and Management Foundation

FSC®N002711

Sustainability and Management Foundation

Raw Milk Sourcing
Approaches to Raw Milk Sourcing
The Meiji Group believes it is important to support environmentallyconscious dairy farming and to care about the cows’ health, in addition to
pursuing tastiness in its drinking milk production. We also take into accounthuman rights, the environment, and animal welfare in collaboration with ourbusiness partners based on the Meiji Group Procurement Policy and the Raw
Milk Procurement Guideline. Also, in the 2023 Medium-Term Business Plan,
we established a new KPI related to support activities for dairy farmers thatare unique to the Meiji Group. We will realize sustainable production of raw
milk through these activities.

New KPI

Dairy farm management support
activity MDA (Meiji Dairy Advisory)
Conduct at least 400 times annually,
and a total of at least 2,150 times
by FY2023[Examples of MDA Activities]

Meiji Dairy Advisory—Support Program for Dairy Farmers
that is Unique to the Group
Japan’s dairy farming industry faces the issue of strengthening its foundation
for producing raw milk. The Meiji Group is undertaking the Meiji Dairy
Advisory (MDA), a farm management support activity for dairy farmers, toaddress this issue.
MDA is an initiative to support sustainable dairy farming. It helps dairy
farms to carry out their own improvement activities. It also helps to create
environments where every worker can work equally with a sense offulfillment and grow together everyone involved in the activities. Morespecifically, Meiji Group specialist staff consider how farms should operate(principles, vision, and targets) together with managers. The staff also discussvarious matters such as how to meet targets and what needs to be checked.
We will help dairy farm owners to improve their farm management skills
through this MDA and contribute to the enduring development of Japan’s
dairy farming industry.

[Past Results]
Farms where the MDA has been conducted: about 50 farms nationwide;
number of visits to dairy farms: a total of 948 times

Announcementof targets bymanagers

Study groups for foreign interns

Onsite improvement activities

Interview with Dairy Farmer

Productivity Has Improved Significantly Thanks to Support for
Human Resource Development and Breeding Management
I am the president of the Kusunoki Dairy Production Association. We have a farm in
Nogata City, Fukuoka Prefecture, where we currently raise about 85 dairy cows. In
recent years, with the expansion of our farm, we have faced issues with securing
workers. I believe it is an issue common to all dairy farmers. To secure human resources,
our association considered accepting foreign interns a few years ago. We asked for advice
from Meiji’s Milk Procurement Department and started receiving management support.
Meiji Group staff members formed a team for our association, and we implemented
various initiatives together with the members. First, we undertook 5S activities* withthem aimed at developing good working environments before accepting interns. We also
standardized milking and other procedures so that even dairy farming beginners could
carry out the work without getting confused. Moreover, we have regularly provided
Japanese language training and study groups on dairy farming skills to foreign interns
taught by Meiji staff. We have also received specialized advice on breeding management fordairy cows, and this has helped to reduce illness in calves and promote their growth.
Thanks to such support, our productivity has improved, leading to improvement in thequality and quantity of raw milk supplied to Meiji’s Kyushu Plant. As a result, we havedeveloped a mutually beneficial relationship with the Meiji Group. We also hope to receive
support on farm management in the future when the scale of our association expands.
By working with Meiji staff, we gained a wealth of knowledge and developed theability to solve issues on our own. Going forward, we would like to share these resultswith local dairy farmers and contribute to the development of the entire dairy farming
industry.

Mr. Ryudai Matsuno
President
Kusunoki Dairy Production Association(Fukuoka Prefecture)(From left) Mr. Ryudai Matsuno and his
wife, Yuka; five foreign interns (front
row on the right); and two farmers(back row on the right)* Improvement activities based on
5Ss: seiri (sort), seiton (set inorder), seisou (shine), seiketsu(standardize), and shitsuke(sustain)

Meiji Holdings Co., Ltd.｜Integrated Report 2021

61

Directors and Audit & Supervisory Board Members (As of Jun 29, 2021)

4

1 Kazuo KawamuraCEO
President and Representative Director
President (Corporate Development
Dept., Group HR Strategy Dept.,
and Co-Creation Center)*1

3

2 Daikichiro Kobayashi

COO (Pharmaceutical Segment)
Member of the Board
and Executive Officer*2

1

3 Katsunari Matsuda
COO*2 (Food Segment)
Member of the Board
and Executive Officer

Significant Concurrent Positions

Significant Concurrent Positions

Significant Concurrent Positions

Member of the Board, Meiji
Member of the Board, Meiji Seika Pharma
President, Japan Dairy Association (J-Milk)
Chairperson, Japan Food Industry
Association (JFIA)

President and Representative Director,
Meiji Seika Pharma
Chairman and Representative Director,
KM Biologics

President and Representative Director,
Meiji

4 Koichiro Shiozaki

CFO*3
Member of the Board
and Senior Executive Officer
Senior Managing Executive Officer(Corporate Administration Dept.,
and Risk Management Dept.)

5 Jun Furuta

6 Mariko Matsumura

CSO*4
Member of the Board
and Senior Executive Officer
Managing Executive Officer (PR & IR Dept.)
Managing Executive Officer(Sustainability Management Dept.)

Member of the Board (Outside)
Independent Director

Significant Concurrent Positions

Significant Concurrent Positions

Significant Concurrent Positions

Member of the Board, Meiji Seika Pharma
Member of the Board, KM Biologics

Member of the Board, Meiji

Attorney at Law/Shinwa Sogo Law Offices
Outside Audit & Supervisory
Board Member, Adastria Co., Ltd.

*1 CEO (Chief Executive Officer): Oversees management of entire Group*2 COO (Chief Operating Officer): Oversees business operations for Food segment and Pharmaceutical segment*3 CFO (Chief Financial Officer): Oversees Group financial strategy and operational management*4 CSO (Chief Sustainability Officer): Oversees Group sustainability strategy, sustainability activities

62

7

8

9

Corporate GovernanceCorporate Governance

10

11

12

2

7 Masaya Kawata

Member of the Board (Outside)
Independent Director

5

8 Michiko Kuboyama

Member of the Board (Outside)
Independent Director

Significant Concurrent Positions

Significant Concurrent Positions

Chairman and Representative Director,
Nisshinbo Holdings Inc.
Outside Director, Central Glass Co., Ltd.

Outside Director,
Isetan Mitsukoshi Holdings Ltd.
External Director, Kids Smile Holdings Inc.
Outside Director,
Sumitomo Mitsui Banking Corporation

10 Takayoshi Ohno

Audit & Supervisory Board Member

11 Hajime Watanabe

Audit & Supervisory Board Member(Outside)
Independent Director

6

9 Hiroaki Chida

Audit & Supervisory Board Member

12 Makoto Ando

Audit & Supervisory Board Member(Outside)
Independent Director

Significant Concurrent Positions

Significant Concurrent Positions

Attorney at Law/STW & Partners
Member of the Board (Outside),
Hitachi Transport System, Ltd.

Certified Public Accountant/Ando Certified Public Accountant
Joint Office
Unaffiliated Auditor,
Nippon Concrete Industries Co., Ltd.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

63

Responsibilities of Members of the Board and Audit & Supervisory Board Members(As of Jun 29, 2021)

Members of the Board
Attendance at meetings (FY2020)

Number of years Number ofas Member of the Company’s
the Boardshares held

Name

Positions and areas of
responsibility in the Company

Kazuo KawamuraCEO
President and Representative Director

16 /16

9 years

39,079sharesDaikichiro Kobayashi

COO (Pharmaceutical Segment)
Member of the Board
and Executive Officer

16 /16

7 years

13,171shares

Katsunari Matsuda

COO (Food Segment)
Member of the Board
and Executive Officer

16 /16

3 years

11,396
sharesKoichiro Shiozaki

CFO
Member of the Board
and Senior Executive Officer

16 /16

6 years

12,275
sharesJun Furuta

CSO
Member of the Board
and Senior Executive Officer

16 /16

7 years

6,228
sharesMariko Matsumura

Member of the Board (Outside)
Independent Director

16 /16

3 years

365
shares

OutsideMasaya Kawata

Michiko Kuboyama

Board of Directors

Member of the Board (Outside)
Independent Director
Career summary/Ex- President andRepresentative Director and Chairman and
Representative Director, Nisshinbo Holdings Inc.

Member of the Board (Outside)
Independent Director
Career summary/Communication Fellow,
Lifestyle Research Department,Kao Corporation

Appointed in June 2021―

Appointed in June 2021―

Audit & Supervisory Board Member

Corporate Governance

Number of years Number ofas Member of the Company’s
the Boardshares held

Positions and areas of
responsibility in the Company

Hiroaki Chida

Audit & Supervisory Board Member

Appointed in June 2021

3,552
sharesTakayoshi Ohno

Audit & Supervisory Board Member

Appointed in June 2021

3,021
sharesHajime Watanabe

Audit & Supervisory Board Member(Outside)
Independent Director

16 /1615/15

8 years―

Makoto Ando

Audit & Supervisory Board Member(Outside)
Independent Director

14/16

14/15

4 years

2,029
shares

Outside64

Attendance at meetings (FY2020)

Name

Audit &
Board of Directors Supervisory Board

Corporate Governance

Main expertise and backgroundManagement
strategies

Globalbusiness

Sales
MarketingAccounting

HR

Advisory body members to the Board of Directors
Legal affairs

Corporate
communication

Main expertise and backgroundManagement
strategies

Globalbusiness

Sales
MarketingAccounting

HR

Nomination
Committee

Compensation
Committee

Chairperson

Chairperson

Advisory body members to the Board of Directors
Legal affairs

Corporate
communication

Nomination
Committee

Compensation
Committee

WEB Directors and Audit & Supervisory Board Members
Meiji Holdings Co., Ltd.｜Integrated Report 2021

65

Message from Independent Outside Director

I will monitor the MeijiGroup’s governance fromthe consumer’s perspectivein addition to the attorney’s viewpoint.
Thus I will contribute to achieving
the Meiji Group 2026 Vision.
Mariko Matsumura

Attorney at Law (Shinwa Sogo Law Offices)
Independent Outside Director

I have been an Outside Director of Meiji Holdings since 2018and have also been serving as a member of the Nomination
and Compensation Committees.
As an attorney at law, I have been involved in domestic andforeign corporate legal affairs, consultation and litigation on
individual disputes, and bankruptcy cases over roughly 33
years. As a bar association executive, I have investigatedpetitions for redress of human rights filed by Japanese andforeign individuals, dealt with whistleblowing consultation
services, and promoted gender equality. Moreover, I engage inpublic service, including serving as a governmental committee
member and an educational board member, while providing
consultation and handling litigation for municipalities. I haveaccumulated many valuable knowledge and expertise throughthese experiences. My duty in the Meiji Group is to monitor theGroup’s governance from various points of view based on mycareer—including but not limited from a corporate
management perspective, I believe it is important to checkfrom the perspective of the consumer of Meiji products.
Outside Directors account for over one third of the MeijiGroup’s Board of Directors. The Group also has one attorney at
law and one certified public accountant as Independent
Outside Audit & Supervisory Board Members. At Board of
Directors meetings, we pose questions and exchange opinions
about important issues intensely over time. Thus, I believe the
Meiji Group’s Board of Directors is highly effective. In FY2020,
we spent a lot of time formulating the Meiji Group’s 2023
Medium-Term Business Plan. We examined why the Group did
not achieve some of the targets set in the 2020 Medium-Term

66

Corporate GovernanceBusiness Plan. Further, we discussed goals for the 2023
Medium-Term Business Plan and actions we should take toachieve them. Ultimately, we concluded “selection andconcentration” is the key to success, and we reviewed theGroup’s business portfolio. Also, we recognized building a firm
governance system in global operations is an urgent issue
because the Group is accelerating the overseas expansion.
The Meiji Group handles foods and pharmaceuticals—
products essential for people’s lives—accordingly, the Group isrequired to maintain high ethical standards. Therefore,
engaging in environmental and human rights issues isessential, in addition to seeking profits. In the Meiji Group 2026
Vision, the Group has set out the Sustainability Vision, alongwith the Business Vision and Management Foundation Vision,and has established numerical targets. The Group should try
hard to realize these Visions to achieve the 2026 Vision. Afterthese fruitful discussions, the Group has formulated awell-balanced medium-term plan that includes all material
issues to increase corporate value.
Personally, I pay close attention to the progress of
initiatives for diversity and inclusion in the Meiji Group. In the2026 Vision, it has set out the targets to increase the ratio of
female managers to 10% and raise a ratio of employees withdisabilities above the statutory employment quota. While theGroup has already achieved the target for the ratio of
employees with disabilities, its female manager ratio currently
stands at 3.7%. I will therefore discuss measures to improve theGroup’s diversity and inclusion further with other members of
the Board of Directors.

Corporate Governance

Message from Independent Outside
Audit & Supervisory Board Member

As a certified public accountant, I have been involved in audits
for listed companies and supporting accounting andmanagement for overseas subsidiaries of Japanese
corporations. I also have experience of working at an economic
crimes investigation bureau. Utilizing knowledge acquired
through these experiences for audits, I contribute to the MeijiGroup’s business management. As an Audit & Supervisory
Board Member independent of the Board of Directors,
I effectively communicate with auditors at businesssubsidiaries, internal audit departments, and the accounting
auditor. Through these communication activities, along withfacility tours, I work to keep track of the Group’s situation.
When I come across something that does not sound right at
Board of Directors meetings or on other occasions, I posequestions and deepen the discussion to guide the Group to
appropriate decisions.
The Meiji Group has cultivated its unique corporate identity
over the past 100-year history. Using this strength, the Group
has achieved remarkable growth since management
integration in 2009. The Meiji Group 2026 Vision is the Group’s
ideal corporate identity. In the 2026 Vision, one of the Group’s
key strategies is to grow in overseas markets and the Group is
working hard to grow further. I have cherished the Meiji Brand
since I was a child. I feel very happy when imagining people allover the world enjoying Meiji products.
The 2020 Medium-Term Business Plan was the first stage togrow in overseas markets. Under the Plan, the Group
determined specific directions to expand its overseas businessand established business management structures, including
introduction of a chief officer system. It was thus a period theGroup established its growth foundation to expand business inoverseas markets further.
The 2023 Medium-Term Business Plan represents thesecond stage. Under the Plan, the Meiji Group is carrying out
large-scale investments to realize growth in overseas markets.
In the Food segment, the Group is constructing plants to launch
new products to China’s eastern market and expand into thenorthern and southern markets. In the Pharmaceuticalsegment, it is increasing production capacity to strengthen its
CMO/CDMO* business. These projects require long-term capital
investment, and the Group may face various difficulties before
their completion. I will always monitor the progress of the
projects and pay close attention to the point that the Group ismaking appropriate management decisions particularly whensomething happens that requires changes to the projects. It isalso important to prepare for potential risks at the sites,
immediately identify what is actually happening, and check
whether the Group is dealing with such events appropriately.
I will examine whether the Group is flexibly building andmaintaining its risk management system and whether thesystem is functioning properly.
I am now on my second term as an Audit & Supervisory
Board Member. I will play a part in securing well-orderedbusiness management and fulfill my duties as an Audit &Supervisory Board Member. As a result, the Group can
successfully realize both profit growth and sustainability
activities simultaneously.
* CMO: Contract manufacturing organization
CDMO: Contract development andmanufacturing organization

I will pay close attention to management
decisions so that the Group can
successfully realize both profit growth andsustainability simultaneously
Makoto Ando

Certified Public Accountant(Ando Certified Public Accountant Joint Office)Independent Outside Audit & Supervisory Board Member

Meiji Holdings Co., Ltd.｜Integrated Report 2021

67

Corporate Governance

Basic Views
As a corporate group in the Food and Health fields, theMeiji Group’s goal is to continue finding innovative ways
to meet our customers’ needs, today and tomorrow.
In this way, we aim to achieve sustainable growth andincrease corporate value over the medium- to long-term.
We are working to widen the world of Tastiness andEnjoyment, and meet all expectations regarding Healthand Reassurance in order to brighten our customers’ daily
lives.
The basic approach to management of the Groupis that the operating companies manage businesses
autonomously while collaborating with each other under
the holding company’s control. The main roles of Meiji
Holdings Co., Ltd. are as follows: promoting Groupwide

management strategies; creating an optimal operating
structure; and overseeing the business management ofeach company. Responsibility for operational execution
is delegated to the operating companies appropriately.
Within the Group, oversight and execution of business
management are separated. Accordingly, the Group has
established and operates a corporate governance system
including Directors. Meiji Holdings Co., Ltd. is a company
with Audit & Supervisory Board. Oversight by the Board of
Directors and auditing by the Audit & Supervisory Board
enhance the objectivity and transparency of the business
management.
The Meiji Group’s basic approach to corporate
governance is available at the following link.
WEB Corporate GovernanceCorporate Governance Structure(As of June 29, 2021)

General Meeting of Shareholders
Election, Dismissal

Election, Dismissal

Meiji Holdings Co., Ltd.
Nomination Committee
Compensation Committee
4 Member System
Outside Directors*1 : 3Internal Director: 1

Audits Conducted byAudit & Supervisory
Audit & Supervisory Board
Board of Directors
Board Members
Audit & Supervisory
Directors: 8
Board Members: 4(Including Outside Directors*1 : 3)
(Including Outside Audit &Supervisory Board Members*1 : 2)
Appointment, Dismissal,
Supervision
Collaboration

President andRepresentative Director
CEO

ReportAudit Dept.

Group Strategy Committee

Corporate
Administration
Dept.

Collaboration
Accounting Audit
Internal Control Audit Accounting Auditor
Ernst & Young
ShinNihon LLC
Collaboration

Internal Audit

Executive Committee

Corporate
Development
Dept.

Election, Dismissal

Group HR
Strategy
Dept.

Risk
Management
Dept.

PR & IR
Dept.

Sustainability
Management
Dept.

Co-Creation
Center
Accounting Audit
Internal Control Audit

Group Companies

Corporate Governance Data

(As of June 29, 2021)

Items related to corporate governanceContent

Basic views on corporate governance

Established

Organization Form

Company with Audit & Supervisory Board

Directors

Term of Directors

1 yearChairperson of the Board

President

Number of Directors (including Outside Directors)

8 (3 Outside Directors*1, including 2 female Directors)

Number of Board of Directors meetings

16 times (FY2020)

Attendance of Outside Directors at Board of Directors meetings
Number of Audit & Supervisory Board Members(including Outside Audit & Supervisory Board Members)
Attendance of Outside Audit & Supervisory Board Members
at Board of Directors meetings
Principal meetings auditors attend

100% (FY2020)
4 (2 Outside Audit & Supervisory Board Members*1,
including 1 female member)

Audit &
Supervisory
Board

Number of Audit Committee meetings
Attendance of Outside Audit & Supervisory Board Members
at Audit Committee meetings
Election of Independent Director

94% (FY2020)
Board of Directors, Executive Committee*2, Audit & Supervisory
Board, Audit Department Liaison Meeting, and others
15 times (FY2020)
97% (FY2020)
5 (3 Outside Directors, 2 Outside Audit & Supervisory Board Members)

Accounting Auditor

Ernst & Young ShinNihon LLC

Audit department (internal auditing)

Audit Department*1 Designated as independent directors *2 Attended only by full-time members of Audit & Supervisory Board

68

Corporate GovernanceCorporate GovernanceFeatures of the Meiji Group
Corporate GovernanceWe also incorporate the opinions of Outside
Directors and Auditors into management to improve theeffectiveness and transparency of the Board of Directors.
Through this system, we are driving governance reform.
In 2020, we introduced a chief officer system tostrengthen the Group’s management. The chief officers
direct and oversee businesses and functions across theGroup in accordance with the basic management policies
determined by the Board of Directors. They meet at theGroup Strategy Committee comprised of the chief officers
once a month in principle. The Committee decides on the
directions of key issues, such as our Group-wide vision,
management plans, business policies, and the allocationof management resources.

Since Meiji Holdings Co., Ltd. was established in 2009,
the Meiji Group have been building and strengthening
our corporate governance system suitable for the Group’s
management structure. Management is particularlycommitted to sustainable improvement of corporate
value, focused on our medium- to long-term management
policy developed based on the Meiji Group Philosophy. We
have introduced an executive officer system to separate
oversight and execution of business management. In thatway, we have improved the effectiveness of management.

Chief Officer Management StructureManagement
Team

CEO

Food Segment

Pharmaceutical Segment

CEO (Chief Executive Officer)

COO

COO

COO (Chief Operating Officer)

CFO

Meiji Seika
PharmaCo., Ltd.

Meiji Co., Ltd.

CSO

Oversees management of the entire Group
Oversees the business execution of the Food or
Pharmaceutical segments

KM
Biologics
Co., Ltd.

Oversight the function
strategies acrossthe Group

CFO (Chief Financial Officer)

Oversees the Group’s financial strategy and businessadministration

CSO（Chief Sustainability Officer）
Oversees the Group’s sustainability business strategy
and sustainability activities

Oversight the business execution by the segments

Initiatives to Enhance the Corporate Governance System and Improve its Effectiveness
From FY2009

From FY2015

Group Management
Structure2009 • Established Meiji Holdings through2018 • KM Biologics Co., Ltd. joined the Group
2020 • Introduced Chief Officer system

Institutional Design

2009 • Became a company with an Audit & Supervisory Board

management integration• Introduced executive officer system
2011 • Reorganized business (established Food company
and Pharmaceutical company)

2015 • Formulated Corporate Governance Policy
2018 • Revised Corporate Governance Policy

PolicySupport System
for Directors’
Independence

2009 • Independent outside directors: 2

Nomination2009 • Nomination Committee

2015 • Meetings of independent outside directors and auditors: 2–3 times/year
2016 • Independent outside directors: 3• Tours of operating bases by outside directors and auditors:
2–3 times/year
2020 • Total number of directors: 8 (Percentage
of independent outside directors: 37.5%)

2015 • Established rules of the Nomination Committee
2017 • Established Leadership Values, competencies
for managers who drive the Group forward

2018 • Established development policies

for succession planning for the Group2019 • Implemented succession planning
Compensation2009 • Compensation Committee
2015 • Established rules of the Compensation Committee
2011 • Established rules for director
2017 • Introduced Restricted Stock Compensation Planand executive officer compensation
2021 • Revised compensation plans• Revised rules for Director andExecutive Officer compensation

2015 • Effectiveness evaluation of the Board of Directors (questionnaire): Once/year
2019 • Individual interviews between Chairperson

Board of Directors
EffectivenessEvaluation
Otherof the Board and outside directors: Once/year

2009 • Formulated the Meiji Group’s
System of Principles

2010 • Formulated

the Meiji Group 2020 Vision2015 • Revised the Corporate Behavior Charter(reconfigured as a stakeholder-specific behavior charter)2016 • Advisory Committee for the 2026 Visioncomprised of the Board of Directors: 4 times

2017 • Formulated the Meiji Group 2026 Vision
Meiji Holdings Co., Ltd.｜Integrated Report 2021

69

Corporate Governance

Board policies and procedures in theappointment/dismissal of the senior
managers and the nomination ofcandidates for the Board of Directors
and the Audit & Supervisory Board

Criteria for Independence ofOutside Directors and Auditors■ Nominating internal director candidates
We nominate persons who are major executives and aresenior managers in major operating companies. All suchcandidates must have the following qualifications:• Extensive experience• Specialist expertise• Business decision making• Upstanding character

When an Outside Director and an Outside Audit &Supervisory Board Member are independent, such Member
shall not fall under any of the following categories.

