Integrated Report 2018

Contents

Meiji Group’s Vision

1 Introduction
1 Meiji Group’s Vision
2 At a Glance
4 Product and Market Presence

6 Our Value Creation Story
6
8
10
12
13
18
22
26

History
Meiji Group’s Process for Value Creation
Process for Medium-and Long-Term Growth
Message to Stakeholders
Message from the President
Medium-Term Business Plan (Food Segment)
Medium-Term Business Plan (Pharmaceutical Segment)
Special Feature “Creating Markets with a Strong Value Chain”

32 Our Activities for Sustainability
32 Meiji Group’s Approach to CSR
40 Directors and Audit & Supervisory Board Members
42 Responsibilities of Members of the Board andAudit & Supervisory Board Members
44 Dialogue with Outside Directors and Their Message
48 Corporate Governance
51 Risk Management
Compliance

52 Financial and Non-Financial Section
52
54
56
60
97

Financial and Non-Financial Highlights (9 Years Summary)Financial and Non-Financial Highlights (Main Indices)
MD&A (The Management Discussion and Analysis)
Consolidated Financial Statements
Independent Auditor’s Report

98 Corporate Information
98 Operating Bases and Group Companies
100 Corporate Data / Stock Information
101 Independent Practitioner’s Assurance of
CO2 Emissions
Editorial Policy
Starting from 2018, Meiji Holdings (the Company) will issue an“Integrated Report” and replace the Annual Report that has been
issued up until now. After celebrating our 100 year anniversary, theMeiji Group will seek further growth. In this report, we have compiled
ﬁnancial and non-ﬁnancial information focusing on the “Value
Creation Story” that has led us to sustainable growth.
*Reference : The International Integrated Reporting Council Framework

Using the “Integrated Report 2018”
This report is based on the performance results from the ﬁscal year2017 (ﬁscal year ended March 2018). Some content from the ﬁscal
year 2018 (ﬁscal year ending March 2019) is also included. The
content is compiled based on information that is available at thetime when the Company created the “Integrated Report 2018.”
Therefore, please note that the actual results may be diﬀerent fromthe Company’s forecast. The information in the report unlessotherwise speciﬁed is current as of August 2018.

Group Philosophy
Our mission is to widen the world of “Tastiness andEnjoyment” 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.

Introduction

Beyond meiji- above imagination -Our Value Creation Story

We have been helping our customers of all ages attain“Healthier Lives” for more than a century.
We will continue to create value

Our Activities for Sustainability

that exceeds our customers’ expectations
and be a company
that is essential not just to the lives of people
in Japan and around the world.

Financial and Non-Financial Section
Corporate Information
Meiji Holdings Co., Ltd.｜Integrated Report 20181

At a Glance
Our corporate group is made up of Meiji Co., Ltd. – which runs the food segment, and Meiji Seika
Pharma Co., Ltd. and KM Biologics Co., Ltd. – which run the pharmaceutical segment. Our mission as abusiness is to widen the world of "Tastiness and Enjoyment" and to meet all expectations regarding"Health and Reassurance" by providing a wide range of products that are essential in people’ s lives,
such as dairy products, confectioneries, nutritionals 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 was thenreorganized into its current Groupstructure in 2011. KM Biologics Co., Ltd.
joined the Group in July 2018.

Group Organization(As of July 2, 2018)

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 productsthat 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.

FY3/18 (Fiscal Year Ended March 2018) Business Results
Net Sales

Operating Income¥1,240.8billion¥ 94.6billion

Down0.1%

Up7.1%

year on year

year on year

Pharmaceutical
Segment

Pharmaceutical
Segment

13.6 %
Food Segment

Food Segment

86.4 %

88.4 %

ROE

Profit Per Share

13.1¥ 422.15

Down1.1 pt

Up2.1%

year on year

year on year%

2

Introduction｜At a Glance

11.6 %

Number of Group Companies and Employees (As of March 31, 2018)

The U.S.

4332

companiescopeople

Asia

20
3,856

companiescopeoplecompanies
peopleOur Value Creation Story

3
567

EuropeIntroduction

The number of group companies is the number of consolidated companies and affiliates accounted for by the equity method.
The number of employees includes all consolidated companies.

Overseas Group Companies

27

Japan

companies

Number of Group Employees

16,296

peopleOur Activities for Sustainability

11,541peopleDomestic Group Companies

35*

companies

Financial and Non-Financial Section* Including Meiji Co., Ltd., Meiji Seika Pharma Co., Ltd.
and Meiji Business Support Co., Ltd.

Overseas Sales Ratio (FY3/18)
Food Segment

Pharmaceutical Segment

23.0

Up0.5pt

Down0.9pt

year on year

year on year%%

As part of the Japan Revitalization Strategy 2016, theMinistry of Economy, Trade and Industry established The
Nippon Kenko Kaigi (Japan Healthcare Council) to run a
Certiﬁed Health & Productivity Management Organization
Recognition Program. Meiji Holdings, Meiji and Meiji Seika
Pharma were recognized as a large corporate sector(White 500) under the 2018 Certiﬁed Health & Productivity
Management Outstanding Organizations Recognition
Program. This is a program that recognizes and citesorganizations 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 2018

Corporate Information

4.0

Recognized for Outstanding
Health Management in 20183

Product and Market Presence
The Meiji Group has built a strong market position by providing products with unique value throughout society. In both thefood and pharmaceutical businesses, we currently 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
Since

1950

YogurtNo.1 in Japan

43.5%
Since *

1999

Based on Meiji data as of March 20188

Camembert Cheesese* Started processedcheese productionin 1932

No.1 in Japan

42.9%
Based on INTAGE Inc., SRI (camembert cheese market)
April 2017–March 2018 market share (money amount)

Since

1926
926

ChocolateteNo.1 in Japan

24.3%
Since
Based on INTAGE Inc., SRI (chocolate market)
April 2017–March 2018 market share (money amount)

1980

Powdered &Granulated ProteinnNo.1 in Japan

53.9%
Based on Meiji data as of March 2018

4

Introduction｜Product and Market PresenceIntroduction

Pharmaceutical Segment
Since

1999
Our Value Creation Story

Antidepressant &Atypical Antipsychotic
Drugs
sychotic Drugugs
No.3 in Japan

11.4%

Since

1958

Systemic
mic
Antibacterial
Drugs
AntibaA

Our Activities for Sustainability

Copyright©2018 IQVIA
Calculated based on JPM 2018 Mar MAT
Market scope as deﬁned by Meiji Seika Pharma* Reprinted with permission

No.1 in Japan

16.4%
Copyright©2018 IQVIA
Co
Calculated
based on JPM 2018 Mar MAT
Ca
Marketscope as deﬁned by Meiji Seika PharmaM* Reprinted with permission

Since

1975

Generic
eneric Drugs
Dru
ugs
g

No.1
in Japan*(Agricultural Chemicals)(Agrs)

No.1 in Japan

40.8%
Source: Japan Crop Protection Association, 2017
agricultural chemical year (October 2016–September 2017)

Meiji Holdings Co., Ltd.｜Integrated Report 2018

Corporate Information* Among the manufacturers that provide
brand-name drugs
Source: CRECON RESEARCH &CONSULTING, INC., ﬁscal 2017

Rice Blast
Blas Preventives
esFinancial and Non-Financial Section

Since

1998

5

History
Since being founded in 1916, the Meiji Group has already built a history that spans more than a century. During thistime, we have always kept abreast with the state of aﬀairs in society and the changing needs of our customers. We
will be building progressive value in order to continue to create new demands. This “Ability to create a market” is thesource of our strength to grow.

1910

1920

1930

1940

1950

1960

1970

1980

1961
Meiji Seika launches
Marble Chocolate. 1975

1962

Meiji Seika launches
Meiji Seika launches the chocolate snack
Almond Chocolate. Kinoko no Yama.
1980
Meiji Seika
1969
launches SAVAS,
Meiji Seikaa series of protein
launches thefor athletes.
chocolate Apollo.

1926
Meiji Seika launches
Milk Chocolate.

Confectioneries
Pharmaceuticals

1916
Tokyo Confectionery Co., Ltd. (Tokyo Confectionery),the predecessor of Meiji Seika, is established.
At this time, popular culture ﬂourished andTokyo Confectionery was established torespond to the growing demand forconfectionaries. Meiji Sugar Co., Ltd. (Meiji
Sugar) invested in Tokyo Confectionery, andthen changed the company name to Meiji
Seika Kaisha, Ltd. (Meiji Seika) in 1924.

1946
Pharmaceutical business is started.
Penicillin research was started during WorldWar II in 1944 and succeeded in fermentation.
Set up mass production system and launched
our pharmaceutical business.

1975
The agriculturalchemical product
ORYZEMATE is launched.

1950

1946
Penicillin
formulation
manufacturing
is launched.

The antibiotic
STREPTOMYCIN MEIJI is launched.

1958
The antibiotic KANAMYCIN MEIJI is the ﬁrst productto be exported after being discovered in Japan.

Dairy

1921

1917

Tokyo Confectionery launches
the Condensed Milk Meiji Merry Milk.

Kyokuto Condensed Milk Co., Ltd. (Kyokuto Condensed Milk),
the predecessor of Meiji Dairies, is established.

1971

Since the 1910s, Meiji Sugar had manufactured and sold dairy products, such asbutter, milk powder and condensed milk, which are used as confectionery
ingredients. Later in 1940, Meiji Sugar acquired capital in Kyokuto Condensed Milkand then changed its company name to the Meiji Dairies Corporation (Meiji Dairies).

1923

1950
Meiji Dairies launches
Meiji Honey Yogurt.

1951

The infant formula Patrogen is created.

Meiji Dairies launches
Soft Curd Meiji
Infant Formula.

1928
Meiji Dairies launches Meiji Milk.

Meiji Dairies launches
Japan’s ﬁrst plain yogurt
Meiji Plain Yogurt.

1973
Meiji Dairies
launches
Meiji Bulgaria Yogurt.

The Meiji Group Has Created Markets with Various Products.

6

Chocolate

YogurtAntibiotics

Meiji Milk Chocolate, launched in 1926, hasdriven the Japanese chocolate market.
Recently, we have expanded that market bydeveloping products with new value, forexample, a chocolate which accentuates its
health eﬀects inherent in the cocoa beans
and the premium chocolate Bean to Bar.

Since the ﬁrst yogurt product was launchedin the 1950s, we have carved out a Japaneseplain yogurt market. At the turn of the
century, we developed an innovative yogurtthat oﬀers characteristics of probiotic, andnow those yogurt products garner
tremendous support for their new healthvalue.

After our manufacturing and sales launch of
the penicillin formulation in 1946, we thenlaunched STREPTOMYCIN MEIJI and
KANAMYCIN MEIJI in the 1950s that
cemented our reputation in Meiji antibiotics.
Thereafter, we developed antibiotics such as
MEIACT and ORAPENEM and improved the
medical treatment of infectious diseases.

Our Value Creation Story｜History

1988

2000

2010

1996

Meiji Seika
Meiji Seika launches
launches
new-texture chocolate Galbo.
Kaju Gummy.

1997

2020

2014
Meiji launches
Meiji The Chocolate.

2002

2015

Meiji Seika launches
Amino Collagen.

Meiji launches
SAVAS Milk.

1998

Our Value Creation Story

Meiji Seika
launches Xylish Gum.

Introduction

1990

2017

Meiji Seika launches
the high cocoa content
chocolate Chocolate Kouka.

Meiji launches
Meiji Spreatable.

2011
The food company Meiji Co., Ltd.
begins operation.
Meiji Seika and Meiji Dairies establish
staablHo
old
Meiji Holdings Co., Ltd. (Meiji Holdings),
ndjoint holding company, andnt.
t.
integrate the management.
Food Segment

2009
Meiji Seika launches Japan’s ﬁrst
treatment for Methicillin-resistant
Staphylococcus aureus (MRSA)
infections, the antibiotic HABEKACIN.

Integration RReorganization

See below for details.

2008
1994
The antibiotic
MEIACT is launched.

Pharmaceutical Segment

Meiji Seika launches
the calcium channel
blocker generic drug
AMLODIPINE TABLETS MEIJI.

2011

1999

2009

The pharmaceutical company
Meiji Seika Pharma Co., Ltd. begins operation.

The antidepressant
DEPROMEL is launched.

The antidepressantdrug REFLEX is launched.

2018

2000

Meiji Dairies launches
Meiji Hokkaido Tokachi Cheese.

Meiji Dairies launches
Meiji Probio Yogurt LG21.

1994

2002

Meiji Dairies launches
the ice cream
Meiji Essel Super Cup
Ultra Vanilla.

Meiji Dairies launches
the drinking milk
Meiji Oishii Gyunyu.

1995

Meiji Dairies launches the world’s
ﬁrst infant formula in cube form
Meiji Hohoemi Raku Raku Cube.

Meiji Dairies launches
the enteral formula Mei Balance.

Financial and Non-Financial Section

KM Biologics Co., Ltd.
joins the Meiji Group.

1992

Meiji Dairies launches
the sports nutritional
drink VAAM.

Our Activities for Sustainability

1990

2011
The liquid formula
ZAXA herbicide is launched.

2015
The generic antibiotic
TAZOPIPE MEIJI
is launched.

2007

2016

2009

Treatment for
schizophrenia
SYCREST is launched.

Meiji Dairies launches
Meiji Yogurt R-1.

Anti-allergy drug
Bilanoa is launched.

Corporate Information

Based on Our More Than 100 Year History,
We Integrate the Management and Reorganize the Business to Accelerate Future Growth.
Meiji Seika founded in 1916 and Meiji Dairies founded in 1917 derivefrom the former Meiji Sugar. Both companies have forged acooperative relationship, which includes co-developing various
products over many years.
Recently, due to a shrinking market from depopulation and an
aging society, a sharp rise in global raw materials, a reduction in social
security payments, a cutthroat corporate competition in a mature
market and other factors, the businesses of both companies should
be more competitive in Japan. On the other hand, the lifestyle and setof values of each and every person have changed signiﬁcantly. As aresult, developing and marketing products to diﬀerent needs, such as

diversiﬁed dietary habits and a growing awareness of health andsafety, are becoming critical issues.
Responding to these changes, we have integrated the
management in 2009 in order to maximize the management
resources of both companies and achieve sustainable growth.
Thereafter, the Group’s business was reorganized in 2011, and thebusiness segments were separated into food products andpharmaceuticals, which had diﬀerent competitive markets, businesscycles and regulations, etc. Based on this system, we have accelerated
growth in our core business and the eﬀects from management
integration.
｜

Meiji Holdings Co., Ltd. Integrated Report 20187

Meiji Group’s Process for Value Creation
The Meiji Group’s competitive edge is attributed to our business model, which is based on
the accumulation of our intellectual, social capital for “creating a market,” our strategy for
distributing the capital and our strong value chain. Through this series of processes, we will
increase our corporate value by creating new value in the “Food and health” ﬁelds, helping
address social issues and earning the trust from our customers.

CapitalCapitalDistribution

Financial
capitalCreating Markets with a Strong Value Chain
The Meiji Group’s strength lies in our value chain that is based on reliable quality.
This value chain creates new value and delivers productswith that value to our customers.
For details, please see page 26 “Special Feature.”Intellectual
capitalStrengthencore areas
R&D

Human
capitalManufactured
capitalSocial capital
NaturalcapitalFor details,
please see below.

Invest in
futuregrowthareas

Procurement

Production
andDistribution

Wealth of superior materials
Using customerUser
and outstanding R&D capabilities
feedback
For details,
please see page 28.

Safe and Reassuring Quality

Sales andCommunication

Excellent communicationand strong sales resources

For details, please see page 30.

For details,
please see
page 13.

GovernanceFor details, please see page 48.

Social Issues
Addressing growing social issues and needs,
such as food shortages, ageing populations, malnutrition,
antimicrobial resistance and lifestyle related diseases

Breakdown of Capital

8

Financial CapitalIntellectual Capital

Human Capital• Ability to generate stable cash ﬂow toinvest in growth• Sound and safe ﬁnancial structure• Higher proﬁtability thanks to productswith leading market share• Experience and expertise built from our
100 year history• Basic research (Lactobacilli, cocoa,
microorganism fermentation,biotechnology and drug discover y)• Patent• Manufacturing technologies• Product commercialization expertise• Personnel who embrace the Meiji Way

Our Value Creation Story｜Meiji Group’s Process for Value Creation

WEB Mission and Vision | Action Guidelines
https://www.meiji.com/global/
about-us/mission-and-vision/• Comfortable workplace environment• Promoting diversity

Outcome

We deliver a wide range of products to customers of allages which include dairy products, confectioneries,
nutritionals and pharmaceuticals. We do not just oﬀer
products but supply valuable information related to “Foodand health,” thereby increasing the value of our products.

We have earned the conﬁdence of ourcustomers and continue to brighten
their daily lives by widening the world of"Tastiness and Enjoyment" and meeting
all expectations regarding "Health andReassurance."

Introduction

OutputOur Value Creation Story
Our Activities for Sustainability

Health Nutrition
Safety Reassurance
Tastiness Enjoyment

Providing
productswith valuable
information

Financial and Non-Financial Section

We help address social issues through our businessand further improve our corporate value,
to help develop our capital resources and achieve sustainable growth.

Social Capital

Natural Capital• Production sites and sales oﬃces inJapan and all over the world• Our distribution network is designed
to cover all temperature ranges:
frozen, chilled and room temperature• Our production system ensures astable supply of high quality
pharmaceuticals• Reliable Meiji brand• Brand strength from products withleading market share• Relationship with suppliers andbusiness partners• Strong, close relationship with ourcustomers• Active engagement with shareholders
and investors• Wealth of resources (cocoa, raw milk
and microorganisms such as
Lactobacilli and Actinomycetes)• Energy• Water

Meiji Holdings Co., Ltd.｜Integrated Report 2018

Corporate Information

Manufactured Capital9

Process for Medium- and Long-Term Growth
We created the new “Meiji Group 2026 Vision” to maximize the strengths of the Meiji Groupto grow further. This vision is our promise and commitment on what will strive for by 2026.
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 will carry out three Medium-Term Business Plans torealize the 2026 Vision. We coined the slogan “Beyond meiji- above imagination –” for this vision. Our slogan was
created to stop doing what we always do, identify issues
by ourselves and resolve them, so that the Meiji Group canbreak out of its shell and grow further.

2026
26
6

Meiji Group
2026 Vision
Our promise andcommitment

2023
Beyond meiji
The 3rd stage

2020

Beyond meiji
The 2nd stage

2018

Beyond meiji
The 1st stage

Address strategic issues continuously
and challenge for the further growth

Noteworthy Areas
in Business Climate
There will be three social trends that
could potentially aﬀect the Meiji Groupbusiness to achieve the Meiji Group 2026
Vision. We believe these changes in thesocial and economic climate areopportunities for growth. We will drive
our business according to the strategies
outlined in the 2026 Vision in order tomeet the expectations from society.

1 Change in social structure due toaging population
・30% of Japan’s population will be 65 years
or older by 2025
・Aging population is a common issue
throughout the world

2 More health conscious and focusedon 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 Larger middle class all over the world・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
10

Our Value Creation Story｜Process for Medium- and Long-Term GrowthThe Meiji Group 2026 Vision
Introduction

Our Promise and Commitment
for the 2026 Vision
We will combine the strengths, the Meiji Grouphas cultivated over the past 100 years, with thelatest technology and new findings. Thus wecreate innovative ways to meet our customers’
needs with food and health and grow in Japanand around the world sustainably.

- above imagination ‒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

Op. Income Mid to high
CAGR
single-digit growth

Our Value Creation Story

Key Strategies

Overseas
Sales Ratio Target at

20 %Maintain 10 % or more

ROE

Structure of the Meiji Group 2026 Vision

4. Social contributions

To promote;・Use external resources
・Increase productivity significantly

Business
VisionCSR
Vision• Establish functional, strategic
management system to growManagement sustainably in Japan and globally
Vision• Develop work environment, in-housesystem, organizational climate tomaximize individual potential• Enhance the Meiji brandFinancial and Non-Financial Section• Healthier Lives• Caring for the Earth• A Richer Society

Our Activities for Sustainability

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

Beyond meiji The 1st stage 2020 Medium-Term Business Plan
Basic Concept

Address strategic issues continuously
and challenge for the further growth
Key Strategies

Corporate Information

1．Expand share and achieve high revenues in core businesses
2．Expand aggressively in overseas markets and establish growth platform
3．Propose new value in health care domain
4．Continue structural reforms and resolve specific business issues in each business
5．Enhance Meiji Group management platform and promote CSR
FY3/21 Targets

Net Sales JPY 1,350 billion(Overseas sales JPY 142 billion)

Op. Income JPY 125 billion(Overseas profits JPY 9.5 billion)

Meiji Holdings Co., Ltd.｜Integrated Report 201811

Message to Stakeholders

Chairman and Representative Director

President and Representative Director

Masahiko Matsuo

Kazuo Kawamura

After the Meiji Group celebrated its 100th anniversary in October 2016, we are now heading
for another 100 years.
We created the Meiji Group 2026 Vision with the slogan “Beyond meiji – above imagination–” to ensure that we remain true to the Group Philosophy and brighten our customers’ daily
lives in Japan and all over the world in these constantly changing times. Each and every oneof us needs to rise above the current situation, be innovative and build up distinct values sothat we can grow within Japan and globally.
As the ﬁrst stage of this vision, the 2020 Medium-Term Business Plan began in April 2018 andwill continue until FY3/21.
In Japan, we will improve market share in core businesses with high proﬁtability, and inoverseas markets, we will actively strengthen and expand existing businesses, thereby making
the “Meiji brand” stronger on a global scale.
In addition, we will work hard to develop new products focusing on health. Based on thisnew Meiji Group CSR 2026 Vision, we will actively address social issues through our businessactivities and do our part to realize a sustainable society for people to live healthy, peaceful
lives.
Going forward, we shall work hard every day with sincerity and humility and make surethat our top priority is to build trust with all of our customers and users in quality and safety.
I would like to thank you for your continued support.

12

Our Value Creation Story｜Message to Stakeholders / Message from the President

Message from the President

Introduction

Growing Further under
the Meiji Group 2026 Vision:“Beyond meiji – above imagination –.”Our Value Creation Story

President and Representative Director

Kazuo Kawamura

Our Activities for Sustainability

The Meiji Group 2026 Vision / Business Vision for Our Food Segment

Establish Overwhelming Position in Japan and Distinctive Position Overseas
In the Meiji Group 2026 Vision, we have established four key strategies. In order to carryout these strategies, we have broken down our vision into a three-prong approach which
includes a “Business Vision,” “Management Vision” and “CSR Vision.” (For details, please see

Food Segment

FY3/27
Overseas Sales
Ratio

page 11.)For our Business Vision, I will explain our medium- to long-term strategy in the Foodsegment. Our goal in the Food segment is to establish an overwhelming position in Japanand a distinctive position overseas.
In Japan, we have identified three “Core,” “Growth” and “Reform” areas to strengthen ourbusiness portfolio. In the core areas where we hold our strengths with yogurt (including
functional yogurt), chocolate and nutritional products, we will actively invest management
resources, expand the market and strengthen our market presence more. In potential
growth areas such as with cheese, frozen dessert products and products for professionaluse, we will develop innovative products that have unique value and create new markets
in order to gain the leading market share. Furthermore, in reform areas such as with milk
and prepared foods, we will pursue unique value and improve income through structuralreforms.
Our international business, which was profitable in FY3/18*, covers key regions such as
China, Southeast Asia and the U.S. Our goal is to achieve dynamic growth and increase theoverseas sales ratio by more than 10% for FY3/27. In order to achieve this, our approach
focuses on developing distinctive Meiji-style products in each region. Thus, we will establish
a distinctive market position, increase brand recognition and accelerate growth.
We shall advance our strategy and reach a 6% range for the compound annual growthrate in the Food segment income.

%Op. Income
CAGR

6% rangeCore

GrowthReformFood Business

Yogurt (including functional yogurt)

CheeseMilk

Chocolate

Frozen dessert

Prepared Foods

Nutritional products

Products for professionaluse businessPrepared foods operated
by subsidiaries

Expand further by investing
business resources intensely●●

Create new markets
Become #1 in the future●●

Corporate Information* Fiscal year ended March 2018●

Financial and Non-Financial Section>10

Pursue unique value
Improve income throughstructural reforms

Meiji Holdings Co., Ltd.｜Integrated Report 201813

Message from the President

The Meiji Group 2026 Vision / Business Vision for Our Pharmaceutical Segment

Promote Selection and Concentration through Securing
and Strengthening Competitive Advantage
I will explain our Pharmaceutical segment strategy in the Business Vision.
As we look toward 2026 in the Pharmaceutical segment, we shall promote “Selection
and concentration” by securing and strengthening our competitive advantage. In Ethicalpharmaceuticals and Agricultural chemicals and veterinary drugs, we identified the businessareas as core when we have a competitive edge and expect high market growth or a certain
market size. We will grow businesses further in these areas. Whereas, in the growth and reformareas, we shall set certain priority themes and strive to create new markets.
In the ethical pharmaceuticals business, our core areas include drugs for infectious diseases,
central nervous system (CNS) disorders, and vaccines, generic drugs and biopharmaceuticals.
We will expand these areas both in Japan and overseas. On the other hand, our growth andreform areas include immune system and inflammatory disorders, treatment of hematologicalcancer and treatment of cancer using the PDT (photodynamic therapy) method. Specifically,
we will put substantial effort into R&D for new drug discovery research. In international
business, we will expand the business in ASEAN and Europe as a core area and in Mainland
China as growth and reform areas. Because we have a competitive advantage in the infectious
disease field, we will seek to become a leading company in Asia. For that, we will increase
production capacity, and strengthen R&D and promotion activities.
In the agricultural chemicals and veterinary drugs business, we have discovered a varietyof compounds in-house and are currently developing them for agricultural chemicals. We will
launch environment-friendly products and help improve productivity in the agricultural andlivestock industry. Thus, we will expand our business, including our international business.
Our goal for overseas sales, combining ethical pharmaceuticals, agricultural chemicals andveterinary drugs, is to achieve more than 30% of the total sales by FY3/27.
The target income range for the compound annual growth rate in the Pharmaceuticalsegment is 9% in FY3/27. Due to the negative impact from the drug pricing reforms, thepharmaceutical market in Japan has an unclear future. However, I am confident that we canovercome the tough conditions and generate new growth by carrying out these strategies.

Pharmaceutical
Segment

FY3/27
Overseas Sales
Ratio

>30

%

Op. Income
CAGR

9% range

Pharmaceutical Business
Ethical Pharmaceuticals●●

Agricultural Chemicals and Veterinary Drugs

Become leading company in Asia for
infectious diseases
Provide high-quality, low-priced pharmaceuticals

Japan

Provide environment-friendly products,
contribute to improve productivity inagricultural and livestock industry

Overseas *1

Japan

Infectious diseases / Vaccines
*2

Core

●

*3

Overseas

Newly developed agricultural chemicals(sales of active ingredient / royalty)

Generic drugs (distributed by Meiji / CMO and CDMO)
Biopharmaceuticals
CNS disorders

Growth /ReformImmune system and inﬂammatory disorders
Hematological cancer /PDT *4

New

Agricultural chemicals(distributed by Meiji)

Export
Healthcare solutions*1 Core area: ASEAN and Europe Growth/reform area: Mainland China*2 Contract Manufacturing Organization*3 Contract Development Manufacturing Organization*4 Photodynamic Therapy

14

Our Value Creation Story｜Message from the President

Veterinary drugs

Introduction

The Meiji Group 2026 Vision / Overall Business Vision of Group

Provide Unique Value in the Health and Preventive Medicine Domain
Constantly Engage in Innovation

Food
Nutrition science expertise● Milk, lactobacillus,
cocoa research● Nutrition engineering
technology●

Our Value Creation Story

PharmaceuticalPharmacological expertise
Synthetic technology● Microbial andbiopharmaceutical technology●●

Our Activities for Sustainability

I will touch on the overall business vision of the Group.
The Meiji Group has a “Food and health” business with foodproducts and pharmaceuticals. We will focus the overall approachof the Group toward the “Health and preventative medicine”
domain because it continues to gain international attention and is
expected to see market growth in the future.
Based on our policy, we look to combine our expertise in the
Food segment with the ones in the Pharmaceutical segment. Our
fields of expertise include “Nutritional science,” “Milk, lactobacillus,
cocoa research” and “Nutritional engineering technology” in the
Food segment and “Pharmacology,” “Synthetic technology” and“Microbial and biopharmaceutical technology.” Additionally, we will
actively work with experts from external institutions/academia.
To achieve this, we set up an “Open Innovation Promotion
Committee” under the direct supervision of the Executive
Committee in 2017. In this committee, we discuss research topics
from a long-term perspective, including joint research between
industry and academia as well as investment in venture companies.
One topic we have been discussing is the effect of gut microbiota(bacterial flora) on the retardation of aging, which currently is a hot
topic in academia. We shall drive these approaches to perpetuallystimulate innovation and provide new health and nutritional
value, and strive to be a world class company in the health andpreventative medicine domain.

