Integrated Report 2019

Contents

Meiji Group’s Vision

Disclosed Information

Beyond meiji

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

Investors
Our Website > Investors

We will continue to create valuethat exceeds our customers’ expectations
and be a company
that is essential not just to the lives of people

Group Philosophy
Our mission is to widen the world of “Tastiness and Enjoyment”
and meet all expectations regarding “Health and Reassurance.”
Our wish is to be closely in tune with our customers’ feelings

Our responsibility as “Food and Health” professionals is
to continue finding innovative ways to meet
our customers’ needs, today and tomorrow.

Our Website > sustainability > ESG Data

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

GRI Standard Table
Our Website > sustainability > GRI Standard Table

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

Sustainability
Our Website > Sustainability

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

Our Activities for Sustainability
36 Meiji Group’s Approach to CSR
48 Directors and Audit & Supervisory Board Members
50 Responsibilities of Members of the Board andAudit & Supervisory Board Members
52 Three Outside Directors Discuss the Meiji Group56 Corporate Governance
59 Risk Management
Compliance

Financial and Non-Financial Section
60 Financial and Non-Financial Highlights (10 Years Summary)
62 MD&A (The Management Discussion and Analysis)
66 Consolidated Financial Statements
103 Independent Auditor’s Report

Financial and Non-Financial Section

and to always be there to brighten their daily lives.

ESG Data

Our Activities for Sustainability

in Japan and around the world.

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

6 History
8 Meiji Group’s Process for Value Creation
10 Meiji Group’s Approach to CSR in Our Value Chain
12 Achieving Our Goals in 2026 Vision
14 Financial and Non-Financial Highlights (Main Indices)
16 Message from the President
22 Overview by Business (Food Segment)
26 Overview by Business (Pharmaceutical Segment)
30 Special Feature
Working Toward Sustainable Cocoa Production

Our Value Creation Story“Healthier Lives” for more than a century.

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

Our Value Creation Story- above imagination We have been helping our customers of all ages attain

Introduction

Introduction

Refer to our website for more detailed information such asactivities or data that is not available in this report.

Contents

Corporate Information
104 Operating Bases and Group Companies
106 Corporate Data/Stock Information
107 Independent Practitioner’s Assurance of
CO2 Emission Volume & Water Consumption Volume
Editorial Policy

Corporate Information

Since 2018, Meiji Holdings Co., Ltd. (the Company) has beenissuing an Integrated Report and will continue to replace theAnnual Report that was previously issued. After celebrating our
100 year anniversary, the Meiji 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 tosustainable growth.
* Reference: The International Integrated Reporting Council Framework

Using the Integrated Report 2019
This report is based on the performance results from the fiscal
year 2018 (fiscal year ended March 2019). Some content from thefiscal year 2019 (fiscal year ending March 2020) is also included.
The content is compiled based on information that is available atthe time when the Company created the Integrated Report 2019.
Therefore, please note that the actual results may be different
from the Company’s forecast. The information in the report unlessotherwise specified is current as of August 2019.

Meiji Holdings Co., Ltd.｜Integrated Report 20191

Contents

At a GlanceGroup Organization(As of March 31, 2019)

Meiji Holdings Co., Ltd.

Food Segment

Pharmaceutical Segment

Meiji Co., Ltd.

Meiji Seika Pharma Co., Ltd.

Number of Group Companies and Employees (As of March 31, 2019)
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.

The U.S.

3561

companies

billionyear on year

1.1 UP%

Pharmaceutical
Segment

15.8%

billionyear on year

3.9 UP

Overseas Sales Ratio (FY2018)

Pharmaceutical
Segment

84.2%

14.4 %

Food Segment
Food Segment

85.6 %

12.2
year on year

0.9pt DOWN
2Introduction

426.61
Profit Per Share%¥people%0.4 pt UP

Pharmaceutical Segment

20.6

%

year on year

2.7pt DOWN

peoplepeople36

Domestic Group Companies*

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

Recognized for Outstanding
Health Management in 2019
As part of the Japan Revitalization Strategy 2016, the Ministryof Economy, Trade and Industry established The Nippon
Kenko Kaigi (Japan Healthcare Council) to run a CertifiedHealth & Productivity Management Organization
Recognition Program. Meiji Holdings Co., Ltd., Meiji Co., Ltd.
and Meiji Seika Pharma Co., Ltd. were recognized as a large
corporate sector (White 500) under the 2019 Certified Health& Productivity Management Outstanding Organizations
Recognition Program. This is a program that recognizes andcites organizations for practicing outstanding healthcare
management through health promotion efforts. At the MeijiGroup, we shall continue striving to create a working
environment where employees can thrive in their work.

Corporate Information

4.5

year on year

ROE

12,50817,60898.3%

Food Segmentcompanies

Japan

Number of Group Employees

Operating Income¥

people22
4,200

Financial and Non-Financial Section

1,254.3

companies

Our Activities for Sustainability

FY2018 (Fiscal Year Ended March 2019) Business Results¥

people29This 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.

Net Sales

4339

companies

Asia/Oceania

Overseas Group Companies

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.

EuropeOur Value Creation Story

Meiji Holdings Co., Ltd. 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.