■ Nominating outside director candidates
We nominate persons with the following qualifications:• Ability to analyze the Company’s business operations
objectively and from multiple perspectives• Ability to strictly monitor whether the management ismaking sound decisions• Character, insight and ability to express one’s views andopinions as necessary
All such candidates must meet our Criteria for
Independence.
■ Appointing senior managers
We nominate persons who can drive the Group towardsustainable growth based on past achievements. To
implement our corporate philosophy and promote ourcorporate value, we look for the following qualifications:• Effective decision-making ability: Transparent and boldbusiness decisions swiftly and impartially• Group management: Achieve optimal Group-wide
management■ Nominating Audit & Supervisory Board member candidates
For our Audit & Supervisory Board members to properly
audit the Group’s operations for lawfulness andappropriateness, and to bring any issues to our attention
from an objective and impartial perspective, we nominate
persons with the following qualifications:• Upstanding character• Excellent insight• Specialist expertise• High moral standards
At least one of the candidates must have solid grounding in
finance and accounting.
■ Nominating method
The Board of Directors makes the final decision on who
to nominate as candidates for the Board of Directors andAudit & Supervisory Board and who to appoint as senior
managers. Audit & Supervisory Board Member candidates
are selected by the Board of Directors following approval by
the Audit & Supervisory Board.
On this matter, it first consults the opinion of theNomination Committee, which comprises three outside
directors and one internal director.
■ If a Director, Audit & Supervisory Board Member, or senior
manager commits a dismissible offense, the Nomination
Committee will convene a special meeting to discuss
the matter and issue its recommendation to the Boardof Directors. The Board of Directors will examine thisrecommendation, and then if it concludes that the person
should be dismissed, it will propose the person’s dismissal(if the person is the Board of Director or Audit & Supervisory
Board member) or dismiss the person (if the person is asenior manager). Any dismissal of the Board of Director or
Audit & Supervisory Board member will be pursuant to theCompanies Act and other relevant legislation.
70

Corporate Governance

The Meiji Group has established Criteria for Independenceof Outside Director and Outside Audit & Supervisory Board
Member (Criteria for Independence) as follows.

1. A person who executes business of the Company or
its subsidiary
2. A person who executes business of the Company’s
parent company or a fellow subsidiary
3. A party which has material business transactions
with the Company or a person who executes business
transactions of that party, or a major business partnerof the Company, or a person who executes business
transactions of that business partner
4. A consultant, an accounting expert, or a legal expert
who receives a considerable amount of cash or otherassets other than remuneration for Directors (andother officers) as a Member of the Board or an Audit &Supervisory Board Member from the Company (whena party who receives such assets is an organization, suchas a corporation or an association, this shall refer toa person who is associated with such organization)
5. A person who fell under category 1 above during theten-year period prior to assuming the position
6. A person who fell under category 2, 3, or 4 above during
the one-year period prior to assuming the position
7. A relative within the second degree of kinship of aperson (excluding a person who does not have an
important management position) who currently falls
or fell under category 1, 2, 3, or 4 above during the oneyear period prior to assuming the position(Notes)1. “A party which has material business transactions with the Company” is
one that received payment from the Company during the latest fiscal year
equivalent to 2% or more of the party’s annual consolidated net sales or 100
million yen, whichever is greater.
2. “A major business partner of the Company” is one that made payment to
the Company during the latest fiscal year equivalent to 2% or more of theCompany’s annual consolidated net sales.
3. “A consultant, an accounting expert, or a legal expert who receives aconsiderable amount of cash or other assets other than remuneration
for directors (and other officers) as a Member of the Board or an Audit &Supervisory Board Member from the Company” is the one who received
cash or assets from the Company during the latest fiscal year other than
remuneration for Directors (and other officers) as a Member of the Board or
an Audit & Supervisory Board Member, equivalent to 2% or more of his/herconsolidated net sales or 10 million yen, whichever is greater.

Reasons for Nominationof Outside Directors and Auditors
Outside Director
Mariko Matsumura

We elected Mariko Matsumura as an outside director because her
extensive career as a lawyer would enable her to offer professional andinsightful advice on company management and to effectively oversee
execution of duties. We expected that through such work, she would
contribute to improving corporate governance. While she has not been
involved in corporate management in the past, except as an Outside
Director or an Outside Audit & Supervisory Board Member, we concluded
that she would be able to perform her duties appropriately as an Outside
Member of the Board for the reasons mentioned above.

Corporate Governance

Masaya Kawata

Masaya Kawata served as Representative Director and President Nisshinbo
Holdings before becoming Director and Chairman in 2019, and is involvedin Group management and global business management. We elected
him as an outside director because his extensive experience, significant
achievement and vast knowledge related to business management
would enable him to provide Group management with valuable advice
and ensure the appropriate monitoring of business execution for ourGroup. We expect that through such work, he will contribute to improving
corporate governance.

Michiko Kuboyama

Michiko Kuboyama has vast experience related to product development
and marketing through her roles at Kao having worked in the Products
Public Relations Center before serving as Center manager and as acommunications fellow in the Lifestyle Research Department. We elected
her as an outside director because she would be able to provide Groupmanagement with valuable advice and ensure the appropriate monitoringof business execution from the perspective of the consumer and a diverse
range of other perspectives. We expect that through such work, she willcontribute to improving corporate governance. While she has not been
involved in corporate management in the past, except as an Outside
Director or an Outside Audit & Supervisory Board Member, we concluded
that she would be able to perform her duties appropriately as an Outside
Director for the reasons mentioned above.

Outside Audit & Supervisory Board Member
Hajime Watanabe

Hajime Watanabe has a prolific career as an attorney at law and has
deep expertise in international business transactional law areas. We
elected him as an Outside Audit & Supervisory Board Member so that
he can supervise the execution of the Group’s business operations froman objective and impartial perspective. While he has not been involvedin corporate management in the past, except as an Outside Director oran Outside Audit & Supervisory Board Member, we concluded that hewould be able to perform his duties appropriately as an Outside Audit &Supervisory Board Member for the reasons mentioned above.

Makoto Ando

Makoto Ando has built a prolific career and gained deep expertise in boththe private sector, working in major audit firms and accounting firms inJapan and overseas as a certified public accountant, and the public sector.
We elected her as an Outside Audit & Supervisory Board Member so that
she can supervise the execution of the Group’s business operations froman objective and impartial perspective. While he has not been involvedin corporate management in the past, except as an Outside Director oran Outside Audit & Supervisory Board Member, we concluded that hewould be able to perform his duties appropriately as an Outside Audit &Supervisory Board Member for the reasons mentioned above.
(Notes) All outside director and auditors are designated as independent
directors.

Succession Planning for the CEO and Other Top Executives
The Nomination Committee recommends the appointments
and dismissals of top executives. This Committee iscomprised of at least three members, and the majority are
Outside Directors. The members also discuss the succession
planning for the CEO. In order for the Meiji Group executives
to lead the Group toward achieving the Meiji Group 2026
Vision, we believe it is critical for them to instigate change
and lead reform efforts. We established a set of Leadership
Values for our executives (see below), which were discussed
by both the Nomination Committee and the Board of
Directors before being adopted by the Board in January 2018.
In addition, the development policy for our succession
planning was discussed and decided by the Board meetingin March 2019 after careful discussion by the Nomination
Committee. The policy stipulates that the nomination

Leadership Values, Competencies

for managers who drive the Group forwardand development of candidates for the presidents of theCompany and major group companies are to be discussed by
the Nomination Committee.
Following these policies, we created an annual timeline
covering gathering of information on candidates fordiscussion in Nomination Committee and implemented itfrom FY2019. In January 2020, the Nomination Committee
discussed the appointment and dismissal of an incumbent
president and representative director, as well as thenomination of successor candidates and a successor talentbench for the position. The progress of succession planning in
FY2020, which was the second year of planning, was reported
and discussed at the May 2021 Board of Directors meeting.
The nomination of executive candidates was also discussed
and decided at the meeting.

Discussions in the Nominating Committee
Review competencies for presidents and development policies foreach company (see illustration below)

Ability to instigate change and lead reform efforts
Strategy/Execution

PeopleDevelops clear strategies,
takes action, and resolves
unexpected difficulties
in Japan and overseas

Draws out and improves
the potential capabilities ofthe organization, takes
advantage of surroundings with
an open-minded approach,and leads the organization

Imagination

Ability to communicate and convince

Decisiveness

Ability to motivate

Ability to achieve breakthroughs

Magnanimity for others’ mistakes

Ability to channel creative energies

Ability to develop others’ talents

Personal
Ability to recognize and channel diverse talents

Personal Characteristics (Strengths and Challenges) Strengths Challenges
Strategicplanning
and action
Organizational
leadershipskillsCharacter

Details

Imagination
Decisiveness
Ability to achieve breakthroughs
Ability to channel creative energies
Ability to communicate and convince
Ability to motivate
Magnanimity for others’ mistakes
Ability to develop others’ talents
Ability to utilize diverse talents
Upstanding character

Efforts to accomplish the Meiji Group 2026 Vision(understanding, directions, action)

Desirable experience for the future
Career Summary (Section Manager and Above) Recent Roles and Achievements
Section manager

PeriodPosition

Role

Achievement

Evaluation

Recent Roles and Achievements

Upstanding character

Meiji Holdings Co., Ltd.｜Integrated Report 2021

71

Corporate Governance

Effectiveness of the Board of Directors

Self-assessment questionnaire categories

Plans to improve the effectivenessof the Board of Directors

Self-assessment categories are set from the following
perspectives.

• Corporate Governance Policy

The Board of Directors generally meets once a month.
Meeting materials are distributed in advance to facilitate
substantive and lively discussions. The board’s secretariat
briefs major topics to independent outside directors,
if necessary, to clarify points of meetings.
Moreover, to improve the effectiveness of the Boardof Directors, independent outside directors and outside
Audit & Supervisory Board Member hold regular meetings.
In the meetings, they exchange objective ideas and share
information. They also better understand segment-specificbusiness. Outside directors and auditors tour major facilities
a few times a year.

Roles of the Board (setting strategic direction, overseeing
company, preparing succession plan, discussing/deliberating/reporting on business matters) andcomposition of the Board• Running the Board of Directors

Meeting management by Chairperson,
quality of meeting materials and presentations,and secretariat’s performance• Issues to be addressedfrom the previous fiscal year

Progress in achieving challenges set in the previous fiscal
year

Meetings of outside directors and auditors
Outside directors and auditors met three times during
FY2020. Some topics for the meetings were as follows:• Meiji’s business in China

Vision for developing high value-added products toward
2030

Facility tours by outside directors
and auditors
In FY2020, facility tours were not conducted due tothe COVID-19 pandemic.

Evaluation of the Board of Directors
The Company regularly analyzes and evaluates theeffectiveness of the Board of Directors as a whole andaddresses any identified issues. This is based on surveys
that include self-evaluation questionnaires by members of
the Board of Directors (the Board), and individual interviews
between the Chairperson of the Board (the Chairperson) andindependent outside directors, both of which are conducted
once a year.

1

Method for analyzing/evaluating
effectiveness of the Board in FY2020(1) Self-evaluation questionnaires
by all members of the Board of Directors
In compliance with the Corporate Governance Policy,
the Meiji Group has conducted self-assessments for theeffectiveness of the Board once each year since FY2015. We
use a questionnaire prepared by the Board’s secretariat.
Based on the survey results, we analyze and evaluate theBoard and identify issues for improving its effectiveness. The
survey for FY2020 was conducted in May 2021.

72

Corporate Governance(2) Individual interviews between the Chairpersonof the Board and independent outside directors
From FY2019, the Chairperson had individual interviews
with independent outside directors. In the interviews, they
discussed roles, composition and performance of the Boardand discussed the Board’s ideal corporate identity for the
Meiji Group to achieve sustainable growth.

2

Results of analyzing/evaluating
the effectiveness of the Board in FY2020,
and initiatives for FY2021

Based on the results of the Board members’ self-evaluationquestionnaires, individual interviews between the
Chairperson and independent outside directors, and theBoard meeting records, the Board is considered to be
operating effectively.
Based on the results of self-evaluations, we identified thefollowing issues we should improve:• Strengthening monitoring• Encourage constructive discussion on the Company’s
response to revisions to the Corporate Governance Code
Individual interviews between the Chairperson of theBoard and independent outside directors, the following
subjects were discussed for improving the efficacy of theBoard of Directors. The subjects discussed include enhancing
risk management, promoting digital transformation (DX),the Company’s succession plan, diversity and inclusion, andhuman resource development. Meetings were also frank
discussions about how the Group should execute strategy
during the 2023 Medium-Term Business Plan and under the
Chief Officer system. We are reflecting their opinions in ourplans and executing those plans.

Corporate Governance
FY2018 Issues
Self-evaluation
using questionnaires(from FY2015)• Execution of the MeijiGroup succession planning
development policy• Improving the quality ofmeeting materials andpresentations

FY2019 Initiatives

FY2019 Issues

FY2020 Issues

FY2021 Plan

Holding Individual interviews between the Chairperson andindependent outside directors (from FY2019)• Enhancing the• Starting the succession
planning according to thedevelopment policy andreporting on progress andperformance• Supporting preparation of
meeting materials andpresentations that focus on
important points• Appropriate
implementation of the MeijiGroup succession planning• Improving the quality ofmeeting materials andpresentations• Reporting on business
operations in a
strategy-focused manner

Remuneration for Directors(and Other Officers)
The amount of remuneration for directors falls within atotal amount of remuneration that is decided at the General
Meeting of Shareholders. The amount is calculated basedon an evaluation of the Company’s performance and theindividual’s performance, while referencing the standard
compensation level at other companies obtained throughexternal research.

Director Remuneration(Excluding Outside Directors)
The remuneration of directors (excluding Outside Directors)
is comprised of the following three components.
1. Base compensation, which is fixed according to theposition and responsibilities
2. Performance based compensation as a short-term
incentive, which is assigned according to the Company’s
and individual’s performances from the previous fiscal year
3. Stock-based compensation as a medium- to long-term
incentive, which is based on the Company’s stock pricemovement
The base compensation and performance-linked
compensation are paid in cash, and stock-based
compensation is allocated as restricted stock. The fixed (base)compensation and variable compensation (performancelinked compensation and stock-based compensation) havean approximate 6:4 ratio of the overall remuneration. The
variable compensation is designed to pay out more for higher

implementation of the MeijiGroup succession planning• Further improving the qualityof meeting materials andpresentations• Enhancing the reporting ofbusiness operations andclarifying issues in unachieved
targets• Strengthening monitoring• Encourage constructive
discussion in invigorating
Board of Directors
following the revised
Corporate GovernanceCodepositions.
The metrics of company performance are consolidated
net sales and consolidated operating profit, which links tothe performance level of achieving the Meiji Group 2026
Vision. Performance-linked compensation reflects how
well the Company met its targets for these two metrics,
how well it performed in these metrics compared to theprevious year, and how well the relevant director performed.
The performance-linked compensation for the Chairman
and Representative Director, and the President andRepresentative Director is based entirely on the two metrics.

Outside Director and Audit & Supervisory
Board Member Remuneration
The remuneration for outside directors and Audit &Supervisory Board members is only comprised of a fixed basecompensation due to their position and to maintain their
independence.

Methods for Determining Amounts
Compensation plans for directors and amounts ofcompensation calculated based on the evaluation of theCompany’s performance and the individual’s performanceare decided by the Board, based on a recommendationfrom the Compensation Committee, the majority of whose
members are independent outside directors.
Amounts of compensation for Audit & Supervisory Board
members are decided through discussion among the Audit &Supervisory Board members and fall within a general rangethat is decided at the General Meeting of Shareholders.

Breakdown of Director Remuneration (FY2020)

Information is disclosed such as the total amount of remuneration for each type of director, the total amount for each type ofcompensation and the number of officers that are paid. In addition, the individual remuneration is disclosed for any director who
has a total compensation of JPY 100 million or higher.
The details of the remuneration for each type of director during FY2020 are as follows.
Monetary Compensation
Type of Director

Total
Amount ofRemuneration

Stock-based Compensation

Base Compensation

Performance-linked
Compensation

Total
AmountTotal
AmountNumberof Officers

Numberof Officers

Total
AmountNumberof Officers

Directors(other than outside directors)¥285 million¥142 million

7¥106 million

5¥37 million

5

Audit & Supervisory Board
members (other than Outside Audit& Supervisory Board Member)¥55 million¥55 million

2

―

―

―

―

Outside Director¥43 million¥43 million

3

―

―

―

―

Outside Audit & Supervisory Board
Member¥26 million¥26 million

2

―

―

―

―

Total

¥410 million¥267 million

14¥106 million

5¥37 million

5(Notes) 1. As per the resolution of the 1st Ordinary General Meeting of Shareholders held on June 29, 2010, the amount of remuneration for directors is capped at JPY
1 billion per year (not including the employee portion of remuneration for directors who concurrently serve as employees)
2. As per the resolution of the 1st Ordinary General Meeting of Shareholders held on June 29, 2010, the amount of remuneration for Audit & Supervisory
Board members is capped at JPY 300 million per year.
3. We have introduced a transfer-restricted stock-based compensation plan for directors other than outside directors. As per the resolution of the 8th Ordinary
General Meeting of Shareholders held on June 29, 2017, the amount of remuneration under this plan is capped at JPY 200 million per year.
4. The total stock-based compensation is the amount recorded as an expense in the fiscal year being reported.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

73

Corporate Governance

Overview of System for Remuneration for Directors (and Other Officers) in FY2021
Revisions to system for remuneration for directors (and other officers)
We revised our system for remuneration for directors (and other officers) considering its intended objectives. Specifically, we revised
the compensation composition ratio and the details of performance-linked compensation and stock-based compensation so thatcompensation is linked to the key performance indicator set in the 2023 Medium-Term Business Plan. These revisions are described
below.
We have not changed the method of calculating compensation for Audit & Supervisory Board members since FY2020. Amountsof compensation for Audit & Supervisory Board members are decided through discussion among the Audit & Supervisory Board
members and fall within a general range decided at the General Meeting of Shareholders.

Compensation composition ratio
To increase incentives for improved performance and promote the sharing of interests with our stakeholders, we set compensation
composition ratio that is approximately a 50-50 mix of fixed (base) compensation and variable compensation (performance-linked
compensation and stock-based compensation). We apply a higher rate of variable compensation as the rank and position of theexecutive increases. We set ratios of 45% to 50% for fixed compensation and 50% to 55% for variable compensation.

Details of performance-linked compensation

Details of stock-based compensation

Outline of revisions

Outline of revisions

Our 2023 Medium-Term Business Plan aims to achieve growth inoperating profit by improving capital productivity. We have thus set
consolidated operating profit and ROIC as performance indicators
for the Company. We have also introduced medium-and long-termtarget evaluations to achieve these targets in addition to fiscal year
targets.

The previous system included stock-based compensation. Thiswas designed to provide incentives for improving the Group
corporate value and to share interests with shareholders and otherstakeholders. We have modified the design of the previous system
to further motivate the achievement of these objectives. Underthe revised system, the monetary amount for restricted stock paidby the Company fluctuates annually based on Meiji ROESG® fromthe previous fiscal year. The transfer restriction period and otherconditions have not changed from the previous system in FY2020.

Payment amount calculation method
We set standard amounts for each performance indicator for theCompany and individuals. We then calculate performance-linked
compensation by multiplying each amount by a coefficient calculated
based on the level of achievement for each performance indicator.
The total of the amounts calculated for each performance-linked
compensation category represents the total amount of performancelinked compensation.

Performance indicator for the Company
1. Fiscal year Target Evaluation
Consolidated operating profit:• When achieving fiscal year target, it will be 100%. The
coefficient fluctuates 0% to 200% based on the achievement
ratio (50% to 150%) against the fiscal year target.

Payment amount calculation method
We set the Meiji ROESG as a performance indicator. The Meiji ROESG
is calculated based on ROE and the achievement of ESG initiatives.
The payment amount is calculated as detailed below.

• 100% for achieving 13pt, the target set for the 2023 MediumTerm Business Plan.
• The coefficient fluctuates 50% to 150% depending on theactual Meiji ROESG figure, 9pt to 17pt, respectively.
• No stock-based compensation will be allocated if the Meiji
ROESG is lower than 5pt for two consecutive years.

ROIC:• When achieving fiscal year target, it will be 100%. The
coefficient fluctuates 0% to 200% based on the achievement
ratio (80% to 120%) against the fiscal year target.
• Regardless of the achievement against the fiscal year target,
the coefficient is reduced by half if earnings are less thancapital costs.

2. Medium- and Long-term Target Evaluation
Consolidated operating profit:• When achieving the medium- and long-term target, which
is separate from the fiscal year target, it will be 100%. The
coefficient fluctuates 0% to 200% based on the achievement
ratio against the medium- and long-term target.

Performance indicator for individuals• The coefficient fluctuates 0% to 200% based on a seven-tierevaluation, which is determined through comprehensive
assessment by the CEO, President and Representative Director.
• There is no individual performance evaluation for the CEO,President and Representative Director.
74

Corporate Governance* ROESG is a registered trademark for a management indicator developed byKunio Ito, a professor at Hitotsubashi University.

Corporate Governance

Strategic Cross-Shareholding
Meiji Holdings Co., Ltd. holds cross-shareholdings when
we consider it would: 1) Accelerate the Group’s financial
operations, 2) Strengthen our relationship with our groupcompanies, 3) Strengthen the Group’s transactional
relationships and 4) Be reasonable in light of our
responsibility to shareholders.
Meanwhile, the Board of Directors reviews all thebrands the Group is holding and determines whether theCompany should continue holding or sell them. For eachbrand, the Board of Directors reviews the following factors:• The rationale for holding the brand• The transactions for the brand in the past year
• The medium- to long-term outlook for the brand• The amount of dividend
Following its September 2020 review, the Board of
Directors concluded that the Company should continue
holding 31 of the brands. Later, from the perspective of
reducing strategic cross-shareholding as is outlined in the
Corporate Governance Code,in FY2020 we sold all shares of one brand and partiallysold another brand. By the end of the 2023 MediumTerm Business Plan, we plan to reduce strategic crossshareholding by 30% based on book value.
As a rule, Meiji Holdings will exercise the voting rights
in line with the wishes of the stock issuing company’s
Board of Directors. However, we will decline to do so if
we think that it would negatively impact the business
relationships with the Meiji Group or if it would clearlyharm the common interests of shareholders.