Open Innovation

Financial and Non-Financial Section

Engaging in the Vaccine Business with Full ForceKM Biologics head oﬃce / Kumamotooﬃce. The premises are approximately
147,000 m2 and include a main building, abuilding for manufacturing plasma
derivatives and a building for
manufacturing vaccines.

Corporate Information

In July 2018, the Meiji Group acquired a partial stake in a new company
KM Biologics which has inherited the following principal businesses:
the human vaccine business, the plasma derivatives business and theveterinary vaccine business from The Chemo-Sero-Therapeutic
Research Institute. The Meiji Group has since made it a subsidiary inorder to enter into the vaccine business.
We will create a value chain that covers preventive throughtherapeutic treatment of infectious diseases, by combining theadvanced R&D capability in vaccines from KM Biologics with ourexpertise in antibiotics in the Pharmaceutical segment. Thereby, we will
strengthen the health and preventative medicine domain noted in the
Meiji Group 2026 Vision.
In business management, we will strengthen corporate governanceto ensure strict quality management and production management.
Based on this system, we will provide a stable supply of blood
derivatives and help develop the vaccine industry. Accordingly, we will
help protect public health and the health of the citizens.

WEB KM Biologics Co., Ltd.
http://www.kmbiologics.com/en/

Meiji Holdings Co., Ltd.｜Integrated Report 201815

Message from the President

The Meiji Group 2026 Vision / Management Vision and CSR Vision

Advance the Management System andContribute to Addressing Social Issues through Business
Advance our Management System

The “Management system” and “CSR” are key topics to increase
corporate value over the medium- to long-term.
In the Management Vision, we formulated three policies as
indicated in the table on the right. The major topics in establishinga management system is “Management personnel” and “Global
personnel.” Leadership Values which identify managerial qualities
were discussed and set in the Board of Directors Meeting in FY3/18
in light of the Nomination Committee’s review. Based on these
Leadership Values, we will establish a succession plan. We arestrengthening our global personnel through “Training” and by“Acquiring outside talent.” In order to expand the international
business at a faster rate, we must consider self-sufficiency andalso add something extra in the Meiji approach. We will review
improving the quality of local operations in the international
business. With regard to the second policy: “Developing a work
environment, in-house system and organizational climate,” weare creating a motivated and enthusiastic work environment andpromoting diversity. We encourage all employees to participate
actively in order to attain this vision. To “Enhance the Meiji brand,”we, as a food and health business group, will communicate amessage of progressive value all over the world and advance the
Meiji brand both in Japan and globally.
We shall fulfill our CSR in accordance with the newly formed
Meiji Group CSR 2026 Vision. Under the three main themes:“Healthier Lives,” “Caring for the Earth” and “A Richer Society,” wewill actively contribute to addressing social issues through business(see p.32 for details). By embracing this approach, the Meiji Groupis committed to realizing a sustainable society for people to live
healthy, peaceful lives.

1 Establish functional,

strategic management system
to grow sustainably
in Japan and globally

Systemize and apply succession plan,created based on our leadership value● Establish business management system,
secure and develop quality humanresources to expand overseas business●

2 Develop work environment,

in-house system,
organizational climate tomaximize individual potential

Create motivated and enthusiastic work
environment● Promote diversity● Improve labor productivity and commit tohealth and safety in the work environment●

3 Enhance the Meiji brand

Meiji Group CSR 2026 Vision

Areas of Activity

Domains

WEB Meiji Group CSR 2026 Visionhttps://www.meiji.com/global/sustainability/

16

Our Value Creation Story｜Message from the President

Introduction

2020 Medium-Term Business Plan (FYE March 2019-2021)

Address Strategic Issues Continuously and Challenge for the Further Growth
Key Strategies
Basic Concept

Address strategic issues
continuously and challenge
for the further growth

Our Value Creation Story

1 Expand market share and achieve
high revenues in core businesses

2 Expand aggressively in overseas

markets and establish growth platform

3 Propose new value inhealth care domain

4 Continue structural reforms and resolve

speciﬁc business issues in each business

Our Activities for Sustainability

5 Enhance the Meiji Group management
platform and promote CSR

KPIs
Growth & Profitability (FY3/21)
Net sales

JPY 1,350 billion

Op. income (margin)

JPY 125 billion (9.3%)

Overseas sales

JPY 142 billion

Overseas proﬁts

JPY 9.5 billion

Financial and Non-Financial Section

For the first stage of the 2026 Vision, we set up the 2020 MediumTerm Business Plan which began in April 2018 and will continue for3 years.
The plan’s basic concept is to “Address strategic issues
continuously and push for further growth.” Based on this concept,
we will carry out five strategies as shown in the table on the right.
The goal of the 2020 Medium-Term Business Plan is to reach a
net sales of JPY 1,350 billion and an operating income of JPY 125
billion for the overall Group. Our target is to achieve JPY 142 billion
in overseas sales and JPY 9.5 billion in overseas profits. Our target
for ROE is a range of 13%.
We expect to generate an operating cash flow of approximately
JPY 400 billion over 3 years and will earmark those funds forcapital expenditures. Capital expenditures are expected to reacha total of approximately JPY 330 billion over a 3 year period. These
funds will be allocated selectively and primarily for increasing
production capacity, improving quality and expanding overseas
businesses. In addition, we will provide stable and continued
increases to dividends with a target payout ratio of 30%. This 2020
Medium-Term Business Plan focuses particularly on expanding
the international business. We may consider alliances or mergers
and acquisitions as the opportunity arises and if they serve ourstrategy. The funds for such a venture will basically follow our loan
procurement target with a debt/equity ratio of less than 0.5.
Based on this policy, our goal is to build momentum in the firstfiscal year of the 2020 Medium-Term Business Plan. The outlook in
FY3/19 is a net sales of JPY 1,260 billion and an operating incomeof JPY 99.5 billion. The specific measures in the 2020 MediumTerm Business Plan are summarized in the following pages by thepresident of each operating company in food and pharmaceuticals.

Efficiency & Stability
11-12%ROA*

Debt/equity ratio < 0.5

Food 13-14%
Pharma6-7%* ROA: Operating income / Average net assets

Shareholder ReturnROE

13-14%

Payout ratio

Increasing dividends witha target payout ratio of 30%

Use of Cash Flows
Capital expenditures

Generate stable cash ﬂow by increasing income

Invest in new growth drivers and improvement of
productivity to achieve 2026 Vision

FY3/19-FY3/21

FY3/19-FY3/21

Approx.
JPY

400 bn(incl.) Depreciation and amortization
Approx. JPY 160 bn

Approx.
JPY

330

Corporate Information

Operating cash flows

Breakdown: Increase production capacity and improve quality 50%
Expand overseas business, strengthen subsidiaries
20%
bn
R&D
5%
Logistics, technology and procurement
5%

Interest bearing debt

Returns to shareholders

Procure as need D/E ratio: 0.5 or lower

Stable and continued increases to dividends with a target
consolidated payout ratio of 30% by considering medium- tolong-term business forecasts

Strategic investments
Invest in growth platform through alliances, M&A
Meiji Holdings Co., Ltd.｜Integrated Report 201817

Medium-Term Business Plan (Food Segment)

Katsunari Matsuda
President andRepresentative Director
Meiji Co., Ltd.

Making Our “Core” and “Growth” Areas Stronger in Japanand around the World to Generate More Profit.
The goal of the 2020 Medium-Term Business Plan in the
Food segment is to reach a consolidated net sales of JPY
1,160 billion and to increase the operating income to JPY
110 billion, a 30% increase compared to FY3/18. The key
is expanding the core and growth areas both in Japanand overseas. We plan to actively invest in marketing tosigniﬁcantly increase sales and generate earnings.
FY3/19 is the ﬁrst year in our plan and our target is
JPY 1,090 billion in net sales and JPY 90 billion in
operating income. To counteract the increase in costs fordairy ingredients, logistics and other items, we will
strengthen our marketing to increase sales. We will
follow the key strategies in the Medium-Term Business
Plan to seek more growth while adapting to the changes
in the marketplace.

Consolidated Net Sales

Food Segment
Japan(Billions of Yen)
1,160.0

Overseas

1,090.0

1,073.6

90.0

43.4

51.8

1,030.1

1,038.2

1,070.0

FY3/18

FY3/19FY3/21

Breakdown of Consolidated Op. Income(Billions of Yen)
FY3/18

84.1
+40.0
-13.5
-3.0
+2.4

FY3/2118

Our Value Creation Story｜Medium-Term Business Plan

110.0

Sales growth of
products in Core
and Growth areas
Increase in costsof goods soldIncrease inpromotion expenses
Improvement in proﬁtability
at subsidiaries, etc.

Expand share and achieve high revenues in core businesses

Introduction

Key Strategies

Expanding Yogurt, Chocolate, and Nutritional Products
Japan

Consolidated Net Sales(Billions of Yen)

Functional and plain yogurt
Chocolate

1,030.1

Nutritionals
Other1,070.0

1,038.2*
CAGR18-21

Our Value Creation Story

6-7%

+
72.0
104.0

77.8
105.9

107.9
130.0

203.5

210.0

224.0

FY3/18

FY3/19FY3/21* CAGR : Compound Average Growth RateJapan

Market Share

Meiji
Largest peer

Our Activities for Sustainability

We are focusing on yogurt, chocolate and nutritional products, thecore of the Food segment, to expand sales further and raise ourmarket share even more.
In functional yogurt, our goal is to achieve sustainable growthby constantly providing scientiﬁc information for existing products
to customers and boosting the demand. For example, we are
expanding the market by promoting Meiji Probio Yogurt R-1
throughout the year, and by conveying a new marketing message
for Meiji Probio Yogurt LG21: “Beneﬁting from Lactobacillus in thestomach.” In plain yogurt, we not only continue to communicate
the nutritional value of Meiji Bulgaria Yogurt but also introduce new
products such as Meiji THE GREEK YOGURT, launched in April. In
chocolate, we are extending our product line for Chocolate Kouka
and Meiji The Chocolate in order to increase our customer base andattract repeat customers.
In addition to the existing products in our sports nutrition line,
we will launch new products with various conﬁgurations tostimulate new demand. We will increase the production capacity
for SAVAS in the second half of FY3/20. In enteral formula, we focus
on Meiji Mei Balance. The drug stores currently make up the
majority of our sales network for Meiji Mei Balance, and sales insupermarkets and convenience stores continue to increase. Goingforward, we will strengthen our marketing and expand our sales
channels.

53.9%
44.0%

43.5%
24.3%

N/A

Yogurt

ChocolateSportsproteinFoods forthe elderly(consumer products)* Meiji Holdings’ estimate as of March 31, 2018

Financial and Non-Financial Section

Develop Products to Drive Growth into the Future
Japan

Net Sales of Growth Area
(Billions of Yen)
Foods for professional use

CheeseFrozen dessert

59.8

58.6

58.1

43.0

44.9

35.2

35.6

40.5

FY3/18

FY3/19FY3/21Japan

CAGR18-21

3-4%

+

52.1

Corporate Information

Cheese, frozen dessert products and food products for professionaluse make up our growth area in the Food segment. We would liketo increase sales for these products to become market shareleaders in order to make them into our next core products.
In cheese, operations began at our new plant for Camembert.
We will develop new natural cheese products. As the cheesemarket continues to expand each year, we will grow our sales
through active marketing. In frozen dessert products, we will
vitalize the overall brand for our mainstay products Meiji Essel SuperCup by introducing new ﬂavors to the Meiji Essel Super Cup Sweet’sthat features high added value. In addition, we are developing
healthcare-oriented products to create new markets. In foodproducts for professional use, we provide cream and confectionary
ingredients through our B2B network. We will develop distinctive
products and secure new business partners using the results fromour dairy and cocoa research and our advanced manufacturing
technologies.

Market Share

Meiji
Largest peer

11.1%
7.1%

Natural cheese Process cheese

9.6%

Ice cream* Meiji Holdings’ estimate as of March 31, 2018

Meiji Holdings Co., Ltd.｜Integrated Report 201819

Medium-Term Business Plan (Food Segment)

Key Strategies

Expand aggressively in overseas markets and establish growth platform

Focusing on the Mainland China Market and Supporting E-commerce
In order to ensure future growth, developing overseas markets is a
key topic, and our goal is to reach a size of JPY 90 billion in net sales
for the entire international business by FY3/21.
In the 2020 Medium-Term Business Plan, we are focusing on
Mainland China and planning to reach a size of JPY 23 billion insales by FY3/21, which is approximately two times bigger than thecurrent ﬁgures. Our speciﬁc approach is to expand our productlines that are already popular in Mainland China, such as milk,
yogurt, confectioneries and ice cream. Recently, e-commerce for
digital commercial transactions via the Internet has become
increasingly important in the Mainland China market. Our current
sales system is based in actual stores, but we are trying to optimize
the system for e-commerce as quickly as possible. We also need todevelop exclusive products for e-commerce tailored to local needsin order to strengthen our sales channels.
In addition, this Medium-Term Business Plan considers thepotential of the sports nutrition business in Mainland China.
Recently, the health conscience trend is increasing and gaining
more attention in Mainland China than in Japan, causing us tomonitor the situation more carefully.

Consolidated Net Sales
and Proﬁts (Billions of Yen)

Overseas
Net Sales
Op. income

90.0

3.0

51.8
43.4

0.7

0.8

FY3/18

FY3/19FY3/21

Sales Breakdown by Area (Billions of Yen)
FY3/21

Focusedarea

FY3/18Results

TargetChangeMainland
China

11.9

23.0

+92.0%

ASEAN

3.8

13.5

+251.0%The U.S.

18.6

34.5

+85.3%

Exports

9.0

19.0+110.5%

Taking on a New Challenge to Develop Nutritional Products Globally
Products with the biggest competitive edge in international
business will be our nutritional products. As a new challenge, wewill promote a strategy to develop nutritional products that havethe potential to achieve large market growth in the global market.
We are developing infant formula, sports nutrition and enteral
formula in our target area, Mainland China, ASEAN and the U.S.
While we must follow the regulations and laws in each country, we
will grow nutritional products as a major part of our business.
In the international business as a whole, we will revise themanagement system and increase the interest and awareness of
the Meiji brand in order to improve the Meiji Group corporate value
globally. Furthermore, we will invest more in international businessto increase our production capacity and accelerate businessgrowth. One other available option for growth may be M&A.

20

Our Value Creation Story｜Medium-Term Business PlanIntroduction

Continue structural reforms and resolve specific business issues in each business

Key Strategies

Continue Structural Reforms to Improve Productivity

Strategy
Create production structure optimal to business strategy
Promote labor-saving● Solve issues to create ideal production system

KPIs *●

Production

●

●

R&D

●

●

Optimize shipment and delivery
Achieve superior logistics quality
Build advanced research networkby consolidating research labs

Build strong relationship with major clients
Create attractive visual store displays● Build strategic sales organization●

Per capita net sales
in production division●

Net sales-to-logistics costs ratio
Number of logistics centers●

Per capita production marginal proﬁt
in research division● Number of patent applications
●

●

Sales
Admin

●

●
●

Strengthen risk management
Promote additional process consolidation●

Per capita sales marginal proﬁt
in sales division●

Net sales-to-personnel cost ratio
in management division

Our Activities for Sustainability

Logistics

Our Value Creation Story

The Structural Reforms are outlined in the table below. We have set up a strategy and the KPIs in production,
logistics, R&D, sales and administration. We are working hard to achieve those targets.
In sales, for example, we reorganized the sales organization in April 2018. Accordingly, we have changed froma product based structure to a customer based structure because the boundaries of our sales channels are
disappearing. The organizational restructuring has strengthened our sales capabilities and made them more
eﬃcient, and we expect to see big results within a few years. Our goal with these structural reforms is to improve
the productivity of each person.

* KPI: Key Performance Indicator

Make Milk Business Proﬁtable by FY3/21

Financial and Non-Financial Section

Milk Business* Sales

Japan(Billions of Yen)

107.1

Meiji Oishii Gyunyu

106.0

94.6

57.7

54% 59.1

FY3/18

FY3/1970%

67.4 >

FY3/21

Corporate Information

Improving proﬁtability in the milk business is one issue in the Foodsegment. Instead of a 1 liter package, we launched a 900 mL
package of Meiji Oishii Gyunyu nationwide to establish a strong
presence. We will continue our marketing that appeals to its
manufacturing method and “delicious taste” to diﬀerentiate it fromother drinking milk. In addition to Meiji Oishii Gyunyu, we aredeveloping milk-based drinks with added value, and at the sametime improving eﬃciency in our production system.
There is plenty of potential in the milk business to generateearnings because the turnover rate is high and the products do not
require large promotional investments. We are looking to make themilk business proﬁtable by FY3/21 by creating added value andimproving productivity.

* Milk business includes sales of low-fat milk andother milk-based drink.

Sales of Meiji Oishii Gyunyu
Breakdown by Volume
Small
13%
Middle15%

Home delivery 2%

Large

70%
(FY3/18 Results)

Meiji Holdings Co., Ltd.｜Integrated Report 201821

Medium-Term Business Plan (Pharmaceutical Segment)

Daikichiro Kobayashi
President andRepresentative Director
Meiji Seika Pharma Co., Ltd.

Our Goal is to Build up Our Portfolio and Grow Further
by Expanding Brand-name and Generic Drugs
as well as by Strengthening International Business.
In the Pharmaceutical segment, we are strengthening
our presence in the domestic core areas and creating
new markets in international business. Our goal is toreach JPY 190 billion in consolidated net sales and JPY 15
billion in consolidated operating income in FY3/21.
Assuming that the NHI price revision will occur twice by
FY3/21, our plan is to secure earnings with threestrategies: 1) Expand our brand-name and generic drugs,2) Improve the revenue in our agricultural chemicals andveterinary drugs business and 3) Grow our international
business.
Our target in the 2020 Medium-Term Business Plan for
FY3/19 is JPY 171.6 billion in consolidated net sales and
JPY 10 billion in consolidated operating income. While
we expect the NHI price revision to have a negative
impact, approximately JPY 12 billion, we will still reachour earnings target by increasing the volume of sales forour brand-name and generic drugs in core areas andalso by promoting cost down measures, which includes
cutting costs in purchasing active ingredients.

Consolidated Net Sales
Pharmaceutical Segment (Billions of Yen)Japan

Our Value Creation Story｜Medium-Term Business Plan

190.0

168.4

171.6

39.4

41.9

129.0

129.7

138.0

FY3/18

FY3/19FY3/21

52.0

Breakdown of Consolidated Op. Income(Billions of Yen)
FY3/18

FY3/21

22

Overseas

11.0

Sales growth of newly launched
products and generics, offset
the impact of NHI price revision+0.7
Improvement in profitabilityof agricultural chemicals and+2.6
veterinary drugs
Increase in-1.2
promotion expenses
Sales expansion at+1.9
overseas subsidiaries

15.0

Expand share and achieve high revenue in core businesses

Introduction

Key Strategies

Maximize Product Value in Core Areas and Enhance PresenceMarket Share Targets in FY3/21
Systemic
antibacterial drugs

1 20

#

1 32

#

%

(FY3/18: #3, 21.8%)

Bilanoa inantihistamine drugs*2

3 >10

#

%

*1 Based on the number of prescriptions*2 Meiji Seika Pharma only
* Market share: Meiji Holdings’ estimate

Japan

Consolidated Net Sales

Our Activities for Sustainability(Billions of Yen)

REFLEX + SYCREST + Bilanoa
Generic drugs

129.0

129.7

46.7

47.1

Other

138.0

65.0

25.7

28.3

25.0

FY3/18

FY3/19FY3/21

Financial and Non-Financial Section

Expand Sales of Generic Drugs andAccelerate Biosimilar Development to Drive Growth

DM BioMedreich Thai Meiji
Pharmaceutical

Corporate Information

We will be focusing on generic drug sales and biosimilar (biologic
medical product that is almost an identical copy of an original
product) development in Japan. In “Speciality generic drugs,”
including antibacterial and CNS disorders, we will increase the sales
volume by providing information on both brand-name and genericdrugs. We will also strengthen “Essential generic drugs” inlifestyle-related and gastrointestinal diseases.
In addition to the manufacturing from Thai Meiji Pharmaceuticaland PT. Meiji Indonesian Pharmaceutical Industries, we started
production at Medreich for the Japanese market to achieve low
cost production overseas. As the drug price competition is getting
ﬁercer, a stable supply of high quality generic drugs at a low cost isa tremendous advantage for us.
We will develop biosimilars steadily at DM Bio, a joint venture in
Korea.
Even though an NHI price revision is expected twice by FY3/21,
we will work hard to overcome the tough conditions to reach JPY
65 billion in net sales for generic drugs.

%(FY3/18: #1, 16.4%)

Antidepressantdrugs andschizophrenia drugs*1

Our Value Creation Story

Our domestic growth strategy is to strengthen the core areas:“Infectious diseases,” and “Depression and schizophrenia” and thegrowth and reform area: “Immune system and inﬂammatory
disorders.”
In the infectious diseases domain, we entered into the vaccine
business and expanded our product lines, covering frompreventive to therapeutic drugs. We obtained a tremendous
advantage to build up our presence with medical institutions. In
the depression and schizophrenia domain, we will continue toexpand our sales volume for the antipsychotic drug SYCREST, which
is our mainstay product in this domain. When our new drug
ZIPRASIDONE is launched in the market, this will expand our
product line in antipsychotic drugs and will also provide patientswith additional options when selecting a treatment to ﬁt theirneeds. Accordingly, we will reorganize our sales system so that it
can handle an increase in antipsychotic drugs. Our new oral,
anti-allergy drug Bilanoa will be key in the immune system andinﬂammatory disorders domain. Sales increased favorably during
hay fever season for FY3/18. Our goal is to secure more than 10% of
the market through active promotional activities.

PT. Meiji Indonesian
Pharmaceutical Industries

Enhance global supply chain
and realize low-cost production

Meiji Holdings Co., Ltd.｜Integrated Report 201823

Medium-Term Business Plan (Pharmaceutical Segment)
Key Strategies

Expand share and achieve high revenues in core businesses /Expand aggressively in overseas markets and establish growth platform

Expanding a Global Market with Medreich’s CMO/CDMO Business
The international business is already part of our core area in the
Pharmaceutical segment. Our FY3/21 target in the Medium-TermBusiness Plan is to grow the consolidated net sales to JPY 52 billion,
a 30% increase compared to FY3/18, and to increase the operating
income to JPY 6.5 billion, a 50% increase compared to FY3/18.
Medreich’s CMO/CDMO* business is the leading force behind
this growth. Medreich has created a global sales network and uses
its low cost with the right quality as a competitive advantage tomanufacture and supply products to 50 countries all over theworld (excluding the U.S.). Those business partners primarily
include large global pharmaceutical companies. It is expected thatthe global market will have a rising demand to contract
manufacturers in the future. As a result, we will not only continue
to grow our contracting service from existing business partners but
create new business partners as well.

Consolidated Net Sales
Overseas and Profits (Billions of Yen)
Net sales
Op. income

52.0
41.9

39.4
4.4

3.0

FY3/18

FY3/19FY3/21

Global Trend in CMO Business

17.7
CAGR14-26(Bn USD)* CMO: Contract Manufacturing Organization
CDMO: Contract Development Manufacturing Organization

6.1%

+
9.9
8.6 9.2

Strengths of Medreich
Global sales network
Obtained regulatory approval in over 50 countries(Europe, Canada, Africa, Asia, Oceania)● Seven production plants in India● Supplying products to major global companies

6.5

●
●

Key Strategies

2014

2017

2020

2026

* Visiongain, Pharmaceutical Contract
Manufacturing Market 2016-2026

Continue structural reforms and resolve specific business issues in each business

Promoting R&D Pipelines for Promising Agricultural Chemicals to Significantly Increase Revenue
Our structural reforms in the Pharmaceutical segment will change the agricultural chemicals and veterinary
drugs business into a proﬁt earning business in the Medium-Term Business Plan.
Agricultural chemicals appear to be a vital business to support future growth. We will improve the
proﬁtability of the rice blast preventative ORYZEMATE and the ZAXA liquid formula foliage herbicide, which are
currently mainstay products in this domain. We will facilitate the development of our R&D pipelines that are
targeted for the global market. All three items listed below came from our advanced R&D capabilities, and welicensed them out to global chemical companies.
All of these chemicals are unique and have new chemical structures, and it has been proven to be highly safe
for mammals and other environmental organisms including honey bees. The royalty revenue from thesechemicals and the selling of the active ingredients are expected to produce a new revenue stream. For
veterinary drugs, we will focus on management resources in the livestock and ﬁshery domains. We will increase
proﬁtability in the agricultural chemicals and veterinary drugs business by FY3/21.

Agricultural Chemicals: Promising Pipelines
ME5343 Insecticide

ME5223 Fungicide

ME5382 Insecticide

Conducting joint development with
BASF SE (Global excluding parts of Asia)● Market size: Japan JPY 20 bn
Overseas JPY 300 bn●

Conducting joint development with
DowDuPont (Global excluding parts of Asia)● Market size: Japan JPY 10 bn
Europe JPY 150 bn●●

Green chemicals manufactured by innovative fermentation technology

Conducting joint development with
Arysta LifeScience Corporation (India)● Market size: Japan JPY 30 bn
India JPY 60 bn (CAGR 12%)Europe & Americas JPY 200 bn● Labor-saving for hydroponic culture
in India* Meiji Holdings’ estimate

24

Our Value Creation Story｜Medium-Term Business Plan

FY3/19

R&D Pipeline

FY3/21

Phase II

ME1100 Arbekacin[Hospital Acquired Bacterial Pneumonia /Ventilator Associated Bacterial Pneumonia
treatment (HABP/VABP)] ●OP0595 Nacubactam[β-lactamase inhibitor] ● *Phase Ib

(Overseas)

Phase I

SME3110 Fluvoxamine[Selective serotonin reuptake inhibitor(SSRI) (Pediatric OCD)]

CNS disorders

Ethical Pharmaceuticals

Our Value Creation Story

Infectious diseases

ME1111 [Antionychomycosis] ●FY3/20Introduction

R&D Pipeline

Approved

Expanded indication
ME2125 Safinamide *[Anti-Parkinson’s disease]

ME2112 Ziprasidone
REFLEX [Fibromyalgia treatment]
Expanded indication

Apply

Approve

Phase III

Apply

Approve

New fields

Phase II

SP-02L Darinaparsin[Relapsed and refractory peripheral
T-cell lymphoma (PTCL)]

DMB-3111[Trastuzumab biosimilar] ● *ME5382 [Insecticide] ● *ApplyPhase II

Out-licensing(P I finished)

Applied

Apply(Overseas)

Approve

ME5343 [Insecticide / Afidopyropen] ● *(Discovered in a research collaboration between
Meiji Seika Pharma and The Kitasato Institute)ANM-138 [Insecticide / Flometoquin] ●Joint development with Nippon Kayaku

AppliedApplied

ME4129 [Injectable antibacterial drugs]
Expanded indication

Applied

ME4136 [Injectable antibacterial drugs]

Applied

ME4624 [Vaccine]

Approve(Overseas)

Approved

ME5223 [Fungicide / Fenpicoxamid] ● *ME4137 [Injectable antibacterial drugs](Overseas)(Overseas)

Approve(Overseas)

Approve
Approve
Apply
Apply

Approve

Corporate Information

Veterinary drugs

Financial and Non-Financial Section

Agricultural chemicals

Our Activities for Sustainability[Antipsychotic]

Phase II/III

Approve● Compounds discovered in-house* Out-licensed items. Please refer to our website for details of the companies and areas out-licensed to.
https://www.meiji.com/global/investors/our-businesses/pharmaceutical-pipeline/

Meiji Holdings Co., Ltd.｜Integrated Report 201825

Special Feature

Creating Markets
with a Strong Value Chain

R&D

Procurement

Production
and Distribution

Sales andCommunication

Safe andReassuring Quality

We Have Excellent R&D Capability
and Provide Trusted Quality.
With These Strengths, We Will Provide Progressive Values
and Continue Finding Innovative Ways to Meet
Our Customers’ Needs, Today and Tomorrow.
The Meiji Group has outstanding functionality in all of “R&D,” “Procurement,”“Production and Distribution” and “Sales and Communication.” We have built a value
chain and these work processes are supported with “Safe and reassuring quality” (Seenext page for details). We have been producing progressive value through this value
chain. We have delivered this value and information to our customers and created
new markets. Thus, we have achieved sustainable growth. The special feature section
focuses on our Group’ s strengths in “R&D” and “Safe and reassuring quality” withinthat value chain and introduces recent topics in the Food and Pharmaceuticalsegments.