Introduction

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 Healthand Reassurance by providing a wide range of products that are essential in people’ s lives, such as dairy
products, confectioneries, nutritional products and pharmaceuticals.

year on year

1.0 UP%

Meiji Holdings Co., Ltd.｜Integrated Report 20193

Contents

Product and Market Presence
Pharmaceutical Segment

Antidepressant &Atypical Antipsychotic Drugs

Food Segment

11.3
No.4 in Japan

44.9
No.1 in Japan

Since *

1999
* Started processedcheese productionin 1932

%

*

Since

1999
Our Value Creation Story

Camembert Cheese

Introduction

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

%

Copyright © 2019 IQVIA.
Calculated based on JPM 2019 Mar MAT
Market scope as defined by Meiji Seika Pharma Co., Ltd.
* Reprinted with permission

Based on INTAGE Inc., SRI (camembert cheese market)
April 2018–March 2019 market share (money amount)

Rice Blast Preventives

36.2

Our Activities for Sustainability(Agricultural Chemicals)

Shipping data of Rice blast preventives
No.1 in Japan

Since

1950

Since

1958

%

Based on INTAGE Inc., SRI (yogurt market)
April 2018–March 2019 market share (money amount)Powdered &Granulated Protein%

Based on Fuji Keizai Co., Ltd., FY2018

Since

1980

Chocolate

Since

24.3

1926

No.1 in Japan

%

16.8

Based on Handbook of Agricultural Chemicals,Japan Plant Protection Association, FY2017

No.1 in Japan%

Copyright © 2019 IQVIA.
Calculated based on JPM 2019 Mar MAT
Market scope as defined by Meiji Seika Pharma Co., Ltd.
* Reprinted with permission

Based on INTAGE Inc., SRI (chocolate market)
April 2018–March 2019 market share (money amount)

Since

1998

Corporate Information

50.9
No.1 in Japan

Systemic
Antibacterial Drugs%

Financial and Non-Financial Section

43.0

Yogurt No.1 in Japan

Since

1958

Generic Drugs

4.8
No.4 in Japan%

Source: CRECON RESEARCH &CONSULTING, INC., FY2018

4

Introduction

Meiji Holdings Co., Ltd.｜Integrated Report 20195

Contents

History
Introduction

Since being founded in 1916, the Meiji Group has already built a history that spans more than a century. During this time,
we have always kept abreast with the state of affairs in society and the changing needs of our customers. We will bebuilding progressive value in order to continue to create new demands. This Ability to create a market is the source of ourstrength to grow.

1910

1920

1930

1940

1950

1960

1970

1980
1988

Meiji Seika launches
Marble Chocolate. 1975

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

1980

1969

Meiji Seika
launches SAVAS,
a series of protein
for athletes.

Meiji Seika
launches the
chocolate Apollo.

2010

1996

2014

1997

Meiji launches
Meiji The Chocolate.

2015

2002

Meiji Seika
launches Xylish Gum.

Meiji launches
SAVAS Milk.

Meiji Seika launches
Amino Collagen.

1998

2017

Meiji Seika launches
the high cocoa content
chocolate Chocolate Kouka.

Meiji launches
Meiji Spreatable.

2019

Confectioneries

Meiji launches liquid infant formula
Meiji Hohoemi Rakuraku Milk.

Pharmaceuticals

1916
Tokyo Confectionery Co., Ltd. (Tokyo Confectionery),the predecessor of Meiji Seika, is established.

1990

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.

1950

1946
Penicillin
formulation
manufacturing
is launched.

The antibiotic
STREPTOMYCIN MEIJI is launched.

1975

1988

The agriculturalchemical product
ORYZEMATE islaunched.

Geneticallymodified hepatitis
B vaccine
Bimmugen islaunched.

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

1994

2011

2009
Meiji Seika and Meiji Dairies
establish Meiji Holdings Co., Ltd.
(Meiji Holdings), joint holding
company, and integrate
the management.
Meiji Seika launches
the calcium channel
blocker generic drug
AMLODIPINE TABLETS MEIJI.

1996
Influenza HAvaccine is launched.

1958

1999

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

The antidepressant
DEPROMEL is launched.

1971

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

Meiji Dairies launches
Meiji Honey Yogurt.

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

The antidepressant drug
REFLEX is launched.

2018
KM Biologics Co., Ltd. joins the Meiji Group.

1951

The infant formula Patrogen is created.

Meiji Dairies launches
Soft Curd Meiji
Infant Formula.

Meiji Dairies launches Meiji Milk.

2000

Meiji Dairies launches
Meiji Hokkaido Tokachi Cheese.

Meiji Dairies launches
Meiji Probio Yogurt LG21.

1994

2002

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

Meiji Dairies launches
the drinking milk
Meiji Oishii Gyunyu.

1973

1995

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

Meiji Dairies
launches
Meiji Bulgaria Yogurt.

Meiji Dairies launches
the sports nutritional
drink VAAM.
Meiji Dairies launches
the enteral formula Mei Balance.

High economic growth period (1946-1969)

1916 Albert Einstein published general
theory of relativity
1917 Russian Revolution leads toestablishment of Soviet Union
1920 The 1st Tokyo-Hakone round-trip
college relay race (Hakone Ekiden)
1923 The Great Kanto Earthquake occurred
1925 Chaplin released the movie
the Gold Rush
1926 The era name was changed to Showa

1946 Serial comics Sazae-san started
1949 Hideki Yukawa received the Nobel Prizein Physics as the first Japanese winner1950 The price deregulation of dairy
products
1951 San Francisco peace conference
1953 NHK started television broadcast
1954 Gozilla, the first special effects monster
film in Japan, was released
1957 The Soviet Union launched the artificial
satellite Sputnik I successfully
1958 Tokyo Tower was built

Our Value Creation Story

1992

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

Period of flourishing popular culture (1916-1945)
1927 The first subway in Tokyo opened
between Ueno and Asakusa
1928 Dr Fleming discovered Penicillin
1929 The Great Depression
1935 The 1st Akutagawa Prize Soubou
The 1st Naoki Prize Tsuruhachi
Tsurujiro
1936 The steam locomotive D51 class
was built
1945 The Pacific War ended* KM Biologics - formerly The Chemo-Sero-Therapeutic
Research Institute which was established in 1945.