Constructive Dialogue
with Shareholders
Meiji Holdings engages in shareholder dialogue positively
and voluntarily and promote constructive dialogue. To
make the dialogue constructive, we are engaging in thefollowings:• The PR & IR Department manages the dialogue withshareholders. The Department is administered by the
Director in charge of Public Relations & Investor Relations.
• To support shareholder dialogue, the Director in chargeof the PR & IR Department holds meetings with otherdepartments, including Corporate Development Dept.,
Corporate Administration Dept., Risk Management Dept.,
and Sustainability Management Dept. so that they canshare information.
• Dialogue with shareholders is not limited to one-on-one
meetings. The Company holds earnings conferences twiceyearly for institutional investors and securities analysts
after announcing the second quarter and the annual
results. In addition to such conferences, the Company holds
small meetings led by the President. At the end of the first
and third quarter, we host earnings conference calls for
institutional investors and securities analysts.
• For dialogue with individual investors, we held online
briefings about the Group in FY2020. We will continue topromote dialogue with individual investors and work toincrease their understanding of the Group.
• We are promoting ESG dialogue with investors. We holdone-on-one meetings with institutional investors andconferences with institutional investors and securities
analysts.
• We provide information for shareholders and investors
on our website. We publish our annual securities reports,financial statements (Japanese/English), integrated reports(Japanese/English), and earnings conference materials(Japanese/English). Video of our earnings conferences areavailable online (Japanese/English) and we post a Q&A
summary (Japanese/English) to promote communication.
Also, we post reports on briefings and events for individual
investors on our website.
• Comments and feedback collected through investor
relations activities are summarized into reports. The
Director in charge of Public Relations & Investor Relations
reports to the Executive Committee and the Board of
Directors regularly.
• Dialogue with shareholders is held in accordance with theRules Concerning the Prevention of Insider Trading, which
outlines the handling of relevant information. Due care isalso given to insider information during communication.
We set quiet period.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

75

Risk Management
Basic Views
and Risk Management System
The Meiji Group recognizes that risk management is
not just for responding when emergencies or disasters
occur and severely impact business activities. It is also
important to take preventive measures to control andmitigate/avert risks. The Meiji Group has establisheda risk management structure that promotes further
growth to realize the Meiji Group 2026 Vision. Under
this risk management structure, we identify overall
Group management risks, reduce risks, and manage
appropriate risk-taking.
In April 2021, Meiji Holdings Co., Ltd. established
Risk Management Department and strengthened
the Group-wide risk management. Our Executive
Committee and Board of Directors evaluate andconfirm management risks aligned with our Group
Vision. Thus we can manage risks adapting to changes
in our operating environment.
Furthermore, we have developed risk management
systems that are suited to the Food and Pharmaceuticalbusinesses respectively. We regularly share risk
information across the company, which includes risks
common to all our businesses and risks that impact on
the whole Group. Accordingly, we identify, evaluate,
treat, and solve risks promptly.

Risk Management System
Board of Directors

Confirm

Opinion/instruction

ReportEvaluate/confirm
Ascertain/review/
instruct
Risk reduction
measures

Executive Committee
ReportRisk Management Dept.

ManageAscertain, review,
response measures,confirm

Meiji, Meiji Seika Pharma, KM Biologies,
other Group companies

The Meiji Group
Business Management Risks
We appropriately identify risks and develop
countermeasures considering the risk impact froma companywide business management perspective.
In this way, we not only minimize risks, but we alsoachieve sustainable growth and gain new growth
opportunities. We outlined the three visions—theBusiness Vision, Sustainability Vision and Management
Foundation Vision —in the Meiji Group 2026 Vision. We
have identified the Meiji Group Business Management
Risks based on those three Visions.

Listed on the following page are risks inherent inmatters indicated in our securities report in relation
to the status of operations and accounting. The
management recognizes them as major risks that may
significantly affect the financial position, operating
performance, or cash flows of our consolidated results.
The future risks outlined in the tables are categorized based on our
medium- and long-term management strategy. We have assessed
their importance to the Group, taking into account the likelihood of
occurrence and the level of impact on the Group.
The information represents risks recognized by the Meiji Group asof the date of submission of the securities report. These risks are
not a comprehensive representation of all the risks related to ourbusinesses.
For information on the Meiji Group 2026 Vision,please see page 4-5.

76

Corporate GovernanceCorporate GovernanceBusiness Risks
Change in risk Importanceto therecognition fromprevious year
Group

Risks

Countermeasures

Sale and supplyof products andservices• Abandon to launch planned product• Changes in customer lifestyles and values• Negative rumors about the Meiji Group’s corematerials (milk, cocoa, etc.)• Establish solid Proofs of Concept (POC)• Gather information on market trends• Develop products that are friendly tothe environment and society• Create products and services unique to Meiji
that address social issues• Appropriately disseminate relevant
information about products and materials$

The majority ofprofits comesfrom specificproducts• Sluggish sales of products that account fora considerable portion of sales and profits• Implement promotions that maximize
unique value• Improve product portfolio management• Explore new markets and new businessdomains$$

Supply chains• Insufficient or excess procurement or priceincreases of raw materials• Difficulties in procuring raw milk
• Cessation of production due to production
problems, etc.
• Unstable product supplies due to
distribution problems• Gather information on raw materials markets
and promote procurement strategies• Diversify suppliers and consider alternative
materials• Strengthen coordination between
production and sales divisions• Improve distribution efficiency throughlabor-saving/automation$

Technologicaladvances• Rapid advances in digital technologies• Discovery of innovative treatment methods,
manufacturing methods and formulation
methods• Consider introducing new technologies as
early as possible• Research new manufacturing andformulation methods, and search foralliances$

Laws andregulations• Revisions that significantly impact corporate
activities• NHI drug price revisions• Obtain information about system revisions
early and implement countermeasures• Make appropriate approaches to relevant
government authorities• Expand portfolio of products that are notaffected by NHI drug price revisions$

Overseas
expansion andoverseas Group
companies• Rapid changes in society, or outbreaks of
war or terrorism• Revisions of the systems that greatly exceed
expectations in various countries• Gather information, and investigate andimplement countermeasures early• Create product supply systems from multiple
locations$$

Business plans,etc.

• Failure to achieve the Visions or MediumTerm Business Plans due to change inbusiness conditions• Growth slowdowns in core business, or
failure to achieve targets for overseas
markets or new business domains• Impairment losses on non-current assets or
goodwill• Fluctuations in foreign exchange or interest• Enhance unique value and search for newvalue• Provide unique value in overseas markets• Manage business portfolio from theperspectives of profitability, growth andproductivity• Make decisions and monitor investment andM&A plans appropriately• Use foreign exchange contracts and borrowat fixed interest rates$$$: Risks of greater importance$: Risks of great importance

Sustainability-related Risks
Risks
Caringfor the Earth

Climate change• Environment friendliness in corporate
activities• Address climate changeCountermeasures

Change in risk Importanceto therecognition fromprevious year
Group

• Reduce CO2 emissions and prevent
fluorocarbon leaks, switch to renewableenergies, appropriately treat wastewater andindustrial waste, and conduct initiatives incompliance with ISO 14001• Manage supply and demand, and decrease
food loss• Comply with policies related to theenvironment$• Analyze climate change scenarios according
to the TCFD framework, formulate strategies
and release information$
Continued on page 78

Meiji Holdings Co., Ltd.｜Integrated Report 2021

77

Risk Management

Thriving
Communities• Sustainable raw material procurement• Consider human rights, and human rights
issues• Understand diversity, and use a diverse
workforce effectively• Increase the ratio of sustainably procured
raw materials, such as cocoa beans and palmoil
• Strengthen cooperation and collaboration
with dairy farmers and other suppliers• Address challenges of human rights basedon due diligence• Create organizations and cultures that value
diverse perspectives and abilities• Comply with policies related to procurement,
human rights and society, etc.

$

Management Foundation-related Risks
Risks
Corporate
Governance• Make business decisions in a timely andappropriately manner• Internal or external non-compliance• Improve effectiveness of the Board of
Directors• Enhance corporate governance systems• Provide education on compliance and social
media usage, and comply with internal andexternal policies

Damage to
the Meiji brand• Product recalls or withdrawals from themarket due to quality defects or unexpectedside effects of pharmaceuticals, etc.
• Unexpected harmful rumors about the MeijiGroup or its products• Pursue quality and safety• Communicate appropriately with eachstakeholder

Human capitaland culture• Recruit and develop human capital requiredfor corporate growth• Employee engagement• Effects of business environment on
productivity• Appropriately implement succession
planning• Improve employee training• Enhance employee engagement• Enhance health and productivity
management and create comfortable work
environments$$

Information
asset leaks• Information leaks and system shutdowns
due to unauthorized access, etc.
• Data breaches due to inappropriate systemmanagement• Strengthen information management
systems and information security• Strengthen education on information
management and comply with regulations
and policies$

Disaster,emergency
or otherunforeseen
circumstances• Temporary or full suspension of business
operations due to disasters, pandemics orother unexpected emergency• Increases or decreases in product demand
due to changes in business conditions in an
emergency• Develop business continuity plans and risk
management plans for swift recovery• Maintain a broad product portfolio acrossthe Group

There was an incident that hypnotic substance wascontaminated in Itraconazole tablets manufactured
by Kobayashi Kako Co., Ltd. and sold by Meiji Seika
Pharma Co., Ltd. Meiji Seika Pharma stopped
shipments of such products and instituted a voluntary
recall. The Meiji Group works to confirm and enhance
the reliability assurance structure applied to contract
manufacturers and development partners.
The Meiji Group will fulfill the product supply
responsibilities as a manufacturer of essential
foods and pharmaceuticals. To undertake these
responsibilities, we are working to improve
workplace hygiene and establish safe and secure

78

Countermeasures

Change in risk Importanceto therecognition fromprevious year
Group

Corporate Governance

$

$$

$

work environments at all manufacturing facilities inJapan and overseas. Due to the COVID-19 pandemic,
we are seeing dramatic changes in our businessenvironment: increase in prevention awareness andhealth consciousness, the significant expansion of
e-commerce, workstyle changes, and decrease in
numbers of outpatient visits to medical institutions.
We will continue to perform our responsibilities
to ensure a stable supply as Food and Healthprofessionals. Also, we will try hard to develop andlaunch vaccine against COVID-19, and propose productsthat match people’s needs living with COVID-19.

Corporate GovernanceCompliance
Basic Views

Anti-Corruption

The Meiji Group complies with the laws, regulations
and social rules in each country in order to ensure
all transactions are proper and to promote fair,transparent, and free competition. To increaseawareness and strengthen compliance further,
we established internal regulations based on our
Corporate Behavior Charter and work to improve
internal training. We conduct business with highethical standards and shall remain a company
trusted by society.

The Meiji Group formulated the Meiji Group AntiCorruption Policy in March 2019 in order to remaina transparent and sound corporate group that istrusted by society. In May 2019, we becamea signatory to the UN Global Compact and we comply
with Principle 10: Business should work against
corruption in all its forms, including extortion andbribery. We translated this policy into English,
Chinese, Spanish, Thai, Indonesian and Hindi to raise
employee awareness, not only in Japan but overseas
as well. We will continue internal training and otherefforts to improve employee understanding.

Management System
The Meiji Group has Compliance Regulations as well
as related rules and committees in place, implements
and introduces a whistle-blowing system.
At Meiji Co., Ltd., our approach is based on theidea that risk management and compliance areclosely related to one another. We have set up
a Compliance & Risk Management Committee topromote a variety of activities and programs, so that
we can nurture and foster compliance awareness.
Compliance is the cornerstone of our operations andwe conduct business operations fairly, faithfully andaccordingly.
Meiji Seika Pharma Co., Ltd. has established
the Compliance Program Guidelines and the Meiji
Seika Pharma Code of Practice. As we work inpharmaceutical business, we are closely related
to the health and lives of people. Thus we, all
executives and employees, are required to act inaccordance with high ethical standards.
At KM Biologics Co., Ltd., we are continually
improving our compliance promotion system. We
conduct regular educational programs to raisecompliance awareness among frontline workers.
To detect issues before they happen and solve
problems early, we are working to strengthen our
audit function, ensure independence in auditing,and clarify responsibilities and authority. We willcontinue seeking a stringent compliance system.

Tax Compliance
Regulatory compliance and risk management
are becoming increasingly important as the MeijiGroup becomes more globalized and conducts
more international transactions. In addition, tax
authorities in each country strengthen taxation.
We therefore pay taxes properly complying withTransfer Pricing Guidelines. We formulated the MeijiGroup Tax Policy in March 2019 to comply with the
tax laws and regulations in each country and region
where we conduct business. We communicate thisinformation to relevant departments and the Group
companies, make the information publicly available,
pay appropriate taxes and minimize tax-relatedrisks. Our staff in charge of taxation attend external
training to increase their knowledge about taxation.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

79

Financial and Non-Financial Highlights (11 Years Summary)
Consolidated Balance Sheet
Financial information

For the fiscal year:

Unit

Net sales

Millions of yen

Segment
Segment(Overseas)

At fiscal year-end:

Per share data *4

RatiosMillions of yen
Food
Pharmaceuticals Millions of yen
Millions of yen
Food
Pharmaceuticals Millions of yen

Gross profit
Operating profit
Profit before income taxes
Profit attributable to owners of parent
Capital expenditures *2
Research and development costs
Depreciation *3
Cash flows from operating activities (A)Cash flows from investing activities (B)Cash flows from financing activities
Free cash flows (A+B)
Total assets
Interest-bearing debt
Shareholders’ equity
Profit (EPS)
Net assets (BPS) *5
Cash dividends
Return on Equity (ROE)
Return on Assets (ROA)
Equity ratio
Payout ratio

Millions of yen
Millions of yen
Millions of yen
Millions of yen
Millions of yen
Millions of yen
Millions of yen
Millions of yen
Millions of yen
Millions of yen
Millions of yen
Millions of yen
Millions of yen
Millions of yen

Yen
Yen
Yen
%
%
%
%

FY20101,114,095
988,854
124,202——381,234
28,873
17,925
9,552
40,511
23,41841,34557,995(32,440)(19,570)
25,555716,368
192,810
287,78264.82
1,953.18
40.00
3.3
4.2
40.2
61.7

FY2011
1,109,275
986,319
125,274——
370,774
20,18914,588
6,805
38,32423,82340,87130,597(44,314)
4,861(13,716)
749,985
205,261
291,589
46.19
1,979.12
40.00
2.3
3.0
38.9
86.6

FY2012
1,126,520
1,001,551
127,361——
382,684
25,85925,214
16,646
37,66826,19940,821
50,622(39,504)(9,411)
11,118785,514205,394
313,383112.992,127.28
40.00
5.5
3.8
39.9
35.4

FY2013
1,148,076
1,015,265
135,105
29,097
17,325394,062
36,496
33,687
19,06047,03826,06740,972
63,847(47,293)(18,194)
16,553
779,461
198,376
320,447129.402,175.98
40.00
6.0
5.0
41.1
30.9

—

48.4

52.4

58.2

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—
—
—
—
—
—
—
—
—

—
23,674———
21,652————
22,902———
20,864————22,723———
20,566
—
—
—

—

25.9

25.8

25.6

—

8.7

8.1

7.2

Non-financial information

Scope 1 *6
Scope 2 *6
Scope 3 *7
Overseas Mainland China *8 Scope 1
Scope 2
Scope 1
Asia (excluding
China) *9
Scope 2
Scope 1
North America
and Europe *10
Scope 2
Combined *14
Scope 3
*11
Japan
Water
consumption volume Overseas Mainland China *8
Asia (excluding China) *9
North America and Europe *10
Japan *11
Total water
discharge volume
Overseas Mainland China *8
Asia (excluding China) *9
North America and Europe *10
Energy consumption
Japan *12
volumeJapan *12
Waste Volume
Overseas *14
CO2 emission
volume

Japan

*1
*2
*3
*4
*5
*6

10,000 t-CO2
10,000 t-CO2
10,000 t-CO2
10,000 t-CO2
10,000 t-CO2
10,000 t-CO2
10,000 t-CO2
10,000 t-CO2
10,000 t-CO2
10,000 t-CO2
1,000 m3
1,000 m3
1,000 m3
1,000 m3
1,000 m3
1,000 m3
1,000 m3
1,000 m3
Fuel oilconversion:
10,000 kl
10,000 t
10,000 t

―

―

―

―

U.S. dollar amounts are provided solely for the convenience of readers based on an exchange rate of US$1 = ¥110.71, the exchange rate prevailing on March 31, 2021.
Figures for capital expenditures represent property, plant and equipment and intangible fixed assets based on the consolidated statement of cash flows.
Figures for depreciation represent property, plant and equipment and intangible fixed assets based on the consolidated statement of cash flows.
A 2-for-1 common stock split was issued on October 1, 2015. This value was retro-actively applied.
Net assets per share = (Total net assets – Non-controlling interests) ÷ (Number of shares of common stock issued – Number of treasury shares)
The domestic Meiji Group. Past data has been revised.
The Kumamoto Plant of KM Biologics Co., Ltd. was included in the calculation from FY2018, and all of the company’s sites were included from FY2019.
*7 Category 4 (Upstream transportation and distribution) and Category 9 (Downstream transportation and distribution) have been added and are included in
the calculation for Scope 3 from FY2018.In addition, the calculation for Category 1 was expanded to include the raw materials that make up the majority of what isneeded for production. Note that the Kumamoto Plant of KM Biologics Co., Ltd. was included in the calculation from FY2018, and all of the company’s production
plants were included from FY2019.

80

Financial and Non-Financial Performance

Financial and Non-Financial Performance

FY2014
1,161,152
1,021,806
141,338
29,41823,961
403,386
51,54348,65730,89164,347
26,10541,88586,487(92,822)6,846(6,335)877,367
221,480
370,341209.792,515.26
50.00
8.9
6.5
42.2
23.8

FY2015
1,223,746
1,061,398
164,542
38,353
41,961
445,561
77,781
95,21062,58042,35427,30842,077105,155(9,809)(85,071)
95,346856,115
147,828
408,874
425.062,777.28
90.00
16.1
9.4
47.8
21.2

56.8

55.0

—

—

—

4.1

—

6.1

—

2.6

—
20,148———16,504———FY2016
1,242,480
1,082,115
161,620
38,191
38,731
461,326
88,39589,19260,78650,417
26,16245,872
81,888(44,291)(46,548)
37,597883,895
129,497448,901
413.11
3,064.91
110.00
14.2
10.2
50.8
26.6

FY2017FY20181,240,860
1,254,380
1,073,655
1,056,637
168,466
198,688
43,47447,182
39,485 *13
41,009454,882456,569
94,673
98,38391,07994,586
61,27861,86871,777
71,24326,507
29,182
46,511
43,033
108,775
112,100(64,394)(100,202)(40,121)(13,980)
44,38011,898927,544
1,004,143
119,102116,385
487,310527,310422.15426.61
3,360.70
3,635.79
130.00140.00
13.1
12.2
10.6
10.3
52.5
52.5
30.8
32.8

FY20191,252,706
1,049,559
204,354
48,42243,507
462,523
102,710 *15
97,74767,318 *15
71,109 *15
31,44646,198 *15
114,103（70,811）（30,287）
43,291
998,920 *15
106,764
562,753 *15
464.08 *15
3,879.18 *15
150.00
12.4
10.3
56.3 *15
32.3

FY20201,191,765
999,673
193,664
49,17337,692449,625
106,061
103,183
65,65567,90031,404
48,411
123,683(93,110)(28,293)
30,573
1,067,000
101,775
621,428452.52
4,282.80
160.00
11.1
10.7
58.2
35.4

—
24,375———21,214
—
—
—

23.6
28.7
—
0.5
3.5
1.5
5.3
1.1
0.9
—
24,104———
20,255
—
—
—

23.0
27.4
203.5
0.3
3.0
1.3
5.5
1.3
0.9
—
22,305
1,192
511
74
17,914
—
—
—

22.8
28.2
318.9
0.5
2.5
1.1
5.2
1.1
0.9
—
22,056878
487
62
19,702
696
141
47

22.2
27.9
303.5
0.5
2.2
1.0
4.7
1.1
0.7
21.9
21,979903
459
56
18,415
790
180
53

21.5
25.4
294.9
0.3
2.6
1.0
3.6
1.1
0.8
18.7
20,513845
479
58
17,248
761
162
54

25.3

24.9

24.5

24.0

24.6

26.0

24.8

7.4

7.6

5.4

6.3

2.8 *122.8 *120.4 *12

2.5
0.4

―

―

―

―

―

FY202010,764,747
9,029,661
1,749,298
444,165
340,463
4,061,288
958,011932,015
593,044613,319
283,662
437,281
1,117,182(841,026)(255,563)
276,156
9,637,799
919,300
5,640,633
4.087
38.684
1.445

Unit *1
Thousands of U.S. dollars
Thousands of U.S. dollars
Thousands of U.S. dollars
Thousands of U.S. dollars
Thousands of U.S. dollars
Thousands of U.S. dollars
Thousands of U.S. dollars
Thousands of U.S. dollars
Thousands of U.S. dollars
Thousands of U.S. dollars
Thousands of U.S. dollars
Thousands of U.S. dollars
Thousands of U.S. dollars
Thousands of U.S. dollars
Thousands of U.S. dollars
Thousands of U.S. dollars
Thousands of U.S. dollars
Thousands of U.S. dollars
Thousands of U.S. dollars

U.S. dollars
U.S. dollars
U.S. dollars*8 Five production plants *9 Four production plants *10 Three production plants (four plants in FY2020)*11 Meiji Co., Ltd. and Meiji Seika Pharma Co., Ltd. up until FY2014, and the domestic Meiji Group from FY2015. The Kumamoto Plant of KM Biologics Co., Ltd. wasincluded in the calculation from FY2018, and all of the company’s production plants were included from FY2019. Past data has been revised.
*12 The domestic Meiji Group. The Kumamoto plant for KM Biologics Co., Ltd. was added and included in the calculation from FY2018.
From FY2019, all of the company’s sites were included in the calculation for energy consumption and all of the company’s production plants were included in
the calculation for waste volume. From FY2018, only industrial waste generated from production sites was included in the waste volume.
*13 The standard used for calculating the overseas sales was revised from FY2017.
*14 Twelve production plants in Mainland China, Asia (excluding China), North America and Europe (13 plants in FY2020)*15 In the first quarter of the consolidated fiscal year ended March 31, 2021, we finalized provisional accounting treatment pertaining to a business combination.
Accordingly, major management indicators for the fiscal year ended March 31, 2020 represent amounts reflecting the revisions to the initial allocation of
the acquisition cost resulting from the finalization of provisional accounting treatment.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

81

Non-Financial Performance (Progress on Materiality)
The 13 Main SDGs the Meiji Group Can Address

Materiality related to social issues
New KPIs[] Scope of KPI
Meiji G : the Meiji Group (consolidated)
Meiji HD : Meiji Holdings Co., Ltd.
Meiji
: Meiji Co., Ltd.
MSP
: Meiji Seika Pharma Co., Ltd.
KMB
: KM Biologics Co., Ltd.