26

Our Value Creation Story｜Special Feature

R&D

For details, please see page 28.

Introduction

In the Food segment, we have unique properties, for example, a library of approximately
5,500 strains of lactobacillus and a wealth of information about cocoa beans. We use theseas a foundation for product development that oﬀers new nutritional value. In the
Pharmaceutical segment, we are conducting research in the ﬁelds of infectious diseases
and central nervous system (CNS) disorders to develop generic drugs. In addition, we are
expanding into new ﬁelds, such as autoimmune disease, cancer treatment andregenerative medicine.

Meiji Seika Pharma has four
research laboratories where
researchers conduct highly
specialized R&D.

In the Food segment, we select suppliers who can provide astable supply of ingredients which comply with the standards
established by the Company. In addition, we support dairy andcocoa farmers to ensure sustainable procurement. In the
Pharmaceutical segment, we carry out various measures toimprove the reliability of our products, such as risk assessmentsof the ingredient suppliers, regular audits and training.

SCM Department ensures the
procurement of bulk drugs andraw materials is stable and ofgood quality.

All Meiji products are produced
under strict sanitary control
management.

Our pharmaceutical plant follows
GMP* standards and provides
stable production.
*Good Manufacturing Practice

Feedback from staﬀ in retailstores provides us with valuable
marketing information.

We focus on collecting data andhelping our MRs provide useful
information to physicians.

Our Activities for Sustainability

Collecting and supplying
information for producer’s groupand dairy farmers.

Our Value Creation Story

Procurement

Production and Distribution
In the Food segment, based on our own strict regulations, wehave set up a sanitary control system to ensure our products
comply with the quality standards. Our distribution is designed
to deliver room temperature, chilled and frozen products
appropriately to the market. In the Pharmaceutical segment,
we established a system in all domestic and overseas plants sothat high quality products that meet all standards can beproduced and manufactured consistently.

Financial and Non-Financial Section

Sales and Communication
We always engage in two way communication. We convey toour customers the new value that we created. We also listen to
their feedback on what to focus on next. In the Food segment,
we provide information to stimulate customer’s interest in
health, for example, through “Shokuiku activities” (food andnutrition education). In the Pharmaceutical segment, our MRs(Medical Representative) provide high quality information,
feedback on health care facilities’ needs and use that
information for further research & development.

Corporate Information

Safe and Reassuring Quality
In the Food segment, we established a unique quality management system called “Meiji
Quality Comm.” We implement a management cycle for all functions in the Company inorder to promote constant improvements in quality. In the Pharmaceutical segment, we
set up the “Meiji Seika Pharma Reliability Assurance Policy.” We are engaged in a number ofquality assurance activities that cover the entire supply chain from raw material
procurement, to production, distribution and post-marketing.
For details, please see page 30.

We are providing safe andreassuring quality throughout
our entire supply chain.

Meiji Holdings Co., Ltd.｜Integrated Report 201827

Special
FeatureCreating Markets with a Strong Value Chain

R&D

Food
Segment

Meiji Innovation Center

Opened New R&D Center as a
Platform for Continuous Innovation

Voice

In November 2017, the Meiji Group consolidated two
research laboratories and integrated all R&D activities(i.e. Research & Development, Food Science Research,
Food Technology Research and Quality Food Research)
to form the “Meiji Innovation Center” in Hachioji inTokyo.
We should come up with breakthrough innovations
to bring new nutritional value to customers such aswith functional yogurt and Meiji Chocolate Kouka inorder to achieve further growth. At our new R&D center,the researchers with diﬀerent specializations work
closely together to combine their respective expertiseand transcend the organization’ s boundaries. We will
live up to our slogan if we keep innovating uniqueproducts that only we can oﬀer.
In addition, we use the new research laboratory as acenter for open innovation to accelerate R&D activities.
We will create a network with leading companies andresearch institutes at home and abroad including the
Pasteur Institute in France. With our strength in “Milk,”“Lactobacillus,” “Cocoa” and “Nutrition engineering,” wewill use this network to develop products with value
essential to our customers’ healthy lifestyle.

In Meiji’s scientific quest,
we will unravel the nutritional value
concealed in food.

Communication
areas are set up oneach ﬂoor featuring
diﬀerent designconcepts.

28

Our Value Creation Story｜Special Feature

In the new Meiji Innovation Center, we have staﬀed
researchers with diﬀerent specializations on thesame ﬂoor. This design encourages mutualcommunication among researchers and enables
product development to be completed on each
ﬂoor. We see its eﬀectiveness already; the ﬂow ofideas has been increasing signiﬁcantly and the paceof discussions and trial manufacturing are also
speeding up tremendously. In addition, we areenergizing the environment inside the researchlaboratories and promoting personnel training, forexample, by launching bottom-up projects. In theseprojects, we collect innovative ideas from young
researchers and make them project leaders for theirprojects.
There are still many new and exciting frontiers in
the food science that should be examined. For
example, intestinal bacterial ﬂora is one promising
topic. It has been discovered that diﬀerent bacteria
play various functions within the intestine, and wecontinue to examine and research theirmechanisms. There are still many
substantial issues to be discovered indairy and cocoa research. We will beseeking unprecedented nutritional
value and creating new markets forpeople throughout the world tolead healthy and happy lives.

Hiroyuki Itoh, Ph.D.
Member of the Board
Managing Executive Oﬃcer
R&D Division
Meiji Co., Ltd.

Introduction

Pharmaceutical
Segment
Our Value Creation Story

R&D

Voice

Due to a recent rise in microbes resistant toconventional antibiotics, the international community
has been confronted with a major concern on how tocounteract antimicrobial resistance (AMR). We havebeen researching and developing antibiotics for many
years, and we are committed to ﬁnding a solution tocounteract AMR.
We will apply our wealth of expertise in theinfectious disease ﬁeld and extend our business model
to include immunology and inﬂammation related ﬁelds.
By encouraging our researchers to have an open mind,
we currently have new drug candidates in ourdevelopment pipeline. We are also working with theFoundation for Biomedical Research and Innovation at
Kobe on “Drug discovery research on autoimmune
disease and cancer” and focusing on unmet medical
needs. In addition, we will soon collaborate with R&D in
the Food segment, which will include research on
antiaging and cross-border topics between nutritionals
and pharmaceuticals. “Pre-symptomatic” states is agood example in an interdisciplinary ﬁeld involving
both the pharmaceutical and food industries. Therefore,
these research themes are tremendous opportunities tocreate new business models for the Meiji Group using
both of our segments. We will introduce leading
technologies such as AI to our research process andimprove our competitive edge and eﬃciency in R&D.

The deep trust from medical institutions
sharpens our competitive edge.
Our competitive edge in R&D is attributed to our longexperience and involvement in antibiotics research, andhas earned us the deep trust from medical institutions.
We have amassed a huge amount of data collectedfrom drug sensitivity testing for resistant strains ofbacteria, which medical institutions sent to us. We
promote R&D based on the practical needs at hospitals,
because we stay informed on the latest trends involving
infectious diseases.
We pour many resources into β-lactamase (enzymethat breaks down antibiotics such as penicillin
formulation) and producing bacteria because many
medical institutions are very interested in counteracting
drug-resistant bacteria. We have successfully discovered
OP0595 (development number), which inhibits
β-lactamase and shows anti-bacterial activities against
drug-resistant bacteria when combined with
antibacterial drugs. We concluded a licensing
agreement with the Swiss company F. Hoﬀmann-La
Roche and have now completed Phase I in clinical trials.
OP0595 was born thanks to a unique idea from one of
our researchers and has been developed under a solid
strategy. We have started clinical trials injust 3 years, an unusually fast pace. We
expect that this new candidate will
combat AMR, and we shall continue
to carry out our social responsibilities
through revolutionary drug
discovery.

Financial and Non-Financial Section
Corporate Information

Many new drugcandidates are in ourdevelopment
pipeline thanks to thesuccess of ourresearchers.

Our Activities for Sustainability

Doing Our Part in Drug Discovery Researchto Counteract AMR as a Global Concern

Toshihiro Kikkoji, Ph.D.
Member of the Board
Senior Managing Executive Oﬃcer
Pharmaceutical Development Division
Intellectual Property, R&D Administration
Meiji Seika Pharma Co., Ltd.

Meiji Holdings Co., Ltd.｜Integrated Report 201829

Special
FeatureCreating Markets with a Strong Value Chain

Quality

Food
Segment

Meiji Dairies (Suzhou) Co., Ltd.

Milk ﬁlling process

Meiji Quality is Marking a New Phase in the
Milk and Dairy Market for Mainland China.

Voice

In 2011, we established Meiji Dairies (Suzhou) Co., Ltd.
We started milk and yogurt production from 2013 andlaunched our dairy business in China. Up until then in
the Chinese dairy market, long life milk that can be
stored at room temperature and sweetened soft yogurt
were the leading products. We believed that we could
create a new market here by introducing our fresh
tasting products like chilled milk and plain yogurt.
When we opened our plant, we applied the sameadvanced manufacturing technology that we use inJapan, and we set up a system so that local staﬀ could
attain the same quality as in Japan. Furthermore, we
introduced an ESL control processing method (methodthat Extends the Shelf Life or expiration date using an
advanced sanitary control system), which was virtuallyunprecedented in China at that time, and acquired“Enterprise Standards” certiﬁcation from the relevant
authority in Suzhou. We were able to achieve the same
shelf life as in Japan: 14 day expiration date from the
manufacturing date. Accordingly, we were able toexpand our market successfully. In addition, our Meiji
Bulgaria Yogurt – Plain, that we have produced since westarted the business, is also gaining support from
Chinese consumers and sales continue to increase,
thanks in part to an increasing health trend in China.
Meiji quality and the new value oﬀered by our milk,
dairy and yogurt products have had a tremendous
impact on the Chinese dairy market.

After persevering and negotiating withlocal authorities, we were able to becomecompliant with Japanese standards in China.
The government imposes strict safety regulations in
the Chinese dairy market. We had to clear a numberof hurdles in order to successfully launch ourbusiness in China. For example, this was true when
we introduced the ESL control processing method. Inorder to develop a market in fresh chilled milk, we
believed that ESL control processing was essential
and convinced local authorities after working
tirelessly to secure the data to prove its safety. In
addition, we have been working relentlessly toestablish a stable distribution system for chilled
products. We are doing this by providing instructions
at the local distribution center, in order to ensure thevalue of the ESL chilled milk is delivered properly tothe market. We also focused on training local staﬀ incharge of quality at the plant, because those leaders
would impact our future. We invited them tocomplete training in Japan to ensure they
understood and learned the approach and method
behind Meiji’s quality control.
Because of these eﬀorts we can deliver
fresh, delicious milk and yogurt to manycustomers in China. We have imparted
change in the local diet and feel proud of
stimulating a new demand with ourquality. In the future, we will actively makeinvestments in equipment in order toenhance our competitiveness.

Jun Okajima
E chilled milk andESLyyogurt productsoopened up themmarket.

30

Cream ﬁlling process

Our Value Creation Story｜Special Feature

Director General Manager
Meiji Dairies (Suzhou) Co., Ltd.

Introduction

Pharmaceutical
Segment
Our Value Creation Story

Unit 7, a new plant for Medreich Limited

Working together with local staﬀ

Voice

One of our important strategies is to expand our genericdrug business. Our decision to buy out the Indian
pharmaceutical company Medreich Limited was aimed
at creating a system that could deliver competitively
priced products while maintaining quality required forpharmaceuticals. We possess a facility to produce
pharmaceuticals at a low cost and still meet the Japanesemarket standards. In addition, Medreich also has sales
channels in Europe, Australia and ASEAN countries, andwe believe these will play a major role in ourinternational business strategy in the future.
At the new Unit 7 plant for Medreich, we designed aplant that complies with all Japanese regulations andconstructed a dedicated line with a production capacityof 3 billion tablets for the Japanese market. In addition,
we were able to transfer technology to local staﬀ toensure Japanese quality standards were met within ashort time period. During this time, a total of 71
employees in charge of pharmaceutical development,
manufacturing technologies and quality control travelled
to Medreich and spent 1,864 days working onsite. By
doing this, our Japanese staﬀ became deeply involved
with onsite operations and were able to launch Unit 7
smoothly and begin supply to the Japanese market.
Going forward, we will take full advantage of Medreich’s
resources, Meiji quality and our brand strength, to lift ourgeneric drug business model to a level that is unaﬀectedby the NHI price revision in Japan.

Many Japanese staff became deeply involved
with the launch of plant operations.
This played a major role in the projectʼs success.

Our Activities for Sustainability

Expanding our generic drug businessglobally with Japanese quality in India

Financial and Non-Financial Section

When we constructed a production system for theJapanese market at Medreich, training local staﬀ waschallenging due to diﬀerences in culture and values.
Japanese staﬀ trained local staﬀ and carefully
checked their progress, covering areas such as
assessing potential risk, selecting and introducing
equipment based on the manufacturing line designs,
transferring manufacturing technologies andconducting trial manufacturing, transferring quality
testing and Good Manufacturing Practice (GMP)
standards training. When a problem arose, we
discussed the potential solution together and gave
detailed instructions to ensure the staﬀ could
implement this problem-solving approach onsite.
Through these eﬀorts we completed the project at
an unusually fast pace of just 22 months. There wereJapanese staﬀ members who had experience inlaunching plants in Thailand and Indonesia and intransferring technologies. Their expertise played amajor role in this project very much.
Our quality-focused approach is thesame in Japan and overseas. The meiji
brand is based in quality, and byhaving the staﬀ at Medreich embrace
this philosophy, we will grow ourgeneric drug business globally.

Corporate Information

Yuji Sasaki, B.Pharm., M.Sc

Local staﬀ is taking out
granulated active
ingredients at the newplant Unit 7.

Member of the Board
Senior Managing Executive Oﬃcer
Corporate Development
Partnering Strategy and Business Development
Photodynamic Therapy BusinessBusiness Planning and Operation
Biologics / Bioscience Labs.
Meiji Seika Pharma Co., Ltd.

Meiji Holdings Co., Ltd.｜Integrated Report 201831

The Meiji Group’s Approach to CSR

Our Target Prof ile— A Corporate Group Essential to and Tru
TrusteTrusted by Its
tss Stakeho
Stakeholde
Stakeholders
The basis of "the Meiji Group’ s Approach to CSR""
is to fulﬁll corporate social responsibility (CSR) byynaputting the Group Philosophy into practice onbday-to-day basis in mainstay businesses and byremaining a corporate group society needs.
Each Meiji Group employee will advance
activities based on the Corporate Behavior
Charter to meet stakeholders’ expectations andcontinue fulﬁlling social responsibilities.

Meiji Group CSR 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.
Creating Our Vision

The Meiji Group has created the MeijiGroup CSR 2026 Vision. This was
designed to embody “Social
contributions,” which is a key strategy in
the Meiji Group 2026 Vision. The CSR
vision identiﬁes activities that the MeijiGroup should embrace over the longterm. We have set KPIs* so that theGroup CSR Committee can monitor our
progress and disclose information.

Step 1

Select activities tailored for the Meiji Group consideringbusiness initiatives, community requests and sustainable
development goals (SDGs).

Step 2

Step 3

Obtain approval from management
CSR secretariat and the Group CSR Committee discusses,
and the Board of Directors makes a decision.

Feedbackfrom Experts

32

Identify materiality and set the KPIs
Set the KPIs. Confer with experts outside of the Company
regarding the selected activities, identify materiality (material
issues).

* KPI: Key Performance Indicator

The CSR 2026 Vision is based on two solid
foundations focusing on three important
themes. Its approach is easy-to-understandand its content is attractive.
A “Low-carbon society” is the one area thatshould be revised quickly. With theinternational community heading toward“decarbonization,” I believe that a long-term
vision is needed to cover changing thepower at least used in manufacturing andoperation to 100% renewable energy.

Identify issues and select activities

Mr. Peter David Pedersen
Co-founder, NELIS
Director, TACL
Co-founder, E-Square Inc.

Our Activities for Sustainability｜Meiji Group’s Approach to CSR

In the age of SDGs, I thinkthat it is well-timed that
the Group set up the new
CSR 2026 Vision focusing
on addressing social
issues. I expect that theGroup will continue todisclose information as
the Group achieves
success through its
businesses.

Mr. Hidemi Tomita
Director
Lloyd’s Register Japan K.K.

Outline of Vision
Introduction
Our Value Creation Story

The Meiji Group CSR 2026 Vision isbroken down into three themes:“Healthier Lives,” “Caring for the Earth”
and “A Richer Society.” We establishedspeciﬁc areas of activities under eachtheme. Based on this framework,
shown in the ﬁgure, we promote CSR
activities that are developed in the
Meiji way to fulﬁll our corporate
responsibilities.

Our Activities for Sustainability

We identiﬁed the materiality and set the KPIs as indicated below in the CSR 2026 Vision. By achieving these
performance indicators, we will help solve issues in society and also improve our corporate value.
Red font: Materiality issues

Theme

Areas of Activity

Healthier Health andNutrition
Lives

Social Issues

KPIs• Contribute to healthy diets• Respond to a super-aged society

1. Develop products that contribute to healthy diets and asuper-aged society
2. Enroll a total of 500,000 people into nutrition and healthy
diet education (Shokuiku*) within three years from
FY3/19 to FY3/21

Quality and
Safety• Ensure product quality
and safety

Climate Change • Reduce CO2 emissions
Caringforthe Earth Circular Economy • Reduce environmental impact

A RicherSociety

Water• Secure water resources

Biodiversity• Secure local biodiversity

Human
Resources• Promote diversity
and inclusion* Shokuiku: Food and Nutrition Education

Financial and Non-Financial Section• Improve nutrition in emerging
countries• Ensure the sustainable supply ofpharmaceuticals• Measures against infectious diseases

Obtain Global Food Safety Initiative (GFSI) certiﬁcation, which
includes HACCP for all domestic food plants by FY3/21
Reduce total domestic CO2 emissions by more than 15%
compared with FY3/14 baseline by FY3/31
Reduce domestic water use volume (base units) by more than
20% compared with FY3/16 baseline by FY3/31
1. Raise the ratio of female managers to greater than 10% by
FY3/27 from 2.6% in FY3/18. Triple the number of female
leaders* to more than 330 by FY3/27

Corporate Information* Leader: Manager and assistant manager

2. Raise the ratio of employees with disabilities above thestatutory employment quota• Employee-friendly workplace

Society• Respect and promote
human rights• Communicate with stakeholders• Promote CSR activities

SharedThemesSustainable
Procurement• Procure raw materials withconsideration toward humanrights and the environment• Provide stable procurement(1 and 2 are the combined total targets for Meiji HD,
Meiji and Meiji Seika Pharma alone, excluding aﬃliates)

100% of employees receive training on human rights(in Meiji HD, Meiji and Meiji Seika Pharma alone, excluding aﬃliates)

1. Improve traceability of cocoa
2. Use 100% of RSPO*-certiﬁed palm oil by FY3/24* RSPO: Roundtable on Sustainable Palm Oil

3. Use 100% of environmentally friendly paper raw materials
by FY3/21
Meiji Holdings Co., Ltd.｜Integrated Report 201833

The Meiji Group’s Approach to CSR

Healthier Lives

Policies & Plan
Part of the Meiji Group’s mission is to improve the health of people through our business. We promote nutrition
with various information and increase public awareness to create a society where all generations from infants tothe elderly live a healthier and richer lifestyle in both “mind” and “body.”

Shokuiku Activities (Food and Nutrition Education)
As a resource for becoming healthy, we focus on
Target Shokuiku Participants:“Shokuiku activities” to promote knowledge anddeepen understanding about “Food.” We are providing
information to promote healthier dietary habits bytargeting the three aspects: “The value and enjoyment(Total from FY3/19 to FY3/21)
of food,” “Nutritional balance” and “Food-related safety
and reassurance.” We are expanding our nutrition andhealthy diet education and will enroll a total of 500,000
people within 3 years from FY3/19 to FY3/21.

500,000

Fun interactive classes for elementary and junior high school students
We provide programs for children to appreciate and learn about the importanceof food so that they become more interested in healthy dietary habits from ayoung age. We will continue to visit and teach fun, easy-to-understand lessons
for elementary and junior high schools. Our curriculum uses both “educationaltalks” and “ﬁrsthand experiences” that stimulate all ﬁve senses.

Our Fun Milk Classes are popular andteach how “Milk” is essential for
healthy growth.

Fun Seminars on Health for Adults
We conduct a variety of seminars and oﬀer programs for adults. Participants can“learn” new things about food to increase their interest in healthy dietary habits.
We also provide valuable information for daily lives through various venues suchas local activities, company seminars, PTA activities and preventive care lessons.

Voice

We hold seminars at diﬀerent
locations for adults to educate them
about “Food.”

We create lessons that stimulate the children’s interest.
I am involved in lesson planning for the fun interactive classes for elementaryand junior high school students. With more emphasis being put on active
learning in education, I am working on creating attractive content for children,
such as integrating group work into the lesson and keeping them interested.
Once the interactive class is ﬁnished, I really sense how impactful this activity isafter hearing comments from the students such as: “Now I understand why foodis important” or “I am going to make sure I drink all of my milk from now on.” I
think we should strengthen our relationships with companies and public oﬃces
and I would like to convey how important “Food” is to people of all ages.

34

Our Activities for Sustainability｜Meiji Group’s Approach to CSR

Fuyuko Mimura
Direct Communication Team
Public Relations Department
Meiji Co., Ltd.

The Meiji Group is helping improve access topharmaceuticals in emerging countries by supplying
the antituberculous drug KANAMYCIN. Currently, it isestimated that there are approximately 10 million
tuberculous patients per year in the world, and 5% or
500,000 of those patients have multidrug-resistanttuberculosis. KANAMYCIN is eﬀective against
multidrug-resistant Mycobacterium tuberculosis. We
have been supplying patients with KANAMYCIN
through a United Nations project called the “Stop TB
Partnership.” The goal of this project is to bring an
end to this global epidemic. To achieve this, theproject plans to improve access to pharmaceuticals inremote areas of Asia and Africa. The Meiji Group isalso working to obtain data by 2020 to show that
KANAMYCIN can be stored for more than 5 years, evenin hot and humid conditions. We shall continue toprovide a stable supply of high quality
pharmaceuticals to help stop tuberculous.

Obtain GFSI certiﬁcation,
which includes HACCP for

all domestic food plants
by FY3/21.

Our Activities for Sustainability

The Meiji Group embraces a management attitude
to provide safe and reassuring high-quality products.
Based on our Group Philosophy, we use a uniquequality management system called the “Meiji Quality
Communication” in the food business. Meiji’s strict
quality assurance follows a coherent system thatcovers from product development all the way tosales and communication.
In addition, we are adopting the Hazard Analysis
and Critical Control Point (HACCP) at all plants as atactical measure to ensure food safety. In all
domestic food plants by FY3/21, we are alsoplanning to acquire Global Food Safety Initiative(GFSI) certiﬁcation, a global food safety management
system.

Our Value Creation Story

Provide Infection Countermeasures

Introduction

Quality Measures

Stable Supply of Pharmaceuticals -Global Production System-

Financial and Non-Financial Section

The most important job for us in the pharmaceuticalbusiness is to provide a stable supply of high quality
pharmaceuticals. Because the patient comes ﬁrst, wehave an optimal production system throughout theworld that not only follows strict quality
management but is environmentally-friendly as well.
We have also created a logistics system that supports
emergency situations such as disasters to preserve
the patients’ lives.

Source: Stop TB Partnership

The Meiji Group is doing its part to stop TB by
supplying KANAMYCIN.

Voice

One person dies from tuberculosis in the world every 18 seconds. People dedicatedto distributing antituberculosis drugs in international organizations, ﬂy all aroundthe world every day to save the lives of tuberculosis patients. In our involvementwith supplying KANAMYCIN, I have met with those people. We have received a lotof praise from them about how “Meiji is a wonderful company” or that “we are
happy that Meiji is involved.” I am proud of our technological capabilities thatprovide high quality products in a timely manner. I am also extremely happy to be
involved in work to improve the health of people all over the world.

Corporate Information

Praised by international organizations
for our help in stopping tuberculosis.

Junji Hattori
Manager
API Operations Headquarters
Meiji Seika Pharma Co., Ltd.

Meiji Holdings Co., Ltd.｜Integrated Report 2018

35

The Meiji Group’s Approach to CSR

Caring for the Earth

Policies & Plan
We, the Meiji Group, in recognition of the fact that our business operations originate from the bounty of nature,
will contribute to the creation of a sustainable society. To this end, we intend to harmonize our business activities
with the global environment and manage the Group in a way that protects the environment.
WEB Meiji Group Environmental Policy https://www.meiji.com/global/sustainability/for-the-environment/index.html

Environmental Management System
Our food company (Meiji Co., Ltd.) and our pharmaceutical company (Meiji Seika Pharma Co., Ltd.) each conduct
environmental management through their environmental committees. There is the Meiji Group Environmental
Meeting, which is made up of representatives from both companies and the CSR representatives from Meiji
Holdings Co., Ltd. This meeting oversees the environmental management for the whole Group, including risk
management and drafting long-term vision policies.

The Meiji Group CSR Committee
ReportFood

Pharmaceuticals

Meiji Group Environmental Meeting
Meiji
Environmental
Committee

Meiji Seika Pharma
Environmental
Committee• Meets monthly• Environmental representatives from Meiji Co., Ltd.
and Meiji Seika Pharma Co., Ltd. andCSR representatives from Meiji Holdings Co., Ltd.

Climate Change Initiatives
We should reduce CO2 emissions to achieve a sustainable
society. For countermeasures against global warming, wehave set long-term targets for FY3/31 in the Meiji Group CSR
2026 Vision. We will take various measures to achieve thosetargets and reduce CO2 emissions.

Activities for Reducing Energy Consumption
The Meiji Group is reducing energy consumption in our
corporate activities in various ways. At production sites, wehave switched from heavy oil to natural gas to curb our CO2
emissions, introduced energy-eﬃcient equipment such ascogeneration systems, and improved equipment operationeﬃciency.

Renewable Energy
Using renewable energy such as solar power contributes toconserve limited resources and to prevent global warming.
We currently have large roof installations of solar panels at our
Osaka, Aichi and Santa Ana (CA) Plants to reduce CO2
emissions.

36

Our Activities for Sustainability｜Meiji Group’s Approach to CSR

Domestic CO2 emissions volume for FY3/31* Compared to FY3/14

More
than

15

% reduction

CO2 emissions volume for FY3/18
Domestic

230
Scope2 274
Scope3 2.035
Scope1

thousandtons
thousandtons

Overseas

34
98

thousandtons
thousandtons

milliontons(Domestic)

Scopes 1 and 2 are calculated based on the Act on Promotion of Global WarmingCountermeasures. The scope of the CO2 emissions that are included is noted on
p.101. In addition, the numerical data indicated withhave been assured by anindependent practitioner.
Scope 3 is calculated based on the Basic Guidelines on Accounting forGreenhouse Gas Emissions throughout the Supply Chain.
Categories included in calculation:
Category 1 (Purchased Goods and Services), 2 (Capital Goods), 3 (Fuel- andEnergy-Related Activities Not Included in Scope 1 or Scope 2), 5 (Waste Generated
in Operations), 6 (Business Travel), 7 (Employee Commuting) and 12 (End-of-Life
Treatment of Sold Products)(Overseas)
14 overseas production plants are included in the calculation. Scope 1 uses theemission factors from the Act on Promotion of Global Warming Countermeasures,and Scope 2 uses the emission factors from the IEA, Emissions from Fuel
Combustion.