1961 Universal Health Insurance introduced
1962 Kenichi Horie completed the voyage
across the Pacific aboard a yacht
1963 TV cartoon Astro Boy started
1964 The Tokaido Shinkansen opened
1966 The Beatles came to Japan
1967 Group sounds, a genre of Japanese rockmusic, becomes popular
1968 Yasunari Kawabata received the Nobel
Prize in Literature
1969 The American Apollo 11 achieved thefirst lunar landing

2007

2009
Meiji Dairies launches
Meiji Yogurt R-1.

2011
The liquid formula
ZAXA herbicide is launched.

2015
The generic antibiotic
TAZOPIPE MEIJI
is launched.

2016
Treatment for
schizophrenia
SYCREST is launched.
Anti-allergy drug
Bilanoa is launched.

Stable growth period (1970-1994)

Period of deflation up to present date (1995-2019)1970 Japan World Exposition, Osaka
1970
1972 Sapporo 1972 Winter Olympic
Games
1973 The first oil crisis
1975 Oyoge! Taiyaki-kun released
1978 New Tokyo International
Airport (Narita International
Airport) opened
1979 Walkman launched
1980 Momoe Yamaguchi retired
1981 Space shuttle Columbia
completed the first space flight1982 500-yen coin introduced

1995
1995
1997
1998
1999
2002
2005
2006
2007

1984 Los Angeles 1984 Olympic Games1986 Equal Employment Opportunity
Law came into effect1987 The Japan National Railways was
split up and privatized to form the
JR Group
1989 The new era Heisei started
1989 Consumption tax (tax rate 3%)
adopted1990 German reunification
1992 United Nations Conference on
Environment and Development(Earth Summit)
1993 Professional Soccer J League started

The Great Hanshin-Awaji Earthquake
Tokyo subway sarin gas attack
Consumption tax was raised from 3% to 5%
Nagano 1998 Winter Olympic Games
Single currency Euro introduced
2002 FIFA World Cup Korea/JapanThe 2005 World Exposition, Aichi, Japan
Japan won the first World Baseball Classic
The first Tokyo Marathon was held. The
number of participants was 30,000
2008 The global financial crisis

Corporate Information

1923
1928

6

1950

2011

Financial and Non-Financial Section

Tokyo Confectionery launches
the Condensed Milk Meiji Merry Milk.

Pharmaceutical Segment

2009

Dairy

1921

Food Segment

Integration Reorganization

2008

The antibiotic
MEIACT is launched.

The food company Meiji Co., Ltd.
begins operation.
Our Activities for Sustainability

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.

1917

2020

Our Value Creation Story

Meiji Seika launches
Meiji Seika launches the chocolate snack
Almond Chocolate. Kinoko no Yama.

Meiji Seika launches
Milk Chocolate.

2000

1961
1962

1926

1990

2010 Asteroid explorer Hayabusa returned toEarth2011 The Great East Japan Earthquake2011 The Japan women's national footballteam (Nadeshiko Japan) won FIFA
Women's World Cup
2012 Shinya Yamanaka received the Nobel
Prize in Physiology or Medicine
2014 Consumption tax was raised from 5% to 8%
2016 42nd G7 summit (Ise-Shima Summit)
2017 Donald Trump was inaugurated as thepresident of the United States
2019 The new era Reiwa started

Meiji Holdings Co., Ltd.｜Integrated Report 20197

Contents

Meiji Group’s Process for Value Creation

Social challenges the Meiji Group is addressing• Change in social structure due
to aging population• More health conscious andfocused on prevention• Larger middle class all over the world• Fighting against malnutrition• Increase in lifestyle related diseases
and antimicrobial resistance

Financial capital• Sound financial
structure

Human capital• Personnel who
embrace the meiji way

R&D

Procurement

Production
andDistribution

Sales andCommunication

お客さまの声を現場に戻す

Manufactured capital• Production anddistribution sites in Japanand all over the world• Wealth of resources

Safe and Reassuring Quality

Valuable information related to Food and Health• Features that help
improve health• High quality nutrition• Offer new foodculture and cuisine• Public awareness on
diseases and prevention• Promote properuse of medication• Scientific data and articles

Variety of products
for customers of all ages
• Ensure efficacy
and safety• Consistent quality• Stable supply• Improve access topharmaceuticals

Ensure safe and trusted products
Financial and Non-Financial Section

Natural capital• Accumulate financial capital andsteady return to stakeholders• Lead healthy, fulfilling lives• Live longer, healthier lives• Reduce environmental impact• Establish a workplace environmentthat utilizes the strength andskills of each employee

Our Activities for Sustainability• Basic research/development technology

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.

Our Value Creation Story

Intellectual capital

Capital Distribution• Trust in the Meiji brand

Value for stakeholders

We are increasing product value even more byoffering safe and trusted products as well as
valuable information related to Food and Health.

Creating Markets with a Strong Value Chain

Social capital

Output• Food shortage• Increase in medical expenses• Access to pharmaceuticals

Value Chain

Input

Our contribution toaddress social challenges

Making Healthier Livesby creating value thatexceeds the customers’
expectations

Introduction

The Meiji Group’ s competitive edge is attributed to our business model, which is based on the accumulationand strategic distribution of various capital for Creating a Market as well as our strong value chain. Throughthis series of processes, we will increase our corporate value by creating value that exceeds the customers’
expectations in the Food and Health fields and help address many important social challenges.

See below for Strengths and Features of the Meiji Group’ s Value Chain.
For Meiji Group’ s Approach to CSR in Our Value Chain, please see page 10-11.

GovernanceFor details, please see page 56.

Human Resource

For details, please see page 44.

Research and Development• Accumulated expertise drawn from basic research(Lactobacilli, cocoa, microbial fermentation, biotechnology anddrug discovery research)• Collection of microorganisms (lactobacilli and actinomycetes)• Chemical library• Excellent R&D capability, product commercialization expertise,manufacturing technologies and related patents• Open innovation and academia-industry alliance8

Our Value Creation Story

Procurement• Nationwide network of dairy farmers and the Meiji Group• Collaboration with cocoa farmers• Network with related groups• Cost-competitive and stable procurement ofpharmaceuticals using a global supply chain

Production andDistribution• Quality control system (Ensure product quality and safety)• Our distribution network is designed to cover all temperature
ranges• Ideal production and distribution system tailored for domestic
and global needs• Low-cost, global production system for pharmaceuticals

Corporate Information

Strengths and Features of the Meiji Group’ s Value Chain
Sales andCommunication• Reliable Meiji brand and brand strength• Excellent two-way communication• Strong, close relationship with business partners and our customers• Sales/marketing capabilities to meet customer needs• Pharmaceuticals covering prevention and treatment as well ascomprehensive customer support

Strengths and Features across the Meiji Group’ s Value Chain• Create new markets• Provide Value in• Product categories that span the entire Health andDisease Prevention
life cycle from infants to the elderly
Meiji Holdings Co., Ltd.｜Integrated Report 20199

Contents

Meiji Group’s Approach to CSR in Our Value Chain
In the Meiji Group, we established the Meiji GroupCSR 2026 Vision to help solve social issues throughbusiness activities. We broke down this vision into
the following categories: Healthier Lives, Caring for
the Earth, A Richer Society and Sustainable
Procurement, and are working to promote CSR in
the meiji way.