Healthier Lives
Health and Nutrition SDGs: 2, 3, 4
Social Issues

KPI
Develop products that contribute tohealthy diets (until FY2020)

Contribute tohealthy diets
Respond toa super-aged society[Meiji, unconsolidated]

Performance
FY2018 FY2019 FY2020

Health-conscious products

47

20

28

Nutritional products with added value

32

45

46

6

2

2

Develop products that contribute to a super-aged society (until FY2020)[Meiji, unconsolidated]

Enroll a total of 500,000 participants into nutrition and healthy diet education
within three years from FY2018 to FY2020 (until FY2020) [Meiji, unconsolidated]

196,000 407,000 504,000
peoplepeoplepeopleIncrease sales of health-conscious products, nutritional products with added value, and products
for a super-aged society by at least 10% in FY2023, compared with FY2020 baseline [Meiji, consolidated (domestic)]
Enroll a total of 700,000 participants into nutrition and healthy diet education within three years
from FY2021 to FY2023 [Meiji, unconsolidated]● Stable supply ofpharmaceuticals

Achieve a volume share of at least 50% in five Key Drugs by FY2023[MSP, consolidated (domestic)]

Countermeasures against
emerging and re-emerging
infectious diseases*

Aim for launch of COVID-19 vaccines by FY2023[MSP, KMB, unconsolidated]* Set as materiality for the 2023 Medium-Term Business Plan

Quality and Safety SDGs: 3, 12
Social Issues

KPI
Obtain third party GFSI certification, which includes Hazard Analysis
and Critical Control Point (HACCP), at all domestic food plants by FY2020
and all global food plants by FY2021*2 [Meiji, consolidated]

Ensuring productquality and safety*1*1 Materiality until FY2020*2 Expanded globally in FY2020*3 In Japan

Performance
FY2018 FY2019 FY2020

50%
*3

87%
*3

Japan:

100%

Overseas:100%

GFSI: Global Food Safety Initiative

Caring for the Earth
Climate Change SDGs: 7, 13
Social Issues
Reduce CO2 emissions

KPI

Performance
FY2018 FY2019 FY2020

Reduce company-wide CO2 emissions (Scope 1, 2) by at least 40% by FY2030(compared to FY2015) [Meiji G, consolidated]−11.9%−18.5%−24.1%

Expand renewable energy usage to make up at least 50% of totalcompany-wide usage by FY2030 [Meiji G, consolidated]

0.2%

2.1%

2.5%

*1

*3

*2

*2

Reduce CO2 emissions (Scope 3 from purchased goods and services, upstream and downstream transportationand distribution, and end of life treatment of sold products) by at least 14% by FY2030 (compared to FY2019)[Meiji G, consolidated]● Eliminate the use of
specified fluorocarbons

Total abolition of CFC-using refrigeration, freezer, and other equipment
at all domestic production sites by FY2030 [Meiji G, consolidated (domestic)]*1 The Meiji Group excluding KM Biologics Co., Ltd.
*2 The emission volume for the base year was 742,000 t-CO2, which includes CO2 emissions from KM Biologics Co., Ltd.
*3 The domestic Meiji Group, excluding KM Biologics Co., Ltd.
*4 Planned replacement with CFC substitutes and natural coolants

82

Financial and Non-Financial Performance*4*4

Base year*4Financial and Non-Financial Performance

Circular Economy SDGs: 12
Social Issues
Reduceenvironmental
impact*1

Performance
FY2018 FY2019 FY2020

KPI
Consolidated domestic recycle rate 97% or above

94.6%

77.7%

Reduce product waste in our domestic food business by 50% by FY2025(compared to FY2016) [Meiji, consolidated (domestic)]−21.9% −25.1%−29.3%

Reduce domestic plastic usage (packaging, etc.) by at least 25% by FY2030(compared to FY2017), and expand usage of bioplastics and recycled plastics*3(until FY2020) [Meiji G, consolidated (domestic)]−8.2% −9.8%

*3

95.6%

[Meiji G, consolidated (domestic)]*2

Consolidated domestic recycle rate 85% or above by FY2023 [Meiji G, consolidated (domestic)]

Reduce domestic plastic usage (packaging, etc.) by at least 25% by FY2030 (compared to FY2017)[Meiji G, consolidated (domestic)]

Ensure 100% effective use of materials used by our logistics division (pallets, crates, and stretch film, etc.)
by FY2030, through reuse and recycling. [Meiji G, consolidated (domestic)]
Expand usage of bioplastics and recycled plastics [Meiji G, consolidated (domestic)]*1 Set as materiality for the 2023 Medium-Term Business Plan
*2 In FY2020, the calculation method for the recycling rate has been changed: thermal recovery is not included in the amount of recycling*3 To be calculated in FY2021

Water SDGs: 6, 14
Social Issues
Securewater resources

Performance
FY2018 FY2019 FY2020

KPI
Reduce company-wide water consumption volume per unit of sales
by at least 20% by FY2030, compared with FY2017 [Meiji G, consolidated]

−1.5%

*

−3.8%

−5.3%

Replenish an amount of water to nature equivalent to 45% the amount used in our products by FY2030[Meiji G, consolidated]* The Meiji Group excluding KM Biologics Co., Ltd.

Biodiversity SDGs: 6, 15
Social Issues● Protection of
local biodiversity

Performance
FY2018 FY2019 FY2020

KPI
Conduct biodiversity activities at all production sites in Japan by FY2020,
and all production sites worldwide by FY2023[Meiji G, consolidated]

62.0%

*

80.8%

*

Japan:

36.2%

Overseas:45.0%

Conduct biodiversity activities at all production sites worldwide by FY2023 [Meiji G, consolidated]* JapanEnhancement of Environmental Management
Social Issues-

KPI
Obtain ISO 14001 Multisite Certification at all domestic production locations by FY2021[Meiji G, consolidated (domestic)]

Meiji Holdings Co., Ltd.｜Integrated Report 2021

83

Non-Financial Performance (Progress on Materiality)

Thriving Communities
Human Resources SDGs: 5, 8, 10
Social Issues
Promote diversity
and inclusion,and provide training
to employees● Employee-friendly
workplaces

KPI
Increase the ratio of female managers to over 10% by FY2026, compared with
the FY2017 result of 2.6% [Meiji HD, Meiji, MSP, KMB, unconsolidated]
Increase the number of female managers (including assistant managers) toat least 420 by FY2026 (approximately triple the number as in FY2017)

Performance
FY2018 FY2019 FY2020

3.1%
171

3.4%
189

3.7%
208

[Meiji HD, Meiji, MSP, KMB, unconsolidated]peoplepeoplepeopleRaise the ratio of employees with disabilities above the statutory employment
quota [Meiji HD, Meiji, MSP, KMB, unconsolidated]

2.29%

2.28%

2.42%

Continue to be recognized by the Nippon Kenko Kaigi as White 500 organizations[Meiji HD, Meiji, MSP, KMB, unconsolidated]

Society SDGs: 8, 10, 17
Social Issues
Respect and promote
human rights

KPI
100% attendance rate at human rights training among new employees andthose promoted to managing positions (until FY2020)[Meiji HD, Meiji, MSP, KMB, unconsolidated]

Performance
FY2018 FY2019 FY2020

100%

100%

100%

All domestic Meiji Group employees to attend a human rights training (including e-learning)at least once annually [Meiji G, consolidated (domestic)]
All overseas Meiji Group employees to attend a human rights training (including e-learning)at least once by FY2023 [Meiji G, consolidated (global)]● Engagementwith stakeholders[Meiji HD]● Promote social
contribution activities

All domestic Meiji Group employees to participate in social contribution activities at least twice annually(at least once each 6-month period) [Meiji G, consolidated (domestic)]

Hold an ESG session for investors, and advisory board meetings at least three times annually

Shared Themes
Sustainable Sourcing SDGs: 8, 12, 15, 17
Social Issues
Procure raw materials
with consideration
toward human rights
and the environment

KPI

Performance
FY2018 FY2019 FY2020

Start conducting a sustainable sourcing survey of suppliers for domestic Group companies by FY2021
Start conducting a sustainable sourcing survey of suppliers for major overseas Group companies by FY2022[Meiji G, consolidated]

Approx.

Sourcing 100% Sustainable Cocoa by FY2026*1 [Meiji, consolidated]--

Use 100% certified palm oil globally by FY2023*1 (until FY2020)

7%

21%

68%

55%

60%

77%

[Meiji, consolidated]40%

Use 100% RSPO-certified palm oil by FY2023 [Meiji, consolidated]
Use paper raw materials with 100% forest certified (FSC®, PEFC) and/or
recycled paper by FY2020 (until FY2020) [Meiji G, consolidated (domestic)]*2

Use 100% environmentally-friendly paper by FY2023 [Meiji G, consolidated]
Conduct MDA, an activity to provide management support to dairy farmers, at least 400 times per year,
and also at least 2,150 times on a cumulative basis by FY2023 [Meiji, consolidated (domestic)]*1 Newly set in FY2020*2 The domestic Meiji Group, excluding KM Biologics Co., Ltd.
RSPO: Roundtable on Sustainable Palm Oil
FSC®: Forest Stewardship Council®
PEFC: Programme for the Endorsement of Forest Certification Schemes
MDA: Meiji Dairy Advisory

84

Financial and Non-Financial Performance

Financial and Non-Financial Performance

Independent Practitioner’s Assurance of Energy Consumption Volume,
CO2 Emission Volume & Water Consumption Volume
In order to improve the reliability of the data, Meiji Holdings Co., Ltd. obtained the independent practitioner’s assurance for thedomestic energy consumption volume, the domestic CO2 emission volume (Scope 1, Scope 2 and Scope 3 category 1) andthe domestic water consumption volume for FY2020 indicated on p.52 and 54 in the Japanese version of this report by Deloitte
Tohmatsu Sustainability Co., Ltd. We will work hard to improve the reliability of all environmental data.

Scope of domestic energy consumption volume, domestic CO2 emission volume (Scope 1 and 2) anddomestic water consumption volume
Meiji Holdings Co., Ltd., Meiji Co., Ltd. and group companies (Shikoku Meiji Co., Ltd., Tokai Meiji Co., Ltd., Gunma Meiji Co., Ltd., Tochigi Meiji Milk Products Co., Ltd.,
Meiji Oils and Fats Co., Ltd., Chiba Meiji Milk Products Co., Ltd., Donan Shokuhin Co., Ltd., Zao Shokuhin Kaisha, Ltd., Meiji Sangyo Co., Ltd., Meiji Chewing Gum Co.,
Ltd., Tokai Nuts Co., Ltd., Okayamaken Shokuhin Co., Ltd., Nihon Kanzume, Co., Ltd., Meiji Feed Co., Ltd., Asahi Broiler Co., Ltd., Okinawa Meiji Milk Products Co., Ltd.,
Meiji Logitech Co., Ltd.), Meiji Seika Pharma Co., Ltd. and group companies (OHKURA Pharmaceutical Co., Ltd.), and KM Biologics Co., Ltd.
Note that the energy consumption volume and CO2 emission volume for Meiji Logitech Co., Ltd. only include the fuel used in company-owned delivery vehicles/trucks.

Scope of domestic CO2 emission volume (Scope 3 category 1)

This scope includes the main raw materials and packaging materials (paper, plastic, cardboard, steel, aluminum and glass bottles) that will be introduced into thedomestic production locations for Meiji Co., Ltd. and the group companies (Shikoku Meiji Co., Ltd., Tokai Meiji Co., Ltd., Gunma Meiji Co., Ltd., Tochigi Meiji Milk
Products Co., Ltd., Meiji Oils and Fats Co., Ltd., Chiba Meiji Milk Products Co., Ltd., Donan Shokuhin Co., Ltd., Meiji Sangyo Co., Ltd., Meiji Chewing Gum Co., Ltd., Tokai
Nuts Co., Ltd., Nihon Kanzume, Co., Ltd., Okinawa Meiji Milk Products Co., Ltd.), Meiji Seika Pharma Co., Ltd. and the group companies (OHKURA Pharmaceutical Co.,
Ltd.), as well as KM Biologics Co., Ltd.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

85

Consolidated Financial Statements

Consolidated Balance Sheet
Meiji Holdings Co., Ltd. / As of March 31, 2021

Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

ASSETS
Current assets:
Cash and deposits (Note 11)40,328¥ 37,446

Notes and accounts receivable-trade¥177,730

179,931$

1,605,368

364,275

Merchandise and finished goods

1,060,836

117,445

111,028Work in process

4,054

3,729

36,626

Raw materials and supplies

60,48858,542546,370

Others28,35327,454

256,104

Allowance for doubtful accounts(2,347)(1,247)(21,205)

426,053

416,885

3,848,376

Total current assets
Non-current assets:
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net (Notes 11, 16)
Machinery, equipment and vehicles

355,394353,843

3,210,137(177,630)
177,764(172,887)
180,956(1,604,463)
1,605,673

550,069

539,437

4,968,563

Accumulated depreciation(390,691)(384,661)(3,528,962)

Machinery, equipment and vehicles, net (Notes 11, 16)

159,378

154,775

1,439,601

Tools, furniture and fixtures

60,90958,049550,170

Accumulated depreciation(46,435)(43,478)(419,437)

Tools, furniture and fixtures, net (Note 16)

14,473

14,570130,733

67,63969,363610,963

Land (Note 11)
Leased assets
Accumulated depreciation

2,781

3,046

25,121(2,067)(2,166)(18,671)

Leased assets, net

714

880

6,450

Construction in progress

35,02523,645316,367

Total property, plants and equipment

454,994

444,191

4,109,790

Intangible assets:
Goodwill

42

57

382

Others15,95014,240144,074

Total intangible assets

15,992

14,297

144,457

Investment securities (Note 14)
Retirement benefit asset

125,494

84,5981,133,547

23,25815,500210,083

Deferred tax assets

13,135

16,341

118,648

Others

8,133

7,171

73,468

(63)

(66)

(572)

169,959

123,545

1,535,174

Investments and other assets:

Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets
See accompanying notes to consolidated financial statements.

86

Financial and Non-Financial Performance

640,946

582,034

5,789,422¥ 1,067,000¥ 998,920$ 9,637,799

Financial and Non-Financial Performance

Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

LIABILITIESCurrent liabilities:
Notes and accounts payable-trade¥ 104,974¥ 112,317$ 948,190

Short-term borrowings (Notes 10, 11)

17,25030,874

155,816

Accrued expenses

46,84045,457423,092

Income taxes payable

22,421

12,164

202,522

Provision for bonuses

11,94812,090107,924

Provision for sales returns

424

256

3,830

Provision for sales rebates

1,886

1,908

17,038Others47,266

41,451

426,941

Total current liabilities

253,011

256,520

2,285,356

30,00054,52520,00055,890270,978492,505

Non-current liabilities:
Bonds payable
Long-term borrowings (Notes 10, 11)Deferred tax liabilities
Retirement benefit liability
Provision for retirement benefits for directors
OthersTotal non-current liabilities
Total liabilities

10,3438,399

93,432

55,19855,410498,590

96

121

867

4,466

5,004

40,339154,630

144,826

1,396,714

407,642401,347

3,682,071

270,978

NET ASSETS
Shareholders’ equity:
Share capital

30,00030,000Capital surplus

100,693

100,245909,528

Retained earnings

496,766

453,729

4,487,094

Treasury shares(30,177)(30,288)(272,578)

Total shareholders’ equity

597,282553,687

5,395,022

33,962

26,968306,771

37

53

343
(36,370)

Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment(4,026)(3,279)Remeasurements of defined benefit plans(5,828)(14,677)(52,645)

Accumulated other comprehensive income

24,145

9,066

218,097

Non-controlling interests

37,93034,819342,607

Total net assets

659,358

597,573

5,955,727¥ 1,067,000¥ 998,920$ 9,637,799

Total liabilities and net assets
See accompanying notes to consolidated financial statements.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

87Consolidated Financial Statements

Consolidated Statement of Income
Meiji Holdings Co., Ltd. / For the year ended March 31, 2021

Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

¥ 1,191,765¥ 1,252,706$ 10,764,747

Cost of sales (Note 21)742,139

790,183

6,703,458

Gross profit

449,625

462,523

4,061,288

Selling, general and administrative expenses (Notes 20, 21)

343,563

359,8123,103,277

Operating profit

106,061

102,710958,011Net sales

Non-operating income:Interest income

290

229

2,627

Dividend income

1,286

1,326

11,617

Foreign exchange gains

734

—

6,637

1,578

—

14,257

710

299

6,417

Others

2,335

3,086

21,093

Total non-operating income

6,936

4,942

62,651

622

717

5,620

Share of profit of entities accounted for using equity method
Subsidy income

Non-operating expenses:
Interest expenses
Foreign exchange losses

—

546

—

Share of loss of entities accounted for using equity method

—

793

—

Compensation expenses

370

—

3,345

Others

1,828

2,269

16,515

Total non-operating expenses

2,821

4,326

25,481

110,176

103,326

995,181

533

1,142

4,821

346
928
371

886
—
—

3,131
8,388
3,357

Ordinary profit
Extraordinary income:Gain on sales of tangible and intangible assets (Note 22)
Gain on sales of investment securities
Gain on sales of shares of subsidiaries and associates
Subsidy income
Others

—

1

—

2,180

2,030

19,698Loss on disposal of tangible and intangible assets (Note 23)
Impairment loss (Note 24)

2,981

2,549

26,932

2,762

2,390

24,950

Provision of allowance for doubtful accounts

1,078

1,096

9,745

Others

2,351

1,570

21,237

Total extraordinary losses

9,174

7,607

82,865

Profit before income taxes

103,183

97,749932,015

Income taxes-current

35,30028,784

318,852

Income taxes-deferred(2,197)(791)(19,846)

Income taxes-total

33,102

27,992

299,006

Profit70,08069,756

633,008

Profit attributable to non-controlling interests

4,424

2,438

Total extraordinary income
Extraordinary losses:

Profit attributable to owners of parent
See accompanying notes to consolidated financial statements.

88

Financial and Non-Financial Performance¥

65,655¥67,31839,963$593,044

Financial and Non-Financial Performance

Consolidated Statement of Comprehensive Income
Meiji Holdings Co., Ltd. / For the year ended March 31, 2021

Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

¥ 70,080¥ 69,756$ 633,008

7,037(6,320)63,570

(15)

51

(135)

Foreign currency translation adjustment(1,219)(1,461)(11,017)

Remeasurements of defined benefit plans, net of tax

9,016(2,608)81,445404
15,224(53)(10,392)

3,649
137,512¥ 85,304¥ 59,364$ 770,521¥ 80,735¥ 56,656$ 729,251

4,568

2,707

41,269ProfitOther comprehensive income:
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

Share of other comprehensive income of entities accounted for using
equity method
Total other comprehensive income (Note 25)
Comprehensive income(Profit attributable to)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests
See accompanying notes to consolidated financial statements.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

89Consolidated Financial Statements

Consolidated Statement of Changes in Equity
Meiji Holdings Co., Ltd. / For the year ended March 31, 2021

Millions of yen
Shareholders’ equity
Number ofcommon shares(Thousands)

Share capital

Capital surplus

Retained earnings

Treasury shares

Total shareholders’equityBalance at March 31, 2019
Cumulative effects of changes inaccounting policies

152,683¥ 30,000¥ 100,061¥ 407,943¥ (30,422)¥ 507,582

Restated balance

152,683

30,000100,061

407,442		(30,422)

507,081

(500)

(500)

Changes during period:(21,032)

Dividends of surplus
Profit attributable to owners ofparent(21,032)

67,31867,318Purchase of treasury shares

145

Disposal of treasury shares
Purchase of shares of consolidated
subsidiaries
Change in ownership interest ofparent due to transactions with
non-controlling interests
Net changes in items other thanshareholders’ equity

(33)

(33)

168

313

0

0

38

38

Total Changes during period

—

—

184

46,286134

46,605

Balance at March 31, 2020

152,683¥ 30,000¥ 100,245¥ 453,729¥ (30,288)¥ 553,687

Changes during period:(22,488)

Dividends of surplus
Profit attributable to owners ofparent(22,488)

65,65565,655Purchase of treasury shares

141

Disposal of treasury shares

(25)

(25)

136

277

(130)

Change in scope of consolidation
Change in ownership interest ofparent due to transactions with
non-controlling interests
Net changes in items other thanshareholders’ equity

(130)

306

306

Total Changes during period

—

—

447

43,037110

43,595

Balance at March 31, 2021

152,683¥ 30,000¥ 100,693¥ 496,766¥ (30,177)¥ 597,282

Thousands of U.S. dollars
Shareholders’ equity

Balance at March 31, 2020

Number ofcommon shares(Thousands)

Share capital

Capital surplus

Retained earnings

Treasury shares

Total shareholders’equity152,683$ 270,978$ 905,482$ 4,098,357$ (273,580)$ 5,001,237

Changes during period:(203,126)

Dividends of surplus
Profit attributable to owners ofparent593,044

Purchase of treasury shares

1,275

Disposal of treasury shares

593,044
(229)

(229)

1,231

2,506

(1,181)

Change in scope of consolidation
Change in ownership interest ofparent due to transactions with
non-controlling interests
Net changes in items other thanshareholders’ equity

90(203,126)(1,181)

2,770

2,770

Total Changes during period

—

—

4,045

388,737

1,001

393,784

Balance at March 31, 2021

152,683$ 270,978$ 909,528$ 4,487,094$ (272,578)$ 5,395,022

Financial and Non-Financial Performance

Financial and Non-Financial Performance

Millions of yen
Accumulated other comprehensive income
Valuation difference
on available-for-sale Deferred gains or
securities
losses on hedges

Foreign currencytranslation
adjustment

Remeasurements Total accumulatedof defined benefit other comprehensive
incomeplans

Non-controllinginterests

Total net assets¥ 33,261¥ 3¥ (1,751)¥ (11,785)¥ 19,728¥ 33,320¥ 560,630

		
33,2613

		(1,751)

		(11,785)

19,72833,320560,129(500)(21,032)
67,318
(33)
313
0
38
(6,292)50(1,528)(2,892)(10,661)

1,499(9,162)(6,292)50(1,528)(2,892)(10,661)

1,499

37,443¥ 26,968¥ 53¥ (3,279)¥ (14,677)¥ 9,066¥ 34,819¥ 597,573(22,488)
65,655
(25)
277
(130)
306

6,993
6,993

(15)
(15)

(747)
(747)

8,849
8,849

15,07915,079

3,110
3,110

18,18961,785¥ 33,962¥ 37¥ (4,026)¥ (5,828)¥ 24,145¥ 37,930¥ 659,358

Non-controllinginterests

Total net assets$ 314,513$ 5,397,642

Thousands of U.S. dollars
Accumulated other comprehensive income
Valuation difference
on available-for-sale Deferred gains or
securities
losses on hedges$ 243,599$ 487

Foreign currencytranslation
adjustment$ (29,619)