Introduction

Initiatives for Water Resources
Domestic water usage for FY3/31 (base unit)* Compared to FY3/16

2015

More
than

20

% reduction*

Our Value Creation Story

Water is a vital resource for the Meiji Group, and as aninvaluable resource in the world, we believe its
management is essential for achieving a sustainable
society. Therefore, the Meiji Group set a target to
reduce our water consumption by 20% (base unit,
compared to FY3/16) by FY3/31. To achieve this target,
we will appropriately manage water intake anddischarge as well as mitigate risk, and thereby conserve
water and ensure the continuity of our businesses.

2030

Water Intake

Our Activities for Sustainability

The Meiji Group is constantly working hard to save water and reduce its footprint in the environment from ourwater intake. We have revised our production processes to enhance our water-use eﬃciency and are also working
to recycle water.

Water Discharge
The Meiji Group has set more stringent standards for discharged water than thelegal standards in Japan, and we are working on preventing water pollution. In
order to reduce our environmental footprint of discharged water, we installequipment that uses activated sludge treatment and methane fermentation atplants or for processes that discharge a lot of water.

Methane fermentation treatment
facility for Meiji Chewing Gum Co., Ltd.

Water Risks

Financial and Non-Financial Section

We assess the water risks in all areas where our domestic and international production sites are located in order tounderstand the impact of water usage on production. For this assessment, we use AQUEDUCT, an international
water risk assessment software launched by the World Resources Institute (WRI). We also collect information anddevelop speciﬁc measures for the site.

Voice
We set new targets for water resources
to realize sustainable growth.

Corporate Information

In the Meiji Group CSR 2026 Vision, achieving a low-carbon society and conserving
water resources are vital priorities for ensuring a sustainable business. We will
implement our energy-saving measures throughout the company to reduce CO2
emissions. For the ﬁrst time, the Meiji Group has created speciﬁc targets and amanagement system to conserve water resources. When setting the targets, we
discuss the various water risks and the management systems needed in thecurrent environment, where clean water is accessible and plentiful in Japan but asa resource is precious and limited in the world. We shall continue these initiatives
to ensure that the water resources, which are unevenly distributed throughout theworld, are not wasted at all even when there is abundant access to it.

Masahiro Murao
Manager
Environmental Aﬀairs TeamCSR Promotion Dept.
Meiji Co., Ltd.

Meiji Holdings Co., Ltd.｜Integrated Report 2018

37

The Meiji Group’s Approach to CSR

A Richer Society

Policies & Plan
Being involved in the Food and Health business, the Meiji Group takes the weight of this responsibility seriously.
We will fulﬁll our social responsibilities by developing our business in a healthy way. We respect and promote
human rights for all those involved with our corporate activities. We shall comply with the laws and regulations of
all related countries and regions and run our businesses while being respectful of the diﬀerent cultures andcustoms. In addition, we will develop our involvement with local communities as good corporate citizens andcontribute throughout society.

Human Rights
We established the Meiji Group Policy on Human
Rights to show our Group’s stance on human rights
and continue our businesses while maintaining
respect for and promoting human rights among all of
our stakeholders. We have set a target so that 100% of
all new employees and managers complete thetraining on human rights awareness to ensure ourpolicy is followed.
WEB The Meiji Group Policy on Human Rights

All employees whoneed training on
human rights
awareness
will be trained
Human rights awareness training.
Our goal is for all new employees
and managers to be trained.

100%

https://www.meiji.com/global/about-us/mission-and-vision/pdf/Policy_on_Human_Rights.pdf

Diversity
The Meiji Group establishes our respect for the diversity andTargetindividuality of employees in our Corporate Behavior Charter. Based on
femaleour approach, we develop an HR system and workplace environmentMoremanagers
so that each employee can maximize their capabilities with energy.
than% by FY3/27
Consequently, we will improve our corporate competitiveness. To
support the success of women in the workplace, we will improve our
Female leaders* in FY3/27
working environment so that many women can perform well in various
positions. To that end, we will expand and improve support systems that
Minimum of
encourage female employees to balance work and family life and set*
Leader: Manager and assistant manager
targets for the number of women in managerial positions.

10

330

Personnel Training
The Meiji Group embraces a management attitude to “foster thedevelopment of the synergies and capabilities of the organization andeach individual.” We believe the development of each employee is vitalto achieve sustainable growth in the company and thus focus on
personnel training. The basic policies in our HR development system
are as follows: “Develop personnel who have the proactive mindset—
as well as the expertise, creativity, and practical skills—needed to takeon and achieve ambitious targets.” “Spur the Group’s expansion by
growing individuals, develop independent-minded personnel who
help raise the general level of capabilities in the Group.” “Develop
personnel who thoroughly understand the Group Philosophy, andemploy business practices in the meiji way consistently at a high level.”38

Our Activities for Sustainability｜Meiji Group’s Approach to CSR

For training
in FY3/18
Approx. JPY

274

million** Training held by HR & GeneralAﬀairs Department at two in-housetraining sites

Sustainable Procurement
Introduction

Procure raw materials with consideration toward human rights and the environment

Policies & Plan

Our Value Creation Story

When procuring raw materials and basic ingredients for our corporate activities, the Meiji Group has establishedthe Meiji Group Procurement Policy in order to provide our customers with safe and reassuring high-quality
products. Based on this policy, when we procure from our business partners, we always consider fairness,transparency and compliance with laws and regulations, and take into account our corporate social responsibility,
including human rights and the environment.
WEB Meiji Group Procurement Policy https://www.meiji.com/global/about-us/mission-and-vision/pdf/Procurement_Policy.pdf

Cocoa

Our Activities for Sustainability

As the demand for chocolate continues to increase, it is essential toestablish a stable supply of cocoa beans, the main ingredient inchocolate. The Meiji Group has secured multiple suppliers. In
addition, the Group oﬀers Meiji Cocoa Support, which supports
farmers secure a stable production of high quality cocoa beans. This
includes working with local partners, holding seminars on cultivation
techniques, establishing a seedling supply center and teaching aunique fermentation process. We joined the NPO World Cocoa
Foundation (WCF) in 2006. We have contributed funds to the ﬂagshipprogram in the WCF: Cocoa Livelihoods Program (CLP), in order toprovide support to increase the income of farmers in western Africancountries such as Ghana.

Farmer training school

For palm oil, the Meiji Group started to support sustainableprocurement and joined the Roundtable on Sustainable Palm Oil(RSPO) in March of 2016. We have set targets for FY3/24 to use 100%
RSPO certiﬁed palm oil to facilitate a consistent changeover.

Financial and Non-Financial Section

Palm Oil
Use RSPO certiﬁed palm oil
by FY3/24

100

%

Paper
Drinking milk,
Meiji Oishii Gyunyu 900 mL(FSC® certiﬁed paper)

Corporate Information

The Meiji Group uses environmentally-friendly
paper in order to protect the ﬁnite forest
resources and help prevent global warming. The
Forest Stewardship Council® (FSC®) is a third
party organization that oﬀers an international
forestry certiﬁcation system. We have set atarget to use 100% environmentally-friendly
paper by FY3/21, and been promoting suchinitiatives that include using paper products
certiﬁed by the FSC®.

Use
environmentally-friendly
paper raw materials
by the ﬁscal year 2020

100%

Meiji Holdings Co., Ltd.｜Integrated Report 201839

Directors and Audit & Supervisory Board Members(As of July 2, 2018)40

Member of the Board andExecutive Oﬃcer

Member of the Board andManaging Executive Oﬃcer

Member of the Board andManaging Executive Oﬃcer

Member of the Board andSenior Managing Executive Oﬃcer

Member of the Board(Outside)

Shuichi Iwashita

Jun Furuta

Koichiro Shiozaki

Michiro Saza

Mariko Matsumura

Member of the Board

President andRepresentative Director

Katsunari Matsuda

Kazuo Kawamura

Our Activities for Sustainability｜Directors and Audit & Supervisory Board Members

Introduction
Our Value Creation Story
Our Activities for Sustainability
Financial and Non-Financial Section

Makoto Ando

Member of the Board(Outside)

Member of the Board(Outside)

Audit & Supervisory
Board Member (Outside)

Audit & Supervisory
Board Member

Audit & Supervisory
Board Member

Corporate Information

Audit & Supervisory
Board Member (Outside)

Tomochika Iwashita Tohru Murayama Hajime Watanabe Mineo Matsuzumi Hiroyuki Tanaka

Chairman and
Representative Director

Member of the Board

Masahiko Matsuo

Daikichiro Kobayashi

Meiji Holdings Co., Ltd.｜Integrated Report 201841

Responsibilities of Members of the Board andAudit & Supervisory Board Members(As of July 2, 2018)

Members of the Board
Attendance at meetings (FY 3/18)

Number of years
Number ofas Member of
the Company’ s
the Boardshares held (Shares)

Name

Positions and areas of
responsibility in the Company

Masahiko Matsuo

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

17 /17

9 years

24,849Kazuo Kawamura

President and Representative Director
Member of the Board, Meiji
Member of the Board, Meiji Seika Pharma

17 /17

6 years

27,729Michiro Saza

Member of the Board and Senior Managing Executive Oﬃcer（Corporate Development Dept. and HR & General Aﬀairs Dept.）
Member of the Board, Meiji
Member of the Board, KM Biologics

16 /17

6 years

11,475

Koichiro Shiozaki

Member of the Board and Managing Executive Oﬃcer
General Manager, Financial & Accounting Department

17 /17

3 years

sharesJun Furuta

Member of the Board and Managing Executive Oﬃcer
General Manager, PR & IR Department

17 /17

4 years

sharesShuichi Iwashita

Member of the Board and Executive Oﬃcer
General Manager, HR & General Aﬀairs Department

17 /17

4 years

Daikichiro Kobayashi

Member of the Board
President and Representative Director, Meiji Seika Pharma

17 /17

4 years

Katsunari Matsuda

Member of the Board
President and Representative Director, Meiji

Appointed in June 2018

Name

Positions and areas of
responsibility in the Company

Attendance at meetings (FY 3/18)

Tomochika Iwashita

Member of the Board (Outside)
Independent director

17 /17

2 years

sharesTohru Murayama

Member of the Board (Outside)
Independent director

17 /17

2 years

sharesMariko Matsumura

Member of the Board (Outside)
Independent director

Appointed in June 2018

Board of Directors

Board of Directors

sharessharesshares

8,878

3,253

11,297
shares7,632
shares4,372
sharesNumber of years
Number ofas Member of
the Company’ s
the Boardshares held (Shares)

435

373

―

Audit & Supervisory Board Member

42

Attendance at meetings (FY 3/18)

Number of years as
Number of
Audit & Supervisory the Company’ sBoard Member shares held (Shares)

Name

Positions and areas of
responsibility in the Company

Mineo Matsuzumi

Audit & Supervisory Board Member
Audit & Supervisory Board Member,
KM Biologics

13 /13*

11/11*

1 yearsharesHiroyuki Tanaka

Audit & Supervisory Board Member

13 /13*

11/11*

1 yearsharesName

Positions and areas of
responsibility in the Company

Board of Directors Audit & Supervisory Board

Attendance at meetings (FY 3/18)
Board of Directors Audit & Supervisory Board

2,719

6,684

Number of years as
Number of
Audit & Supervisory the Company’ sBoard Member shares held (Shares)

Hajime Watanabe

Audit & Supervisory Board Member(Outside)
Independent director

17 /1715 /15

5 years―

Makoto Ando

Audit & Supervisory Board Member(Outside)
Independent director

13 /13*10 /11*

1 yearsharesOur Activities for Sustainability｜Responsibilities of Members of the Board and Audit & Supervisory Board Members

369

Advisory body members to the Board of Directors

Career summary

Compensation Committee

Chairperson

Chairperson

Introduction

Nomination Committee

Masahiko Matsuo entered the Company in 1969 and has experience and achievements in areas such as overseas business planning,production, sales and corporate development. He has held positions as Company President of the pharmaceutical business of Meiji
Seika and as President and Representative Director of Meiji Seika Pharma. In June 2014, he became President and Representative
Director of the Company and then became Chairman and Representative Director of the Company (current position) in June 2018.
Kazuo Kawamura entered the Company in 1976 and has experience and achievements in areas such as corporate
development, sales and PR. He has held positions as Executive Oﬃcer in Nutritionals Sales Division of Meiji Dairies and as
President and Representative Director of Meiji. In June 2018, he became President and Representative Director of theCompany (current position).
Michiro Saza entered the Company in 1978 and has experience and achievements in areas such as corporate
development and information systems. He has held positions as Executive Oﬃcer in the Corporate Development
Department of Meiji Seika and as Executive Oﬃcer in the Corporate Development Department of the Company. In June
2017, he took on his current position.

Our Value Creation Story

Koichiro Shiozaki entered the Company in 1978 and has experience and achievements in areas such as accounting,budget control, and general aﬀairs. He has held positions as Executive Oﬃcer in the Administration Department of Meiji
and as Member of the Board and Executive Oﬃcer in the Financial & Accounting Department of the Company. In June
2017, he took on his current position.
Jun Furuta entered the Company in 1981 and has experience and achievements in areas such as corporate
development, accounting, PR, and as accounting manager of U.S. subsidiaries. He has held positions as Executive Oﬃcer
in the PR Department of Meiji and as Member of the Board and Executive Oﬃcer in the PR & IR Department of theCompany. In June 2018, he took on his current position.
Shuichi Iwashita entered the Company in 1977 and has experience and achievements in areas such as HR, legal aﬀairs,
and general aﬀairs. In June 2014, he was appointed Executive Oﬃcer in the HR & General Aﬀairs Department of theCompany (current position).

Our Activities for Sustainability

Daikichiro Kobayashi entered the Company in 1979 and has experience and achievements in areas such as sales strategy,
distribution policy, and pharmaceutical information management. He has held positions as Executive Oﬃcer in theMarketing Planning Strategy Department of Meiji Seika and as Executive Oﬃcer of Meiji Seika Pharma. In June 2014, hetook on his current position.
Katsunari Matsuda entered the Company in 1980 and has experience and achievements in each business such as fresh
dairy, processed food, confectionery and nutritionals. He has held the position as Executive Oﬃcer in the Consumer
Products Department of Meiji. In June 2018, he took on his current position.

Career summary

Main expertise and backgroundManagement

Legal aﬀairs

Advisory body members to the Board of Directors

Global business

Nomination Committee

Compensation Committee

Ex-Executive Vice President, Tokio Marine & Nichido Fire
Insurance Co., Ltd.
Ex-President, Tokio Marine & Nichido Life Insurance Co., Ltd.
Director (External), DCM Holdings Co., Ltd.

Financial and Non-Financial Section

Ex-Representative Director and President and Ex-Director and Chairman,
Accenture Japan Ltd.
Visiting Professor, Faculty of Science and Engineering, Waseda University
External Director, FAST RETAILING CO., LTD.

Attorney at Law

Career summary

Mineo Matsuzumi entered the Company in 1978 and has experience and achievements in areas such as information systems, purchasing, auditing and accounting.
He has held positions as Executive Oﬃcer in the Financial Department and the Chief HR & General Aﬀairs Oﬃcer. In June 2017, he took on his current position.

Corporate Information

Hiroyuki Tanaka entered the Company in 1977 and has experience and achievements as a manager for developing and integrating core systems, and managing
general IT systems and information security in the information systems ﬁeld, which he oversaw for a long time. He has held a position as an Executive Oﬃcer in the
Information Systems Department of Meiji. In June 2017, he took on his current position.

Career summary

Main expertise and background
Legal aﬀairs

Accounting

Attorney at Law
Outside Audit & Supervisory Board Member, SEIKO PMC CORPORATION
Outside Audit & Supervisory Board Member, FURYU Corporation

Certiﬁed Public Accountant
Unaﬃliated Auditor, Nippon Concrete Industries Co., Ltd.
* Attendance since appointment to Audit & Supervisory Board on June 29, 2017

Meiji Holdings Co., Ltd.｜Integrated Report 201843

Dialogue with Outside Directors and Their Message

Outside director

Outside director

Tomochika Iwashita

Tohru Murayama

Achieving Sustainable Growth in the Meiji GroupIn June of 2016, Meiji Holdings increased the number of outside directors
from 2 to 3, in order to strengthen the function of the Board of Directors andto establish more eﬀective corporate governance. Here in this section,
Tomochika Iwashita and Tohru Murayama, who were appointed outside
directors in 2016, give us their thoughts on what issues confront the MeijiGroup and how to resolve them to maintain sustainable growth in the future.

44

Our Activities for Sustainability｜Dialogue with Outside Directors and Their Message

Iwashita Meiji Holdings created the Meiji Group
2026 Vision, and we were deeply involved withformulating that 2026 Vision. After active and detailed
discussions among the Board of Directors, I believethat we have come up with a really good vision.

Iwashita

Iwashita In order for the Meiji Group to growfurther, all employees must be on board andcommitted to carrying out the 2026 Vision. It is
important to nurture a “healthy sense of crisis or
urgency” throughout the Group. In recent years, theMeiji Group has posted outstanding performances,
but the growth rate has now seemed to slow downslightly. The 2026 Vision targets are far bigger thananything previously achieved, and requires an evenbigger jump to the next level. I hope that each andevery employee embraces the idea that this vision
cannot be achieved without massive reforms.

Our Activities for Sustainability

I see the Meiji Group as steady andsound, which is one of our strengths. However, theGroup also needs bold ideas to make bigger leaps
forward, and I believe both of us can make a larger
contribution as we encourage this approach.

What type of leaders does the Meiji Groupneed in management going forward?

Our Value Creation Story

Murayama We not only showed a general concept,
but broke down our strategy into an attainablemedium-term business plan as well as an annual plan,so that we could follow through with it. We did thesame in the Meiji Group 2020 Vision, which enabled
us to achieve the targets ahead of schedule. Thus, theMeiji Group has proven we can produce results.

of management to continuously pursue a “Diﬀerentway” was fantastic. I am conﬁdent that we will reﬁne
this approach even more as we look toward the 2026
Vision, and constantly ask ourselves what is diﬀerent
than before when we implement measures in ourbusiness.

Introduction

Creating the Meiji Group 2026 Vision

Murayama When we created the 2026 Vision, I
Murayama While employees may understand thepolicies outlined in the 2026 Vision literally, it is hardto visualize how to reﬂect policy into a meaningfulchange in one’s own work. This is where the leaders
who make up the core of the organization have an
important responsibility to bridge this gap. They must
act like an “interpreter,” where they understand thepolicies correctly, and then put them into clear words
for other members to change their attitudes and takemeaningful action to achieve a goal. My theory is thatthe leaders of the organization must be “interpreters,”

Financial and Non-Financial Section

really pushed them to focus on “How diﬀerent” orwhat is diﬀerent than before. The reason is because
the Meiji Group has embraced the idea of a “Diﬀerentway” multiple times in the past and this has produced
a good competitive edge. A prime example of thisis the reduction of SKUs (stock keeping units) in the
Food segment, where we implemented “Selection
and concentration” initiatives under strong leadership.
Thus, Meiji generated a dramatic increase in revenue.
Another example was the Medreich buyout in the
Pharmaceutical segment. I think that the attitude

Corporate Information
Meiji Holdings Co., Ltd.｜Integrated Report 201845

Dialogue with Outside Directors and Their Message

and that the Meiji Group must increase the number ofcapable “interpreters.”

What value can the Meiji Group generate in
the health value domain?

As for the leader Mr. Murayama justmentioned, the Meiji Group created “Leadershipvalues” in FY3/18, which state what the Meiji Grouprequires of its management personnel. These values
do not just apply to current management but toall employees. They should keep them in mind andstrive to achieve them. Thus, I think that this will help
produce the next generation of capable leaders.
Among the qualities identiﬁed in the Leadership
Values, the most important one I think is having“Upstanding character.” What is important about thecharacter I am referring to is “Managerial qualities,”
showing a noble quality as a leader, having a clear
philosophy and being able to make fair decisions inbusiness operations. Recently, corporate scandals
have made headlines in society. I think that a major
factor and cause can be attributed to the lack ofmanagerial qualities in the leaders. I believe that if aleader possesses excellent managerial qualities, theorganization will keep growing and not be misguided
down the wrong path or direction.

One of the key policies in the 2026 Vision
is engaging in “New challenges in the health value
domain.” I believe that the market in this domain holds
considerable potential for the Meiji Group. No othercompany has this many “Food” and “Drug” productswith nutritional value, for example, functional yogurt,
chocolate, nutritional products, pharmaceuticals andvaccines.

Iwashita

Murayama We will systemize our succession plan

based on the Leadership Values. The succession plan
will clarify the qualities of personnel needed by thecompany, and it will provide opportunities for various
personnel to play major roles and thereby encourage
diversity.

Iwashita

Murayama As Mr. Iwashita has just mentioned,

the Meiji Group has a wealth of assets related to thehealth value domain. I believe that the idea “Newchallenges” in the health value domain stated in the2026 Vision is to create new value by combining
existing assets and maximize that value before
creating a market from scratch. There must be a lot ofways to combine assets, such as collaborating withother departments, cooperation within the Group,working with other companies and/or using open
innovation with academia. I believe this is what weshould keep at the forefront of our mind as we work.
Iwashita

Some may believe that a collaboration
between the Food and Pharmaceutical segments
is diﬃcult because they are such diﬀerent businessmodels. However, its degree of diﬃculty makes it
worth the eﬀort and means that we can create valuethat others cannot oﬀer. Our only option is to try ourbest to succeed. As I have suggested on diﬀerent
occasions, we should create diﬀerent chances for
personnel to interact between segments. I believethat the experience of working with diﬀerent cultures
helps personnel job performance and grow businessin the health value domain.
Murayama Taking on new challenges in the healthvalue domain is a crucial subject that will determine
the future of the Meiji Group and I hope that we, as
outside directors, will actively pursue it.

46

Our Activities for Sustainability｜Dialogue with Outside Directors and Their Message

Two years have passed since myappointment as outside director in Meiji Holdings,
and I feel that the scope outlined in the Corporate
Governance Code is really being followed. The board
meetings are not just formal discussions. The chairman
has created an environment where Mr. Murayama
and I can speak freely and actively participate in thediscussion. In the beginning, the internal directors
did not speak very much, but recently, meetings
have become active and fruitful. However, in orderto stay on task for the 2026 Vision, I believe that wemust speed up the decision-making process and thatbold challenges will be essential as the opportunities
present themselves.

Introduction

What future issues are there in thecorporate governance of the Meiji Group?
Iwashita

Our Value Creation Story

must be taken in the holdings. When the Group
expands, the next major issue we will face will be how
to maximize our corporate value using governance.
I think in the Meiji Group there are stillsome areas concerning the “Succession plan” and“Diversity” that are not suﬃcient. These are extremely
important issues as we continue to globalize, and I
think we must make quick progress on them.
Iwashita

Our Activities for Sustainability

Murayama As an outside director, I hope that I can
Murayama I think that the corporate governancesystem in the Meiji Group is set up well. However,there is a possibility that new companies will join theGroup later through reorganization or other M&A
activities and therefore a new and diﬀerent action

help the Meiji Group achieve the “Beyond Meiji” targets
in the 2026 Vision. I will not just oversee or supervise
operations but keep stimulating and motivating the
Meiji Group.

Message from Outside Director

Financial and Non-Financial Section

As a female director, I would like to promote
diversity and thereby increase corporate strength.

Mariko Matsumura

Corporate Information

I was appointed as a new outside director in the 2018 General Meeting of
Shareholders. On a personal level, since I was child I have been familiar
with the Meiji Group products, such as chocolate and yogurt or
pharmaceuticals including antibiotics. Recently, SAVAS has also become
our favorite health brand for my family. The Meiji Group has strong brandand make consumers feel comfortable.
With my new position, I would like to use my experience as a lawyer
being involved in global cases to give meaningful advice in the MeijiGroup management. The Meiji Group business is expanding more andmore into overseas markets. And, I hope to visit the procurement,
production and distribution sites myself. In addition, as a female director, I
actively participate and provide input from the perspective of woman topromote diversity. I would like to create an environment where female
employees become more active and are able to raise children and work at
the same time. Thus, I would like to help strengthen the Meiji Group’s
competitive edge.
Attorney at Law (Shinwa Sogo Law Offices)
Outside director

Meiji Holdings Co., Ltd.｜Integrated Report 201847

Corporate Governance
Basic Views
As a corporate group in the Food and Health fields, theMeiji Group's goal is to continue to finding innovative
ways to meet our customers' needs, today andtomorrow. In this way, we aim to achieve sustainablegrowth and increase corporate value over the medium
to long term. We are working to widen the world of“Tastiness and Enjoyment” and meet all expectations
regarding “Health and Reassurance” in order to brighten
our customers' daily lives.
The basic approach to management of the Groupis for operating companies to manage businesses
autonomously while collaborating with each other
under the holding company's control.
The main role of Meiji Holdings Co., Ltd. is toadvance Groupwide management strategies, create an

optimal operating structure, and oversee the business
management of each company. Responsibility for
operational execution is delegated to the operatingcompanies appropriately. Within the Group, oversightand execution of business management are separated.
Accordingly, the Group has established and operates
a corporate governance system including a Board of
Directors. Meiji Holdings is a company with Audit &Supervisory Board Members. Oversight by the Board of
Directors and auditing by the Audit & Supervisory Board
enhance the objectivity and transparency of the business
management.

Corporate Governance System (As of June 28, 2018)
General Meeting of Shareholders
Election, Dismissal

Meiji Holdings Co., Ltd.
Board of Directors

Audits ConductedAdby Audit &Supervisory
Board Memberss

Directors: 11(Including Outside Directors: 3)

Nomination Committee

Election, Dismissal

Audit & Supervisory Board
Collaboration

Audit & Supervisory
Board Members: 4(Including Outside Audit &Supervisory Board Members: 2)

Appointment, Dismissal,
Supervision

Election, Dismissal

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

Collaboration

Compensation Committee
5 Member System
Outside Directors: 3
Internal Directors: 2

President andRepresentative Director

ReportInternal Audit

Executive Committee

Corporate Development
Department

Collaboration

Audit Department

Financial & Accounting
Department

HR & General Aﬀairs
Department

PR & IR Department

Accounting Audit
Internal Control Audit

Group Companies

48

Our Activities for Sustainability｜Corporate GovernanceCorporate Governance Data
Basic views on corporate governanceContent
Established

Organization Form

Company with Audit & Supervisory Board

Directors

Term of Directors

1 yearChairperson of the Board

President

Number of Directors (including Outside Directors)

11 (3 Outside Directors, including one female Director)

Number of Board of Directors meetings

17 times (FY3/18)
100% (FY3/18)
4 (2 Outside Auditors, including one female Auditors)

Our Value Creation Story

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

Introduction(As of June 28, 2018)

Items related to corporate governance100% (FY3/18)
Board of Directors, Executive Committee*, Audit & Supervisory Board,
Audit Department Liaison Meeting, and others

Number of Audit Committee meetings

15 times (FY3/18)

Attendance of Outside Auditors at Audit Committee meetings

96% (FY3/18)

Election of Independent Director

5 (3 Outside Directors, 2 outside audit & supervisory board members)

Accounting Auditor

Ernst & Young ShinNihon LLC

Audit department (internal auditing)

Audit Department* Attended only by full-time members of Audit & Supervisory Board

Calculating Remuneration
Directors

Audit & Supervisory Board
The remuneration for an Audit & Supervisory Board
Member falls within a general range that is decided at
the General Meeting of Shareholders and is set after
consulting with the Audit & Supervisory Board Members.

Details of the Compensation of Directors andAudit & Supervisory Board Members (FY3/18)
Information is disclosed such as the total amount of
remuneration for each type of director, the total amountfor each type of compensation and the number of officers
that are paid. In addition, the individual remuneration isdisclosed for any director who has a total compensationof JPY 100 million or higher.
The details of the remuneration for each type of
director during FY3/18 are as follows.