For details on specific measures, see the “Meiji Group CSR” on page 36-47

page 40-41▲

Wells donated to cocoa
farmers to improve thestandard of living• Develop value-added nutrition products (sports
nutrition, infant nutrition and medical nutrition, etc.)• Develop products that contribute to asuper-aged society(liquid foods for the elderly, etc.)• Develop new pharmaceuticals andvaccines for Infectious Disease• Meiji Dairy Advisory (MDA), farmmanagement support program fordomestic dairy farmers• Develop new, eco-friendly agricultural chemicals• Activities for preserving forests

Educational activities onfood and nutrition, Shokuiku

For details, please see

page 42-43

A Richer Society

R&D

Procurement

Production andDistribution• Use lighter and thinner packaging (plastic) and switch to alternative materials

R&D

Procurement

Production andDistribution

Sales andCommunication• Promote diversity
and inclusion

page 44-45

Sustainable
Procurement

For details, please see

page 46-47
10

Our Value Creation Story▲ Develop insecticides thateliminate pests and keep
beneficial insects such as honeybees• Secure anddevelop human resources• Employee-friendly workplaces(encourage personal healthmanagement)• Procurement based on procurement
policies and guidelines• Strengthen partnerships withdairy farmers• Promote Meiji Cocoa Support(support cocoa farmers, increaseamount of traceable cocoa)
For details, please see
page 30-35 “Special Feature”

Production andDistribution• Human rights
due diligence▲ Introducing renewable energy ▲ Paddy field flooding• Cut food loss through efficient production
and distribution management• Provide our products to food banks• Promote
CSR activities

Corporate Information

For details, please see

Procurement

Financial and Non-Financial Section• Promote renewable energy• Introduce energy-efficient equipment• Reduce industrial waste• Appropriate Water Management and Water Risk Management• Improve accuracy of environmental data using acentralized data management system

Caring for the Earth• Extend the expiration dates of food products, changing food
expiration labels from year-month-date to year-month formats• Disseminate information to promote health andnutrition• Offer new food culture and cuisine• Improve access to pharmaceuticals in China andSoutheast Asia
• Educate about
drug-resistant bacteria▼

For details, please see• Obtain Global Food Safety Initiative (GFSI)
certification• Ensure the sustainable supply of pharmaceuticals

Sales andCommunication

Our Activities for Sustainability

Healthier Lives

Production andDistribution

Procurement

Our Value Creation Story

R&D• Develop products that contribute tohealthy diets (lactobacillus, cocoa,
reduced sugar and low fat, etc.)

Introduction

Meiji Group CSR 2026 Vision

In addition to managing its business activities, the Meiji Group identifies important CSR issues per
the Meiji Group CSR 2026 Vision, taking into account how R&D, Procurement, Production andDistribution as well as Sales and Communication impact society and the environment in the value
chain. By addressing these issues, we can help solve social issues and also achieve sustainablegrowth.

▲ Donate infant formulas to homes for infants and orphanages• Disseminate information about raw milk and cocoa▲ Discussing

Meiji Dairy Advisory▲ Plant tour, Meiji Naruhodo

Factory in Tokachi, Hokkaido▲ Hello, Chocolate by meiji• Shift to 100% RSPO-certified palm oil• Expand use of eco-friendly paper
raw materials
Meiji Holdings Co., Ltd.｜Integrated Report 201911

Contents

Achieving Our Goals in 2026 VisionRoadmap to Realize the 2026 Vision

2026

Meiji Group
2026 Vision

Our promise andcommitment2023

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.

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

The 2nd stage

The 1st stage

President and Representative Director

Kazuo Kawamura

20 %Maintain 10 % or more

ROE

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

4. Social contributions• Healthier Lives• Caring for the Earth• A Richer Society

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

Address strategic issues continuously
and challenge for the further growth

Looking back on the first fiscal year
and touching on initiatives thereafter
Message from the President

Overseas
Sales Ratio Target at

Structure of the Meiji Group 2026 Vision

Beyond meiji

2018

Op. Income Mid to high
CAGR
single-digit growth

Our Activities for Sustainability

Beyond meiji- above imagination ‒Key Strategies

Beyond meiji
The 3rd stage

2020

Our Promise and Commitment
for the 2026 Vision

Our Value Creation Story

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 Groupcan break out of its shell and grow further.

The Meiji Group 2026 Vision

Introduction

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

For details, please see page 16-21.

Noteworthy Areas
in Business Climate

12

Our Value Creation Story

・30% of Japan’s population will be 65 years or older by 2025
・Aging population is a common issue throughout the world

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

2 More health conscious and focused on prevention
・Rise in diseases and disorders due to changes in lifestyleand 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

Address strategic issues continuously
and challenge for the further growth

Corporate Information

There will be three social trends that
could potentially affect the MeijiGroup business to achieve the MeijiGroup 2026 Vision. We believe thesechanges in the social and economic
climate are opportunities for growth.
We will drive our business according
to the strategies outlined in the 2026
Vision in order to meet the
expectations from society.