Remeasurements Total accumulatedof defined benefit other comprehensive
incomeplans$ (132,576)$ 81,890(203,126)
593,044(229)
2,506(1,181)
2,770
63,171(144)(6,750)79,930136,207

28,09363,171(144)(6,750)79,930136,207

28,093

164,300
558,085$ 306,771$ 343$ (36,370)$ (52,645)$ 218,097$ 342,607$ 5,955,727

Meiji Holdings Co., Ltd.｜Integrated Report 2021

91Consolidated Financial Statements

Consolidated Statement of Cash Flows
Meiji Holdings Co., Ltd. / For the year ended March 31, 2021

Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

Cash flows from operating activities¥ 103,183¥ 97,749$ 932,015

Depreciation

Profit before income taxes

48,411

46,198437,281

Impairment loss

2,762

2,390

24,950

15

33

139

2,958

2,546

26,726

212

150

1,915

1,098

1,061

9,919

(18)

298

(169)

Increase (decrease) in retirement benefit liability

5,647

2,915

51,013

Interest and dividend income(1,577)(1,556)(14,245)

622

717

5,620

Amortization of goodwill
Loss on retirement of property, plant and equipment
Loss (gain) on valuation of investment securities
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses

Interest expenses
Share of loss (profit) of entities accounted for using equity
method

(1,578)793(14,257)

Loss (gain) on sales of property, plant and equipment(413)(1,006)(3,732)

Loss (gain) on sales of shares of subsidiaries and associates

(592)

—

(5,348)Loss (gain) on sales of investment securities

(256)

(878)

(2,318)Decrease (increase) in trade receivables

2,769

20,70125,012

Decrease (increase) in inventories(9,556)(8,685)(86,316)

Increase (decrease) in trade payables(7,502)(11,323)(67,766)497(2,554)

4,491

146,683

149,550

1,324,931

2,119

1,958

19,142

—

1,432

—

(627)

(726)

(5,664)

Others, net
SubtotalInterest and dividends received
Proceeds from insurance income
Interest paid
Income taxes paid

(24,492)(38,110)(221,227)

Net cash provided by (used in) operating activities

123,683

114,103

1,117,182

Purchase of property, plant and equipment(63,029)(68,217)(569,318)

Purchase of intangible assets
Proceeds from sales of property, plant and equipment andintangible assets(4,871)(2,912)(44,001)

2,645

2,161

23,893

Cash flows from investing activities

Subsidies received

2,674

—

24,153(32,821)(2,473)(296,464)

Proceeds from sales of investment securities
Purchase of investments in capital of subsidiaries and associates
resulting in change in scope of consolidation
Proceeds from sales of shares of subsidiaries resulting in change
in scope of consolidation

1,296

1,004

11,714

—

(656)

—

2,164

39

19,549Others, net(1,168)243(10,553)¥ (93,110)¥ (70,811)$ (841,026)

Purchase of investment securities

Net cash provided by (used in) investing activities

92

Financial and Non-Financial Performance

Financial and Non-Financial Performance

Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

¥ (10,319)¥ (4,487)$ (93,216)

Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings

3,267

358

29,515

Repayments of long-term borrowings(8,219)(4,851)(74,241)

Proceeds from issuance of bonds

9,957

—
268

89,945236(22,446)(20,987)(202,748)

(607)
(162)

(154)
(434)

(5,486)(1,471)(255,563)

Decrease (increase) in treasury shares
Dividends paid
Dividends paid to non-controlling interests
Others, net
Net cash provided by (used in) financing activities

2,138(28,293)(30,287)

Effect of exchange rate change on cash and cash equivalents

(378)

(375)

(3,419)Net increase (decrease) in cash and cash equivalents

1,901

12,62817,173

37,110¥ 39,011

24,481¥ 37,110

335,205$ 352,378

Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period (Note 19)
See accompanying notes to consolidated financial statements.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

93

Notes to Consolidated Financial Statements
Meiji Holdings Co., Ltd.

1

Basis of Presenting Consolidated
Financial Statements

The accompanying consolidated financial statements of
Meiji Holdings Co., Ltd. (the “Company”) and its consolidated
subsidiaries have been prepared from the consolidated
financial statements in Japanese filed with the Kanto Local
Finance Bureau as required by the Financial Instruments andExchange Law. The statements conform to generally accepted
accounting principles and practices in Japan (“Japan
GAAP”), which are different in certain respects regarding theapplication and disclosure requirements of International
Financial Reporting Standards (“IFRS”). The consolidated
financial statements are not intended to present the financial
position, results of operations or cash flows in accordancewith accounting principles and practices generally acceptedin countries and jurisdictions other than Japan.
In preparing the accompanying consolidated financial
statements, certain reclassifications have been made topresent the information in a form familiar to readers outside
Japan. The accounts and the financial statements of theCompany and its subsidiaries are maintained in Japaneseyen. For the convenience of the reader, the accompanying
consolidated financial statements are also presented in
U.S. dollars by converting Japanese yen amounts at theexchange rate of ¥110.71 to US$1, the amount prevailing on
March 31, 2021. This translation should not be construed as arepresentation that amounts shown could be converted into
U.S. dollars at such rate.
Amounts less than one million yen and one thousand U.S.
dollars have been rounded down. The total Japanese yen
and U.S. dollar amounts shown in the financial statements
and notes do not necessarily agree with the sum of theindividual amounts.
Certain amounts in prior years’ financial statements
have been reclassified to conform to the current year’s
presentation.
In the first quarter of the consolidated fiscal year ended
March 31, 2021, the Company also finalized provisional
accounting treatment pertaining to a business combination.
Accordingly, consolidated financial statements and related
notes for the fiscal year ended March 31, 2020 represent
amounts reflecting the revisions to the initial allocationof the acquisition cost resulting from the finalization ofprovisional accounting treatment.

2

Significant Accounting Policiesa) Consolidation Policy

The accompanying consolidated financial statements
include the accounts of the Company and significant
subsidiaries over which the Company has power of control
through majority voting rights or existence of certain
conditions evidencing control by the Company. Investments
in affiliates over which the Company has the ability to
exercise significant influence over operating and financial
policies of the investees are accounted for by the equity
method. The consolidated financial statements consistof the Company and its 57 consolidated subsidiaries. All
significant intercompany transactions and accounts havebeen eliminated. Accounts of subsidiaries whose fiscal yearends are December 31 have been included using financial
information at that date with appropriate adjustment where
necessary. Investments in seven affiliates are accounted forusing equity method. The difference between the investment
amount and the net assets of acquired consolidated
subsidiaries and affiliates is allocated to identifiable assets
based on fair value at the date of acquisition. The unallocatedportion is recognized as goodwill and amortized over a
period of five years on a straight-line basis.

b) Translation of Foreign Currency

Monetary receivables and payables denominated in foreign
currencies are translated into Japanese yen at the exchange
rate at the consolidated balance sheet date. The difference
arising from the translation is accounted for as a gain or loss.
The assets and liabilities of overseas subsidiaries aretranslated into Japanese yen at the year-end rate, whereas
the income and expenses of overseas subsidiaries aretranslated into Japanese yen using the average exchange
rate during the fiscal year. The differences arising from thetranslation are included in foreign currency translation
adjustment and non-controlling interests in the net assets
section of the consolidated balance sheet.

c) Investment Securities

Investment securities are valued using the following
standards and methods.
Available-for-sale securities
Securities that have market prices:
By the market value method based on market prices atthe consolidated fiscal year-end.
Unrealized holding gains or losses are included directlyin net assets, and cost of securities sold is calculatedusing the moving-average method.
Securities that have no market prices:
Primarily by the cost method based on the movingaverage method.

d) Derivatives

Derivatives are valued by the market value method.

94

Financial and Non-Financial Performance

Financial and Non-Financial Performancee) Inventoriesn) Provision for Retirement Benefits for Directorsf) Property, Plant and Equipment(excluding leased assets)o) Retirement Benefits

Inventories are stated principally at the lower of cost or net
realizable value, cost being determined principally by theweighted average method.

The straight-line method is primarily used for depreciation.
The estimated useful lives of the assets are as follows:
Buildings and structures
2–60 years
Machinery, equipment and vehicles
2–18 years
Tools, furniture and fixtures
2–20 yearsg) Intangible Assets(excluding leased assets)

Amortization of intangible assets is calculated primarily
by the straight-line method. Amortization of internal-use
software is calculated by the straight-line method based on
the estimated useful lives of five years.

h) Leased Assets

Leased assets relating to finance lease transactions that do
not transfer ownership
For the depreciation of leased assets, the straight-line
method is applied based on the lease term as the useful lifeof the asset and the residual value of zero.

i) Investments in Real Estate

The straight-line method is primarily used for depreciation.

j) Allowance for Doubtful Accounts

In order to prepare for losses on doubtful accounts suchas notes and accounts receivable, the Company and its
consolidated subsidiaries primarily record allowances basedon actual loss experienced as a general reserve, and amounts
estimated to be unrecoverable for individual receivables forthe companies in financial difficulty.

k) Provision for Bonuses

In order to prepare for payment of bonuses to employees
existing on the consolidated balance sheet date, the amount
expected to be paid for the subject period is recorded.

l) Provision for Sales Returns

In order to prepare for losses on the returns of goods andproducts sold at some of the Company’s consolidated
subsidiaries, the actual amount of the expected future losses
on returns in the current consolidated fiscal year is recorded
as a provision (under Provision for Sales Return).

The Company and its consolidated subsidiaries provide forretirement benefits for directors and corporate auditors
based on the amount required to be paid at the end of the
fiscal year under the Company bylaws.

(1) Method used to attribute expected benefit payments toperiods
In calculating retirement benefit obligation, the benefit
formula basis method is used to attribute expected benefit
payments to the period extending up to the end of the fiscal
year.
(2) Method of amortizing actuarial gains or losses, priorservice costs
Actuarial gains or losses are amortized from the consolidated
fiscal year following the year in which the gain or loss is
incurred by the straight-line method for a certain numberof years (7–18 years) not longer than employees’ averageremaining years of service.
Prior service costs are amortized from the time those costs
are accrued by the straight-line method for a certain numberof years (principally 4–15 years) within employees’ averageremaining years of service.
(3) Accounting treatment for unrecognized actuarial gains
or losses, unrecognized prior service costs
Unrecognized actuarial gains or losses and unrecognizedprior service costs are adjusted for tax effect and thenrecorded in remeasurements of defined benefit plans underaccumulated other comprehensive income in the net assets
section of the consolidated balance sheet.

p) Cash and Cash Equivalents
Cash and cash equivalents in the consolidated statement of cash
flows are composed of cash on hand, bank deposits available forwithdrawal on demand and short-term investments with original
maturity of three months or less, which have immaterial risk offluctuations in value.

q) Derivative Financial Instruments(1) Method of hedge accounting

The deferral hedge accounting method is applied underwhich the unrealized gain or loss is deferred as a componentof net assets when certain criteria are met.

For forward foreign exchange contracts, etc., the allocation
method is applied when the relevant criteria are met. Forinterest rate and currency swaps, the integrated method (theshortcut method, the allocation method) is applied when therelevant criteria are met.

m) Provision for Sales Rebates

At some of the Company’s consolidated subsidiaries, inorder to provide for sales discounts on goods and products
sold, an allowance is recorded at the estimated amount inconsideration of the discount ratio.

Meiji Holdings Co., Ltd.｜Integrated Report 2021

95

Notes to Consolidated Financial Statements(2) Hedge instruments and hedged items
Hedge instruments:

Hedged items:

Forward foreignexchange contracts andother instruments

Trade payables and receivables
denominated in foreign currencies
and forecasted transactions
denominated in foreign currencies

Interest rate andcurrency swap
contracts

Interest on borrowings andborrowings(3) Hedge policy
Some of the Company’s consolidated subsidiaries use
forward foreign exchange contracts and other instruments
to mitigate the currency exchange rate risk associated with
import and export transactions conducted in the normal
course of business. The Company uses interest rate andcurrency swap transactions to reduce the interest rate andforeign exchange rate fluctuation risk involved in procuring
funds. The Company and its consolidated subsidiaries do notuse derivatives for speculative purposes.
(4) Method of evaluating the effectiveness of the hedge
As forward foreign exchange contracts, etc., are used as ahedge against trade payables and receivables denominatedin foreign currencies to fix the yen-denominated future
cash flows, the allocation method is applied, and therequirements of assessing the effectiveness of the hedge ona periodic basis are satisfied. For forecasted transactions
denominated in foreign currencies, suitability for hedging isinvestigated with consideration of whether the transaction ishighly likely to be executed.
The assessment of the hedge effectiveness is omitted when
the interest rate and currency swaps meet the integrated
method (the shortcut method, the allocation method) witha high correlation between the hedged items and hedging
instruments.

r) Other Important Matters for the Preparation
and Presentation of Consolidated Financial
Statements

Consumption taxes and local consumption taxes areaccounted for using the tax exclusion method.
Bond issuance cost is recognized in expenses as incurred.

3

Significant Accounting Estimatesa) Valuation of investment in an affiliate(1) Amounts recorded in the consolidated financial
statements for the current fiscal year
Investment securities ¥29,387 million (valued as of March 31,
2021 using the equity method)

96

Financial and Non-Financial Performance

The Food segment of the Company aims to strengthen its
value chain from raw milk procurement through productionand establish a basis for sustainable growth in dairy
production business in China. As described in “6. Additional
Information”, the Company acquired 25% of the shares in
AustAsia Investment Holdings Pte LTD. (“AustAsia”), which
operates raw milk production business in China, for ¥28,540
million and has applied the equity method accounting fromthe current fiscal year.
The amounts in excess of the Company’s shares in the net
assets of the AustAsia as of the end of the current fiscal year
are as follows:
Customer-related assets ¥10,700 million;
Goodwill ¥1,929 million(2) Additional information that will help the users of theconsolidated financial statements[1] Calculation method for amounts disclosed in the
consolidated financial statements for the current fiscal
year
As the method for measuring the fair value of customerrelated assets at the time of the share purchase, theCompany used the income approach and discounted
estimated future cash flows, which is calculated by thebusiness plan based revenue expected to be generated in the
future from existing customers after taking certain attrition
rates into consideration.
Goodwill is calculated as a remainder after deducting thecustomer-related assets from the difference between theinvested amount and the fair value of the corresponding net
assets.
Customer-related assets and goodwill will be amortizedon a straight-line basis over a period of 10 years, as the
cumulative earnings before interest and taxes (EBIT)
calculated based on the business plan, exceeds the amountof customer-related assets and goodwill after this period.
[2] Key assumptions used for calculating amounts recordedin the consolidated financial statements for the current
fiscal year
In the business plan used for determining the fair valueof customer-related assets and the number of years
for amortization, the Company determined increase in
consumption of raw milk resulting from the Westernizationof Chinese people’s lifestyles, the execution of farmdevelopment plan in response to increase in sales volume
and rise in raw milk prices as key assumptions.
In estimating the future cash flow for the measurement of
the fair value, the Company estimated a sales growth rate of
2.6% while using a sales attrition rate of 2% in considerationof customer defection. As for the discount rate used for
discounting the future cash flow to the present value, theCompany used a discount rate of 11%, which is calculated
based on weighted average cost of capital.

Financial and Non-Financial Performance[3] Impact on the consolidated financial statements for thefollowing fiscal year
If the actual results of farm development, the actual sales
volume and the price of raw milk deviate significantly fromthe business plan, the Company may identify this as anindication of impairment and recognize impairment losses byreconsidering the future business plan of AustAsia.

b) Impairment of non-current assets of equitymethod affiliate(1) Amounts recorded in the consolidated financial
statements for the current fiscal year
The investment securities of ¥125,494 million recordedon the consolidated balance sheet for the current fiscal
year include an equity-method investment balance of¥4,346 million for DM Bio Limited (“DM Bio”), in which
the Pharmaceutical segment of the Company has a 49%
of shares. Major assets held by DM Bio are non-current
assets related to the production and development ofbiopharmaceuticals, and the balance of non-current assets
in DM Bio is ¥11,704 million as of the end of the current fiscal
year.
(2) Additional information that will help the users of theconsolidated financial statements[1] Calculation method for amounts recorded in the
consolidated financial statements for the current fiscal
year
Indication of impairment for the non-current assets held
by DM Bio has been identified due to continuous operating
losses recorded. However, impairment loss was notrecognized in the current fiscal year, as the recoverable
amount exceeds the book value.
Note that DM Bio measures the recoverable amount of
non-current assets based on their value in use and calculates
the value in use by discounting their future cash flow to thepresent value.
[2] Key assumptions used for calculating amounts recordedin the consolidated financial statements for the current
fiscal year
Key assumptions used in measuring value in use are thediscount rate, the growth rate and sales period for major
development items. The figures used in these assumptions
are based on the business plan that reflects management
decision by the management of DM Bio.
[3] Impact on the consolidated financial statements for thefollowing fiscal year
The Company deems that the key assumptions used indetermining whether to recognize impairment loss arereasonable.
However, if the actual results of clinical trials for thedevelopment of biopharmaceuticals differ from the
projection, or the discount rate and the growth rate deviatesignificantly from the projected rates, the Company may
record impairment loss on non-current assets of DM Bio.

4

Change in Method of Presentationa) Application of “Accounting Standard forDisclosure of Accounting Estimates”

The Company applies the “Accounting Standard forDisclosure of Accounting Estimates” (ASBJ Statement No.
31, March 31, 2020), starting from the consolidated financial
statements as of the end of the current consolidated fiscal
year, and provides notes to significant accounting estimatesin the consolidated financial statements.
However, in accordance with the transitional treatment
stipulated in the proviso to paragraph 11 of the AccountingStandard, the Company does not include descriptions
regarding the consolidated fiscal year ended March 31, 2020.

b) Consolidated statement of income“Subsidy income,” which was included in “Others” under“Non-operating income” presented in the consolidated fiscal
year ended March 31, 2020, has been reported independently
in the current consolidated fiscal year because the monetaryamounts have become more significant. Also, “Insurance
claim income” and “Royalty income,” which were reported
independently under “Non-operating income” presented
in the consolidated fiscal year ended March 31, 2020, havebeen included in “Others” under “Non-operating income” inthe current consolidated fiscal year because the monetaryamounts have become less significant. To reflect thesechanges in method of presentation, amounts disclosed forthe consolidated fiscal year ended March 31, 2020 have been
reclassified.
As a result, ¥1,238 million, ¥285 million and ¥1,861 million,
which were presented in “Insurance claim income,” “Royalty
income” and “Others,” respectively, under “Non-operating
income” in the consolidated statement of income for the
consolidated fiscal year ended March 31, 2020, have been
reclassified as ¥299 million in “Subsidy income” and ¥3,086
million in “Others.”

5

Accounting Standards, etc.,
Not Yet Adopted• “Accounting Standard for Revenue Recognition”(ASBJ Statement No. 29, March 31, 2020).
• “Implementation Guidance on Accounting Standard for
Revenue Recognition”(ASBJ Guidance No. 30, March 26, 2021).
• “Implementation Guidance on Disclosures about Fair Valueof Financial Instruments”(ASBJ Guidance No. 19, March 31, 2020).

Meiji Holdings Co., Ltd.｜Integrated Report 2021

97a) Overview

The International Accounting Standards Board (IASB) andthe Financial Accounting Standards Board (FASB) worked
together to develop comprehensive accounting standards
for revenue recognition. The “Revenue from Contracts with
Customers” was officially issued in May 2014 (IFRS 15 in the
IASB and Topic 606 in the FASB). IFRS 15 became effectivefrom the fiscal year beginning on or after January 1, 2018 andTopic 606 became effective from the fiscal year beginning
after December 15, 2017. Due to these standards taking
effect, the ASBJ developed a comprehensive accounting
standard for revenue recognition and officially issued it inconjunction with the implementation guidance.
The basic policy behind the ASBJ developing the
Accounting Standard for Revenue Recognition was toestablish a standard, initially taking in the general principleof IFRS 15 in terms of comparability among financial
statements. Also, when there is any practical expedient thatshould be considered in the practices that has previously
taken place in Japan, an alternative guidance will be added
insofar as not to impair comparability.

b) Effective Date

The Company plans to adopt the accounting standard andrelated implementation guidance from the beginning of the
fiscal year ending March 31, 2022.

c) Impact from Applying New Accounting Standards,
etc.

98

a) Overview

The International Accounting Standards Board (IASB) andthe Financial Accounting Standards Board (FASB) haveestablished detailed guidance for fair value measurement
which are more or less the same in content (IFRS 13 “Fair
Value Measurement” in the International Financial ReportingStandards (IFRS), and “Fair Value Measurement” (AccountingStandards Codification Topic 820) for US GAAP). Given this,the Accounting Standards Board of Japan has endeavored
to ensure Japanese GAAP on guidance and disclosure of thefair value of financial products are largely consistent withinternational accounting standards, and has published the“Accounting Standard for Fair Value Measurement,” etc.
The basic policy behind the ASBJ developing the
Accounting Standard for Fair Value Measurement was tobasically incorporate all the provisions of IFRS 13. Thiswas based on the perspective of improving comparabilityof financial statements between companies in Japan andoverseas, by using a uniform method of measurement. In
addition, considering past practices in Japan, other guidance
for individual items is to be added, to the extent it does
not significantly impair comparability between financial
statements.

b) Effective Date

The Company plans to adopt the accounting standards andrelated implementation guidance from the beginning of the
fiscal year ending March 31, 2022.

At the moment, impact from adopting “Accounting Standard
for Revenue Recognition,” etc., to the consolidated financial
statements is being assessed. In applying the “AccountingStandard for Revenue Recognition,” etc., the Company will
adopt a method under which the cumulative effects arisingfrom the retroactive application of the new accounting policy
to before the beginning of the following consolidated fiscal
year will be added to or subtracted from retained earnings at
the beginning of the following consolidated fiscal year.

c) Impact from Applying New Accounting Standards,
etc.

• “Accounting Standard for Fair Value Measurement”(ASBJ Statement No. 30, July 4, 2019).
• “Accounting Standard for Measurement of Inventories”(ASBJ Statement No. 9, July 4, 2019).
• “Accounting Standard for Financial Instruments”(ASBJ Statement No. 10, July 4, 2019).
• “Implementation Guidance on Accounting Standard for Fair
Value Measurement”(ASBJ Guidance No. 31, July 4, 2019).
• “Implementation Guidance on Disclosures about Fair Valueof Financial Instruments”(ASBJ Guidance No. 19, March 31, 2020).

On April 15, 2020, the Company, reached an agreement with
Japfa LTD., a shareholder of AustAsia, to acquire a portion of
the shares in AustAsia. Subsequently in conjunction with theCompany’s acquisition of 25% of the shares in AustAsia on
July 3, 2020, AustAsia became an equity-method affiliate of
the Company.

Financial and Non-Financial Performance

The impact on the consolidated financial statementsfrom adopting the “Accounting Standard for Fair Value
Measurement,” etc. has not been determined.