Financial and Non-Financial Section

Number of Total Amount of
Officers
Remuneration
Directors (other than outside directors)

8¥331 million

Audit & Supervisory Board members(other than Audit & Supervisory
Board members)

4¥58 million

Member of the Board (Outside)3¥43 million

Audit & Supervisory Board Member (Outside)3¥26 million

Total

18

¥460 million

Corporate Information

The remuneration of internal directors in the Company iscomprised of three components: 1. Base compensation,
which is fixed according to the position andresponsibilities, 2. Performance based compensation as ashort-term incentive, which is assigned according to theCompany’s and individual’s performances from the priorfiscal year, and 3. Stock compensation as a medium- tolong-term incentive, which is based on the Company’s
stock price movement. The base compensation andperformance based compensation are paid out in cash,
and stock compensation is allocated as restricted stock.
Note that the fixed (base) compensation and variable
compensation (performance based compensation andstock compensation) have an approximate 6:4 ratio of
the overall remuneration. The variable compensation isdesigned to pay out more for higher positions.
The remuneration for outside directors and Audit &Supervisory Board members is only comprised of a fixedbase compensation due to their position and to maintaintheir independence.
The amount of compensation for a director falls withina general range that is decided at the General Meetingof Shareholders. The amount is calculated based onan evaluation of the company’s performance and theindividual’s performance, while referencing the standard
compensation level at other companies provided by an
external research agency. The amount of compensationthat is calculated is then decided by the Board of Directors
based on a recommendation from the Compensation
Committee, which is made up of at least 4 members witha majority of independent outside directors.

Our Activities for Sustainability

Director Remuneration(Notes)1. "Number of Officers" in the table above includes one Director, two Audit & Supervisory
Board Members and one outside Audit & Supervisory Board Member who retired onJune 29, 2017.
2. As per the resolution of the 1st Ordinary General Meeting of Shareholders held on June29, 2010, the amount of remuneration for directors is capped at 1 billion yen per year (notincluding the employee portion of remuneration for directors who concurrently serve as
employees).
3. As per the resolution of the 1st Ordinary General Meeting of Shareholders held on June29, 2010, the amount of remuneration for Audit & Supervisory Board members is capped
at 300 million yen per year.
4. We have introduced a transfer-restricted stock compensation plan for directors otherthan 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 iscapped at JPY 200 million per year.
5. The total stock compensation is the amount recorded as an expense in the fiscal year
being reported.

Meiji Holdings Co., Ltd.｜Integrated Report 201849

Corporate GovernanceEvaluation of the Board of Directors

Succession Plan

The Company analyzes and evaluates the effectivenessof the Board of Directors as a whole, takes remedial
measures to address any issues that are highlighted
so that the Board of Directors can fulfill its functions
more effectively. This is based on survey that includes
a self-evaluation questionnaire submitted each year
by members of the Board of Directors on the role andmanagement of the Board of Directors and problems or
issues that the Board faces.

The Nomination Committee recommends theappointments and dismissals of top executives. This
committee is comprised of at least four members, andthe majority are independent outside directors. The
members have a say in the succession plan.
After celebrating our 100th anniversary, the MeijiGroup created a new long-term business plan, the MeijiGroup 2026 Vision. Due to the importance of succession
planning for our top executives as per our Corporate
Governance Code and in order to achieve this Vision,
we established a set of “Leadership Values” for our
executives. These standards were reviewed by boththe Nomination Committee and the Board of Directors
before being adopted by the latter in January 2018.
In order for Meiji Group executives to lead the Group
toward achieving its vision, we believe it is critical forthem to “instigate change and lead reform efforts.” The
Leadership Values identify ten leadership qualities fromthe following three categories.
1) Strategic planning and action: Imagination,
decisiveness, ability to achieve breakthroughs, ability
to channel creative energies
2) Organizational leadership skills: Ability to communicate
and convince, ability to motivate, magnanimity forothers’ mistakes, ability to develop others’ talents
3) Character: Ability to recognize and channel diverse
talents, upstanding character
Based on our Leadership Values, we will promote thedevelopment of succession planning.

1. Method for analyzing/evaluating how
effectively the board functioned in FY3/18
The Board of Directors for the Company uses a survey on
the effectiveness of the Board of Directors in line with ourown corporate governance policy, which we establishedin October 2015. In May 2018, the self-evaluationquestionnaire was created by the Board’s Secretariat, inorder to analyze and evaluate the effectiveness of theBoard of Directors in FY3/18.
This questionnaire covers the following categories:• Roles and responsibilities of the Board meeting (setting
strategic direction, overseeing company, preparing
succession plan, discussing/deliberating/reporting on
business matters)• Board composition• Chairperson’s performance• Quality of presentation materials and performance• Secretariat’s performance• Progress in achieving challenges set in previous year.
The feedback items are summarized as follows:• How well the Board has performed according to our
corporate governance policy• How well the Board is being run• Progress in achieving challenges set in the previous
year.

2. Results of analysis/evaluation
We determined that the Board is functioning effectively
on the whole in light of the frequency of its meetings
and the feedback from directors and members of the
Audit & Supervisory Board. However, we found that theBoard should improve the following areas:• Succession planning (should be more systematic in
how to process and adopt the plan)• Establishing a standard on what to submit• Running of the Board
We will work to improve these items and thus make theBoard more effective.

50

Our Activities for Sustainability｜Corporate Governance / Risk Management / ComplianceRisk Management
Basic Views

The Meiji Group has risk management systems inplace that are appropriate for both the Food andPharmaceuticals businesses. To help identify risk factors*
in our businesses, we conduct regular information
sharing in a three-company committee structure, which
includes Meiji Holdings, in order to detect risk early on.
We also address other issues and review our support.
https://www.meiji.com/global/investors/governance/business-risks/

We are in the process of further strengthening our
BCP. In the event of a major earthquake or other largescale disaster, our planning goal is to be able to restore
operations as quickly as possible so that we can fulfill our
obligations to supply necessary pharmaceuticals andfood products.

Connecting Risk to Growth Opportunities
The Meiji Group 2026 Vision and the Meiji Group CSR
2026 Vision consider risk from social trends or social
issues that could potentially impact business. The MeijiGroup sees these types of changes in the economic orsocial climate as growth opportunities that enable us tocontinue finding innovative ways to meet our customers’
needs, today and tomorrow.

Our Activities for Sustainability* WEB Business Risks

Strengthening Our Business Continuity
Planning (BCP)

Our Value Creation Story

Management system

Introduction

Risk does not just involve support and recovery whenan emergency or disaster occurs that severely impacts
business activities. Our risk management systems are also
based on measures that help control and mitigate risk.
In addition, part of corporate responsibility in the Foodand Health ﬁelds is to have systems in place to ensurea stable supply of pharmaceuticals, infant formulas andenteral formulas is delivered even in times of emergency.

See p.10 for the “Meiji Group 2026 Vision” andp.32 for the “Meiji Group CSR 2026 Vision.”

Compliance

The Meiji Group complies with the laws, regulations
and social rules of each country in order to ensure alltransactions are proper and to promote fair, transparent,
and free competition. To increase awareness andstrengthen compliance further, we established internal
regulations based on our Corporate Behavior Charterand work to improve internal training. We conductbusiness holding ourselves to high ethical standards andshall continue to develop to be a company trusted bysociety.

The Meiji Group has “Compliance Regulations” as well as
related rules and committees in place, and also uses aninternal reporting system.
At Meiji, our approach uses the risk management andcompliance in close conjunction with one another, andwe have a Compliance & Risk Management Committee
to promote a variety of activities and programs. We
promote activities to nurture and foster complianceawareness so as to ensure compliance is the cornerstoneof our operations and to ensure those operations are
conducted fairly and faithfully.
Meiji Seika Pharma has established the “Compliance
Program Guidelines” and the “Meiji Seika Pharma Codeof Practice.” As professionals who work in a business
and with products that concern the health and lives ofpeople, we require all executives and employees to act
in accordance with high ethical standards.
Since KM Biologics joined the Meiji Group in July
2018, KM Biologics has set up an organizational structurethat includes a Compliance Committee to provide
compliance training and to oversee proper operationof the internal reporting system in order to ensure risk
is detected early on. Going forward, as a member of the
Meiji Group, KM Biologics will continue to strengthen thecompliance system further.

Meiji Holdings Co., Ltd.｜Integrated Report 2018

Corporate Information

Management System

Financial and Non-Financial Section

Basic Views

51

Financial and Non-Financial Highlights (9 Years Summary)
Consolidated Balance Sheet (Fiscal years ended March 31)
Financial information
For the fiscal year:
Net sales

Unit
Segment

Segment（Overseas）

At fiscal year-end:

Per share data *4

RatiosMillions of yen

2010
1,106,645—

2011
1,114,095
988,854

2012
1,109,275
986,319

Food

Millions of yen

Pharmaceuticals

Millions of yen

Food

Millions of yen—

124,202125,274——

Pharmaceuticals

Millions of yen——
381,234—
370,774

Gross profit

Millions of yen—
371,970

Operating income

Millions of yen

28,78628,873

20,189Profit before income taxes
Profit attributable to owners of parent

Millions of yen

24,10013,08817,925
9,552

14,5886,805

Capital expenditures *2
Research and development costs

Millions of yen
Millions of yen—
22,69340,511
23,41838,32423,823

Depreciation *3

Millions of yen

39,087

41,34540,871

Net cash provided by operating activities (A)Millions of yen

47,70757,99530,597

Net cash used in investing activities (B)Millions of yen(33,641)(32,440)(44,314)

Net cash used in financing activities

Millions of yen(12,674)(19,570)

4,861

Free cash flow (A+B)

Millions of yen

14,06625,555(13,716)

Millions of yen

Total assets

Millions of yen

730,044716,368

749,985

Interest-bearing debt

Millions of yen

199,400

192,810205,261

Shareholders’ equity

Millions of yen

289,886

287,782

291,589

Profit (EPS)
Total net assets (BPS) *5

Yen

88.87
1,966.53

64.82
1,953.18

46.19
1,979.12

Cash dividends
Return on Equity (ROE)

Yen

40.00
4.6

40.00
3.3

40.00
2.3

Return on Assets (ROA)
Equity ratio

%
%

3.9
39.7

4.2
40.2

3.0
38.9

Payout ratio

%

45.0

61.7

86.6

—

—

48.4

—

—

—

—

—

—

—

—

—

—

—

—

Yen

%

Non-financial information
CO2 emissions

Japan

10,000 t- CO 2

Scope3 *7

10,000 t- CO 2
10,000 t- CO 2

Scope1

10,000 t- CO 2

Scope2

10,000 t- CO 2

Scope1

10,000 t- CO 2

Scope2

10,000 t- CO 2

The U.S. andEurope *1010,000 t- CO 2

Japan *11

1,000 m3——

23,674

Overseas Mainland China *8
Asia *91,000 m3———

1,000 m3———

1,000 m3——

1,000 m3———
21,652The U.S. and Europe *10
Total water discharge volume Japan *11
Energy consumption
volumeJapan *12

Fuel oil conversion:
10,000 kl

—

—

21.3

Industrial Waste Volume

Japan *12

10,000 t

—

—

4.4

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

52

10,000 t- CO 2

Overseas Mainland China *8 Scope1
Scope2
Asia *9

Water resource
input volume

Scope1 *6
Scope2 *6

U.S. dollar amounts are provided solely for the convenience of readers based on an exchange rate of US$1 = ¥106.24, the exchange rate prevailing on March
31, 2018.
Figures for capital expenditures only represent property, plants and equipment based on the consolidated statement of cash flows.
Figures for depreciation represent property, plants 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 shares of treasury stock)
The domestic Meiji Group. From the fiscal year ended in March 2018, the fuel used in company owned delivery vehicles/ trucks and data for the CO2 emissions
from company owned vehicles is included in Scope 1.

Financial and Non-Financial Section｜Financial and Non-Financial Highlights

2014
1,148,076
1,015,265

2015
1,161,152
1,021,806

2016
1,223,746
1,061,398

2017
1,242,480
1,082,115

2018
1,240,860
1,073,655

2018
11,679,784
10,105,939

Thousands of U.S. dollars

Unit *1

127,361

135,105

141,338

164,542

161,620

168,466

1,585,714

Thousands of U.S. dollars—

29,097

29,41838,35338,191

43,474409,206

Thousands of U.S. dollars—
382,684

17,32523,961

41,961

38,73138,752364,763

Thousands of U.S. dollars

394,062

403,386

445,561

461,326

454,882

4,281,645

Thousands of U.S. dollars

25,85936,496

51,54377,781

88,395

94,673891,131

Thousands of U.S. dollars

25,214
16,646

33,687
19,06048,65730,891

95,21062,58089,19260,786

91,07961,278857,303576,789

Thousands of U.S. dollars

37,66826,19947,03826,06764,347
26,10542,35427,30850,417
26,162

71,77726,507

675,611249,504

Thousands of U.S. dollars

40,821

40,972

41,88542,07745,872

46,511

437,792

Thousands of U.S. dollars

50,622

63,84786,487105,155

81,888

108,775

1,023,862

Thousands of U.S. dollars(39,504)(47,293)(92,822)(9,809)(44,291)(64,394)(606,123)

Thousands of U.S. dollars(9,411)(18,194)

6,846(85,071)(46,548)(40,121)(377,653)

Thousands of U.S. dollars

11,11816,553(6,335)

95,346

37,59744,380417,738

Thousands of U.S. dollars

785,514

779,461

877,367

856,115883,895

927,5448,730,652

Thousands of U.S. dollars

205,394

198,376

221,480

147,828

129,497

119,102

1,121,070

Thousands of U.S. dollars

313,383

320,447

370,341

408,874

448,901

487,310

4,586,884

Thousands of U.S. dollars

112.992,127.28

129.402,175.98

209.792,515.26

425.062,777.28

413.11
3,064.91

422.153,360.70

3.973
31.633

U.S. dollars

40.00
5.5

40.00
6.0

50.00
8.9

90.00
16.1

110.0014.2

130.0013.1

1.223

U.S. dollars

3.8
39.9

5.0
41.1

6.5
42.2

9.4
47.8

10.2
50.8

10.6
52.5

35.4

30.9

23.8

21.2

26.6

30.8

52.4

55.9

55.5

55.3

—

—

—

—

22.3
28.7
—

23.0
27.4
203.5

—

—

—

4.2

0.5
3.6

0.3
3.1

—

—

—

6.5

1.5
5.5

1.4
5.8

—

—

—

2.9

1.4
0.9

1.6
0.9

22,902

22,723

20,14824,375

24,104

—

—

—

—

—

22,305
1,200

—

—

—

—

—

522

—
20,864—
20,566—
16,504—
21,214—
20,255

17,914

25.8

25.6

25.3

24.9

24.5

24.0

8.1

7.2

7.4

7.6

5.4

6.3

Introduction

2013
1,126,520
1,001,551

Thousands of U.S. dollars

Our Value Creation Story

Thousands of U.S. dollars

Thousands of U.S. dollars

Our Activities for Sustainability

U.S. dollars

Financial and Non-Financial Section

74

Corporate Information*7

Categories for Scope 3 include Category 1 (purchased products and services), 2 (capital goods), 3 (fuel and energy related activities not included in Scopes 1
and 2), 5 (waste from operation activities), 6 (business trips), 7 (commute of employees) and 12 (waste from sold products).
*8 Six production plants*9 Five production plants*10 Three production plants*11 Meiji and Meiji Seika Pharma up until the fiscal year ended March 2015, and the domestic Meiji Group from the fiscal year ended March 2016.
*12 Meiji and Meiji Seika Pharma in the fiscal year ended March 2012, and the domestic Meiji Group from the fiscal year ended March 2013.

Meiji Holdings Co., Ltd.｜Integrated Report 201853

Financial and Non-Financial Highlights (Main Indices)
Operating Income / Operating Income Margin

Net Sales

Operating income (Left scale)Operating income margin (Right scale)(Billions of yen)
1,400
1,200

1,148.0

1,161.1

1,223.7

1,242.4(Billions of yen)100

1,240.8

88.3
77.7

80

1,000
60

800
600

40

400

94.6

51.5
36.4

6.4

(%)
10
8

7.1

7.6
6
4

4.4

3.2
2

20
200

FY3/14

FY3/15

FY3/16

FY3/17

FY3/14

FY3/18Proﬁt Attributable to Owners of Parent / ROE(Billions of yen)
80

16.1
62.5

60

60.7

6.0

13.1
61.2

0

47.8
41.1
12

FY3/15

FY3/16

FY3/14

42.2

408.8

50.8
448.9

370.3

52.5
487.3

(%)
60

40

FY3/17

6

200

0

0

20

0

FY3/14

FY3/18

FY3/15

FY3/16

FY3/17

FY3/18

Payout Ratio / Dividends on Equity (DOE)

Net cash provided by operating activities
Net cash used in investing activities

54

400

320.4

Cash Flow(Billions of yen)
120
100
80
63.8
60
40
16.5
20
0
-20
-40
-60
-47.2
-80
-100

FY3/1830.8

19.0

FY3/14

FY3/17(Billions of yen)
600

8.9

40

FY3/16

Shareholders’ equity (Left scale)
Shareholders’ equity ratio (Right scale)
(%)
18

14.2

FY3/15

Shareholders’ Equity /Shareholders’ Equity Ratio

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

20

0

0

0

86.4

105.1
95.3

Free cash ﬂow

108.7
81.8
37.5

Payout ratio (Left scale)

(%)
15

(%)
50
40

44.3

30.9
30

23.8

-6.3

-44.2

-64.3

10

1.9

2.1

FY3/14

FY3/15

30.8

10

5

26.6
21.2

20

-9.8

-92.8
FY3/15

Dividends on equity (DOE / Right scale)

3.4

3.8

4.0

FY3/16

FY3/17

FY3/180

FY3/16

FY3/17

FY3/18Financial and Non-Financial Section｜Financial and Non-Financial Highlights

0CO2 Emissions Volume (Scope1, 2) /CO2 Emissions Volume per Production Unit *1

Energy Consumption Volumes /Energy Consumption Volume per Production Unit *2
Energy consumption volumes (Left scale)
Energy consumption volumes per production unit (Right scale)(10,000 t-CO2)
80(t-CO2 / 100 million of yen)
100

(Fuel oil conversion: 10,000 kl)
30

63.6

25.3

68.9

60

64.4

56.3

51.3

51.8

Introduction

CO2 emissions volume (Scope1, 2) (Left scale)CO2 emissions volume per production unit (Right scale)(kl / 100 million of yen)
90

24.9

24.0

24.5

80

60

20
60
40
10

22.8

21.7

21.0

20.7

FY3/15

FY3/16

FY3/17

FY3/1830

Our Value Creation Story

40
20
0

0

FY3/16

FY3/17

Industrial Waste Volume /Industrial Waste Volume per Production Unit *2

Water Resource Input Volume /Water Resource Input Volume per Production Unit *3

Industrial waste volume (Left scale)Industrial waste volume per production unit (Right scale)(t / 100 million of yen)
10

7.6

7.4

Water resource input volume (Left scale)
Water resource input volume per production unit (Right scale)

6.3
6(1,000 ｍ3/ 100 million of yen)

(1,000 m3)
25,0008

20,0006

15,0004

10,00024,375

24,1044.6

424,100Overseas
1,795

10
8

5.4

Japan
22,3052

FY3/16

FY3/17

5,000

0

0

1.92

2.07

1.94
2

FY3/16

FY3/18Japan

FY3/17

Global0

Financial and Non-Financial Section

0

2

6
4

2.13

FY3/1522,305

5.4

6.6

6.6

Our Activities for Sustainability（10,000 t）

8

0

0

FY3/18

FY3/18Percentage of Paid Vacation Taken *4Child Care Leave *4
Female

(%)
80

Male

(Persons)
250

222

63.8
60

47.9

51.8

52.5

200

56.8

150

169

178

144

153

29

25

24

24

30

FY3/14

FY3/15

FY3/16

FY3/17

FY3/1840
100
50

Corporate Information

20

0

0

FY3/14

FY3/15

FY3/16

FY3/17

FY3/18*1 Applies to the Meiji Group (the domestic Meiji Group and 14 overseas production plants). The per production unit is calculated from theconsolidated sales.
*2 Applies to the domestic Meiji Group. The per production units are calculated from domestic sales.
*3 Applies to the domestic Meiji Group. The per production units are calculated from domestic sales.
The global data from the fiscal year ended March 2018; applies to the Meiji Group (the domestic Meiji Group and 14 overseas production plants).
The per production unit is calculated from the consolidated sales.
*4 Applies to Meiji and Meiji Seika Pharma.
WEB ESG data https://www.meiji.com/global/investors/esg/
Meiji Holdings Co., Ltd.｜Integrated Report 201855

MD&A (The Management Discussion and Analysis)
Consolidated Financial Results
FY3/18 was the final year of the STEP UP 17 MediumTerm Business Plan.

Cost of Sales and Selling, General and
Administrative Expenses

Based on our core policy of accelerating growth

Gross profit ratio for FY3/18 was 36.7% (down 0.4 points

and achieving further improvement in profitability, we

year on year), a slight dip from the previous fiscal year.

promoted our growth strategy to increase corporate

We implemented measures to decrease costs for all

value. These initiatives include Strengthening priority

Group companies. However, the cost of sales rose,businesses and taking on the challenge of future growth,

primarily due to an increase in raw material costs in the

Improving profitability to withstand harsh economic

Food segment and due to a rising depreciation of fixedenvironments, Pursuing global expansion, and Evolving

assets, after increasing investment into strengthening

our management system.

the production system.

In the food segment, we grew our core products

Selling, general and administrative (SG&A) expenses

while working on optimizing production, distribution,

came to JPY 360.2 billion (down 3.4% year on year).

and sales as well as reducing cost to achieve

After breaking down the SG&A, the sales promotion andsteady growth. In the pharmaceutical segment, weadvertising expenses came to JPY 133.5 billion (downconcentrated business resources on our core areas, anti-

5.8% year on year) and the carriage and storage charges

infective drugs and CNS agents, to maximize sales andwere JPY 46.2 billion (down 5.4% year on year), bothprofits.

dropping after the previous fiscal year. This reduction

These factors resulted in net sales of JPY 1,240.8

is attributed to our efforts to control all costs in eachbillion (down 0.1%, year on year) and operating income

business. On the other hand, R&D costs came to JPY 26.5

of JPY 94.6 billion (up 7.1%, year on year). Net income

billion (up 1.3% year on year), maintaining the same level

attributable to shareholders of parent company was JPY

as the previous fiscal year in order to promote R&D and61.2 billion (up 0.8%, year on year). ROE was 13.1%.

foster future growth.

Operating Income and Profit Attributableto Owners of Parent Company
Operating income came to JPY 94.6 billion (up 7.1% year

Gains and Losses

on year) with an operating income ratio of 7.6% (up 0.5
points year on year). Factors that contributed to thisNet Sales
Meiji Group’s consolidated net sales for FY3/18 was JPY
1,240.8 billion (down 0.1% year on year). Net sales for
the Food segment was JPY 1,073.6 billion, down 0.8%
year on year. This decrease is attributed to normalizationof yogurt sales after strong sales in the previous fiscal
year and to the impact of changes in our ice creamtransaction system. On the other hand, the ethicalincrease are shown in the graph below.
(Billions of yen)
FY3/1788.3

Due to increased /decreased sales
Costs of goods
sold increase-3.2

Cost reduction

+13.0

-2.2

Other (incl. change in-1.3

results of subsidiaries)

FY3/18pharmaceuticals business drove the Pharmaceutical

94.6

segment, generating JPY 168.4 billion in sales, up 4.2%
year on year.
In addition, consolidated overseas sales was JPY 82.2

In addition, net income attributable to shareholdersof parent company was JPY 61.2 billion (up 0.8% year

billion (up 6.9% year on year). This is attributed to strongon year). After implementing structural reforms in all thesales for the Food segment in Mainland China and thecompanies, including revisions to our production system,

U.S.A.

the impairment loss, loss on sale of subsidiaries andaffiliates’ stocks, and loss on disposal of property, plants
and equipment were recorded under extraordinary
losses.

56

Financial and Non-Financial Section｜MD&A

Overview by Business
Confectionery BusinessNet sales came to JPY 1,073.6 billion, down 0.8% year on

Net sales came to JPY 157.9 billion (down 1.5% year on

year. Operating income came to JPY 84.1 billion (up 1.5%year). Net sales of chocolates continued to be favorable

year on year). As shown in the following graph, we werethanks to contributions from Chocolate Kouka series

able to secure an increase in profit by promoting costand Meiji The Chocolate. However, overall net sales

cutting and cost-effectiveness, despite the rising cost for

declined year on year, because net sales for chewing

procuring dairy ingredients both overseas and within

gum decreased significantly year on year due to a

Japan.

downturn, and because net sales for the savory snack,Introduction

Food Segment

Our Value Creation Story

Karl decreased year on year after downsizing its sales(Billions of yen)
FY3/17area as well as other factors.

82.9

Due to increased /decreased sales
Costs of goods
sold increase

Operating income was JPY 19.7 billion (up 7.0% year
-2.3

Cost reduction
Other (incl. change in-3.2 *1

earnings were a year-on-year decline in raw material+7.9 *2

costs for cacao, etc., and success in reducing sales-1.2

results of subsidiaries)

FY3/18on year). The main factors that contributed to increased

promotion expenses and distribution costs.

84.1

Nutrition Business

Our Activities for Sustainability*1 (Breakdown) Increase in raw material costs: -2.4, Other: -0.8
*2 (Breakdown) Decrease in promotion expenses: +6.8,
Distribution optimization: +0.4, Other: +0.7

Net sales came to JPY 93.4 billion (up 1.9% year onyear). This is attributed to an increase of net sales forthe protein (for sports use) SAVAS year on year thanks

Fresh and Fermented Dairy Businessto more consumption among competitive athletes

Net sales came to JPY 540.0 billion (down 0.9% year on

and more new consumers taking up light to moderateyear). Net sales for Meiji Bulgaria Yogurt were down year

exercise. And, net sales for Meiji Mei Balance Mini-cup

on year due to normalization following a significant

series in the consumer market also increased thanks tojump in sales the previous fiscal year. However, net sales

new flavored products.

for functional yogurt and drinking milk were largely
Operating income was JPY 52.0 billion (up 0.5% year

on year). Income increased thanks to sales growth for

Financial and Non-Financial Sectionunchanged year on year.

Operating income was JPY 12.4 billion (up 7.5% year
mainstay products and reducing various expenses.

on year). Decreased revenues for yogurt were offset
by reducing various expenses, thereby producing an

OTHER Businessincrease in earnings.

Net sales came JPY 360.5 billion (up 0.4% year on year),and operating income was JPY 5.1 billion (down 7.3%
year on year).

Net sales came to JPY 180.4 billion (down 2.0% year

[Overseas]on year). Net sales for butter, margarine and the Meiji

In our export business, sales for infant formula toEssel Super Cup Sweet’s series ice cream were favorable.

Taiwan, Pakistan and Vietnam were favorable. Sales in

However, the overall net sales decreased year on

our subsidiaries in the U.S.A and Mainland China also

year due to the impact from changing our ice creamincreased significantly year on year. This sales growthtransaction system in April 2017 and due to decreased

helped increase the operating income overseas year onrevenue for frozen foods.

year.

Operating income was JPY 7.4 billion (down 0.1%

Corporate Information

Processed Food Business[Other]year on year). Despite making improvements to our

Overall sales were largely unchanged year on year.

product mix, the increased costs for domestic dairy

Although net sales grew at our domestic logistics andingredients and other items impacted our operating

feed subsidiaries, there was a decrease in revenue

income.

attributable to business structural reforms implemented
at certain subsidiaries. In addition, operating income
decreased significantly year on year due to increasedlabor costs with drivers in our distribution subsidiary.
Meiji Holdings Co., Ltd.｜Integrated Report 201857

MD&A (The Management Discussion and Analysis)

Pharmaceutical Segment
Net sales came to JPY 168.4 billion, up 4.2% year on year.