1 Change in social structure due to aging population

Key Strategies
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
FY2020 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 201913

Contents

Financial and Non-Financial Highlights (Main Indices)
CO2 Emission Volume (Scope 1, 2)/
CO2 Emission Volume per Unit of Sales *1

Operating Income/Operating Income Margin
Operating income (Left scale)Operating income margin (Right scale)(Billions of yen)(Billions of yen)

1,400

100

1,200

1,161.1

1,223.7

1,242.4

1,240.8

1,254.3

88.3

1,000
60

600

40

94.6

98.3

(%)

(10,000 t-CO2)

10

80

8
7.1

51.5

7.6

7.8

0

FY2015FY2016FY20170

FY2018

4.4

Profit Attributable to Owners of Parent/ROE

60

62.5

60.7

8.9

61.2

40

(%)

(Billions of yen)

18

600
47.8

12.2

42.2
12

400

61.8

30.8

370.3

FY20170

FY2018

52.6

50.9

50.3

FY2015FY2016FY2017FY2018

0

50.8
448.9

20

0

FY2015FY2016FY2017FY201852.5
487.3(10,000 t)

60

8

52.5
527.3

6
40

408.8

FY201560

FY20160Industrial Waste Volume/
Industrial Waste Volume per Unit of Sales *2

FY20170

FY2018

60

0

10

22.8

21.7

21.0

20.7

21.1

FY2014FY2015FY2016FY2017FY2018

6.6

7.6

6.6

10

(1,000 m3)
24,375 24,104
25,000

6.3

6.2

8

20,000

5.4

5.4

6

15,0004

10,0005.4
4.6

FY2015FY2016FY2017FY2018

2

5,000

0

0

22,305 22,056

FY2014

105.1
95.3

108.7

112.1

81.8

(%)

(%)

(%)

50

15

4

0.8

2.07

1.92

1.89

FY2015 FY2016 FY2017 FY2018

3.1
30.8

30

23.8

-44.2

FY201610-64.3-100.2FY2017FY2018

0

32.8

2.0
2

3.4

3.8

4.0

FY2015FY2016FY2017

4.0

Our Value Creation Story

Japan
22,056

6

1.94

1.87

FY2017FY201820

Global0.71

FY2017FY2018

0.47

2.1
0.4

1.6

1

FY2018

0.69

5

2.1

FY2014Japan
22,305

8

0.6

2.6

26.6

*1 Applies to the Meiji Group (the domestic Meiji Group and 12 overseas production plants). The per production unit is calculated from the consolidated sales.
Data was revised retroactively because the scope of the calculation was changed.
The Kumamoto plant for KM Biologics Co., Ltd. was added and included in the calculation from FY2018.
*2 Applies to the domestic Meiji Group. The per production units are calculated from domestic sales.
The Kumamoto plant for KM Biologics Co., Ltd. was added and included in the calculation from FY2018.
*3 Applies to the domestic Meiji Group. The per production units are calculated from domestic sales.
The global data; applies to the Meiji Group (the domestic Meiji Group and 12 overseas production plants).
The per production unit is calculated from the consolidated sales. Data was revised retroactively because the scope of the calculation was changed.
The Kumamoto plant for KM Biologics Co., Ltd. was added and included in the calculation from FY2018.
14

3
10

21.2

20

-9.8

Overseas
1,427

Dividends on equity (DOE/Right scale)

44.3

11.8

Overseas
1,777

Lost Time Injury Frequency Rate (LTIFR) *5

(%)

40
37.5

FY2015

Payout ratio (Left scale)

Ratio of Female Managers *4(1,000 m3/100 million of yen)
24,082
10
23,4834
2.13

FY20140

Water Consumption Volume/
Water Consumption Volume per Unit of Sales *3(t/100 million of yen)

7.4

0

0

0

Corporate Information(Billions of yen)
120
86.4
100
80
60
40
20
-6.3
0
-20
-40
-60
-80
-100
-92.8

Free cash flow

30

Financial and Non-Financial Section

Payout Ratio/Dividends on Equity (DOE)

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

24.0

20

Japan

Cash Flow

24.6

Water consumption volume (Left scale)
Water consumption volume per unit of sales (Right scale)20

FY2014

24.5

20

(%)

200

0

24.9

80

40

2

FY201490
25.3

Industrial waste volume (Left scale)Industrial waste volume per unit of sales (Right scale)

20

0

57.0

4
6

63.1

(kl/100 million of yen)30

Our Activities for Sustainability

16.1
13.1

FY2016

Shareholders’ equity (Left scale)
Shareholders’ equity ratio (Right scale)(Billions of yen)

14.2

FY2015

Shareholders’ Equity/Shareholders’ Equity Ratio

Profit attributable to owners of parent (Left scale)ROE (Right scale)80

2

FY2014

63.2

60(Fuel oil conversion: 10,000 kl)

40

20

FY2014

65.3

4

400
200

100

69.7

6

6.4

(t-CO2/100 million of yen)

Our Value Creation Story

800

Energy consumption volumes (Left scale)
Energy consumption volumes per unit of sales (Right scale)CO2 emission volume (Scope 1, 2) (Left scale)CO2 emission volume per unit of sales (Right scale)

77.7

80

Energy Consumption Volumes/
Energy Consumption Volumes per Unit of Sales *2

Introduction

Net Sales

0.2

FY2014FY2015FY2016FY2017FY20180.0

FY2016*4 Applies to Meiji Co., Ltd., Meiji Seika Pharma Co., Ltd. and KM Biologics Co., Ltd.
KM Biologics Co., Ltd. was added and included in the calculation from FY2018.
*5 Applies to all plants and research laboratories in the Meiji Group within Japan including consolidated subsidiaries (but excluding KM Biologics Co., Ltd., Meiji
Feed Co., Ltd. and Ohkura Pharmaceutical Co., Ltd.).
Lost Time Injury Frequency Rate: Number of casualties ÷ Total working hours × 1 million

WEB ESG Data https://www.meiji.com/global/sustainability/esg/
Meiji Holdings Co., Ltd.｜Integrated Report 201915

Contents

Message from the President
Introduction

The Meiji Group Continues a Wave of Increased Profits
for the 7th Straight Term in the First Yearof the 2020 Medium-Term Business Plan