6

Additional Information

Overview of the acquisition of AustAsia sharesFinancial and Non-Financial Performance

The following is an overview of the investee company
AustAsia.
Trade name (Name of theinvestee company)

AustAsia Investment Holdings
Pte LTD.

Primary business domain

Raw milk production, etc.
in China

Application date of equity
methodJuly 1, 2020

Percentage of voting
rights after shareacquisition

25%

Other

Upon business realignment
conducted in April 2020, AustAsia
became a company mainly
operating raw milk production
business in Chinaa) Period for which the financial results of the
AustAsia are included in the consolidated
statement of income for the current fiscal year

The balance sheet date of AustAsia is December 31, which
differs by three months from the consolidated balance sheet
date.
As the equity method applied to AustAsia from July 1,
2020, the financial results of the AustAsia for the period
from July 1, 2020 to December 31, 2020 are included in the
consolidated statement of income for the current fiscal year.

b) Outline of the accounting treatment applied(1) Acquisition cost of the investee company and breakdownof the cost
Consideration for
acquisitionCash¥ 27,805 million

Expenses directly
related to acquisition

Advisory fees,
etc.

¥

Acquisition cost

734 million¥ 28,540 million(2) Amount of recorded goodwill included in the investment
securities, reason for the recognition, amortization
method and amortization period[1] Amount of recorded goodwill included in the investment
securities¥2,114 million
In the second quarter of the fiscal year, the Company
used provisional accounting treatment with respect tothe allocation of the acquisition cost based on reasonable
information available at the time of the preparation of
the quarterly consolidated financial statements. This
provisional accounting treatment was finalized in the third
quarter of the fiscal year.

[2] Reason for the recognition
Goodwill was recognized due to the future excess earning
power expected to be generated from the expansion of
their business.
[3] Amortization method and amortization period
Straight-line method over 10 years(3) Amount, type of asset and amortization period of theinvestment securities allocated to intangible assets
recorded other than goodwill
Type

AmountAmortization
periodCustomer-related
assets¥11,725 million

10 years

7

Notes Regarding Lease Transactions

1) Finance lease transactions (lessee side)

Finance lease transactions that do not transfer ownership(1) Content of leased assets
Property, plant and equipment
Mainly sales equipment (tools, furniture and fixtures),production facilities in manufacturing plants (machinery,equipment and vehicles) and testing and research equipment(machinery, tools, furniture and fixtures).
(2) Method of depreciation of leased assets
As described in “2. Significant Accounting Policies,h) Leased Assets.”

8

Notes Regarding Financial Instruments

1) Overview of financial instruments(1) Policy for financial instruments
The Meiji Group (the “Group”) raises necessary funds(primarily through bank loans and bond issuance) basedon its capital investment and working capital plans,
mainly to engage in the business of manufacturing andselling dairy products, confectioneries, food products andpharmaceuticals. The Company manages temporary surplus
funds through highly secured financial instruments andraises short-term operating funds by issuing commercial
paper, etc. Derivatives are used to mitigate the risks
described below. Consequently, the Company does not enter
into any speculative deals.
(2) Content and risks of financial instruments
Notes and accounts receivable-trade that are receivables
are exposed to the credit risk of customers. Also, foreign
currency-denominated trade receivables arise fromoperating businesses globally; these are exposed to currency
fluctuation risk, but some consolidated subsidiaries hedge
such risk using forward foreign exchange contracts, etc.
Investment securities are mainly shares held in relation tobusiness with partner companies, capital alliances, etc.;
these are exposed to fluctuation risk of market prices.
Meiji Holdings Co., Ltd.｜Integrated Report 2021

99

Notes to Consolidated Financial Statements
Notes and accounts payable-trade that are payables arealmost all payable within one year. Also, some of these areforeign currency-denominated, resulting from the importof raw materials; these are exposed to currency fluctuation
risk, but some consolidated subsidiaries use forward foreignexchange contracts, etc., to hedge such risk.
Loans, commercial paper and bonds are mainly used
to raise funds for capital investment and working capital.
Their redemption dates are at maximum seven years
after the balance sheet date. Some of these have forward
foreign exchange contracts and variable interest rates
and currency, thus they are exposed to interest rate andcurrency fluctuation risk. However, the Group uses derivativetransactions (interest rate and currency swap transactions) tohedge such risk.
Derivative transactions are transactions such as forward
foreign exchange contracts, etc., used to hedge currency
fluctuation risk related to foreign currency-denominatedtrade receivables and payables, and interest rate andcurrency swap transactions used to hedge interest rate
fluctuation risk related to variable interest rate and currency
payments on borrowings.
For more information about hedge instruments andhedge items, hedge policy or the method of evaluating theeffectiveness of the hedge for hedge accounting, refer toaforementioned “q) Derivative Financial Instruments” under
section “2. Significant Accounting Policies”.
(3) Risk management for financial instruments[1] Management of credit risk (risk such as default of contract
by customers)
In accordance with receivables management rules, etc.,
each management department in each business unit of theGroup periodically monitors the status of major customers,
and due dates and balances are managed for each customer.
The Group makes efforts for early detection and reductionof collection concerns due to deterioration in financial
conditions, etc., of customers.
Derivative transactions are only executed with highly rated
financial institutions to reduce counterparty risk.
The maximum credit risk for the consolidated closing dateof the current fiscal year is expressed by the values in thebalance sheet for financial assets exposed to credit risk.
[2] Management of market risk (the risk of fluctuation in
exchange rates, interest rates, etc.)
For foreign currency-denominated trade receivables andpayables, some consolidated subsidiaries use forward
foreign exchange contracts, etc., to hedge the currency
fluctuation risk identified by currency and by month.
Further, the Company uses interest rate and currency
swap transactions to curb the interest rate and currency
fluctuation risk related to interest payments on loans.
For investment securities, the Company regularly reevaluates the fair value and the financial situation of theissuer (business partner), and continues to review theholdings taking into consideration the relationship with thebusiness partner.

100 Financial and Non-Financial Performance

At some consolidated subsidiaries, each related
department engages in derivative transactions based onderivative transaction management rules, which establish
the transaction authority and amount limitations.
[3] Management of liquidity risk regarding fund procurement(the risk of becoming unable to make payment on thepayment date)
Based on reports from each business unit, the Group
creates and updates cash flow plans in a timely manner, andmanages liquidity risk.
(4) Supplemental explanation of matters related to the fairvalue, etc., of financial instruments
Fair value of financial instruments includes prices based onmarket prices, and prices rationally calculated in cases where
there are no market prices. Variable factors are incorporated
into the calculation of such prices, therefore, different
assumptions could result in different prices.
For the contract amounts, etc., related to derivativetransactions in the “Derivative transactions” notes, theamounts do not show the market risk related to thederivative transactions.

Financial and Non-Financial Performance2) Matters related to the fair value, etc., of financial instruments(1) The carrying value on the consolidated balance sheet, fair value and their difference as of March 31, 2021 and 2020, arepresented in the following tables. The tables do not include financial instruments for which it is extremely difficult todetermine the fair value (see Note 2).
As of March 31, 2021

Millions of yen

Thousands of U.S. dollars

Carrying value

Fair value

Difference

Carrying value(1) Cash and deposits(2) Notes and accounts
receivable-trade(3) Securities:
Available-for-sale securities(4) Investment securities:
Available-for-sale securities¥ 40,328

Fair value

Difference¥ 40,328¥ —$ 364,275$ 364,275$

177,730

177,730—

1,605,368

1,605,368

—

—

—

—

—

—

—

74,192

74,192—

670,151

670,151—

Total assets(5) Notes and accounts
payable-trade292,251

292,251—

2,639,795

2,639,795—

104,974

104,974—

948,190

948,190—(6) Short-term borrowings

12,875

12,875—116,298

116,298——(7) Accrued expenses

46,84046,840—423,092

423,092—(8) Bonds payable

30,00030,03030

270,978

271,249270(9) Long-term borrowings
Total liabilities
Derivative transactions *(10) Derivative transactions forwhich hedge accounting is
not applied(11) Derivative transactions forwhich hedge accounting isappliedTotal derivative transactions

58,90059,143243

532,023534,221

2,198

253,590

253,863273

2,290,583

2,293,052

2,469

—

—

—

—

—

—

57
¥

57

¥

57

—

57

¥ —

516
$

516

516
$

516

—
$

—

* Net receivables and payables arising as a result of derivative transactions are stated in net amounts.
(Note 1) Method of calculating the fair value of financial instruments and matters related to securities(1) Cash and deposits, (2) Notes and accounts receivable-trade and (3) Securities
These are valued at the carrying values as they are to be settled within a short period and their fair values are almost equal to the carrying
values.
(4) Investment securities
Equity securities are valued at the price quoted in the stock exchange.
Debt securities are calculated based on the present value, which is the total of the principal and interest discounted by an interest rate thattakes into account the credit risk.
In addition, refer to the “Securities” notes for matters related to securities based on their holding purpose.
(5) Notes and accounts payable-trade, (6) Short-term borrowings and (7) Accrued expenses
These are valued at the carrying values as they are to be settled within a short period and their fair values are almost equal to the carrying
values.
(8) Bonds payable
The fair value of bonds payable is calculated based on the market price.
(9) Long-term borrowings
Long-term borrowings with variable interest rates reflect the market interest rates over short periods. As a result, since the fair value can comeclose to the same as the carrying values, that fair value is based on the corresponding carrying value.
Long-term borrowings with a fixed rate are calculated based on the total of the principal and interest discounted by the interest rate that isassumed if new borrowings were made with similar terms.
In addition, the current portion of long-term borrowings is included in these long-term borrowings.
(10) Derivative transactions for which hedge accounting is not applied, (11) Derivative transactions for which hedge accounting is appliedSee 26. Derivative transactions.
(Note 2) Convertible bonds (carrying value on the consolidated balance sheet: ¥2,175 million ($19,650 thousand)) and unlisted stock (carrying valueon the consolidated balance sheet: ¥51,302 million ($463,395 thousand)) are not included in “Assets: (3) Securities and (4) Investment securities”
as their market prices are not available and it is extremely difficult to determine the fair value.

Meiji Holdings Co., Ltd.｜Integrated Report 2021 101

Notes to Consolidated Financial Statements
As of March 31, 2020

Millions of yen
Carrying value

Fair value(1) Cash and deposits(2) Notes and accounts
receivable-trade(3) Securities:
Available-for-sale securities(4) Investment securities:
Available-for-sale securities¥ 37,446¥ 37,446

Difference¥ —179,931

179,931

—

1,343

1,343

—

64,21464,214—

Total assets(5) Notes and accounts
payable-trade282,935

282,935—

112,317112,317—(6) Short-term borrowings

22,911

22,911—(7) Accrued expenses

45,45745,457—(8) Bonds payable

20,00019,984(16)(9) Long-term borrowings
Total liabilities
Derivative transactions *(10) Derivative transactions forwhich hedge accounting is
not applied(11) Derivative transactions forwhich hedge accounting isappliedTotal derivative transactions¥

63,853

63,978124

264,539

264,648

108

45

45

—

78

78

—

124

¥ —

124

¥

* Net receivables and payables arising as a result of derivative transactions are stated in net
amounts.
(Note) Convertible bonds (carrying value on the consolidated balance sheet: ¥1,096 million) andunlisted stock (carrying value on the consolidated balance sheet: ¥20,384 million) are notincluded in “Assets: (3) Securities and (4) Investment securities” as their market prices are
not available and it is extremely difficult to determine the fair value.

(2) Scheduled redemption of monetary claims and securities with maturity dates after the balance sheet date
As of March 31, 2021

Millions of yen
More than one
year up to fiveyears

Withinone yearMore than five
years up to ten
years

More than ten
years

Cash and deposits¥ 40,328———

Notes and accounts receivable-trade177,730

—

—

—

Total

¥ 218,059———

More than one
year up to fiveyears

More than five
years up to ten
years

More than ten
years

—

—

—

As of March 31, 2021

Thousands of U.S. dollars
Withinone year

Cash and deposits$ 364,275

Notes and accounts receivable-trade

1,605,368

—

—

—

Total

$ 1,969,644

—

—

—

More than five
years up to ten
years

More than ten
years

As of March 31, 2020

Millions of yen
Withinone year

Cash and deposits
Notes and accounts receivable-trade

More than one
year up to fiveyears

¥ 37,446———

179,931———

Securities
Negotiable deposits
Total

102 Financial and Non-Financial Performance

1,343

—

—

—

¥ 218,721———

Financial and Non-Financial Performance(3) Scheduled repayment of bonds payable, borrowings and other interest-bearing debt after the balance sheet date
As of March 31, 2021

Millions of yen
More than one
year up to twoyears

Withinone year

Short-term borrowings¥ 12,875

Bonds payable
Long-term borrowings
Total

¥

—

Bonds payable
Long-term borrowings
Total

9

—

¥

—

¥

—

10,000

—

—

4,375

14,2994,060

21,812

12,913

1,438¥ 17,250¥ 24,299¥ 14,060¥ 31,812¥ 12,913¥ 1,438

More than four
years up to fiveyears

More than five
years

Thousands of U.S. dollars
More than one
year up to twoyears$ 116,298—$—

More than two More than three
years up to three years up to four
years
years

$

—

90,326$—90,326$—90,326$———

39,518129,160

36,680197,027

116,646

12,990$ 155,816$ 219,486$ 127,006$ 287,353$ 116,646$ 12,990

Withinone yearMore than one
year up to two
years

More than four
years up to fiveyears

More than fiveyears

As of March 31, 2020

Short-term borrowings¥

10,000Bonds payable
Total

—

More than fiveyears

10,000Withinone yearLong-term borrowings¥

More than four
years up to five
years

—

As of March 31, 2021

Short-term borrowings

More than two More than three
years up to three years up to four
years
years

Millions of yen¥ 22,911¥—

More than two More than three
years up to three years up to four
years
years

¥

—

¥

—

¥

—

¥

—

—

—

10,000—10,000

—

7,963

4,367

14,295

4,059

21,812

11,355¥ 30,874¥ 4,367¥ 24,295¥ 4,059¥ 31,812¥ 11,355

Notes regarding Investment Securities

Information regarding securities held by the Company and its consolidated subsidiaries is as follows:

1) Held-to-maturity securities
As of March 31, 2021
None
As of March 31, 2020
None

Meiji Holdings Co., Ltd.｜Integrated Report 2021 103

Notes to Consolidated Financial Statements
2) Available-for-sale securities with market prices
As of March 31, 2021

Millions of yen
Carrying value

Acquisition cost

¥ 72,909¥ 24,011¥ 48,898

Securities whose carrying value
exceeds their acquisition cost:
StocksOthersSubtotal
Securities whose acquisition costexceeds their carrying value:
StocksSubtotal
Total

Thousands of U.S. dollars
Unrealized
gain (loss)

Carrying value

Acquisition cost

Unrealized
gain (loss)$ 658,565$ 216,888$ 441,677

413

408

5

3,737

3,685

51

73,323

24,41948,903

662,302220,573441,729

868

1,034

(165)

7,848

9,344

(1,495)

868

1,034

(165)

7,848

9,344

(1,495)¥ 74,192¥ 25,454¥ 48,738$ 670,151$ 229,917$ 440,233(Note) Among available-for-sale securities, unlisted stocks (carrying value on the consolidated balance sheet: ¥2,050 million ($18,519 thousand)) andconvertible bonds (carrying value on the consolidated balance sheet: ¥2,175 million ($19,650 thousand)) are not included as available-for-salesecurities in the table above as their market prices are not available and it is extremely difficult to determine their fair values.

As of March 31, 2020

Millions of yen
Carrying value

Acquisition cost

Unrealized
gain (loss)¥ 60,033¥ 20,841¥ 39,191

4,180

4,779

(599)

Securities whose carrying value
exceeds their acquisition cost:
StocksSecurities whose acquisition costexceeds their carrying value:
StocksOthers

1,343

1,343

—

Subtotal

5,523

6,122

(599)

¥ 65,557¥ 26,964¥ 38,592

Total(Note) Among available-for-sale securities, unlisted stocks (carrying value on the consolidatedbalance sheet: ¥2,144 million) and convertible bonds (carrying value on the consolidatedbalance sheet: ¥1,096 million) are not included as available-for-sale securities in the table
above as their market prices are not available and it is extremely difficult to determine
their fair values.

3) Available-for-sale securities sold during the fiscal years ended March 31, 2021 and 2020
Thousands of
U.S. dollars

Millions of yen

2021
Sales amounts

2020

2021

¥ 1,296¥ 1,010$ 11,711

Total gains on sales

346

886

3,131

Total losses on sales

90

8

813

4) Securities that were subject to impairment during the fiscal years ended March 31, 2021 and 2020

Impairment loss recorded in the fiscal year ended March 31, 2021, was ¥212 million (available-for-sale securities: ¥212 million($1,915 thousand)).
Impairment loss recorded in the fiscal year ended March 31, 2020, was ¥150 million (available-for-sale securities: ¥150 million).
Impairment is taken for all securities when the year-end market value has declined by 50% or more below the acquisition cost.
For securities with the year-end market value that has declined by 30%–50% below the acquisition cost, impairment is taken at
an amount necessary in consideration of the potential for recovery and other factors.

104 Financial and Non-Financial Performance

Financial and Non-Financial Performance10

Short-term Borrowings and Long-term Borrowings

As of March 31, 2021 and 2020, short-term borrowings and long-term borrowings are as follows:

1) Short-term borrowings

Weighted-averageinterest rate

Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

Short-term borrowings

1.13%¥ 12,875¥ 22,911

Current portion of long-term borrowings

0.80%

4,375

7,963

39,518¥ 17,250¥ 30,874$ 155,816

Total$ 116,298

2) Long-term borrowings
Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

Unsecured bonds due 2024, 0.22%¥ 10,000¥ 10,000$ 90,326

Unsecured bonds due 2023, 0.12%

10,00010,00090,326

Unsecured bonds due 2023, 0.001%
Borrowings from domestic banks, insurance companies,
government agencies and others

10,000—90,32658,90063,853532,023

88,90083,853803,002

Subtotal
Current portion of long-term borrowings
Total(4,375)(7,963)(39,518)¥ 84,525¥ 75,890$ 763,483

As of March 31, 2021, the aggregate annual maturities of long-term borrowings are as follows:
Millions of yen

Thousands of
U.S. dollars

2021

2021

Fiscal year ended March 31

More than one year up to two years¥ 24,299$ 219,486

More than two years up to three years

14,060127,006

More than three years up to four years

31,812

287,353

More than four years up to five years

12,913

116,646More than five years
Total

1,438
¥ 84,525

12,990$ 763,483

11

Pledged Assets and Secured Liabilities

A summary of assets pledged as collateral for liabilities as of March 31, 2021 and 2020, is as follows:
Thousands of
U.S. dollars

Millions of yen

2021
Cash and deposits

2020

2021

¥ 146

¥ 146

$ 1,324

1,351

1,427

12,207

Machinery, equipment and vehicles

951

1,222

8,591

Land

49

—

446

¥ 2,498¥ 2,797$ 22,568

Buildings and structures

Total

Note that cash and deposits are pledged as collateral in order to guarantee business transactions.

Meiji Holdings Co., Ltd.｜Integrated Report 2021 105

Notes to Consolidated Financial Statements
A summary of secured liabilities as of March 31, 2021 and 2020, is as follows:
Thousands of
U.S. dollars

Millions of yen

Long-term borrowings(including the current portion of long-term borrowings)

12

2021

2020

¥ 15,653

2021¥ 17,201$ 141,393

Deferred Tax Assets and Liabilities

1) The significant components of deferred tax assets and liabilities as of March 31, 2021 and 2020,are as follows:
Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

Deferred tax assets:
Retirement benefit liability¥ 19,799¥ 20,029$ 178,841

Accrued enterprise tax and others

1,448

881

13,086

Accrued expenses

2,966

2,721

26,792

Investment securities

1,155

1,020

10,433

Provision for bonuses

3,654

3,690

33,010Depreciation

4,469

5,104

40,370

Impairment loss

1,507

1,400

13,617

Unrealized gain

824

1,268

7,450

Losses carried forward *

3,694

3,793

33,367

Others

9,217

8,296

83,253

48,737

48,207440,225

Valuation allowance for losses carried forward *(3,396)(3,131)(30,680)

Valuation allowance for deductible temporary differences(4,969)(3,948)(44,886)

Subtotal deferred tax assets

Subtotal valuation allowance(8,366)(7,079)(75,567)

Total deferred tax assets

40,371

41,127364,658

Advanced depreciation reserve for fixed assets(7,077)(7,662)(63,929)

Valuation difference on available-for-sale securities(14,667)(11,569)(132,484)

Retirement benefit asset(7,839)(5,439)(70,814)

Valuation difference due to purchase of investments in subsidiaries(3,675)(2,947)(33,198)

Adjustment account for tax liabilities(2,276)(3,234)(20,564)

Others(2,042)(2,332)(18,450)

		
(37,579)		
(33,185)		
(339,442)

Deferred tax liabilities:

Total deferred tax liabilities
Net deferred tax assets

106 Financial and Non-Financial Performance

¥

2,791

¥ 7,941$

25,215Financial and Non-Financial Performance* Schedule of carryforward periods for tax losses carried forward and corresponding deferred tax assets as of March 31, 2021.
Millions of yen
Withinone yearMore than one
year up to two
years

More than two
years up to
three years

More than
three years up
to four years

More than four
years up to fiveyears

More than five
years

Total

Losses carried forward (a)

¥96

¥123

¥91

¥68

¥1,213¥2,100¥3,694

Valuation allowance

69

118

64

68

1,194

1,880

3,396

Deferred tax assets

27

5

26

—

18

219

297

(a) Losses carried forward are the total amount after multiplying by the statutory tax rate.
Thousands of U.S. dollars
Withinone yearMore than one
year up to two
years

More than two
years up to
three years

More than
three years up
to four years

More than four
years up to fiveyears

More than five
years

Total

Losses carried forward (a)$874$1,118$823$616$10,959$18,974$33,367

Valuation allowance

628

1,072

581

616

10,792

16,98930,680

Deferred tax assets

245

46

242

—

166

1,985

2,686

(a) Losses carried forward are the total amount after multiplying by the statutory tax rate.

2) An analysis of the significant differences between the statutory tax rate and the Company’s effective tax
rate after the adoption of tax-effect accounting for the fiscal years ended March 31, 2021 and 2020, is asfollows:
Statutory tax rate

2021

2020

30.6%

30.6%

Entertainment and other permanently non-deductible expenses

0.6

0.7

Dividend and other permanently non-taxable income

(0.0)

(0.1)

Per capital inhabitant’s tax

0.3

0.4

Tax credit for experimentation and research expenses

(1.8)

(1.9)

Increase (decrease) in valuation allowance

1.2

0.7

Amortization of goodwill, etc.