Agricultural Chemicals andVeterinary Drugs

Operating income was JPY 11.0 billion (up 90.7% year

Net sales came to JPY 18.3 billion (down 5.9% year

on year). As shown in the following graph, in additionon year). Despite one-time revenues from a licensing

to lower expenses—after having incurred expenses

agreement on the new agricultural insecticide

during the previous fiscal year related to new drug

FULPYRIMIN concluded in March 2018 with Aryista

promotion—, cost reduction and one-time payments

LifeScience, net sales were impacted by decreased

from licensing agreements also contributed.

revenues from the rice blast preventative ORYZEMATE.

(Billions of yen)
FY3/175.7

Due to increased /decreased sales
Changes in other
SG&A expenses
Other (incl. change in+0.1+5.1 *+0.1

results of subsidiaries)

FY3/1811.0* (Breakdown) Decrease in promotion expenses: +1.7,
Other cost reduction: +3.2, Decrease in R&D expenses +0.2

Ethical Pharmaceuticals
Net sales came to JPY 150.1 billion, up 5.6% year on year.

[Japan]Our mainstay antidepressant drug REFLEX grew thanks
to enhanced promotional activities. Net sales of theschizophrenia drug SYCREST and the anti-allergy drug
Bilanoa, both launched in 2016, increased significantly
due to approval for long term prescription.
The antibacterial drug TAZOPIPE Combination for I.V.
Infusion Meiji increased significantly year on year due toapproval for additional indication and the acceleration of
the market’s shift to generics.

[Overseas]
The performance was favorable at subsidiaries inIndia, Indonesia, and China. Exports and sales for theantibacterial drug MEIACT declined significantly.

58

Financial and Non-Financial Section｜MD&A

Cash Flows

Total assets at the end of FY3/18 came to JPY 927.5

Cash flow from operating activities in FY3/18 totaled JPY

billion, up JPY 43.6 billion year on year. This is mainly

108.7 billion thanks to an increase of JPY 26.8 billion from

attributed to an increase of JPY 11.9 billion in notes

the previous fiscal year. This is attributed to a smaller

and accounts receivable, JPY 17.2 billion in buildings

payment in income taxes, a decrease in inventories andand structures (net) and JPY 13.0 billion in investment

an increase in trade payables.

Introduction

Assets, Liabilities and Capital

Cash flow from investing activities totaled JPY 64.3

securities.
Total liabilities came to JPY 432.3 billion, up JPY 5.6

billion in payments, up JPY 20.1 billion year on year. This
is attributed to increased payments for purchases of

JPY 10.0 billion in bonds (including current portion ofproperty, plants and equipment.

bonds), this is attributed to an increase of JPY 9.3 billion

In summary, there was a JPY 6.7 billion increase in

in notes and accounts payable, an increase of JPY 4.0

free cash flow year on year, totaling JPY 44.3 billion,

billion in other current liabilities and an increase of JPY 2.8

which is the sum of the cash flows for operating activities

billion in deferred tax liabilities. However, interest bearing

and investing activities.

debt totaled JPY 119.1 billion, a slight slip of JPY 10.3
billion from the previous fiscal year.

Total net assets

came to JPY 495.1 billion, up JPY 37.9 billion year on year.

Our Value Creation Story

billion year on year. While there was a slight decrease of

Cash flow from investing activities totaled JPY 40.1
billion in expenditures, down JPY 6.4 billion year on year.
These results produced a balance of JPY 26.9 billion
in cash and cash equivalents at end of the FY3/18 (updecrease in net assets), this is attributed to an increase of

JPY 4.2 billion from FY3/17).

Our Activities for Sustainability

While the treasury stock was up JPY 13.9 billion (slight
JPY 43.4 billion in retained earnings and JPY 8.0 billion in
unrealized holding gains or losses on securities.

Dividend Policy

However, the equity ratio increased to 52.5%, fromThe Meiji Group considers stable return to shareholders

50.8% in the previous fiscal year. Debt/equity ratio

an important issue. Our basic policy concerning profit

dropped from 0.28 in the previous fiscal year to 0.24 due

dividends shall be a consolidated dividend payout ratio

to a more significant increase in shareholders' equityof around 30%.
The annual dividends for FY3/18 were JPY 130.0 per

than the increase in total liabilities.

share, up JPY 20.0 in cash dividends year on year. Thistranslated into a consolidated dividend payout ratio ofCapital expenditures on a cash basis (includes intangible

30.8%.

Financial and Non-Financial Section

Capital Expenditures
assets) for the current term were JPY 71.7 billion (up42.4% year on year), with main transactions as indicatedbelow.
・Research facilities(product development research center)
・Cheese production facilities (Tokachi Plant)
・Manufacturing building andchocolate production facilities (Sakado Plant)
・Protein production facility (New Plant)

80.0

Corporate Information

Food Segment
Pharmaceutical Segment(Billions of yen)

63.8
60.0

55.8
44.3
36.5

40.0
20.0
0

8.5

5.7

6.0

7.8

FY3/15

FY3/16

FY3/17

FY3/18

Meiji Holdings Co., Ltd.｜Integrated Report 201859

Consolidated Financial Statements
Consolidated Balance Sheet
Meiji Holdings Co., Ltd. / As of March 31, 2018

Thousands of
U.S. dollars

Millions of yen

2018

2017

2018

AssetsCurrent assets:
Cash and deposits (Notes 5, 9)¥ 27,613¥ 24,761

Notes and accounts receivable (Notes 5, 15)

203,229

190,503

1,912,928

Inventories (Note 8)

136,468

134,234

1,284,530

Deferred tax assets (Note 10)

9,670

9,438

91,021Other current assets

15,895

19,139149,615

(202)

(370)

(1,909)392,674

377,7073,696,107

Allowance for doubtful accounts
Total current assets$

259,920

Fixed assets:
Property, plant and equipment:
Buildings and structures (Note 9)319,894

301,158

3,011,050

Machinery, equipment, vehicles and fixtures (Note 9)558,326

553,638

5,255,329

Land (Note 9)71,45472,603

672,579

Lease assets

2,710

3,972

25,516

Construction in progress

22,32324,733

210,118

Accumulated depreciation(590,746)(590,118)(5,560,495)

383,962

365,986

3,614,100

75,04863,527

706,406

15,825

14,334

148,961
212,307

Total property, plant and equipment (net)
Investments and other assets:
Investment securities (Notes 5, 6)
Investment securities(unconsolidated subsidiaries and affiliates) (Note 12)
Intangible assets (Note 14)

22,55525,936

Deferred tax assets (Note 10)

8,366

7,193

78,750Net defined benefit asset (Note 11)

20,777

20,418

195,571

Other

8,427

8,898

79,323

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

60

Financial and Non-Financial Section｜Consolidated Financial Statements

(93)

(107)

(876)

150,908

140,201

1,420,444

534,870

506,187

5,034,544¥ 927,544¥ 883,895$ 8,730,652

Introduction

Thousands of
U.S. dollars

Millions of yen

2018

2017

2018

¥131,064¥117,195$1,233,663

Liabilities and Net Assets
Current liabilities:
Notes and accounts payable (Notes 5, 15)

49,74980,574468,273

18,253

17,457

171,814

Accrued expenses (Note 5)

43,91947,212

413,397

Accrued bonuses for employees

10,857

10,512102,197

Allowance for sales returns

72

132

684

Allowance for sales rebates

1,943

2,061

18,297

Other current liabilities

38,56939,044363,041

294,430

314,191

2,771,369

Long-term loans payable, less current portion (Notes 5, 7, 9)

69,35348,923652,797

Deferred tax liabilities (Note 10)

12,678

9,787

119,337

Net defined benefit liability (Note 11)50,33048,371

473,745

148

150

1,395

Total current liabilities

Our Value Creation Story

Short-term loans payable(including current portion of long-term loans payable) (Notes 5, 7, 9)
Income taxes payable

Long-term liabilities:

Other long-term liabilities

5,426

5,279

51,074

Total long-term liabilities

137,936

112,513

1,298,351

Total liabilities

432,367

426,704

4,069,720

30,00030,000282,379

Our Activities for Sustainability

Reserve for directors’ retirement benefits

Net assets (Note 17) :Shareholders’ equity:
Common stock
Authorized

560,000,000 shares, at March 31, 2017
560,000,000 shares, at March 31, 2018

Issued152,683,400 shares, at March 31, 2017
152,683,400 shares, at March 31, 2018

99,841

99,762939,769

366,276

322,856

3,447,632(30,521)(16,607)(287,290)

465,595

436,011

4,382,491
312,394

Treasury stock, at cost 6,218,500 shares, at March 31, 2017

Financial and Non-Financial Section

Capital surplus
Retained earnings
7,680,613 shares, at March 31, 2018
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized holding gains or losses on securities

33,18825,120

Deferred gains or losses on hedges

(53)

(5)

(502)

Foreign currency translation adjustments

268

1,181

2,526
(110,025)

Remeasurements of defined benefit plans (Note 11)(11,689)(13,406)

Non-controlling interests

7,866

8,289

74,047

Total net assets

495,177

457,190

4,660,932

Total liabilities and net assets¥927,544¥883,895$8,730,652

Corporate Information

See accompanying notes to consolidated ﬁnancial statements.

Meiji Holdings Co., Ltd.｜Integrated Report 201861

Consolidated Financial Statements

Consolidated Statement of Income
Meiji Holdings Co., Ltd. / For the year ended March 31, 2018

Thousands of
U.S. dollars

Millions of yen

Net sales
Cost of sales (Note 20)

2018¥1,240,860

2017¥1,242,480

2018$11,679,784

785,978454,882

781,153
461,326

7,398,138
4,281,645

360,208
94,673372,931
88,3953,390,514
891,131

1,341
(755)
(209)
137
(56)
746

1,338
(795)
241
141
(61)
(420)

12,630(7,115)(1,975)
1,295
(534)
7,025

Gross profit
Selling, general and administrative expenses (Notes 19, 20)
Operating income
Other income (expenses):
Interest and dividend income
Interest expenses
Equity in income of affiliates
Rent income on real estate
Rent cost of real estate
Other
Extraordinary gains (Notes 21, 22)

7,561

7,964

71,175(12,358)
91,079(7,611)
89,192(116,328)
857,303

Income taxes—current (Note 10)

31,64729,351

297,889

Income taxes—deferred (Note 10)(2,529)61,962(1,360)61,200(23,812)583,227

683

414

6,437

Extraordinary losses (Notes 21, 23, 24, 25)
Profit before income taxes

ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent¥

61,278¥60,786

Yen$

576,789

U.S.dollars

Amounts per share of common stock:
ProfitCash dividends
See accompanying notes to consolidated ﬁnancial statements.

62

Financial and Non-Financial Section｜Consolidated Financial Statements¥422.15130.00¥413.11110.00$3.973
1.223

Consolidated Statement of Comprehensive Income
Meiji Holdings Co., Ltd. / For the year ended March 31, 2018

ProfitOther comprehensive income:Comprehensive income(Breakdown)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

2018¥61,9622017¥61,200

2018$583,227

8,071
(50)
(1,686)
1,715
788(1,273)(12)(1,731)
3,941
(357)

75,972(472)(15,875)
16,1487,423

8,838¥70,800

566¥61,766

83,196$666,423¥70,102698¥61,447319$659,850
6,573

Our Value Creation StoryNet unrealized holding gains or losses on securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Equity in affiliates accounted for by the equity method
Total other comprehensive income (Note 26)

Introduction

Thousands of
U.S. dollars

Millions of yen

See accompanying notes to consolidated ﬁnancial statements.

Our Activities for Sustainability
Financial and Non-Financial Section
Corporate Information
Meiji Holdings Co., Ltd.｜Integrated Report 201863

Consolidated Financial Statements

Consolidated Statement of Changes in Net Assets
Meiji Holdings Co., Ltd. / For the year ended March 31, 2018

Millions of yen
Shareholders’ equity
Numbers of sharesof common stock(Thousands)
Common stock
Balance at March 31, 2016

152,683¥30,000

Capital surplus

Retained earnings

Treasury stock

Total shareholders’equity¥98,502¥277,869¥(9,727)¥396,645

Changes during the fiscal period:(15,826)

Cash dividends
Profit attributable to owners ofparent(15,826)

60,78660,786

Acquisition of treasury stock
Disposal of treasury stock
Change in treasury shares ofparent arising fromtransactions with
noncontrolling shareholders
Change of scope of equity
methodNet changes in items otherthan those in shareholders’equityTotal changes during the fiscal
periodBalance at March 31, 2017

1

(6,881)(6,881)

0

1

1,258

1,258
26

26

̶

̶

1,259

44,986(6,880)39,365

152,683¥30,000¥99,762¥322,856¥(16,607)¥436,011

Changes during the fiscal period:(17,858)

Cash dividends
Profit attributable to owners ofparent(17,858)

61,27861,278Acquisition of treasury stock
Disposal of treasury stock
Change in treasury shares ofparent arising fromtransactions with
noncontrolling shareholders
Net changes in items otherthan those in shareholders’equityTotal changes during the fiscal
periodBalance at March 31, 2018170

(14,058)(14,058)

144

314

（91）

(91)

̶

̶

78

43,420(13,913)29,584

152,683¥30,000¥99,841¥366,276¥(30,521)¥465,595

Thousands of U.S. dollars
Shareholders’ equity
Numbers of sharesof common stock(Thousands)
Common stock
Balance at March 31, 2017

152,683$282,379

Capital surplus

Retained earnings

Treasury stock

Total shareholders’equity$939,028$3,038,935$(156,324)$4,104,019

Changes during the fiscal period:(168,091)

Cash dividends
Profit attributable to owners ofparent576,789

Acquisition of treasury stock
Disposal of treasury stock
Change in treasury shares ofparent arising fromtransactions with
noncontrolling shareholders
Net changes in items otherthan those in shareholders’equityTotal changes during the fiscal
periodBalance at March 31, 201864

(168,091)

1,601

576,789(132,324)(132,324)

1,358

2,959

(860)

(860)

—

—

741

408,697(130,966)

278,471

152,683$282,379$939,769$3,447,632$(287,290)$4,382,491

Financial and Non-Financial Section｜Consolidated Financial Statements

Introduction

Millions of yen
Accumulated other comprehensive income
Foreign currency
Net unrealized
translation
holding gains or Deferred gains or
adjustments
losses on securities losses on hedges¥26,417¥8¥3,137

Remeasurements Total accumulatedof defined benefit other comprehensive
incomeplans¥(17,334)¥12,229

Noncontrollinginterests

Total net assets¥10,278¥419,152(15,826)
60,786

Our Value Creation Story(6,881)
1

1,258
26
(13)

(1,956)

3,928

661

(1,988)(1,327)(1,296)(13)(1,956)

3,928

661

(1,988)38,038¥25,120¥(5)¥1,181¥(13,406)¥12,890¥8,289¥457,190

Our Activities for Sustainability(1,296)(17,858)
61,278(14,058)
314

(91)
(48)

(912)

1,716

8,824

(422)

8,401

8,068

(48)

(912)

1,716

8,824

(422)

37,986¥33,188

¥(53)

¥268

¥(11,689)¥21,714¥7,866¥495,177

Noncontrollinginterests

Total net assets$78,025$4,303,377

Financial and Non-Financial Section

8,068

Thousands of U.S. dollars
Accumulated other comprehensive income
Foreign currency
Net unrealized
translation
holding gains or Deferred gains or
adjustments
losses on securities losses on hedges$236,451$(50)$11,117

Remeasurements Total accumulatedof defined benefit other comprehensive
incomeplans$(126,186)$121,332(168,091)

Corporate Information

576,789(132,324)
2,959

(860)
75,943(452)(8,591)

16,161

83,060(3,977)79,08375,943(452)(8,591)

16,161

83,060(3,977)357,555$312,394$(502)$2,526$(110,025)$204,393$74,047$4,660,932

Meiji Holdings Co., Ltd.｜Integrated Report 201865

Consolidated Financial Statements

Consolidated Statement of Cash Flows
Meiji Holdings Co., Ltd. / For the year ended March 31, 2018

Thousands of
U.S. dollars

Millions of yen

2018

2017

2018

Cash flows from operating activities:¥ 91,079¥ 89,192$ 857,303

Depreciation and amortization

46,51145,872437,792

Profit before yincome taxes
Impairment loss

4,214

754

39,668

Amortization of goodwill

1,641

1,605

15,450Loss (gain) on disposal of property, plant and equipment

4,726

3,691

44,492

8

52

77

(177)

291

(1,671)

Loss (gain) on valuation of investment securities
Increase (decrease) in allowance for doubtful accounts

356

276

3,359

Increase (decrease) in net defined benefit liability

3,944

3,192

37,128Interest and dividend income

Increase (decrease) in accrued bonuses for employees(1,341)(1,338)(12,630)

Interest expenses

755

795

7,115

Equity in loss (income) of affiliates

209

(241)

1,975

(6,403)(5,316)(60,273)597(2,317)

5,619

Decrease (increase) in trade receivables(12,724)(3,183)(119,772)

Loss (gain) on sales of property, plant and equipment
Loss (gain) on sales of investment securities
Decrease (increase) in inventories(3,313)(10,668)(31,187)

Increase (decrease) in notes and accounts payable

9,170

5,219

86,316

Other

(497)

(5,374)(4,679)138,758

122,5021,306,085

Interest and dividends received

1,354

1,346

12,749Interest paid

(775)

(779)

(7,299)(30,562)(41,179)(287,672)

108,775

81,8881,023,862

Payments for purchases of property, plant and equipment(69,833)(48,670)(657,321)

Payments for purchases of intangible fixed assets
Proceeds from sales of property, plant and equipment andintangible fixed assets(1,943)(1,746)(18,291)

9,269

6,872

87,246

Subtotal

Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:

Proceeds from sales of investments in real estate

1

118

17

Payments for purchases of investment securities(1,059)(667)(9,973)

746

2,957

7,028

Proceeds from sales of investment securities
Proceeds from sales of investments in subsidiaries resulting inchange in scope of consolidation
Other
Net cash used in investing activities

66

Financial and Non-Financial Section｜Consolidated Financial Statements

126

17

1,190

(1,702)(3,173)(16,020)¥ (64,394)¥ (44,291)$ (606,123)

2018

Introduction

Thousands of
U.S. dollars

Millions of yen

2017

2018

Cash flows from financing activities:
Increase (decrease) in short-term loans payable¥ 8,720¥ 1,572$ 82,081

Proceeds from long-term loans payable

13,802

3,968

129,916(212,327)

Repayment of long-term loans payable(22,557)(3,742)

Proceeds from issuance of bonds

19,909—187,405

Payments for redemption of bonds(30,000)(20,000)(282,379)(10,208)(6,048)(96,086)(17,835)(15,772)(167,879)

(95)

(177)

(902)

(833)

(1,108)(7,845)

Cash dividends paid to non-controlling shareholders
Payments from changes in ownership interests in subsidiaries
that do not result in change in scope of consolidation
Payments made to trust account for acquisition of treasury
stock(4,001)—(1,238)(9,636)(40,121)(46,548)(377,653)

1

(318)

17

Net increase (decrease) in cash and cash equivalents

4,260(9,269)40,102

Cash and cash equivalents at beginning of the year
Increase in cash and cash equivalents from newly
consolidated subsidiaries
Decrease in cash and cash equivalents due to changes inscope of consolidation

22,62431,516

212,960

—

378

—

28
¥ 26,913—¥ 22,624

264$ 253,326

Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents

Cash and cash equivalents at end of the year (Note 18)

Our Activities for Sustainability—(1,023)Other

Our Value Creation Story

Decrease (increase) in treasury stock
Cash dividends paid

See accompanying notes to consolidated ﬁnancial statements.

Financial and Non-Financial Section
Corporate Information
Meiji Holdings Co., Ltd.｜Integrated Report 201867

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

1. Basis of Presenting Consolidated Financial
Statements
The accompanying consolidated ﬁnancial statementsof Meiji Holdings Co., Ltd. (the “Company”) and its
consolidated subsidiaries have been prepared from theconsolidated ﬁnancial statements in Japanese ﬁled with
the Kanto Local Finance Bureau as required by the Financial
Instruments and Exchange Law. The statements conform togenerally accepted accounting principles and practices inJapan (“Japan GAAP”), which are diﬀerent in certain respects
regarding the application and disclosure requirementsof International Financial Reporting Standards (“IFRS”).
The consolidated ﬁnancial statements are not intended
to present the ﬁnancial position, results of operations or
cash ﬂows in accordance with accounting principles andpractices generally accepted in 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 ¥106.24 to US$1, the amount prevailing on
March 31, 2018. This translation should not be construed asa representation 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.

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 ofcontrol through majority voting rights or existence of
certain conditions evidencing control by the Company.
Investments in aﬃliates over which the Company has theability to exercise signiﬁcant inﬂuence over operating andﬁnancial policies of the investees are accounted for by

68

Financial and Non-Financial Section｜Consolidated Financial Statements

the equity method. The consolidated ﬁnancial statements
consist of the Company and its 55 consolidated subsidiaries.
All signiﬁcant intercompany transactions and accounts
have been eliminated. Accounts of subsidiaries whoseﬁscal year-ends are December 31 have been included
using ﬁnancial information at that date with appropriate
adjustment where necessary. Investments in six aﬃliates
are accounted for by the equity method. The diﬀerence
between the cost and underlying net equity at acquisitionof investments in consolidated subsidiaries and aﬃliates
is allocated to identiﬁable assets based on fair value at thedate of acquisition. The unallocated portion is recognized
as goodwill and amortized over a period of 5–10 years on astraight-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 translation adjustments areincluded in foreign currency translation adjustments andnon-controlling interests in the net assets section of theconsolidated balance sheet.

c) Investment Securities
Investment securities are valued using the following
standards and methods.
Other securities
Securities that have market prices:
By the market value method based on market prices
at the consolidated ﬁscal year-end.
Unrealized holding gains or losses, net of theapplicable income taxes, are included directly in net
assets, and cost of security sold is calculated using
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.

e) Inventories
Inventories are stated at cost determined mainly based on
the average method (cost is written down to reﬂect the
decline in their proﬁtability).

Overseas consolidated subsidiaries
The straight-line method is primarily used for depreciation.

g) Intangible Assets(Excluding Lease 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.

Finance lease assets whose ownership does not transfer tothe lessee
For the depreciation of lease 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

At some of the Company’s consolidated subsidiaries, inorder to provide for losses due to returns of goods andproducts sold, an allowance is recorded by multiplying theaccounts receivable balance, the actual return ratio and thegross margin ratio.

m) Allowance 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.

n) Reserve for Directors’ Retirement Benefits
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 theﬁscal year under the Company bylaws.

o) Retirement and Severance Benefits(1) Method used to attribute expected benefit payments
to periods
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 theﬁscal year.
(2) Method of amortizing actuarial gains or losses, priorservice costs
Actuarial gains or losses are amortized from theconsolidated ﬁscal year following the year in which the gainor loss is incurred by the straight-line method for a certain
number of years (7–15 years) not longer than employees’
average remaining years of service. Prior service costs areamortized from the time they accrue by the straight-line
method for a certain number of years (principally 4 years)
within employees’ average remaining 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
portion of the consolidated balance sheet.

Meiji Holdings Co., Ltd.｜Integrated Report 2018

Corporate Information

To provide for losses on doubtful accounts such as notes
and accounts receivable, the Company and its consolidated
subsidiaries primarily record allowances based on actual
loss experience for normal accounts, and an amountestimated to be unrecoverable for individual companies inﬁnancial diﬃculty.

l) Allowance for Sales Returns

Financial and Non-Financial Sectionh) Lease Assets

To provide for payment of bonuses to employees existingon the consolidated balance sheet date, the amount
expected to be paid for the subject period is recorded.

Our Activities for Sustainability

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 yearsk) Accrued Bonuses for Employees

Our Value Creation Story

The Company and its domestic consolidated subsidiaries
In the domestic consolidated subsidiaries, the straight-line
method is primarily used for depreciation (the decliningbalance method is used for the property, plant andequipment of headquarters (excluding the headquarters
building), branches, research laboratories and confectionery
plants and others). For the assets owned by the Company,
the declining balance method is used for depreciation.
However, any buildings (excluding facilities attached tobuildings) acquired on or after April 1, 1998 and any facilities
attached to buildings and structures acquired on or after
April 1, 2016 are calculated using the straight-line method.

Introductionf) Property, Plant and Equipment(excluding lease assets)

69

Notes to Consolidated Financial Statementsp) Cash and Cash Equivalents
Cash and cash equivalents in the consolidated statementof cash ﬂows are composed of cash on hand, bank deposits
available for withdrawal on demand and short-term
investments with original maturity of three months or less,which have minor risk of ﬂuctuations 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., theallocation method is applied when the relevant criteria aremet. For interest rate and currency swaps, the integrated
method (the shortcut method, the allocation method) is
applied when the relevant criteria are met.
(2) Hedge instruments and hedged items
Hedge instruments:

Hedged items:

Forward foreignexchange contracts
and other
instruments

Trade payables andreceivables denominatedin foreign currencies andforecasted transactions
denominated in foreign
currencies

Interest rate andcurrency swap
contracts

Interest on loans payable andloans payable(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
not use derivatives for speculative purposes.

70

Financial and Non-Financial Section｜Consolidated Financial Statements(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
on a periodic basis are satisﬁed. For forecasted transactions
denominated in foreign currencies, suitability for hedging isinvestigated with consideration of whether the transaction
is highly 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) with a high correlation between the hedged items
and hedging instruments.

r) Other Important Matters for the Preparation
and Presentation of Consolidated Financial
Statements
Bond issuance cost is recognized in expenses as incurred.
Consumption taxes and local consumption taxes areaccounted for using the tax exclusion method.

3. Accounting Standards, etc.,
Not Yet Adopted• “Implementation Guidance on Accounting Standard forTax Eﬀect Accounting” (ASBJ Guidance No. 28, February 16,2018).
• “Implementation Guidance on Recoverability of Deferred
Tax Assets” (ASBJ Guidance No. 26 (ﬁnal revision) on
February 16, 2018).

a) Overview
When the practical guidelines related to tax eﬀect
accounting were transferred from The Japanese Instituteof Certiﬁed Public Accountants to the AccountingStandards Board of Japan, the “Implementation Guidanceon Accounting Standard for Tax Eﬀect Accounting,” etc.,
basically followed suit in terms of content but included thefollowing revisions which were deemed necessary.
(Main guidance where accounting was revised)• Guidance for taxable temporary diﬀerences related
to investments in subsidiaries of standalone ﬁnancial
statements• Guidance for recoverability of deferred tax assets forcompanies that fall into (Category 1)

4. Notes Regarding Lease Transactions

The application will take eﬀect from the beginning of theﬁscal year ending March 31, 2019.

1) Finance lease transactions (lessee side)c) Impact from Applying New AccountingStandards• “Accounting Standard for Revenue Recognition” (ASBJ
Statement No. 29, March 30, 2018).
• “Implementation Guidance on Accounting Standard for
Revenue Recognition” (ASBJ Guidance No. 30, March 30,2018).

Finance lease transactions whose ownership does nottransfer(1) Content of lease assets
Property, plant and equipment
Mainly sales of equipment (equipment and ﬁxtures),production facilities in manufacturing plants (machineryand vehicles) and testing and research equipment(machinery, equipment and ﬁxtures).
(2) Method of depreciation of lease assets
As described in “2. Signiﬁcant Accounting Policies,h) Lease Assets.”

Our Value Creation Story

At the moment, impact from adopting “Implementation
Guidance on Accounting Standard for Tax Eﬀect
Accounting,” etc., to the consolidated ﬁnancial statements isbeing assessed.

Introductionb) Effective Date

5. Notes Regarding Financial Instrumentsa) Overviewc) Impact from Applying New AccountingStandards, etc.
At the moment, impact from adopting “AccountingStandard for Revenue Recognition,” etc., to the consolidated
ﬁnancial statements is being assessed.

Meiji Holdings Co., Ltd.｜Integrated Report 2018

Corporate Information

The standard will take eﬀect from the beginning of the ﬁscal
year ending March 31, 2022.

(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 notenter into any speculative deals.
(2) Content and risks of financial instruments
Notes and accounts receivable that are trade 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 foreignexchange contracts, etc. Investment securities are mainly
shares held in relation to business with partner companies,
capital alliances, etc.; these are exposed to ﬂuctuation risk ofmarket prices.
Notes and accounts payable that are trade 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.