President andRepresentative Director

Our Value Creation Story

In FY2018, we have made steady headway with key issues,
but some of them are not always reflected in theperformance results. We are implementing some structuralreforms that will stretch over the medium-term.
Nonetheless, we continue to make good and steadyprogress.
Two of our key issues in the 2020 Plan for the Foodsegment include turning a profit in the milk business, andgrowing and expanding in the international business. The
milk business reported approximately JPY 100 billion insales, but struggled with profits. We are pushing to
improve gains while maintaining a market presence. To be
specific, we are restructuring our production system andintroducing new product packaging, which areprogressing as planned. We will launch new products inthe market as well as consolidate existing production lines.
One new product example is our delightful Meiji Oishii
Gyunyu Low Fat, which was launched in April of this year. It
uses the world’ s first Freeze Concentration production
method and has been well-received by our customers. We
will adopt a premium pricing strategy that reflects thevalue of these innovative products. The structural reform of
the milk business is complex, but through these initiatives,
we will most certainly turn a profit by FY2020.

On the same note, our international business became
profitable in FY2017. The chilled milk business did well inmainland China, which we targeted as a priority region,
and we have grown our sales for business in China overall
by more than 20% in FY2018. The Food segment still has
room for substantial growth in international business, andwe will work toward increasing our sales and profits there.
A pressing issue in our Pharmaceutical segment is to
overcome the NHI drug price revisions scheduled for
October 2019 and April 2020 and ensure continued
growth. To achieve this, we will boost sales by promoting
our core products BILANOA (oral anti-allergy drug) and
SYCREST (schizophrenia drug). We also began full scale
operations in vaccine sales in FY2018. By reinforcing oursales system, we will increase sales of both vaccines andantimicrobial drugs for Infectious Disease.
The financial strategy in the 2020 Medium-TermBusiness Plan is basically to maintain business growth
while balancing the three points: investment in future
growth, returns to shareholders and securing a solid financialbase. We will allocate steady and consistent dividends witha target payout ratio of 30% to shareholders in the 2020
Plan.

Meiji Holdings Co., Ltd.｜Integrated Report 2019

Corporate Information

16

Making Headway with the Key Issues
in the 2020 Medium-Term Business Plan

Financial and Non-Financial Section

Kazuo Kawamura

showed an increase in net sales of approximately 1% fromthe previous year, but the operating income was up
approximately 4% at JPY 98.3 billion, showing an increasein profits for the 7th straight term. The cash dividends were
JPY 140, giving a payout ratio of 32.8% and up for the 5thstraight term.

Our Activities for Sustainability

Harnessing Our Unique Strengths,
the Meiji Group Looks for Synergy
between the Food andPharmaceutical Segments
to Create New Markets.

Our Value Creation Story

The Meiji Group established the Meiji Group 2026 Vision (the2026 Vision), outlining the future direction and strategy of
the Group to ensure further growth. We are currently in the
1st stage of the 2026 Vision, the 2020 Medium-TermBusiness Plan (the 2020 Plan) which covers from FY2018 to
FY2020. The consolidated results for the first year FY201817

Contents
Message from the President

Making a More Diversified and Well-Rounded Board
and Implementing Succession Planning

The Co-Creation Center established in April of this year is a
topic for realizing the 2026 Vision. New challenges in thehealth value domain is a key strategy for the Meiji Group in
the 2026 Vision, and this new research laboratory
embodies that strategy. After integrating the managementin 2009, the Meiji Group was able to grow the Food andPharmaceutical segments and raise the operating income
by streamlining and making the Group more efficient.
Building on this success, our outside directors had broughtup the questions “How can Meiji achieve synergy by
combining both businesses?” or “How can the strengths ofboth the Food and Pharmaceutical businesses result invalue creation?” This led to active discussion on the Board.
Then, the Open Innovation Promotion Committee wasformed for projects such as joint research between
academia and us as well as investment in venturecompanies. As our next step, we assembled researchers
from the Food and Pharmaceutical segments andestablished the Co-Creation Center.
The Co-Creation Center will generate health value thatwill create new markets using a broad range of expertisedeveloped in Food and Pharmaceuticals. We are trying tofoster innovation using the resources and synergy fromboth Food and Pharmaceuticals. Based on the research
being conducted for open innovation, the Co-Creation
Center is concentrating its activities under three themes:

The Meiji Group is currently looking toward further growth.
Corporate governance and sustainability are key to thisfuture growth. Though we have a good Business Vision,
corporate governance and sustainability should be at higher
level to achieve sustainable growth. Given this idea, theMeiji Group manages the Group’ s activities and operations
based on the Management Vision and the CSR Vision. In
addition to the Business Vision, the Management Vision
provides excellent corporate governance and the CSR
Vision promotes more sustainability.
The Meiji Group aims for a substantial boost in growthby targeting continued innovation that we will develop by
combining the resources from the Food andPharmaceutical segments. To achieve this growth, a higher
level of corporate governance is absolutely vital. A morediverse, well-rounded Board is fundamental instrengthening the corporate governance. Therefore, we
increased the number of outside directors and Audit &Supervisory Board members, which has produced more
active discussion in Board meetings. Now on the current
Board, there are five outside directors and auditors coveringa broad range of experience and expertise, who always
contribute to extremely insightful and quality discussions.
The content and results of those discussions can clearly beseen in the 2026 Vision, and they provide us thoughtful
suggestions and comments for the day-to-day operations.
For beyond FY2019, we have implemented succession
planning in order to ensure an appropriate management

system stays in place. In FY2018, the Board of Directors
agreed upon a set of Leadership Values, crucial skills andabilities our next executives should have, after which
succession planning was established. This plan identifies
the three presidents from Meiji Holdings Co., Ltd., the core
operating companies Meiji Co., Ltd. and Meiji Seika PharmaCo., Ltd. as potential successors. Nomination of thesuccessor and the personnel development plan will be
discussed in the Nomination Committee, who will thenmake a recommendation to the Board of Directors. I
believe that incorporating this succession planning
increases the transparency in the process for selecting a
successor. As we incorporate this succession planning, we
will improve and increase the effectiveness of our plan.