0.0

0.0

Consolidation adjustments for loss (gain) on sales of shares of subsidiaries and affiliates

0.6

(2.2)

Others0.6

0.4

Effective tax rate

32.1%

28.6%

13

Retirement and Severance Benefits

Outline of the retirement benefit plans adopted by the GroupThe Group adopts employees’ retirement benefit plans, consisting of lump-sum severance payment plans based on retirement
benefits rules, defined benefit plans, defined contribution pension plans and employees’ pension funds. There are also cases inwhich additional retirement benefits are paid when employees leave the Group before retirement age.
Some consolidated subsidiaries have established retirement benefit trusts, and some consolidated subsidiaries have joined
the Smaller Enterprise Retirement Allowance Mutual Aid system.

Meiji Holdings Co., Ltd.｜Integrated Report 2021 107

Notes to Consolidated Financial Statements
Defined benefit plans
1) Reconciliation of the beginning and ending balances of retirement benefit obligations
Thousands of
U.S. dollars

Millions of yen

Beginning balance of retirement benefit obligations

2021

2020

2021

¥ 139,152¥ 140,519$ 1,256,905

Service cost

5,987

6,138

54,082

Interest cost

747

767

6,754

Actuarial gains or losses

352

1,530

3,181

Retirement benefits paid

(7,497)(7,695)(67,725)

Prior service costs incurred during fiscal year—

(1,195)—Decrease due to exclusion from consolidation

(832)

(897)

(7,519)OthersEnding balance of retirement benefit obligations

62

(14)

565

¥ 137,971¥ 139,152$ 1,246,243(Note) In regard to the multi-employer defined benefit pension plan, the amount of retirement benefit obligation has not been included in the
aforementioned data because of the difficulty in reasonably calculating the amount of plan assets corresponding to the Group’s contributions.

2) Reconciliation of the beginning and ending balances of plan assets
Thousands of
U.S. dollars

Millions of yen

2021

2020

Beginning balance of plan assets¥ 99,242¥ 106,963$ 896,416

Expected return on plan assets

2,294

2,395

20,724

Actuarial gains or losses

8,145(6,166)73,572Contributions from employer

1,712

1,686

15,464Retirement benefits paid

(5,245)(5,193)(47,381)

Decrease due to exclusion from consolidation

—

(411)

—

(117)

(31)

(1,058)¥ 106,030¥ 99,242$ 957,736

OthersEnding balance of plan assets

2021(Note) The multi-employer defined benefit pension plan is not included in plan assets.

3) Reconciliation of the ending balances of retirement benefit obligations and plan assets with the net defined
benefit liability and net defined benefit asset recorded on the consolidated balance sheet
Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

Retirement benefit obligations of funded plans¥ 132,645¥ 133,158$ 1,198,130

Plan assets(106,030)(99,242)(957,736)

26,61433,915

240,393Retirement benefit obligations of non-funded plans
Net amount of liability and asset recorded on the consolidatedbalance sheet

5,326

5,993

48,113

31,94039,909288,507

Retirement benefit liability

55,19855,410498,590

Retirement benefit asset
Net amount of liability and asset recorded on the consolidatedbalance sheet(23,258)(15,500)

210,083¥ 31,940¥ 39,909$ 288,507

108 Financial and Non-Financial Performance

Financial and Non-Financial Performance4) Components of retirement benefit costThousands of
U.S. dollars

Millions of yen

2021

2020

2021

Service cost

¥ 5,987¥ 6,138

Interest cost

747

767

6,754

Expected return on plan assets(2,294)(2,395)(20,724)

Amortization of actuarial gains or losses

5,232

2,194

47,258

(72)

39

(652)

(7)
¥ 9,592(9)¥ 6,733(70)$ 86,648

Amortization of prior service cost
OthersRetirement benefit cost related to defined benefit plans$ 54,082(Note) Includes cost calculated using the simplified method and excludes employees’ contributions to the corporate pension funds.

5) Remeasurements of defined benefit plans recorded in the consolidated statement of comprehensive
income (before tax effect)

The breakdown of items recorded in remeasurements of defined benefit plans in other comprehensive income (before tax effect)
is as follows:
Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

Amortization of actuarial gains or losses¥ 13,059¥ (5,425)$ 117,965

Amortization of prior service cost
Total

(72)
¥ 12,987

1,262¥ (4,162)(652)$ 117,312

6) Remeasurements of defined benefit plans recorded in the consolidated balance sheet

The breakdown of items recorded in remeasurements of defined benefit plans in accumulated other comprehensive income(before tax effect) is as follows:
Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

Unrecognized actuarial gains or losses¥ 8,865¥ 21,925$ 80,075

Unrecognized prior service cost
Total

(707)
¥ 8,158(779)¥ 21,145(6,387)$ 73,688

7) Plan Assets(1) Major categories of plan assets as a percentage of total plan assets are as follows:
2021

2020

Bonds

35%

39%

Stocks15

15

Alternatives (Note 1)

36

37

Cash and deposits

6

4

Others

8

5

100%

100%

Total

(Note 1) “Alternatives” includes multi-asset management, hedge funds, and investment in real estate and other investments.
(Note 2) The total amount of plan assets includes the retirement benefit trust for corporate pension funds and the lump-sum severance payment plan
representing 8% in the current consolidated accounting period and 9% in the previous consolidated accounting period.

Meiji Holdings Co., Ltd.｜Integrated Report 2021 109

Notes to Consolidated Financial Statements(2) Method of determining long-term expected rate of return on plan assets
To determine the long-term expected rate of return on plan assets, reference was made to the current and expected future
allocations of plan assets and to the current and expected future long-term rate of returns on the various assets that make up theplan assets.

8) Actuarial assumptions

Actuarial assumptions are as follows:
2021

2020

Discount rate

0.2–0.9%

0.2–0.9%

Expected future salary increase rate

Principally 1.4%

Principally 1.4%

Long-term expected rate of return on assets

Principally 2.5%

Principally 2.5%

Defined contribution plans

The amount of required contribution to defined contribution plans for the consolidated subsidiaries is ¥1,213 million ($10,960
thousand) in the current consolidated accounting period and ¥1,226 million in the previous consolidated accounting period.

14

Unconsolidated Subsidiaries and Affiliates

As of March 31, 2021 and 2020, investment securities of unconsolidated subsidiaries and affiliates is as follows:
Thousands of
U.S. dollars

Millions of yen

2021
Investment securities (stock)

15

2020

¥ 49,252

2021¥ 18,239$ 444,876

Contingent Liabilities

As of March 31, 2021 and 2020, contingent liabilities are as follows:

1) Guaranteed obligations

The Group is contingently liable as guarantor of loans from financial institutions to the following unconsolidated subsidiaries andemployees:
Thousands of
U.S. dollars

Millions of yen

2021
Sendai Feed Co., Ltd.
Makiba Feed Co., Ltd.

¥

2020
51

1,038

¥

2021
64
1,158

$

467
9,382

Meiji India Pvt. Ltd

—

24

—

DM Bio Limited

958

874

8,657

31
¥ 2,08047¥ 2,168282$ 18,790

Employees
Total

110 Financial and Non-Financial Performance

Financial and Non-Financial Performance

Debt for the following bonds have been transferred in accordance with a bond trust-type debt assumption agreement concluded
with a bank. As a result, the transfer obligations related to these bonds are counterbalanced through the payment amountassociated with the agreement. However, the Company’s bond redemption obligations to bond holders will remain until thebonds have been redeemed.
Thousands of
U.S. dollars

Millions of yen

2021
6th Series of Unsecured Straight Bond

2020
¥—

2021

¥ 15,000$—2) Notes receivable discounted and endorsed
Thousands of U.S.
dollars

Millions of yen

2021
Notes receivable-trade discounted
Notes receivable-trade endorsed

16

2020
¥—
19

2021
¥ 9
52

$ —
180

Reduced Entry

The following amounts were deducted from the acquisition costs of property, plant and equipment due to the granting of
national subsidies, etc.
Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

Buildings and structures

¥ 194

¥ —

$ 1,754

Machinery, equipment and vehicles

269

177

2,438

Tools, furniture and fixtures
Total

61
¥ 525

—
¥ 177

552
$ 4,745

17

Commitment Line Agreements

The Company enters into commitment line agreements with six financial institutions for the purpose of securing a flexible
measure for raising funds and improving capital efficiency.
The unused portion of the commitment line based on these agreements as of March 31, 2021 and 2020, is as follows:
Thousands of
U.S. dollars

Millions of yen

Maximum loan amount
Used portion of the commitment line
Balance2021¥20,000—¥20,000

2020¥20,000—¥20,0002021$ 180,652—$ 180,652

Meiji Holdings Co., Ltd.｜Integrated Report 2021 111

Notes to Consolidated Financial Statements
18

Consolidated Statement of Changes in Equity

1) Matters related to types and total numbers of shares issued and treasury stock
Number of shares
as of March 31, 2020
(Thousands)

Types of shares

Shares issued:
Common stock
Treasury stock:
Common stock (Notes 1, 2)

2021
Increase(Thousands)

Decrease(Thousands)

Number of shares
as of March 31, 2021
(Thousands)

152,683——

152,683

7,613

4

33

7,584

(Note 1) The treasury common stock increased by 4 thousand shares due to an increase in the purchase of 3 thousand shares that are less than one unit
and free-of-charge acquisition of 1 thousand restricted shares.
(Note 2) The treasury common stock decreased by 33 thousand shares due to the disposal of 33 thousand treasury stock used for restricted stockcompensation and decreased by 0 thousand shares due to the sales of shares that were less than one unit.

Number of shares
as of March 31, 2019
(Thousands)

Types of shares

Shares issued:
Common stock
Treasury stock:
Common stock (Notes 1, 2)

2020
Increase(Thousands)

Decrease(Thousands)

Number of shares
as of March 31, 2020
(Thousands)

152,683——

152,683

7,650

4

41

7,613

(Note 1) The treasury common stock increased by 4 thousand shares due to an increase in the purchase of shares that are less than one unit.
(Note 2) The treasury common stock decreased by 41 thousand shares due to the disposal of 40 thousand treasury stock used for restricted stockcompensation and decreased by 0 thousand shares due to the sales of shares that were less than one unit.

2) Matters related to dividends(1) Cash dividends paid

2021
Resolution

Board of Directors’ meeting
held on May 22, 2020
Board of Directors’ meeting
held on November 10, 2020

Types of shares

Commonstock
Commonstock

Total amount of dividends
Millions of Thousands ofyen
U.S. dollars

Dividends per share
U.S.
Yen
dollars¥11,605$104,828¥80.00$0.72

10,882

98,297

75.00

0.67

Cut-off date

Effective date

March 31,2020
September 30,
2020

June 10,2020
December 8,
2020

Cut-off date

Effective date

March 31,2019
September 30,
2019

June 6,2019
December 6,
2019

2020
Resolution

Board of Directors’ meeting
held on May 13, 2019
Board of Directors’ meeting
held on November 8, 2019112 Financial and Non-Financial Performance

Types of shares

Commonstock
Commonstock

Total amount of dividends

Dividends per share

Millions of yen

Yen¥10,877¥75.00

10,15575.00

Financial and Non-Financial Performance(2) Dividends with the cut-off date in the fiscal year ended March 31, 2021, and with the effective date in the fiscal year ending
March 31, 2022
2021
Resolution

Types ofsharesBoard of Directors’ meeting
held on May 18, 2021

Commonstock

Total amount of dividends
Millions
Thousands ofof yenU.S. dollars¥12,333$111,402

Dividends per share
U.S.
Yen
dollarsCut-off date

Effective date

¥85.00March 31,2021

June 7,2021

Yen

Cut-off date

Effective date

¥80.00March 31,2020

June 10,2020

Source ofdividends

Retainedearnings

$0.76

2020
Total amount of dividends
Resolution

Types ofsharesBoard of Directors’ meeting
held on May 22, 2020

Commonstock

Dividends per share

Millions of yen

Source ofdividends¥11,605

Retainedearnings

3) Shareholders’ equity

The Corporation Law of Japan provides that an amount equal to 10% of the amount to be distributed as distributions of capitalsurplus (other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserveand the legal reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of the common stock
account. Such distributions can be made at any time by resolution of the shareholders or by the Board of Directors if certain
conditions are met, but neither the capital reserve nor the legal reserve is available for distributions.

19

Supplemental Cash Flow Information

The following table represents a reconciliation of cash and cash equivalents as of March 31, 2021 and 2020:
Thousands of
U.S. dollars

Millions of yen

Cash and deposits
Time deposits with maturities of more than three months
Securities with maturities up to three months
Cash and cash equivalents

20

2021

2020

¥ 40,328(1,317)—¥ 39,011¥ 37,446(1,679)1,343¥ 37,110

2021$ 364,275(11,897)—$ 352,378

Selling, General and Administrative Expenses

The major elements of selling, general and administrative expenses during the fiscal years ended March 31, 2021 and 2020,are as follows:
Thousands of
U.S. dollars

Millions of yen

Carriage and storage charges
Sales promotion expenses
Labor cost
Provision for accrued bonuses
Employees’ retirement benefit cost
Allowance for sales rebates

2021¥ 45,584
98,97072,742
6,955
7,597
1,886

2020

¥ 47,732
103,093
75,519
7,190
5,563
1,908

2021

$ 411,746
893,961
657,051
62,822
68,625
17,038

Meiji Holdings Co., Ltd.｜Integrated Report 2021 113

Notes to Consolidated Financial Statements
21

Research and Development Costs

The research and development costs that were included in manufacturing expenses and selling, general and administrative
expenses during the fiscal years ended March 31, 2021 and 2020 are as follows:
Thousands of
U.S. dollars

Millions of yen

2021

Research and development costs

22

2020

¥31,404¥31,4462021$283,662

Gain on sales of tangible and intangible assets

Gain on sales of tangible and intangible assets for the fiscal years ended March 31, 2021 and 2020
Thousands of
U.S. dollars

Millions of yen

2021
Land
Other non-current assets
Total

23

2020

2021

¥ 463

¥ 1,066

70

76$ 4,185636¥ 533¥ 1,142$ 4,821

Loss on disposal of tangible and intangible assets

Loss on disposal of tangible and intangible assets for the fiscal years ended March 31, 2021 and 2020
Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

Buildings and structures

¥ 277

¥ 177

$ 2,509

Machinery, equipment and vehicles

1,320

1,242

11,926

Others

1,383

1,129

12,495

Total¥ 2,981¥ 2,549$ 26,932

24

Impairment Loss

Impairment losses for the fiscal year ended March 31, 2021, are as follows:
Application

Type

Location

Assets in use

Machinery, equipment and buildings, etc.

Kasai-gun, Hokkaido

Idle assets

Machinery, equipment and buildings, etc.

Kurashiki-shi, Okayama Prefecture

Assets in use and idle assets

Buildings and structures, etc.

Nonoichi-shi, Ishikawa Prefecture

Assets in use

Land

Kasaoka-shi, Okayama Prefecture

Idle assets

Machinery, equipment and structures, etc.

Sapporo-shi, Hokkaido

Assets in use

Buildings and structures

Shizuoka-shi, Shizuoka Prefecture

Assets in use

Machinery, equipment, tools, furniture and fixtures, etc.

Kamiyama-shi, Yamagata Prefecture

Assets in use

Intangible assets

Madrid, Spain

114 Financial and Non-Financial Performance

Financial and Non-Financial Performance

We group our assets based on the business types for the
impairment test. In addition, assets leased to others and idle
assets are individually assessed for impairment.
In the fiscal year ended March 31, 2021, due to a decreasein the profitability of some assets, the carrying values of
those assets were reduced to recoverable amounts, andimpairment losses of ¥2,762 million ($24,950 thousand) wererecognized as extraordinary losses.
Of this amount, for assets in use, ¥747 million ($6,751
thousand) was buildings and structures; ¥854 million ($7,714
thousand) was machinery, equipment and vehicles; ¥34
million ($309 thousand) was tools, furniture and fixtures;¥250 million ($2,264 thousand) was land; and ¥3 million ($30
thousand) was intangible assets.

In addition, for idle assets, ¥150 million ($1,356 thousand)was buildings and structures; ¥707 million ($6,394 thousand)was machinery, equipment and vehicles; and ¥14 million($128 thousand) was tools, furniture and fixtures.
Additionally, the recoverable amounts of assets in use withdecreased profitability have been measured based on value
in use. For assets in use in Kasai-gun, Hokkaido Prefecture,
the value in use is calculated by discounting the future cash
flow at a rate of 5.00%.
The recoverable amounts for other assets in use and idle
assets have been measured based on the net selling values
when measurable, and the carrying values of these assets
have been reduced to memorandum values or expected sales
amounts, etc.

Impairment losses for the fiscal year ended March 31, 2020, are as follows:
Application

Type

Location

Assets in use

Machinery, equipment and buildings, etc.

Kasai-gun, Hokkaido

Assets in use

Buildings and structures, etc.

Kamiyama-shi, Yamagata Prefecture

Idle assets

Land and buildings, etc.

Hiroshima-shi, Hiroshima Prefecture

Idle assets

Machinery, equipment and buildings, etc.

Nonoichi-shi, Ishikawa Prefecture

Idle assets

Buildings and structures

Fujieda-shi, Shizuoka Prefecture

Assets in use

Intangible assets

Madrid, Spain

Assets in use

Building, tools, furniture and fixtures

Sakai-shi, Osaka Prefecture

Assets in use

Building, tools, furniture and fixtures

Kyoto-shi, Kyoto Prefecture

We group our assets based on the business types for the
impairment test. In addition, assets leased to others and idle
assets are individually assessed for impairment.
In the fiscal year ended March 31, 2020, due to a decreasein the profitability of some assets, the carrying values of
those assets were reduced to recoverable amounts, andimpairment losses of ¥2,390 million were recognized as
extraordinary losses.
Of this amount, for assets in use, ¥814 million wasbuildings and structures; ¥862 million was machinery,equipment and vehicles; ¥30 million was tools, furniture andfixtures; ¥6 million was intangible assets.
In addition, for idle assets, ¥144 million was buildings
and structures; ¥243 million was machinery, equipment andvehicles; ¥4 million was tools, furniture and fixtures; ¥283
million was land.

Additionally, the recoverable amounts of assets in use withdecreased profitability have been measured based on value
in use. For assets in use in Kasai-gun, Hokkaido Prefecture,
the value in use is calculated by discounting the future cash
flow at a rate of 5.00%.
The recoverable amounts for other assets in use and idle
assets have been measured based on the net selling values
when measurable, and the carrying values of these assets
have been reduced to memorandum values or expected sales
amounts, etc.

Meiji Holdings Co., Ltd.｜Integrated Report 2021 115

Notes to Consolidated Financial Statements
25

Consolidated Statement of Comprehensive Income

Reclassification adjustments and tax effects relating to other comprehensive income are as follows:
Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

Valuation difference on available-for-sale securities:
Amount incurred during the current year

¥ 10,485¥ (7,616)(311)(1,075)(2,815)

Amount before tax effect

10,173(8,692)

91,891

Tax effect(3,134)

2,372(28,316)

Valuation difference on available-for-sale securities

7,037(6,320)63,570

Amount incurred during the current year

(21)

73

(195)

Reclassification adjustments for gains and losses included in profit

—

—

—

Asset acquisition costs adjustments

—

—

—

(21)

73

(195)

Reclassification adjustments for gains and losses included in profit$ 94,707

Deferred gains or losses on hedges:

Amount before tax effectTax effect

6

(22)

59

(15)

51

(135)

(1,219)(1,461)(11,017)———(1,219)(1,461)(11,017)

Amount incurred during the current year

7,827

(6,494)70,706

Reclassification adjustments for gains and losses included in profit

5,159

2,331

46,606

Amount before tax effect

12,987(4,162)

117,312

Tax effect

3,970(1,554)35,867

Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted for using
equity method:

9,016(2,608)81,445

Deferred gains or losses on hedges
Foreign currency translation adjustment:
Amount incurred during the current year
Reclassification adjustments for gains and losses included in profit
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax:

Amount incurred during the current year
Total other comprehensive income

116 Financial and Non-Financial Performance

404

(53)

3,649

¥ 15,224¥ (10,392)$ 137,512

Financial and Non-Financial Performance

26

Derivative Financial Instruments

Matters related to derivative transactions in the fiscal year ended March 31, 2021

1) Derivative transactions for which hedge accounting is not applied(1) Currency-related transactions
None(2) Interest rate-related transactions
None2) Derivative transactions for which hedge accounting is applied(1) Currency-related transactions

Millions of yen

Thousands of U.S. dollars

2021

Type of transactions

Hedge accounting method:
Principle method
Forward foreignexchange contracts
Buy
U.S. dollar
Sell
U.S. dollar
Hedge accounting method:
Allocation method
Forward foreignexchange contracts
Buy
U.S. dollar
Euro
Pound
Australian dollar
Sell
U.S. dollar
Euro
Total

Primary hedged items

Accounts payable-trade

Portion with
Contract maturity over
one yearamount, etc.

2021

Fair value

Portion with
Contract maturity over
one yearamount, etc.

Fair value¥ 1,295¥—¥ 57$ 11,703

$—

$ 516

Accounts receivable-trade

—

—

—

—

—

—

Accounts payable-trade
Accounts payable-trade
Accounts payable-trade
Accounts payable-trade

624
—
39
—

—
—
—
—

(Notes)

5,638
—
359
—

—
—
—
—

(Notes)——¥ 1,959——¥—(Notes)——$ 17,701——$—(Notes)Accounts receivable-trade
Accounts receivable-trade(Notes)(Notes)(Notes)(Notes)¥ 57(Notes)(Notes)(Notes)(Notes)$ 516(Note 1) Fair value is based on the statements received from the counterparty financial institutions.
(Note 2) For forward foreign exchange contracts, etc., subject to the allocation method, because they are treated together with the hedged accounts
payable-trade and accounts receivable-trade, their fair values are included in the fair value information of the respective accounts payable-trade
and accounts receivable-trade.

Meiji Holdings Co., Ltd.｜Integrated Report 2021 117

Notes to Consolidated Financial Statements(2) Interest rate-related transactions
Millions of yen

Thousands of U.S. dollars

2021

Type of transactions

Primary hedged items

Method of hedge accounting:Integrated method(shortcut method, allocation
method) of interest rate andcurrency swap
Interest rate and currency
swap contracts
Fixed rate payments/
variable rate receipts

Long-term
borrowings

Portion with
Contract maturity over
one yearamount, etc.

¥14,6552021

Fair value¥13,609(Note)

Portion with
Contract maturity over
one yearamount, etc.

$132,381$122,925

Fair value(Note)(Note) Method for determining fair value: Since the items above are handled together with long-term borrowings that are subject to hedging, the estimatedfair value of these items is included in the fair value of the long-term borrowings.

Matters related to derivative transactions in the fiscal year ended March 31, 2020

1) Derivative transactions for which hedge accounting is not applied(1) Currency-related transactions

Millions of yen

2020

Type of transactions

Transactions other than market transactions:
Currency swap contracts
Buy
U.S. dollar
Total

Portion with
Contract maturity over
one yearamount, etc.

391
¥391

Fair value

Revaluation
gain (loss)

45
¥45

45
¥45

—
¥—

(Note) Fair value is based on the statements received from the counterparty financial institutions.