Financial and Non-Financial Sectionb) Effective Date

1) Overview of financial instruments

Our Activities for Sustainability

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
eﬀective from the ﬁscal year beginning on or after January
1, 2018 and Topic 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 in conjunction 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, which is one of the beneﬁts of ensuringconsistency with IFRS 15. Also, when there is an item thatshould be considered in the practices that has previously
taken place in Japan, an alternative guidance was to be
added insofar as not to jeopardize comparability.

71Notes to Consolidated Financial Statements

Loans, commercial paper and bonds are mainly used toraise funds for capital investment and working capital. Theirredemption dates are at maximum 10 year 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 and currency ﬂuctuation risk.
However, the Group uses derivative transactions (interest
rate and currency swap transactions) to hedge 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 loans payable.
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 ofcontract by customers)
In accordance with receivables management rules, etc.,
each management department in each business unitof the Group periodically monitors the status of major
customers, and due dates and balances are managed foreach customer. The Group makes eﬀorts for early detection
and reduction of 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
date of the current ﬁscal year is expressed by the values
in the balance sheet for ﬁnancial instruments exposed tocredit risk.
[2] Management of market risk (the risk of ﬂuctuation in
exchange rates, interest rates, etc.)

72

Financial and Non-Financial Section｜Consolidated Financial Statements

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
considers the fair value and the ﬁnancial situation of theissuer (business partner), and continues to review theholdings taking into consideration the relationship with thebusiness partner.
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 fundprocurement (the risk of becoming unable to makepayment on the payment 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 thefair value, etc., of financial instruments
Fair value of ﬁnancial instruments includes prices basedon market prices, and prices rationally calculated in cases
where there are no market prices. Variable factors areincorporated 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 the derivativetransactions.

Introduction2) Matters related to the fair value, etc., of financial instruments
The carrying value, fair value and their diﬀerence as of March 31, 2018 and 2017, are presented in the following tables.
The tables do not include ﬁnancial instruments for which it is extremely diﬃcult to determine the fair value (see Note 2).
As of March 31, 2018

Millions of yen
Carrying value

Fair value

Thousands of U.S. dollars
Difference

Carrying value

Fair value

Difference¥—$ 259,920$ 259,920$

1,912,928

1,912,928—¥ 27,613¥ 27,613(2) Notes and accounts receivable(3) Investment securities:
Other securities

203,229

203,229——

72,811

72,811—

685,347

685,347—

296,185

296,185—

2,787,890

2,787,890—(4) Notes and accounts payable

131,064

131,064—

1,233,663

1,233,663—(5) Short-term loans payable

36,48336,483—

343,403

343,403—(6) Accrued expenses

43,91943,919—413,397

413,397—(7) Bonds

20,00019,994(6)

188,253

188,196(56)(8) Long-term loans payable

62,61962,020(598)

589,414583,777(5,637)¥283,129¥282,524¥(604)$2,665,002$2,659,309$(5,693)

Total assets

Total liabilities

Our Value Creation Story(1) Cash and deposits

Millions of yen
Carrying value

Fair value

Difference(1) Cash and deposits¥ 24,761¥ 24,761(2) Notes and accounts receivable(3) Investment securities:
Other securities

183,807

183,807—

Total assets(4) Notes and accounts payable¥—

61,271

61,271—

269,840

269,840—

110,730

110,730——

27,99527,99547,212

47,212—(7) Bonds

30,00030,04242

Total liabilities

71,502

71,045(457)¥287,440¥287,025¥(415)

Corporate Information(5) Short-term loans payable(6) Accrued expenses(8) Long-term loans payable

Financial and Non-Financial Section

As of March 31, 2017

Our Activities for Sustainability(Note 1) Method of calculating the fair value of ﬁnancial instruments and matters related to securities(1) Cash and deposits and (2) Notes and accounts receivable
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.
(3) 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 that takes
into account the credit risk.
In addition, refer to the “Securities” notes for matters related to securities based on their holding purpose.
(4) Notes and accounts payable, (5) Short-term loans payable and (6) 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.
(7) Bonds
The fair value of bonds issued by the Group is calculated based on the market price.
(8) Long-term loans payable
The fair value of long-term loans payable is 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 loans payable is included in these longterm loans payable.
(Note 2) Unlisted stocks (carrying value on the consolidated balance sheet: ¥18,062 million ($170,020 thousand)) are not included in other securities under“(3) Investment securities” above as their market prices are not available and it is extremely diﬃcult to determine the fair value.

(Note) Unlisted stocks (carrying value on the consolidated balance sheet: ¥16,591 million) are notincluded in other securities under “(3) Investment securities” above as their market prices
are not available and it is extremely diﬃcult to determine the fair value.

Meiji Holdings Co., Ltd.｜Integrated Report 201873

Notes to Consolidated Financial Statements

6. 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, 2018
None
As of March 31, 2017
None2) Other securities with market prices
As of March 31, 2018

Millions of yen

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

Unrealized
gain (loss)

Carrying value

Acquisition cost

¥47,241$678,437$233,765$444,672

24,83547,241

678,437

233,765444,672

734

778

(44)

6,910

7,326

(416)

734

778

(44)

6,910

7,326

(416)

¥72,811¥25,613¥47,197$685,347$241,092$444,255

Carrying value

Acquisition cost

¥72,077¥24,835

72,077

StocksSubtotal

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

Total(Note) Unlisted stocks (carrying value on the consolidated balance sheet: ¥2,237 million ($21,058 thousand)) are not included in the table above as theirmarket prices are not available and it is extremely diﬃcult to determine the fair value.

As of March 31, 2017

Millions of yen
Unrealized
gain (loss)

Carrying value

Acquisition cost

¥60,878¥25,205¥35,672

60,87825,20535,672

Stocks

392

486

(93)

Subtotal

392

486

(93)

¥61,271¥25,692¥35,579

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

Total(Note) Unlisted stocks (carrying value on the consolidated balance sheet: ¥2,256 million) are notincluded in the table above as their market prices are not available and it is extremely
diﬃcult to determine the fair value.

74

Financial and Non-Financial Section｜Consolidated Financial Statements

Introduction3) Other securities sold during the fiscal years ended March 31, 2018 and 2017
Thousands of
U.S. dollars

Millions of yen

Sales amounts

2018
¥547

2017
¥2,9572018$5,158

Total gains on sales

353

2,318

3,326

Total losses on sales

1

0

13

Our Value Creation Story

4) Securities that were subject to impairment during the fiscal years ended March 31, 2018 and 2017
Impairment loss recorded in the ﬁscal year ended March 31, 2018, was ¥8 million (other securities: ¥8 million ($77 thousand)).
Impairment loss recorded in the ﬁscal year ended March 31, 2017, was ¥52 million (other securities: ¥52 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.

7. Short-Term Loans Payable and Long-Term Loans Payable
Our Activities for Sustainability

As of March 31, 2018 and 2017, short-term loans payable and long-term loans payable are as follows:

1) Short-term loans payable
Weighted-averageinterest rate

Thousands of
U.S. dollars

Millions of yen

Short-term loans payable

0.76%

2018
¥36,4832017¥27,995

2018$343,403

Current portion of long-term loans payable
Current portion of long-term loans payable(bonds)0.56%

13,266

22,579124,869—

30,000—¥49,749¥80,574$468,273

Total

Financial and Non-Financial Section
Corporate Information
Meiji Holdings Co., Ltd.｜Integrated Report 201875

Notes to Consolidated Financial Statements

2) Long-term loans payable
Thousands of
U.S. dollars

Millions of yen

2018

2017

2018

Unsecured bonds due 2018, 0.76% (Note 13, 2nd series)

—

—

—

Unsecured bonds due 2017, 0.31%—¥ 10,000—

Unsecured bonds due 2019, 0.51% (Note 13, 4th series)

—

—

—

Unsecured bonds due 2017, 0.33%—

20,000—Unsecured bonds due 2021, 0.52% (Note 13, 6th series)

—

—

—

¥ 10,000—$ 94,126

10,000—94,126

Unsecured bonds due 2024, 0.22%
Unsecured bonds due 2023, 0.12%
Loans from domestic banks, insurance companies,
government agencies and others
Subtotal
Current portion of long-term loans payable
Current portion of long-term loans payable (bonds)
Total long-term loans payable

62,61971,502589,41482,619101,502

777,667(13,266)(22,579)(124,869)—(30,000)—¥ 69,353¥ 48,923$ 652,797

As of March 31, 2018, the aggregate annual maturities of long-term loans payable are as follows (other than bonds):
Millions of yen

Thousands of
U.S. dollars

2018¥ 4,2802018$ 40,289

More than two years up to three years

6,327

59,556More than three years up to four years

2,733

25,732More than four years up to five years

12,665

119,212More than five years

23,346

219,753¥49,353$464,544

Fiscal year ended March 31

More than one year up to two years

Total

8. Inventories
Inventories as of March 31, 2018 and 2017, are as follows:
Thousands of
U.S. dollars

Millions of yen

Goods and products

2017¥ 88,524

2018$ 818,236

Work in progress

3,344

4,114

31,483

Raw materials and supplies

46,194

41,596434,810¥136,468¥134,234$1,284,530

Total

76

2018
¥ 86,929

Financial and Non-Financial Section｜Consolidated Financial Statements

Introduction

9. Collateral and Secured Liabilities
A summary of assets pledged as collateral for liabilities as of March 31, 2018 and 2017, is as follows:
Thousands of
U.S. dollars

Millions of yen

Cash and deposits

2018
¥ 146

2017
¥ 146

2018
$ 1,379

1,140

1,970

10,735

1,505

1,674

14,169

51

83

486

Tools and furniture and fixtures
Land
Total

1,093

1,780

10,291¥3,937¥5,656$37,062

Our Value Creation Story

Buildings and structures
Machinery, equipment, vehicles and fixtures

A summary of secured liabilities as of March 31, 2018 and 2017, is as follows:
Thousands of
U.S. dollars

Millions of yen

Long-term loans payable
Total

2018
¥3,7202017¥4,6172018$35,015

2,823

3,484

26,573¥6,543¥8,101$61,588

Our Activities for Sustainability

Short-term loans payable

Financial and Non-Financial Section
Corporate Information
Meiji Holdings Co., Ltd.｜Integrated Report 201877

Notes to Consolidated Financial Statements

10. Deferred Tax Assets and Liabilities
1) The significant components of deferred tax assets and liabilities as of March 31, 2018 and 2017,
are as follows:
Thousands of
U.S. dollars

Millions of yen

2018

2017

2018

Deferred tax assets:
Net defined benefit liability¥ 17,771¥ 17,174$ 167,278

Accrued enterprise tax and others

1,134

1,013

10,674

Accrued expenses

2,247

2,509

21,156

Investment securities

1,191

1,183

11,217

Accrued bonuses for employees

3,318

3,250

31,237

Depreciation of fixed assets

6,025

5,890

56,720

Unrealized gain

732

840

6,898

Investment subsidiary basis differences

—

877

—

Losses carried forward

2,741

2,009

25,806

Other

7,266

6,758

68,398Subtotal

42,431

41,507399,388

Valuation allowance(6,037)(6,061)(56,827)

Total deferred tax assets

36,39335,446

342,561

Deferred tax liabilities:
Advanced depreciation reserve for fixed assets(7,295)(7,421)(68,666)

Unrealized holding gains or losses on securities(13,915)(10,369)(130,985)

Net defined benefit asset
Valuation difference due to purchase of investments in
subsidiaries(5,904)(5,807)(55,575)(2,791)(3,907)(26,277)

Other(1,128)(1,095)(10,622)

Total deferred tax liabilities(31,035)(28,601)(292,128)

5,358¥ 6,844$ 50,433

Net deferred tax assets (liabilities)¥

2) An analysis of the significant differences between the statutory tax rate and the Company’s effective tax
rate for the fiscal years ended March 31, 2018 and 2017, is as follows:

Statutory tax rate

78

2018
30.9%

2017
30.9%

Entertainment and other permanently non-deductible expenses

0.9

1.0

Dividend and other permanently non-taxable income

(0.1)

(0.1)

Per capital inhabitant’s tax

0.4

0.4

Tax credit for experimentation and research expenses

(2.1)

(1.7)

Increase (decrease) in valuation allowance

0.5

0.5

Other

1.5

0.4

Effective tax rate

32.0%

31.4%

Financial and Non-Financial Section｜Consolidated Financial Statements

Introduction

11. Retirement and Severance Benefits

Our Value Creation Story

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 deﬁned contribution plans, and some domestic consolidated subsidiaries
have joined the Smaller Enterprise Retirement Allowance Mutual Aid system. Some consolidated subsidiaries have establishedretirement beneﬁt trusts.

Defined benefit plans
1) Reconciliation of the beginning and ending balances of retirement benefit obligations
Thousands of
U.S. dollars

Millions of yen

2017¥139,5382018$1,296,329

Service cost

5,741

5,253

54,043

Interest cost

753

747

7,095

Actuarial gains or losses

380

138

3,582

Retirement benefits paid

(7,248)(7,912)(68,227)

Prior service costs incurred during fiscal year

23

—

218

(201)

(43)

(1,892)¥137,171¥137,722$1,291,148

Other
Ending balance of retirement benefit obligations

Our Activities for Sustainability

2018¥137,722

Beginning balance of retirement benefit obligations(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

Beginning balance of plan assets

2018¥109,768

2017¥109,0962018$1,033,211

Expected return on plan assets

2,432

2,514

22,899Actuarial gains or losses

(906)

1,678

(8,534)Contributions from employer

1,453

1,338

13,677Retirement benefits paid

(5,065)(4,801)(47,678)

Other
Ending balance of plan assets

(63)

(57)

(601)

¥107,618¥109,768$1,012,973

Financial and Non-Financial Section

Thousands of
U.S. dollars

Millions of yen(Note) The multi-employer deﬁned beneﬁt pension plan is not included in plan assets.

Corporate Information
Meiji Holdings Co., Ltd.｜Integrated Report 201879

Notes to Consolidated Financial Statements

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

Retirement benefit obligations of funded plans

2018¥ 131,3202017¥ 132,313

2018$ 1,236,073(107,618)(109,768)(1,012,973)

23,702

22,544

223,100

Plan assets
Retirement benefit obligations of non-funded plans
Net amount of liability and asset recorded on the consolidatedbalance sheet

5,851

5,409

55,07429,553

27,953

278,174

Net defined benefit liability

50,33048,371

473,745

Net defined benefit asset
Net amount of liability and asset recorded on the consolidatedbalance sheet(20,777)(20,418)(195,571)

29,553¥ 27,953¥$

278,174

4) Components of retirement benefit costThousands of
U.S. dollars

Millions of yen

Service cost
Interest cost2018
¥ 5,7412017¥ 5,2532018$ 54,043

753

747

7,095

Expected return on plan assets(2,432)(2,514)(22,899)

Amortization of actuarial gains or losses

3,492

4,182

32,873

12

1

119

(9)
¥ 7,55817¥ 7,688(86)$ 71,146

Amortization of prior service cost
Other
Retirement benefit cost related to defined benefit plans(Note) Includes cost calculated using the simpliﬁed method (excluding cost arising from the diﬀerences at transition of accounting standards) and excludes
employees’ contributions to the corporate pensions funds.

5) Remeasurements of defined benefit plans recorded in the consolidated statement ofcomprehensive income
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

Amortization of actuarial gains or losses
Amortization of prior service cost
Total

80

Financial and Non-Financial Section｜Consolidated Financial Statements

2018¥2,2252017¥5,7462018$20,948(10)¥2,2151¥5,748(98)$20,849

Introduction

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

Unrecognized actuarial gains or losses

2017¥19,2022018$159,796

118¥17,095

107¥19,310

1,113$160,910

Our Value Creation Story

Unrecognized prior service cost
Total

2018
¥16,976

7) Plan assets(1) Major categories of plan assets as a percentage of total plan assets are as follows:
2018
42%

2017
41%

Equities

20

19

Alternatives

25

25

Cash and deposits

3

3

Other
Total

10

12

100%

100%

Our Activities for Sustainability

Bonds(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 pensions funds and the lump-sum severance payment plan
representing 13% in the current consolidated accounting period and 13% in the previous consolidated accounting period.

(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.

Financial and Non-Financial Section8) Actuarial assumptions
Actuarial assumptions are as follows:

Discount rate

2018
0.2–0.9%

2017
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

Meiji Holdings Co., Ltd.｜Integrated Report 2018

Corporate Information

The amount of required contribution to deﬁned contribution plans for the consolidated subsidiaries is ¥1,300 million ($12,244
thousand) in the current consolidated accounting period and ¥1,301 million in the previous consolidated accounting period.

81Notes to Consolidated Financial Statements

12. Unconsolidated Subsidiaries and Affiliates
As of March 31, 2018 and 2017, investment securities of unconsolidated subsidiaries and aﬃliates is as follows:
Thousands of
U.S. dollars

Millions of yen

Investment securities (stock)2018¥15,8252017¥14,334

2018$148,961

13. Contingent Liabilities
As of March 31, 2018 and 2017, 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

2018
PT MEIJI FOOD INDONESIA
Sendai Feed Co., Ltd.
Employees
Total

¥164

2017
¥224

2018
$1,550

89

101

840

90
¥344

114
¥440

854
$3,244(Note) PT MEIJI FOOD INDONESIA was renamed “P.T. Ceres Meiji Indotama” on May 18, 2017.

The following bonds have been transferred in accordance to a bond trust-type debt assumption agreement concluded with abank. As a result, the transfer obligations related to these bonds are counterbalanced through the payment amount associatedwith the agreement. However, the Company’s bond redemption obligations to bond holders will remain until the bonds havebeen redeemed.
Millions of yen

Thousands of
U.S. dollars

2nd Series of Unsecured Straight Bonds

2018¥15,000

2018$141,189

4th Series of Unsecured Straight Bonds

20,000188,253

6th Series of Unsecured Straight Bonds

15,000141,189¥50,000$470,632

Total2) Notes receivable discounted and endorsed
Thousands of U.S.
dollars

Millions of yen

2018
Notes receivable discounted
Notes receivable endorsed

82

Financial and Non-Financial Section｜Consolidated Financial Statements

2017
¥ 6
67

2018
¥—
66

$ 65
634

Introduction

14. Goodwill
As of March 31, 2018 and 2017, goodwill is as follows:
Thousands of
U.S. dollars

Millions of yen

Goodwill

2018¥10,5902017¥12,8402018$99,685

Our Value Creation Story

15. Notes payable / receivable due on the consolidated balance sheet dateNotes payable / receivable due on the consolidated balance sheet date are based on the speciﬁed settlement date. Thus, thenotes payable / receivable shown below are included in the balance for the consolidated ﬁscal year.
Thousands of
U.S. dollars

Millions of yen

2017
¥—
—

2018
$31,823
3,194

Our Activities for Sustainability

Notes payable
Notes receivable2018¥3,380339

16. Commitment Line Agreements
The Company enters into commitment line agreements with seven 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, 2018 and 2017, is as follows:
Thousands of
U.S. dollars

Millions of yen

2018¥30,000—¥30,000

2017¥40,000—¥40,0002018$282,379—$282,379

Financial and Non-Financial Section

Maximum loan amount
Used portion of the commitment line
Balance

Corporate Information
Meiji Holdings Co., Ltd.｜Integrated Report 201883

Notes to Consolidated Financial Statements

17. Net Assets
1) Matters related to types and total numbers of outstanding shares and treasury stock
2018
Number of shares
as of March 31, 2017
(Thousands)

Type of shares

Outstanding shares:
Common stock
Treasury stock:
Common stock (Notes 1, 2)

Increase(Thousands)

Decrease(Thousands)

Number of shares
as of March 31, 2018
(Thousands)

152,683——

152,683

6,218

1,497

35

7,680

(Note 1) The increase in treasury common stock of 1,497 thousand shares was attributable to the acquisition of 1,490 thousand shares of treasury stock
based on the Board of Directors’ resolution and the purchase of 7 thousand shares that were less than one unit.
(Note 2) The treasury common stock decreased by 35 thousand shares due to the disposal of 34 thousand shares of treasury stock used for restricted stockcompensation and decreased by 0 thousand shares due to the sales of shares that were less than one unit.

2017
Number of shares
as of March 31, 2016
(Thousands)

Type of shares

Outstanding shares:
Common stock
Treasury stock:
Common stock (Notes 1, 2)

Increase(Thousands)

Decrease(Thousands)

Number of shares
as of March 31, 2017
(Thousands)

152,683——

152,683

5,462

756

0

6,218

(Note 1) The increase in treasury common stock of 756 thousand shares was attributable to the acquisition of 662 thousand shares of treasury stock basedon the Board of Directors’ resolution, the purchase of 88 thousand shares from untraceable shareholders, and the purchase of 5 thousand sharesthat were less than one unit.
(Note 2) The treasury common stock decreased by 0 thousand shares due to a decrease in sales of shares that were less than one unit.

2) Matters related to dividends(1) Cash dividends paid
2018

Resolution

Board of Directors’ meeting
held on May 12, 2017
Board of Directors’ meeting
held on November 8, 2017

Type of shares

Commonstock
Commonstock

Total amount of dividends
Millions of Thousands ofyen
U.S. dollars

Dividends per share
U.S.
Yen
dollars¥9,520$89,610¥65.00

$0.61

8,337

78,481

57.50

0.54

Cut-off date

Effective date

March 31,
June 6,2017
2017
September 30, December 6,
2017
2017

2017
Resolution

Board of Directors’ meeting
held on May 11, 2016
Board of Directors’ meeting
held on November 9, 201684

Type of shares

Commonstock
Commonstock

Total amount of dividends

Dividends per share

Millions of yen

Yen¥9,201¥62.50

6,624

45.00

Financial and Non-Financial Section｜Consolidated Financial Statements

Cut-off date

Effective date

March 31,
June 7,2016
2016
September 30, December 6,
2016
2016

Introduction(2) Dividends with the cut-off date in the fiscal year ended March 31, 2018, and with the effective date in the fiscal year
ending March 31, 20192018

Resolution

Type ofsharesBoard of Directors’ meeting
held on May 11, 2018

Commonstock

Total amount of dividends
Millions
Thousands ofof yenU.S. dollars

Source ofdividends¥ 10,512

Retainedearnings$ 98,952

Dividends per share
Yen

U.S. dollars

Cut-off date

Effective date

$ 0.68March 31,2018

June 6,2018¥ 72.50

Our Value Creation Story

2017
Total amount of dividends

Dividends per share

Resolution

Type ofsharesMillions of yen

Source ofdividends

Yen

Cut-off date

Effectivedate

Board of Directors’ meeting
held on May 12, 2017

Commonstock¥9,520Retainedearnings¥65.00March 31,2017

June 6,20173) Shareholders’ equity
Our Activities for Sustainability

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.

18. Supplemental Cash Flow Information
The following table represents a reconciliation of cash and cash equivalents as of March 31, 2018 and 2017:

Cash and deposits
Time deposits with maturities of more than three months
Securities with maturities up to three months
Cash and cash equivalents

2018¥27,613(2,142)
1,442¥26,9132017¥24,761(2,136)—¥22,624

Financial and Non-Financial Section

Thousands of
U.S. dollars

Millions of yen

2018$259,920(20,167)
13,573$253,326

19. Selling, General and Administrative Expenses
The major elements of selling, general and administrative expenses during the ﬁscal years ended March 31, 2018 and 2017,
are as follows:

Carriage and storage charges
Sales promotion expenses
Labor cost
Provision for accrued bonuses for employees
Employees’ retirement benefit cost
Allowance for sales rebates

2018¥ 46,234
110,563
72,265
6,605
5,992
1,943

2017
¥ 48,851
116,668
71,503
6,475
6,359
2,061

Corporate Information

Thousands of
U.S. dollars

Millions of yen

2018$ 435,191
1,040,695
680,213
62,17556,405
18,297

Meiji Holdings Co., Ltd.｜Integrated Report 201885

Notes to Consolidated Financial Statements

20. Research and Development Costs
The research and development costs that were included in general and administrative expenses and manufacturing expenses
during the ﬁscal years ended March 31, 2018 and 2017, are as follows:
Thousands of
U.S. dollars

Millions of yen

Research and development costs

2018¥26,5072017¥26,1622018$249,504

21. Extraordinary Gains and Losses
The major elements of extraordinary gains and losses during the ﬁscal years ended March 31, 2018 and 2017, are as follows:
Thousands of
U.S. dollars

Millions of yen

2018

2017

2018

Extraordinary gains:
Gain on sales of fixed assets
Gain on liquidation of subsidiaries¥ 6,459¥5,395$ 60,805

464

—

4,376

Gain on sales of subsidiaries and affiliates’ stocks

226

—

2,129

Other

410

2,568

3,863

7,561

7,964

71,175

Loss on disposal of fixed assets

4,753

3,513

44,746

Impairment loss

4,214

203

39,668Total
Extraordinary losses:

Loss on sales of subsidiaries and affiliates’ stocks

1,224

0

11,521

Transfer related costs

1,662

709

15,648Loss on disaster

—

2,849

—

Other

503

334

4,743

¥12,358¥7,611$116,328

Total(Note) “Loss on sale of subsidiaries and aﬃliates’ stocks” and “Transfer related costs,” which were included in “Other” under “Extraordinary losses” presented in
the consolidated ﬁscal year ended March 31, 2017, have been reported independently in the consolidated ﬁscal year ended March 31, 2018 because
the monetary amounts have become more signiﬁcant.
“Gain on sale of investment securities” was reported independently under “Extraordinary gains” in the consolidated ﬁscal year ended March 31, 2017,
but has been included in “Other” under “Extraordinary gains” for the consolidated ﬁscal year ended March 31, 2018, because the monetary amount
has become insigniﬁcant.
Amounts disclosed for the ﬁscal year 2017 in the above schedule has been reclassiﬁed in line with the disclosed items for the ﬁscal year 2018.
As a result, ¥1,044 million of “Other” under “Extraordinary Losses” in the consolidated statements of income of the ﬁscal year ended March 31,2017 has been reclassiﬁed as ¥0 million of “Loss on sale of subsidiaries and aﬃliates’ stocks,” ¥709 million of “Transfer related costs” and ¥334 millionof “Other.” ¥2,318 million of “Gain on sale of investment securities” and ¥250 million of “Other” under “Extraordinary gains” in the same have been
reclassiﬁed as ¥2,568 million of “Other.”

22. Gain on sales of property, plant and equipment
Gain on sales of property, plant and equipment for the ﬁscal years ended March 31, 2018 and 2017
Thousands of
U.S. dollars

Millions of yen

Land
Other fixed assets
Total

86

Financial and Non-Financial Section｜Consolidated Financial Statements

2018¥5,5162017¥5,3042018$51,925

942

90

8,879

¥6,459¥5,395$60,805

Introduction

23. Loss on disposal of property, plant and equipment
Loss on disposal of property, plant and equipment for the ﬁscal years ended March 31, 2018 and 2017
Thousands of
U.S. dollars

Millions of yen

2018

2017

2018

¥ 732

¥ 528

Machinery and equipment

1,977

1,069

$ 6,896
18,613

Other

2,043

1,916

19,236

Total¥4,753¥3,513$44,746

Our Value Creation Story

Buildings and structures

24. Impairment Loss
Impairment losses for the ﬁscal year ended March 31, 2018, are as follows:

Buildings and structures

Kasukabe-shi, Saitama Prefecture

Business assets and Idle assets

Machinery, equipment and buildings, etc.

Kasaoka-shi, Okayama Prefecture

Business assets

Land

Tsurugashima-shi, Saitama Prefecture

Business assets and Idle assets

Machinery, equipment and buildings, etc.

Jining Shandong, China

Business assets

Machinery and equipment

Shanghai, China

Idle assets

Machinery, equipment and buildings, etc.

Omitama-shi, Ibaraki Prefecture

Idle assets

Machinery, equipment and buildings, etc.

Fujieda-shi, Shizuoka Prefecture

Idle assets

Buildings and land, etc.