Our Value Creation Story
Our Activities for Sustainability

ageing, medical nutrition therapy (MNT) and humanmicrobiome (intestinal bacterial flora).
For the first theme, we are conducting research on
protein that is closely related to ageing. One of the root
causes for failure or poor condition in the human body isageing, and it is thought that delaying the ageing processoffers the potential for improving the body’ s condition.
Another theme is medical nutrition therapy or MNT. Somenutrition therapies or specific diet regimens may help
patients spend less time in the hospital and that MNT may
have the potential for delaying the progression ofdementia. The last theme involves the human microbiome(intestinal bacterial flora). Recent studies show that thebrain affects the gut health and that the gut may evenaffect brain health. The communication system between
the gut and brain is called the “Gut-brain connection.” A
number of foods are beneficial for this connection andmay help increase the beneficial bacteria in the gut. By
altering the human microbiome, it may be possible toimprove physical health and brain health.
We will continue to conduct collaborative researchwith external research institutes and other businesses. We
will bring forth innovation through this approach andhope to develop/launch products that will contribute to alonger, healthier life.

Introduction

Establishing the Co-Creation Center to Foster Innovation
by Combining Food and Pharmaceuticals

Financial and Non-Financial Section

Meiji Holdings Co., Ltd. received
the Corporate Governance of The
Year® 2018 award (Japan
Association of Corporate Directors)
for improving the corporate value
using effective, practical corporate
governance.

Training and Developing Executives,
Innovators and Personnel with a Global Mindset

18

Our Value Creation Story

separate plan is needed to train and develop thosepotential executives.
We also think that training and developing personnel
with a global mindset is important. The Meiji Group plans
to increase the overseas sales ratio to 20% by 2026. Theinternational business is in the growing process and smallin scale. Thus, it is challenging to give practical experience
working abroad and develop a lot of personnel with a
global mindset. Our plan is to preemptively assign
personnel to the International Division so they gain
experience in Japan doing international business in order
to increase their global mindset. We will also actively hire
non-Japanese personnel and personnel with overseas
experience at other companies to ensure diversity.
Lastly, it is important to train and develop personnel
Meiji Holdings Co., Ltd.｜Integrated Report 2019

Corporate Information

The Co-Creation Center was set up at the Meiji Innovation Center (Hachi-oji city, Tokyo) in April 2019. It combines
the strengths and resources from the Group’ s Food and Pharmaceutical segments and focuses on research in
the three areas: ageing, medical nutrition therapy and human microbiome (intestinal bacterial flora).

A critical area in our Management Vision is training anddeveloping personnel. Training and developing executives
in particular is directly related to the succession planning.
Hence, we should actively address this topic in order todevelop an effective senior management. The experience
required as an executive should be gained in his/her
mid-thirties and mid-forties, a time period when one ismost active. This will be an important foundation for an
executive. However, currently, potential executives are kept
within the conventional organization during this time
period and become capable personnel with excellent
practical skills. But, they will not gain or develop
managerial skills. The potential executives should be given
exposure to what an executive faces including interaction
with outside companies. As a result, we believe that a

19

Contents
Message from the President

the food research laboratory completed in March 2018. I
believe instilling an innovative mindset into researchers
will lead to sustainable innovation.
By focusing our efforts on training and developing
executives, innovators and personnel with a global
mindset, we will create a strong and lasting managementfoundation that will help ensure sustainable growth for theGroup.

show off Meiji’ s uniqueness to the world, blindly scaling
up is not the right answer per se. Our corporate characterand our quality will be the key to beating out thecompetition.
To reach the next 100 year mark, we have identified
innovation as the most critical proponent for the MeijiGroup to grow further. Whenever I am asked about mymotto, my reply is always “Staying one step ahead.” This
comes from a Zen proverb that roughly translates to going
one step further or one step higher. To expand on this idea,
this alludes to the importance of an approach where youneed to take one more step in order to constantly improveand never stay stagnate. Innovation is the embodiment ofthat feeling of aspiration. We should pour all of ourresources and effort into the task at hand. We must try togo even one step further, trusting that it will lead us to a
new world, and take on that challenge of the unknown
without hesitation. I believe that repeating this process will
help us reach the next 100 year mark, and I would like for
us to grow not just in Japan and but all over the world.

Financial and Non-Financial Section

elderly was higher during that post-war period.
Undernutrition is a serious problem in our contemporarysociety during an age when food is readily available. I
firmly believe that the Meiji Group has an important role insociety to address various issues using products with highnutritional or health value.
Furthermore, good ingredients are absolutely
necessary for good products, which is true for both Foodand Pharmaceuticals. In the Food segment, agriculture is
the supply or source for procuring good ingredients, andcontributing to agriculture is an important area in the MeijiGroup’ s CSR. Part of our CSR activities includes Meiji Cocoa
Support (see page 30 for details), which provides support forfarmers in cocoa (ingredient for chocolate) producing
countries. Another important ingredient in addition tococoa beans is raw milk for producing dairy products.
Recently, Japanese dairy farmers are facing a tougher
environment and conditions. The Meiji Group supports
improving the quality of milk and also shares information
with dairy farmers, such as expertise on how to maintainthe quality of raw milk at the shipping stage.
Both nutrition and agriculture are important CSR areas
for the Group and are closely linked with the businessactivities. We would like each and every employee to focus
on their work while holding a sense of ownership over our
CSR. This will help us address social issues and improve
corporate value.