(2) Interest rate-related transactions
None

118 Financial and Non-Financial Performance

Financial and Non-Financial Performance2) Derivative transactions for which hedge accounting is applied(1) Currency-related transactions

Millions of yen

2020

Type of transactions

Hedge accounting method:
Principle method
Forward foreignexchange contracts
Buy
U.S. dollar
Sell
U.S. dollar
Hedge accounting method:
Allocation method
Forward foreignexchange contracts
Buy
U.S. dollar
Euro
Pound
Australian dollar
Sell
U.S. dollar
Euro
Total

Primary hedged items

Accounts payable-trade

Portion with
Contract maturity over
one yearamount, etc.

Fair value¥ 3,567¥—¥78

Accounts receivable-trade

—

—

—

Accounts payable-trade
Accounts payable-trade
Accounts payable-trade
Accounts payable-trade

826
—
237
30

—
—
—
—

(Notes)——¥ 4,660——¥—(Notes)Accounts receivable-trade
Accounts receivable-trade(Notes)(Notes)(Notes)(Notes)¥78(Note 1) Fair value is based on the statements received from the counterparty financial institutions.
(Note 2) For forward foreign exchange contracts, etc., subject to the allocation method, because they are treated
together with the hedged accounts payable-trade and accounts receivable-trade, their fair values areincluded in the fair value information of the respective accounts payable-trade and accounts receivabletrade.

(2) Interest rate-related transactions
Millions of yen

2020

Type of transactions

Method of hedge accounting:Integrated method(shortcut method, allocation
method) of interest rate andcurrency swap
Interest rate and currency
swap contracts
Fixed rate payments/
variable rate receipts

Primary hedged items

Long-term borrowings

Portion with
Contract maturity over
one yearamount, etc.

¥15,702¥14,655

Fair value(Note)(Note) Method for determining fair value: Since the items above are handled together with long-term borrowings thatare subject to hedging, the estimated fair value of these items is included in the fair value of the long-termborrowings.

Meiji Holdings Co., Ltd.｜Integrated Report 2021 119

Notes to Consolidated Financial Statements
27

Segment Information

Reporting segments of the Group are components of the Group by which separate financial information is available andevaluated regularly by the Board of Directors in deciding how to allocate resources and assessing performance.
The Group has operational subsidiaries organized based on products and services. Operational subsidiaries develop theirbusiness activities by formulating comprehensive strategies for Japan and overseas with respect to their products and services.
Accordingly, the Group comprises segments based on operational subsidiaries and has two reporting segments: the Foodsegment and the Pharmaceutical segment.
Millions of yen

2021
Reporting segments
Food

Net sales(1) Sales to third parties(2) Intersegment sales and transfers
Total
Segment income (loss)
Segment assets
Other items
Depreciation
Impairment Loss
Amortization of goodwill (Note 3)
Equity in income of affiliates
Increase in property, plant andequipment/intangible assets

Pharmaceutical

Total

Adjustments(Note 1)

Amount presented
in consolidated
statement of income(Note 2)

¥ 998,988
684
999,673
87,463¥ 755,214¥ 192,776
888
193,664
19,105¥ 286,387¥ 1,191,765
1,573
1,193,338
106,568¥ 1,041,601¥—(1,573)(1,573)(507)¥ 25,399¥ 1,191,765—
1,191,765
106,061¥ 1,067,000¥ 39,259
2,758
15
37,070¥¥¥¥55,859

8,937
3
—
4,346
12,671

48,1962,762
1541,416
68,531

215
—
—
—
179

48,4112,762
15
41,416
68,710Thousands of U.S. dollars

2021
Reporting segments
Food

Net sales(1) Sales to third parties(2) Intersegment sales and transfers
Total
Segment income (loss)
Segment assets
Other items
Depreciation
Impairment Loss
Amortization of goodwill (Note 3)
Equity in income of affiliates
Increase in property, plant andequipment/intangible assets

Pharmaceutical

Total

Adjustments(Note 1)

Amount presented
in consolidated
statement of income(Note 2)

$ 9,023,475
6,185
9,029,661
790,021$ 6,821,554$ 1,741,272
8,026
1,749,298
172,574$ 2,586,824$ 10,764,747
14,212
10,778,960
962,595$ 9,408,378$—(14,212)(14,212)(4,583)$ 229,420$ 10,764,747—
10,764,747
958,011$ 9,637,799$ 354,614
24,920139
334,840

$

$

$

$

504,558

80,72430—
39,257
114,456

435,338
24,950139
374,097
619,014

1,942
—
—
—
1,619

437,281
24,950139
374,097620,634(Note 1) The adjustments are as follows.
The adjustments in the segment income (negative ¥507 million or negative $4,583 thousand) includes the elimination of expenses forintersegment transactions (¥3 million or $29 thousand) and the corporate expenses not allocated to each reporting segment (negative ¥510
million or negative $4,613 thousand). The corporate expenses are expenses related to the Company’s (holding company) operations, etc.
The adjustments in the segment assets (¥25,399 million or $229,420 thousand) includes the elimination of intersegmental assets (negative¥90,809 million or negative $820,251 thousand) and the corporate assets not allocated to each reporting segment (¥116,209 million or $1,049,671
thousand). The main corporate assets include the Company’s (holding company) surplus management funds (cash and deposits), long-term
investment funds (investment securities) and other assets held by the Company (holding company).
(Note 2) The segment income is adjusted based on operating income in the consolidated statement of income.
(Note 3) The balance of goodwill as of the end of the current fiscal year was ¥42 million ($382 thousand), comprising ¥42 million ($382 thousand) for the
Food segment and zero for the Pharmaceutical segment, and there were no adjustments.

120 Financial and Non-Financial Performance

Financial and Non-Financial Performance

Millions of yen

2020
Reporting segments
Food

Net sales(1) Sales to third parties(2) Intersegment sales and transfers
Total
Segment income (loss)
Segment assets
Other items
Depreciation
Impairment Loss
Amortization of goodwill (Note 3)
Equity in income of affiliates
Increase in property, plant andequipment/intangible assets

Pharmaceutical

Adjustments(Note 1)

Total

Amount presented
in consolidated
statement of income(Note 2)

¥ 1,048,963
596
1,049,559
87,340¥ 705,346¥ 203,742
611
204,354
15,984¥ 272,092¥ 1,252,706
1,207
1,253,914
103,324¥ 977,438¥—(1,207)(1,207)(614)¥ 21,481¥ 1,252,706—
1,252,706
102,710¥ 998,920

¥

¥

¥

¥

¥

37,469
2,076
15
7,199

8,515
313
18
5,182

55,72910,33045,9842,390
33
12,382
66,060

213
—
—
—
156

46,1982,390
33
12,382
66,216(Note 1) The adjustments are as follows.
The adjustments in the segment income (negative ¥614 million) includes the elimination of expenses for intersegment transactions (¥13 million)
and the corporate expenses not allocated to each reporting segment (negative ¥627 million). The corporate expenses are expenses related to theCompany’s (holding company) operations, etc.
The adjustments in the segment assets (¥21,481 million) includes the elimination of intersegmental assets (negative ¥87,399 million) and thecorporate assets not allocated to each reporting segment (¥108,880 million).
The main corporate assets include the Company’s (holding company) surplus management funds (cash and deposits), long-term investment
funds (investment securities) and other assets held by the Company (holding company).
(Note 2) The segment income is adjusted based on operating income in the consolidated statement of income.
(Note 3) The balance of goodwill as of the end of the current fiscal year was ¥57 million, comprising ¥57 million for the Food segment and zero for the
Pharmaceutical segment, and there were no adjustments.

28

Related Information

Related information for the consolidated fiscal years ended March 31, 2021 and 2020
(1) Information by product and service
Millions of yen
Fresh andfermented dairy

Sales to third parties¥ 380,954

Processedfood¥ 160,182

2021
Confectionery

Nutritionals

Pharmaceuticals¥ 119,264¥ 88,702¥ 192,776

Other¥ 249,885

Total¥ 1,191,765

Thousands of U.S. dollars

Sales to third parties

2021

Fresh andfermented dairy

Processed
food

Confectionery

Nutritionals

Pharmaceuticals

Other

Total

$ 3,441,008$ 1,446,866$ 1,077,270$ 801,213$ 1,741,272$ 2,257,115$ 10,764,747

Millions of yen
Fresh andfermented dairy

Sales to third parties¥ 394,591

Processedfood¥ 159,230

2020
Confectionery

Nutritionals

Pharmaceuticals¥ 128,214¥ 85,711¥ 203,742

Other¥ 281,215

Total¥ 1,252,706

Meiji Holdings Co., Ltd.｜Integrated Report 2021 121

Notes to Consolidated Financial Statements(2) Information by region
Millions of yen

2021
Property, plant and equipment

Japan

Asia

Other

Total

¥414,171¥36,360¥4,462¥454,994

Thousands of U.S. dollars

2021
Property, plant and equipment

Japan

Asia

Other

Total

$3,741,045$328,432$40,312$4,109,790

Millions of yen

2020
Property, plant and equipment

29

Japan

Asia

Other

Total

¥408,264¥30,925¥5,001¥444,191

Information About Related Parties

Transactions between the company submitting the consolidated financial statements and the related parties in the fiscal year
ended March 31, 2021
Officers and principal shareholders (only for individual parties) for the company submitting the consolidated financial
statements and related items

Category

Director

Name ofperson,company,
etc.

Kazuo
Kawamura

Director of
Katsunarisignificant
Matsudasubsidiary

Director of
Daikichirosignificant
Kobayashi
subsidiary

CommonsharesDescription ofbusinessor occupation—

President andRepresentative
Director—

The Member ofthe Board andPresident andRepresentative
Director of Meiji—

The Member ofthe Board andPresident andRepresentative
Director of Meiji
Seika Pharma

Percentage
of voting Relationship Description oftransaction
rights held with related(Note)
parties
(%)

0.0%

0.0%

0.0%

Amount of transaction
Balance at theMillions Thousands
end of theof U.S.
offiscal year
dollarsyen
Account being reported—

Contributions
in kind formonetary
compensation
claims

¥18

$169

—

—

—

Contributions
in kind formonetary
compensation
claims

14

130

—

—

—

Contributions
in kind formonetary
compensation
claims

11

103

—

—

(Note) Transaction conditions and policy for establishing transaction conditions, etc.
This refers to contributions in kind for monetary compensation claims based on the Restricted Stock Compensation Plan.

122 Financial and Non-Financial Performance

Financial and Non-Financial Performance

Transactions between the company submitting the consolidated financial statements and the related parties in the fiscal year
ended March 31, 2020
Officers and principal shareholders (only for individual parties) for the company submitting the consolidated financial
statements and related items

Category

Director

Director

Name ofperson,company,etc.

MasahikoMatsuoKazuo
Kawamura

Director of
Katsunarisignificant
Matsudasubsidiary

Director of
Daikichirosignificant
Kobayashi
subsidiary

CommonsharesDescription ofbusinessor occupation—

Chairman and
Representative
Director—

President andRepresentative
Director—

The Member ofthe Board andPresident andRepresentative
Director of Meiji—

The Member ofthe Board andPresident andRepresentative
Director of Meiji
Seika Pharma

Percentage
of voting Relationship Description oftransaction
rights held with related(Note)
parties
(%)

0.0%

0.0%

0.0%

0.0%

Amount of transaction
Millions ofyen

Balance at theend of the
fiscal year
Account being reported—

Contributions
in kind formonetary
compensation
claims

¥11

—

—

—

Contributions
in kind formonetary
compensation
claims

18

—

—

—

Contributions
in kind formonetary
compensation
claims

14

—

—

—

Contributions
in kind formonetary
compensation
claims11——(Note) Transaction conditions and policy for establishing transaction conditions, etc.
This refers to contributions in kind for monetary compensation claims based on the Restricted Stock Compensation Plan.

30

Per Share Information
Yen

Net assets per share
Earnings per share

U.S. dollars

2021

2020

¥ 4,282.80
452.52¥ 3,879.18
464.082021$ 38.68
4.08(Note 1) Diluted earnings per share are not presented because there are no potential shares.
(Note 2) The basis for calculation of earnings per share is as follows:
Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

Profit attributable to owners of parent
Amount not attributable to common shareholders
Profit attributable to owners of parent related to common stock¥ 65,655—
65,655¥ 67,318—
67,318$ 593,044—
593,044

Average number of common shares during the fiscal year
(thousand shares)

145,089

145,058

Meiji Holdings Co., Ltd.｜Integrated Report 2021 123

Independent Auditor’s Report

124 Financial and Non-Financial Performance

Financial and Non-Financial Performance

Meiji Holdings Co., Ltd.｜Integrated Report 2021 125

Independent Auditor’s Report

126 Financial and Non-Financial Performance

Financial and Non-Financial Performance

Meiji Holdings Co., Ltd.｜Integrated Report 2021 127

Independent Auditor’s Report

128 Financial and Non-Financial Performance

Financial and Non-Financial Performance

Meiji Holdings Co., Ltd.｜Integrated Report 2021 129

Operating Bases and Group Companies (As of July 1, 2021)

The Meiji Group uses its extensive global network and conducts R&D, production
and distribution to provide a stable supply of high quality food products andpharmaceuticals, in order to maintain society’s trust in the Meiji brand.

Wakkanai Plant

Domestic▼ Food Segment

Asahikawa Plant

Meiji Co., Ltd.
Head Office

Nishi Shunbetsu Plant

Pharmaceuticals
Hokkaido Branch

Research Laboratory

Research Laboratory
Plant

1
26

BranchPlant

BranchGroup Company▼ Pharmaceutical Segment

Group Company

Honbetsu Plant

Eniwa Plant

5
23

Tokachi Plant

Nihon Kanzume, Co., Ltd.
Donan Shokuhin Co., Ltd.

Meiji Seika Pharma Co., Ltd.
Head Office

Research Laboratory

Research Laboratory
Plant

2
2

BranchPlant

BranchGroup Company

KM Biologics Co., Ltd.
Head Office

Research Center

Research Center
Production Center

1
4

OfficeOffice1

Kyoto Plant
Meiji Oils and Fats Co., Ltd.
OHKURA
Pharmaceutical Co., Ltd.

Gunma Meiji Co., Ltd.
Gunma Plant/Gunma Nutritionals Plant
Meiji Sangyo Co., Ltd.
Gunma Pharmaceuticals Plant
Tochigi Meiji Milk Products Co., Ltd.
Karuizawa Plant
Gifu Plant
Pharmaceutical
Meiji Chewing Gum
Research Center
Co., Ltd.
Odawara Plant
Tokai Meiji

KCS Co., Ltd. Osaka
Plant

Co., Ltd.

Kurashiki
Plant

Aichi Plant

Kansai Plant
Kansai Ice Cream Plant
Kansai Nutritionals Plant

Tokai
Plant
Chubu Branch
Pharmaceuticals
Chubu Branch
Pampy Foods
Incorporation

Co-Creation Center
Meiji Innovation Center

Kansai Branch
Meiji Ad Agency Co., Ltd.
Pharmaceuticals Kansai Branch
CNS West Japan Management Dept. Agricultural & Veterinary
Research Laboratory
Agricultural Chemicals West Branch
Veterinary Drugs West Branch
Head office
Kumamoto
Production Center
Kikuchi Production Center
Kikuchi Research Center
Koshi Production Center
Aso Production Center

130 Corporate Information

Kitanihon Branch
Pharmaceuticals Sendai Branch
Agricultural Chemicals East Branch

Three S and L Co., Ltd.

Shikoku Meiji
Co., Ltd.
Kyushu Plant

Tohoku Plant
Zao Shokuhin Kaisha, Ltd.

Meiji Business Support Co., Ltd.

Pharmaceuticals
Chugoku & Shikoku
Branch14
4

Production Center▼ Companywide Common

Nishinihon
BranchPharmaceuticals
Fukuoka BranchGroup Company

Okinawa Meiji
Milk Products Co., Ltd.

SakadoPlant

Pharmaceuticals
Kanto Branch
Saitama Plant

Ibaraki Plant
Moriya Plant

Toda Plant Tokai Nuts Co., Ltd.
Veterinary Drugs
East Branch

Kanagawa Plant

Head Office
CNS East Japan Management Dept.
Meiji Business Support Co., Ltd.
Meiji Food Materia Co., Ltd.
Me Pharma Co., Ltd.
Romeck Pharma, LLC
Tokyo Office

Pharmaceuticals Tokyo Branch
Meiji Techno-Service Inc.
Chiba Meiji Milk
Products Co., Ltd.
Kitasato PharmaceuticalIndustry Co., Ltd.
Kanto Branch
Meiji Feed Co., Ltd.
Meiji Logitech Co., Ltd.
Meiji Fresh Network Co., Ltd.
Meiji Nice Day Co., Ltd.

Corporate Information

Overseas▼ Food Segment▼ Pharmaceutical Segment

Meiji Co., Ltd.

Meiji Seika Pharma Co., Ltd.

Head OfficeGroup Company

1
Group Company 16
OfficeHead OfficeGroup Company

1
Group Company 17
OfficeGuangzhou Meiji Confectionery Co., Ltd.
Meiji Ice Cream (Guangzhou) Co., Ltd.
Meiji Food (Guangzhou) Co., Ltd.

Meiji Dairies (Suzhou) Co., Ltd.
Meiji Seika Food Industry (Shanghai)Co., Ltd.
Meiji China Investment Co., Ltd.

Meiji Seika Europe B.V.

Meiji Dairies (Tianjin) Co., Ltd.
Beijing Office
Meiji Pharma(Shandong)Co., Ltd.

Meiji Pharma Spain, S.A.
Laguna Cookie Co., Inc.

Meiji America Inc.
D.F. Stauffer Biscuit Co., Inc.

Meiji Food Vietnam Co., Ltd.
Medreich Limited＊

DM Bio Limited

Taiwan Meiji Food
Co., Ltd.

Shantou SEZ Meiji
Pharmaceuticals Co., Ltd.
Guangdong Meiji
Pharmaceutical Co., Ltd.
Meiji Seika (Singapore) Pte. Ltd.

Bangkok Office
AustAsia Investment
CP-Meiji Co., Ltd.
Holdings Pte LTD.
Thai Meiji Food Co., Ltd.
Thai Meiji
PT. Meiji Indonesian
Pharmaceutical Co., Ltd.
Pharmaceutical Industries＊ The eight subsidiaries of Medreich Limited are not shown.

Unmarked bases are companies and facilities that do not belong to the segment.

* The group companies are the consolidated companies and entities accounted for by the equity method.

Meiji Holdings Co., Ltd.｜Integrated Report 2021 131

Corporate Data / Stock Information (As of March 31, 2021)
Corporate Data

Stock Information

Company Name

Major Shareholders

Meiji Holdings Co., Ltd. (Securities code: 2269)

Name

Number ofshares held(Thousands)

Percentage of
total sharesissued (%)

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

16,337

10.69

Custody Bank of Japan, Ltd. (Trust Account)

7,756

5.08

April 1, 2009

Nippon Life Insurance Company

3,348

2.19

Share CapitalMizuho Bank, Ltd.

3,117

2.04

The Norinchukin Bank

2,892

1.89

Number of Group Employees

17,832

Meiji Holdings Trading-Partner
Shareholding Association

2,649

1.73

Common Stock Issued

Meiji Holdings Employee Shareholding Association

2,620

1.71

152,683,400

Resona Bank, Limited

2,347

1.53

Stock Listing

STATE STREET BANK WEST CLIENT-TREATY 505234

2,242

1.46

Custody Bank of Japan, Ltd. (Trust Account 5)

2,037

1.33

Head Office2-4-16, Kyobashi, Chuo-ku, Tokyo 104-0031, Japan
Incorporated

JPY 30.0 billion

Tokyo

Fiscal Year-End(Notes) 1. The Company holds 7,584,887 treasury shares as of March 31, 2021.
2. The shareholding ratio is calculated by subtracting the treasury share fromthe total shares of common stock issued.

March 31

Ordinary General Meeting of Shareholders

Late in June

Shareholding by Type of Shareholder

Transfer Agent of Common Stock

Mitsubishi UFJ Trust and Banking Corporation■ Financial Institution

40.25%
26.24%■ Foreign Companies, etc.
21.24%■ Other Companies
9.77%■ Financial Instruments Dealers
2.50%■ Government and Public Bodies
0.00%

Public Notices■ Individuals and Others

Public notices given by the Company
are issued electronically.
URL: https://www.meiji.com/
However, in the event that public notices cannot be issued
electronically due to an accident or some other unavoidable
circumstances, public notices given by the Company shall be carriedin the Nihon Keizai Shimbun.
It should be noted that pursuant to Article 440, Paragraph 4 of theCompanies Act, public notices of financial statements are not given.

* Individuals and Others includes treasury share.

Stock Price and Trading Volume(index)Meiji Group(ThousandTrading volume shares)

TOPIX

150

30,000125

25,000100

20,00075

15,00050

10,000

25

5,000

0
March 2016

March 2017

(Notes) The closing price as of March 31, 2016 is 100.

132 Corporate Information

March 2018

March 2019

March 2020

0March 2021

Corporate Information

External Evaluation of ESG
Meiji Holdings Co., Ltd. is working to achieve sustainable growth through sustainability management.
These efforts have been received positively by external bodies and the Company is included in ESG indicesin Japan and overseas.

Publisher’s Note

Thank you for reading the fourth issue of our Integrated Report.
We considered the many opinions and valuable feedback given
regarding our past reports when preparing the FY2021 report. We
paid attention to the following three points in particular.
First, we gave thorough explanations of the matters that are
viewed as important by the stakeholders reading the report,
especially shareholders and investors. Second, we used plain
language to communicate the ideas behind our new slogan, “Nowideas for wellness,” and approaches to our new Medium-TermBusiness Plan for the years up to FY2023. Third, we combined
our business growth strategies and sustainability initiatives andexplained them as a narrative.
The Meiji Group has Food and Pharmaceutical businesses in asingle group. Therefore, we have focused on foods that contribute tohealthier lives and pharmaceuticals that prevent and treat disease.
COVID-19 began to spread around February 2020. The pandemic has
dragged on and we have been forced to change our lives and values
significantly. This has also led to our stronger desire to become
resistant to illness and be healthy.
Therefore, the Meiji Group will gather knowledge about foods
and pharmaceuticals and grow its products and services businesses
that contribute to healthier lives for customers. We aim to enhance
our corporate value under the slogan “Now ideas for wellness.”
The report introduces the ideas and initiatives behind “Now ideas
for wellness” from each chief officer. We look forward to receiving
honest opinions and feedback on the report from stakeholders. We
hope that the report will encourage productive dialogue.

Youichirou Yamagata
General Manager,
Public Relations& Investor Relations Department,
Meiji Holdings Co., Ltd.

Meiji Holdings Co., Ltd.｜Integrated Report 2021 133

2-4-16, Kyobashi, Chuo-ku, Tokyo 104-0031, Japan
https://www.meiji.com/global