Tomakomai-shi, Hokkaido Prefecture

Idle assets

Machinery, equipment and buildings

Takatsuki-shi, Osaka Prefecture

Idle assets

Machinery, equipment and buildings

Sakado-shi, Saitama Prefecture

Idle assets

Machinery and equipment

Kaminoyama-shi, Yamagata Prefecture

Idle assets

Machinery and equipment

Jiangsu, China

Idle assets

Industrial property rights

Madrid, Spain

Idle assets

Industrial property rights

New South Wales, Australia

Rental assets

Buildings

Taiwa-cho, Miyagi prefecture

In addition, for idle assets, ¥19 million ($188 thousand)was buildings and structures; ¥749 million ($7.052 million)
was machinery, equipment and vehicles; ¥3 million ($28
thousand) was tools, furniture and ﬁxtures; ¥21 million($200 thousand) was land; and ¥26 million ($245 thousand)was intangible assets. For rental assets, ¥45 million ($430
thousand) was buildings.
Additionally, the recoverable amounts of businessassets with decreased proﬁrability have been measured
based on value in use. For business assets in Kasaoka in
Okayama Prefecture, the future cash ﬂow is calculated bydiscounting at a rate of 4.20%, and for business assets in
Jining, Shandong Province in China, the future cash ﬂow is
calculated by discounting at a rate of 13.00%.
The recoverable amounts for other business assets, idle
assets and leased assets have been measured based on
the net selling values when measurable and reduced tomemorandum values or expected sales amounts, etc.

Meiji Holdings Co., Ltd.｜Integrated Report 2018

Corporate Information

The asset groupings in the Group are in principle basedon the type of business. Leased assets and idle assets aregrouped by individual asset.
In the ﬁscal year ended March 31, 2018, due to a decreasein the proﬁtability of some assets and the decision to
dismantle existing facilities to make way for the newfacility construction, the carrying values of said assets werereduced to recoverable amounts, and the reductions wererecognized as “Impairment loss” of ¥4.214 billion ($39.668
million) under “Extraordinary losses.” Of this amount,in business assets, ¥1.398 billion ($13.167 million) was
buildings and structures; ¥1.433 billion ($13.492 million)
was machinery, equipment and vehicles; ¥30 million ($291
thousand) was tools, furniture and ﬁxtures; ¥362 million($3.414 million) was land; ¥1 million ($12 thousand) was
intangible assets; and ¥9 million ($85 thousand) wasconstruction in progress.

Location

Financial and Non-Financial Section

Type

Business assets

Our Activities for Sustainability

Application

87

Notes to Consolidated Financial Statements

Impairment losses for the ﬁscal year ended March 31, 2017, are as follows:
Application

Type

Business assets

Machinery, equipment and buildings, etc.

Location

Fujimino-shi, Saitama Prefecture

Business assets

Structures, machinery and equipment

Sakado-shi, Saitama Prefecture

Business assets

Machinery, equipment and buildings

Kasaoka-shi, Okayama Prefecture

Business assets

Machinery and equipment

Kaminoyama-shi, Yamagata Prefecture

Idle assets

Machinery, equipment and buildings, etc.

Togitsu-shi, Nagasaki Prefecture

Idle assets

Buildings

Sapporo-shi, Hokkaido Prefecture

Idle assets

Machinery and equipment

Kaizuka-shi, Osaka Prefecture

Idle assets

Land

Nasu-machi, Tochigi Prefecture

Idle assets

Machinery, equipment and buildings, etc.

Memuro-cho, Hokkaido Prefecture

The asset groupings in the Group are in principle basedon the type of business. Leased assets and idle assets aregrouped by individual asset.
In the ﬁscal year ended March 31, 2017, due to typhoon
damage and withdrawal from certain businesses ina subsidiary, the carrying values of said assets werereduced to recoverable amounts, and the reductions wererecognized as “Impairment loss” (¥203 million) and “Loss on
disaster” (¥551 million) under “Extraordinary losses.”

Of this amount, in business assets, ¥27 million wasbuildings and structures; ¥69 million was machinery,equipment and vehicles; and ¥0 million was tools, furnitureand ﬁxtures.
In addition, for idle assets, ¥131 million was buildings andstructures; ¥503 million was machinery and equipment; ¥5million was tools, furniture and ﬁxtures; and ¥16 million was
land.
The recoverable amounts for these assets have beenmeasured based on the net selling values and reduced tomemorandum values or the expected sale amounts, etc.

25. Loss on Disaster
The consolidated subsidiary of the Company, Nihon Kanzume, Inc., recorded losses due to the damage of the typhoon that
occurred in 2016.
The breakdown of items recorded is as follows:
Thousands of
U.S. dollars

Millions of yen

2018

88

2017

2018

Inventory loss

¥—

¥193

$—

Loss on disposal of fixed assets and restoration cost

—

997

—

Impairment loss of fixed assets

—

551

—

Loss on compensation to suppliers

—

1,107

—

Total

¥—

¥2,849$—Financial and Non-Financial Section｜Consolidated Financial Statements

Introduction

26. Comprehensive Income
Reclassiﬁcation adjustments and tax eﬀects relating to other comprehensive income are as follows:
Thousands of
U.S. dollars

Millions of yen

2018

2017

2018

Net unrealized holding gains or losses on securities:
Amount arising during the year

¥11,947¥

86$112,453(329)(2,315)(3,104)

Amount before tax effect

11,617(2,229)109,349

Tax effect(3,545)956(33,376)

Net unrealized holding gains or losses on securities

8,071(1,273)75,972

Amount arising during the year

(72)

(18)

(682)

Reclassification adjustments for gains and losses included in profit

—

—

—

Our Value Creation Story

Reclassification adjustments for gains and losses included in profit

Deferred gains or losses on hedges:

Asset acquisition costs adjustments
Amount before tax effect

—

—

—

(72)

(18)

(682)

22

5

210

Deferred gains or losses on hedges

(50)

(12)

(472)

(1,323)(1,732)(12,455)

Our Activities for Sustainability

Tax effectForeign currency translation adjustments:
Amount arising during the year
Reclassification adjustments for gains and losses included in profit
Foreign currency translation adjustments

(363)

0

(3,420)(1,686)(1,731)(15,875)

Remeasurements of defined benefit plans:
Amount arising during the year

(1,290)

1,563(12,144)

Reclassification adjustments for gains and losses included in profit

3,505

4,184

32,993
20,849Amount before tax effect

2,215

5,748

Tax effect(499)(1,806)(4,700)Remeasurements of defined benefit plans

1,715

3,941

16,148

788

(357)

7,423

566

$ 83,196

Amount arising during the year
Total other comprehensive income¥ 8,838¥

Financial and Non-Financial Section

Equity in affiliates accounted for by the equity method:

Corporate Information
Meiji Holdings Co., Ltd.｜Integrated Report 201889

Notes to Consolidated Financial Statements

27. Derivative Financial Instruments
Matters related to derivative transactions in the ﬁscal year ended March 31, 2018

1) Derivative transactions for which hedge accounting is not applied(1) Currency-related transactions
Millions of yen

Thousands of U.S. dollars

2018Type of transactions

Portion withmaturityoverContract
amount, etc. one year

Transactions other than market
transactions:
Currency swap contracts
Buy
U.S. dollar
Total

1,912
¥1,912

1,147¥1,147

2018

Fair value

Revaluation
gain (loss)

180
¥180

180
¥180

(Note) Fair value is based on the statements received from the counterparty ﬁnancial institutions.

(2) Interest rate-related transactions
None

90

Financial and Non-Financial Section｜Consolidated Financial Statements

Portion withmaturityoverContract
amount, etc. one year

18,000$18,000

10,800$10,800

Fair value

Revaluation
gain (loss)

1,702$1,702

1,702$1,702

Introduction2) Derivative transactions for which hedge accounting is applied(1) Currency-related transactions
Millions of yen

Thousands of U.S. dollars

2018Type of transactions

U.S. dollar
Euro

Fair value¥4,251
—

¥—
—

¥(80)
—

$40,013—$——$(760)—

Accounts
receivable

12

—

0

113

—

6

Accounts payable
Accounts payable
Accounts payable
Accounts payable

790
35
273
—

—
—
—
—

(Notes)————(Notes)(Notes)

7,443
333
2,578
—

20

—

(Notes)195—(Notes)157¥5,541—¥—(Notes)

1,477$52,156—$—(Notes)Accounts
receivable
Accounts
receivable(Notes)(Notes)¥(80)(Notes)(Notes)(Notes)$(754)

Financial and Non-Financial Section

Total

Fair value

Our Activities for Sustainability

U.S. dollar
Hedge accounting method:
Allocation method
Forward foreign exchange
contracts
Buy
U.S. dollar
Euro
Pound
Australian dollar
Sell

Accounts payable
Accounts payable

2018
Portion withmaturityoverContract
amount, etc. one year

Our Value Creation Story

Hedge accounting method:
Principle method
Forward foreign exchange
contracts
Buy
U.S. dollar
Euro
Sell

Primary hedged
items

Portion withmaturityoverContract
amount, etc. one year

(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 and accounts receivable, their fair values are included in the fair value information of the respective accounts payable and accounts
receivable.

Corporate Information
Meiji Holdings Co., Ltd.｜Integrated Report 201891

Notes to Consolidated Financial Statements(2) Interest rate-related transactions
Millions of yen

Thousands of U.S. dollars

2018Type of transactions

2018

Portion withmaturityoverContract
amount, etc. one year

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/
Long-term loans
variable rate receipts
payable¥17,796

Fair value¥16,749(Note)

Portion withmaturityoverContract
amount, etc. one year

$167,511$157,658

Fair value(Note)(Note) Method for determining market value: Since the items above are handled together with long-term loans payable that are subject to hedging, theestimated fair value of these items is included in the fair value of the long-term loans payable.

Matters related to derivative transactions in the ﬁscal year ended March 31, 2017

1) Derivative transactions for which hedge accounting is not applied(1) Currency-related transactions
Millions of yen

2017Type of transactions

Portion withmaturityoverContract
amount, etc. one year

Transactions other than market transactions:
Currency swap contracts
Buy
U.S. dollar
Total

2,625
¥2,6252,019¥2,019(Note) Fair value is based on the statements received from the counterparty ﬁnancial institutions.

(2) Interest rate-related transactions
None

92

Financial and Non-Financial Section｜Consolidated Financial Statements

Fair value

Revaluation
gain (loss)

234
¥234

234
¥234

Introduction2) Derivative transactions for which hedge accounting is applied(1) Currency-related transactions
Millions of yen

2017Type of transactions

Fair value¥3,167
3

¥—
—

¥6
(0)

Accounts receivable

286

—

(14)

Accounts payable
Accounts payable
Accounts payable

514
486
69

—
—
—

(Notes)Accounts receivable27¥4,555—¥—(Notes)Our Activities for Sustainability

Accounts payable
Accounts payable

Our Value Creation Story

Hedge accounting method:
Principle method
Forward foreign exchange
contracts
Buy
U.S. dollar
Euro
Sell
U.S. dollar
Hedge accounting method:
Allocation method
Forward foreign exchange
contracts
Buy
U.S. dollar
Pound
Australian dollar
Sell
U.S. dollar
Total

Primary hedged
items

Portion withmaturityoverContract
amount, etc. one year

(Notes)(Notes)¥(7)

Financial and Non-Financial Section(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 aretreated together with the hedged accounts payable and accounts receivable, their fair values areincluded in the fair value information of the respective accounts payable and accounts receivable.

(2) Interest rate-related transactions
Millions of yen

2017Type of transactions

Primary hedged
items¥18,843¥17,796

Fair value

Corporate Information

Method of hedge accounting:Integrated method(shortcut method, allocation
method) of interest rate andcurrency swap
Interest rate and currency swap
contracts
Fixed rate payments/
Long-term loans
variable rate receipts
payablePortion withmaturityoverContract
amount, etc. one year

(Note)(Note) Method for determining market value: Since the items above are handled together with long-term loans
payable that are subject to hedging, the estimated fair value of these items is included in the fair value ofthe long-term loans payable.

Meiji Holdings Co., Ltd.｜Integrated Report 201893

Notes to Consolidated Financial Statements

28. 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

2018
Reporting segments
Food

Sales, operating income (loss)
and assets
Sales(1) Sales to third parties(2) Intersegment sales and transfers
Total
Segment income (loss)
Segment assets
Other items
Depreciation
Equity in income of affiliates
Increase in property, plant andequipment / intangible fixed assets

Pharmaceutical

Total

Adjustments(Note 1)

Amount presented
in consolidated
statement ofincome (Note 2)¥1,073,077
577¥1,073,655¥ 84,189
661,397¥167,783
683¥168,466¥ 11,025
212,702¥1,240,860
1,261¥1,242,121¥ 95,214
874,099—(1,261)¥(1,261)¥ (541)53,445¥1,240,860—¥1,240,860¥ 94,673
927,544

¥

¥

¥

¥

¥

40,188
6,029
66,234

6,006
6,028
8,400

46,195
12,057
74,635

¥

315
—
37

46,511
12,05774,673Thousands of U.S. dollars

2018
Reporting segments
Food

Sales, operating income (loss)
and assets
Sales(1) Sales to third parties(2) Intersegment sales and transfers
Total
Segment income (loss)
Segment assets
Other items
Depreciation
Equity in income of affiliates
Increase in property, plant andequipment / intangible fixed assets

Pharmaceutical

Total

Adjustments(Note 1)

Amount presented
in consolidated
statement ofincome (Note 2)$10,100,499
5,439$10,105,939$ 792,447
6,225,500$1,579,284
6,430$1,585,714$ 103,776
2,002,091$11,679,784
11,870$11,691,654$ 896,223
8,227,591$—(11,870)$(11,870)$ (5,092)
503,060$11,679,784—$11,679,784$ 891,131
8,730,652$$$

434,818
113,493$ 2,973—$702,520357

378,284
56,749623,445

56,53456,74379,075437,792
113,493
702,878(Note 1) The adjustments are as follows.
The adjustments in the segment income (negative ¥541 million or negative $5,092 thousand) includes the elimination of expenses forintersegment transactions (negative ¥7 million or negative $68 thousand) and the corporate expenses not allocated to each reporting segment(negative ¥533 million or negative $5,024 thousand). The corporate expenses are expenses related to the Company’s (holding company)
operations, etc.
The adjustments in the segment assets (¥53.445 billion or $503.06 million) includes the elimination of intersegmental assets (negative ¥77,163
million or negative $726,314 thousand) and the corporate assets not allocated to each reporting segment (¥130,608 million or $1,229,375
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 statements of income.

94

Financial and Non-Financial Section｜Consolidated Financial Statements

Introduction

Millions of yen

2017
Reporting segments
Food

Total

Adjustments(Note 1)

¥1,081,577
538¥1,082,115¥ 82,950
630,185¥160,902
718¥161,620¥ 5,781
215,824¥1,242,480
1,256¥1,243,736¥ 88,731
846,010¥—(1,256)¥(1,256)¥ (336)37,885¥1,242,480—¥1,242,480¥ 88,395
883,895

¥

¥

¥

¥

¥

39,914
5,169
59,475

5,730
6,418
6,207

45,644
11,58765,682

227—
60

Our Value Creation Story

Sales, operating income (loss)
and assets
Sales(1) Sales to third parties(2) Intersegment sales and transfers
Total
Segment income (loss)
Segment assets
Other items
Depreciation
Equity in income of affiliates
Increase in property, plant andequipment / intangible fixed assets

PharmaceuticalAmount presented
in consolidated
statement ofincome (Note 2)

45,872
11,58765,743

Our Activities for Sustainability(Note 1) The adjustments are as follows.
The adjustments in the segment income (negative ¥336 million) includes the elimination of intersegment transactions (¥45 million) and thecorporate expenses not allocated to each reporting segment (negative ¥382 million).
The corporate expenses are expenses related to the Company’s (holding company) operations, etc.
The adjustments in the segment assets (¥37,885 million) includes the elimination of intersegment assets (negative ¥127,135 million) and thecorporate assets not allocated to each reporting segment (¥165,021 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 statements of income.

Financial and Non-Financial Section
Corporate Information
Meiji Holdings Co., Ltd.｜Integrated Report 201895

Notes to Consolidated Financial Statements

29. Significant Subsequent Events(5) Maturity
10 years or less

The meeting of the Board of Directors, held on June 13,
2018, approved the following comprehensive resolution
concerning the issuance of domestic unsecured straightbonds.

(6) Redemption method
Lump-sum redemption upon maturity(7) Purpose of the funds(1) Issuing amount¥50 billion ($470,632 thousand) or lessMultiple issuances within this range shall be permitted.

Operating funds, capital expenditures, investment
and loan capital, debt loan repayment capital, bondredemption capital and commercial paper redemption
capital(2) Planned issue period
From June 2018 to March 2019In case the bond subscription was oﬀered during thesaid period, it shall be included even if the payment datefalls after this period.

(8) Special conditions
The said corporate bonds shall include a negativepledge clause.

(9) Others(3) Amount of payment¥100 ($0.94) or more per corporate bond amount of¥100 ($0.94)(4) Interest rate
Less than or equal to 0.5% over the swap rate with thesame maturity as the corporate bonds

96

Decisions concerning the matters set forth in theprovisions of Article 676 of the Companies Act ofJapan and all other matters required for the issuanceof corporate bonds shall be made at the discretion of
the president and representative director within the
aforementioned limits and shall be reported at the ﬁrst
Board of Directors’ meeting held after a decision has
been made.

Financial and Non-Financial Section｜Consolidated Financial Statements / Independent Auditor’s ReportIndependent Auditor’s Report

Introduction

Our Value Creation Story

Our Activities for Sustainability

Financial and Non-Financial Section

Corporate Information

97

Meiji Holdings Co., Ltd.｜Integrated Report 2018

Operating Bases and Group Companies(As of July 2, 2018)

The Meiji Group uses its extensive global network and conducts R&D, production anddistribution to provide a stable supply of high quality food products and pharmaceuticals,in order to maintain society’s trust in the Meiji brand.
Wakkanai Plant

Domestic▼ Food Segment

Meiji Co., Ltd.
Head Oﬃce

Asahikawa Plant

Research Laboratory

Branches

1
28

Branches

Research Laboratory
Plant

Plant

Nishi Shunbetsu Plant

Group Company

Pharmaceuticals
Hokkaido Branch
Sapporo Plant

5Group Company
29

Honbetsu Plant
Tokachi Plant

Nemuro Plant

Nihon Kanzume, Co., Ltd.
Donan Shokuhin Co., Ltd.

▼ Pharmaceuticals Segment

Meiji Seika Pharma Co., Ltd.
Head Oﬃce

Research Laboratory

Branches

4
3

Branches

Research Laboratory
Plant

Plant

Group Company

16Group Company
3*1

Kitakami Plant

KM Biologics Co., Ltd. *2
Head Oﬃce

Research Laboratory

Branches

1
4

Sales Office

Research Laboratory
Plant

Nishinihon
Branches
Pharmaceuticals
Fukuoka Branch

Plant

1

Kyoto Plant
Pharmaceuticals Kyoto Branch
Meiji Oils and Fats Co., Ltd.
OHKURA Pharmaceutical Co., Ltd.

KCS Co., Ltd.
Okayama Plant
Okayamaken Shokuhin Co., Ltd.
Pharmaceuticals
Chugoku Branch

Osaka Plant

Pharmaceuticals Kanto Branch

Tohoku Plant

Zao Shokuhin Kaisha, Ltd.

Kitanihon Branch
Pharmaceuticals Sendai Branch
Agricultural Chemicals East Branch

Hokuriku Plant
Three S and L Co., Ltd. Kantou Seiraku Co., Ltd.
Gunma Milk Joint Business Cooperatives
Meiji Sangyo
Gunma Plant / Gunma Nutritionals Plant
Co., Ltd.
Gunma Pharmaceuticals Plant
Tochigi Meiji Milk Products Co., Ltd.
Karuizawa Plant
Gifu Plant
Bioscience Laboratories
Meiji Chewing Gum
Co., Ltd.
CMC* Research Laboratories(Ashigara)
Tokai Meiji
Odawara Plant
Co., Ltd.
Tokai Plant
Aichi Plant

Chubu Branch
Pharmaceuticals
Nagoya Branch

Pharmaceuticals Chiba & Saitama Branch
Veterinary Drugs East Branch

Saitama Plant
Moriya Plant
Pharmaceuticals
Ibaraki Plant
Toda Plant
Shikoku Meiji Co., Ltd. Shikoku Branch
Tokai
Nuts
Co.,
Ltd.
Meiji Rice Delica
Kyushu Plant
Kansai Plant
Meiji Techno-Service Inc.
Corporation
Kansai Ice Cream Plant
Asahi Broiler Co., Ltd.
Pampy Foods Incorporation
Kansai Nutritionals Plant
Chiba Meiji Milk Products
Meiji Innovation Center
Kansai Branches
Co., Ltd.
Pharmaceuticals Osaka Branch
Pharmaceuticals Tokyo Branch
Kitasato Pharmaceutical
Agricultural Chemicals West Branch
Nitto Co., Ltd.
Pharmaceuticals
Industry Co., Ltd.
Yokohama Branch
Kanto Branch
Kanagawa Plant
Meiji Kenko Ham Co., Ltd.
Veterinary Drugs West Branch
Meiji Feed Co., Ltd.
Pharmaceutical Research Center
Meiji Logitech Co., Ltd.
[ KM Biologics Co., Ltd. ]CMC* Research Laboratories (Yokohama)
Meiji Fresh Network Co., Ltd.
Head oﬃce
Agricultural & Veterinary
Meiji Nice Day Co., Ltd.
Kumamoto Operating Base
Research
Laboratories
Okinawa Meiji Milk
Kikuchi Laboratory
Products
Co.,
Ltd.
Head Oﬃce
Koshi Operating BaseAso Operating Base
Meiji Business Support Co., Ltd.
Fresh Logistic Co., Ltd.
Meiji Food Materia Co., Ltd.
Me Pharma Co., Ltd.
Sakado Plant[ KM Biologics Co., Ltd. ]Tokyo Sales Oﬃce
98

Corporate Information｜Operating Bases and Group Companies* CMC: Chemistry, Manufacturing & Control

Introduction

Overseas▼ Food Segment▼ Pharmaceuticals Segment

Meiji Co., Ltd.

Meiji Seika Pharma Co., Ltd.

Head Oﬃce

Group Company

Group Company

3Group Company
18

Office*3

Our Value Creation Story

1
Group Company
10

OfficeHead Oﬃce

Meiji Ice Cream (Guang Zhou) Co., Ltd.
Guangdong Meiji Pharmaceutical Co., Ltd.

Our Activities for Sustainability

Meiji Dairies (Suzhou) Co., Ltd.
Meiji Seika Food Industry(Shanghai) Co., Ltd.

Meiji Seika Europe B.V.
DM Bio Limited
Beijing Oﬃce
US Oﬃce
Laguna Cookie Co., Inc.

Meiji America Inc.
D.F. Stauﬀer Biscuit Co., Inc.

Madrid Oﬃce
Tedec Meiji Farma SA

Meiji Pharma(Shandong) Co., Ltd.
Taiwan Meiji
Food Co., Ltd.

Meiji Co., Ltd. Bangkok Oﬃce
CP-Meiji Co., Ltd.
Thai Meiji Food Co., Ltd.
Thai Meiji Pharmaceutical Co., Ltd.

Financial and Non-Financial Section★

Medreich Limited

Shantou SEZ Meiji
Pharmaceuticals Co., Ltd.
Meiji Seika(Singapore) Pte. Ltd.

PT. Meiji Indonesian Pharmaceutical Industries

Corporate Information

Changes in the Group companies starting from April 1, 2018
*1 Consolidated subsidiaries increased by one in April 2018
*2 Became a consolidated subsidiary in July 2018
*3 Consolidated subsidiaries increased by one in April 2018
★ The nine subsidiaries of Medreich Limited are not shown.

Meiji Holdings Co., Ltd.｜Integrated Report 201899

Corporate Data / Stock Information(As of March 31, 2018)

Corporate Data

Stock Information

Company Name

Major Shareholders

Meiji Holdings Co., Ltd. (Securities code: 2269)

Name

Head Office2-4-16, Kyobashi, Chuo-ku, Tokyo 104-0031, Japan

Number ofshares held(Thousands)

Percentage of
total sharesissued (%)

10,945

7.55

Incorporated

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

April 1, 2009

Japan Trustee Services Bank, Ltd. (Trust Account) 6,943

4.79

Paid-in CapitalMizuho Bank, Ltd.

3.18

JPY 30.0 billion

Nippon Life Insurance Company

3,348

2.31

Number of Group Employees

JP MORGAN CHASE BANK 380055

3,273

2.26

Resona Bank, Limited

3,047

2.10

152,683,400

The Norinchukin Bank

2,892

1.99

Stock Listing

STATE STREET BANK WEST CLIENT - TREATY
505234

2,590

1.79

Meiji Holdings Trading-Partner
Shareholding Association

2,557

1.76

Japan Trustee Services Bank, Ltd.
(Trust Account 5)

2,536

1.75

16,296
Common Stock Issued

Tokyo
Fiscal Year-End

March 31
Ordinary General Meeting of Shareholders

Late in June
Transfer Agent of Common Stock

Mitsubishi UFJ Trust and Banking Corporation
Public Notices

Public notices given by theCompany are issued electronically.
URL：https://www.meiji.com/

4,617(Notes) 1. The Company holds 7,680,613 shares of treasury stock as of March 31,
2018.
2. The shareholding ratio is calculated by subtracting the treasury stockfrom the total shares of common stock issued.

Shareholding by Type of Shareholder■ Financial Institutions

40.78%
24.78%■ Foreign Companies, etc.
23.34%■ Other Companies
9.99%■ Financial Instruments Dealers
1.11%■ Government and Public Bodies
0.00%■ Individuals and Others

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
carried in the Nihon Keizai Shimbun. It should be noted that
pursuant to Article 440, Paragraph 4 of the Companies Act, public
notices of ﬁnancial statements are not given.

* Individuals and Others includes treasury stock.

Stock Price and Trading Volume(index)500

Trading volume

Meiji GroupTOPIX(Thousandshares)
25,000400

20,000300

15,000200

10,000

100

5,000
0

0

FY 3/13

FY 3/14

FY 3/15FY 3/16

FY 3/17

FY 3/18(Notes) 1. The closing price as of March 29, 2013 is 100.
2. A 2-for-1 common stock split was issued on October 1, 2015. This value was retro-actively applied.

Website Information
Refer to our website for more detailed information such as activities or data that is not available in this report.
Corporate information

Investors

https://www.meiji.com/global/

https://www.meiji.com/global/investors/

ESG data
Our Website > Investors > ESG data
https://www.meiji.com/global/investors/esg/

Sustainability
Our Website > Sustainability
https://www.meiji.com/global/sustainability/
100 Corporate Information｜Corporate Data / Stock Information / Independent Practitioner’s Assurance of CO2 Emissions

Independent Practitioner’s Assurance of CO2 Emissions
In order to improve the reliability of the data, Meiji Holdings Co., Ltd. obtained the independent practitioner’s assurance
for the domestic CO2 emissions (Scope 1 and 2) of the ﬁscal year 2017 indicated on p.36 in the Japanese version of thisreport by Deloitte Tohmatsu Sustainability Co., Ltd. We will work hard to improve the reliability of all environmental data.

Scope of domestic CO2 emissions (Scope 1 and 2)
Meiji Holdings Co., Ltd., Meiji Co., Ltd. and group companies（Shikoku Meiji Co., Ltd., Tokai Meiji Co., Ltd., Gunma Milk Joint Business Cooperatives, Tochigi Meiji
Milk Products Co., Ltd., Pampy Foods Incorporation, 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., Meiji Kenko Ham Co., Ltd., Meiji Rice Delica Corporation, Okinawa Meiji Milk Products Co., Ltd., Meiji Logitech Co., Ltd.) , and Meiji
Seika Pharma Co., Ltd. and group companies (Me Pharma Co., Ltd., OHKURA Pharmaceutical Co., Ltd.)
Note that CO2 emissions for Meiji Logitech Co., Ltd. only include the fuel used in company owned delivery vehicles/ trucks. In addition, data for the CO2
emissions from company owned vehicles is collected only for Meiji Co., Ltd. and Meiji Seika Pharma Co., Ltd.

Meiji Holdings Co., Ltd.｜Integrated Report 2018 101

2-4-16, Kyobashi, Chuo-ku, Tokyo 104-0031, Japan

https://www.meiji.com/global

Printed in Japan