In our 100 year history, we have compiled numerous top
brand products in the Food segment, and also developed
ethical drugs, agricultural chemicals and veterinary drugs
in the Pharmaceutical segment. This brought us to merge
the Food and Pharmaceutical business and ultimatelytransform ourselves into the present-day Group. This typeof history and corporate group is rarely seen these days.
For this reason, my mission is to combine and maximize
our unique corporate group, and to unify the Group into
One Company.
The Meiji Group exceeded more than JPY 1 trillion in
net sales, but we should set higher targets in order todevelop a meaningful business in the future. The key terms
for that development are food and health. I would like todrive the Group to create new value by staying true to theGroup’ s philosophy As Food and Health professionals. While
globalization continues to leap forward, I think it isimportant to recognize that the Group is rooted in Japan,
and therefore we should take advantage of our strengths
and promote Meiji’ s unique approach. In our endeavor to

Our Activities for Sustainability

The Meiji Group will strengthen CSR activities in order torealize the CSR Vision. Since the Meiji Group follows a B2C
business model, we should operate our businessconsidering the environment, human rights andprocurement to win strong support from customers. We
need to promote CSR activities more aligned with the meiji
way in order to ensure our corporate social responsibility isrecognized by society.
When Hanji Soma founded the Meiji Group 100 years
ago, he offered the following words on his businessapproach: “Contributing to the country through nutrition.” I
think that this slogan really encapsulates the essence ofthe Meiji Group. For example, as we recognized theimportance of infant formula as a breast-milk substitute tosatisfy the nutritional requirements of infants, we allocatedresources to this in order to launch products. This producthistory is an example of contributing to the country
through nutrition. In the confectionery business, we do notjust provide delicious products, but take it one step further,and have always strived for new health value. To give
another example, the decision to go into pharmaceuticals
during the height of World War II is based on the idea ofcontributing to society.
Recently it has been said that the nutritional status of
the Japanese has deteriorated even more than it was after
the war (1945-55). There are survey results that indicate the
dietary intake of protein among young women and the

Looking Beyond Today’ s Successand Staying One Step Ahead for Another 100 Years

Our Value Creation Story

Promoting CSR Unique to the Meiji Groupthrough Nutrition and Agriculture

Introduction

with innovating minds, as they will be integral to the future
growth of the Meiji Group. Innovation does not occur
naturally in personnel, therefore we should consciously
instill this innovating mindset in each and every employee.
The opening of the Co-Creation Center is as an internal andexternal message from management symbolizing theGroup’ s commitment to “Pioneer into new fields.” This was
also true of the investment into the Meiji Innovation Center,

Corporate Information

Employee working as a teacher giving a fun interactive classfor elementary and junior high school students (Shokuiku
activities (food and nutrition education)). In FY2018, 196
thousand students participated in these classes.
20

Our Value Creation StoryEngaging in various activities and building
partnerships with domestic dairy farmers to ensurestable procurement of high quality milk
Meiji Holdings Co., Ltd.｜Integrated Report 201921

Contents

Overview by Business

Food Segment
Introduction

Growth Strategy From FY2019

Meeting Society’s Expectations
with Value Only Meiji Can Provide

President andRepresentative Director
Meiji Co., Ltd.

Business Makes Steady Progress with Key Strategies
in 2020 Medium-Term Business Plan

Chocolate
FY2017
Results(Billions of yen)

Net sales

1,073.6

Operating income

84.1

FY2018Results

YoY Change

1,056.6

－1.6％
－17.0

84.7

+0.7％
+0.5

Breakdown of Consolidated Op. Income(Billions of yen)
FY201784.1-3.2

Decrease in sales for functional yogurt

FY2018

Cost reduction in promotion expenses
and administrative expenses-1.4

Increased income from overseas
subsidiaries and a decreased income
from domestic subsidiaries

84.7(including functional yogurt)

CheeseReformMilk

Frozen dessert

Prepared Foods

Nutritional products

Products for
professional use

Prepared foods
operated by subsidiaries• Expand further by investing
business resources intensely• Create new markets• Become #1 in the future• Pursue unique value• Improve income throughstructural reforms

Chocolate

22

GrowthOur Value Creation Story

203.5

197.8

204.8

84.1

84.9

90.6

119.4

112.9

114.2

FY2017FY2018Functional yogurt

FY2019(Plan)

YogurtNet Sales(Billions of yen)

104.0

FY201795.4

FY2018104.1

FY2019(Plan)* Sales are adjusted to include the sales
price reduction due to commercial
transaction system revision in April 2018

Nutritional products

Strengthening Our Brand and Gaining Market Share
Based on Unique ValueNet Sales

Some of our nutritional products drive the market. Among those products, we will
focus on three categories to prop up our business: infant formula, sports nutrition andenteral formula. We believe by developing unique products that offer greater value
and providing evidence to that fact, we will be able to stay away from a price war.
For the SAVAS series in sports nutrition, we will improve our brand value by
carefully differentiating our product line and defining target consumers in order toachieve a competitive edge. We have been carving out new markets and growing
those businesses a lot. We will use this experience in sports nutrition as well to offer
consumers a new lifestyle.

Corporate Information

Food BusinessCore Yogurt

Recently, we have extended the chocolate market by offering and appealing to thehealth benefits and premium quality chocolates. In particular, chocolates with healthbenefits have maintained strong sales. The Chocolate Kouka series with high-cocoa
and polyphenol-rich properties show strong growth compared to the previous year.
Our new product Oligosmart Milk Chocolate is developing a reputation for using
fructooligosaccharides (FOS), which is not absorbed as a sugar.
That being said, the premium chocolate Meiji THE Chocolate is trailing a bit. In lightof returning to our original strategy of building a culture for adults to enjoy theindulgence and luxury of chocolate, we are revising our product strategy. Therefore
we will concentrate our marketing activities from a medium-term perspective.

* Cost of goods sold

+2.9

(Billions of yen)

Focusing on Health and Premium Value

Decrease in COGS* due to increase/decreasein raw material costs and other cost reductions+2.3

Net Sales (Functional Yogurt, Yogurt)

Financial and Non-Financial Section

During FY2018, we made steady progress with key strategies in
the 2020 Medium-Term Business Plan (the 2020 Plan). Thosestrategies in the 2020 Plan include: Expand share and achieve highrevenues in core businesses, Expand aggressively in overseas markets
and establish a growth platform and Continue structural reforms andresolve specific business issues in each business.
Sales for our core areas: yogurt, chocolate and nutritional
products remained low in the beginning of the fiscal year but
slowly recovered thereafter. On the other hand, sales for cheese,frozen dessert products (ice cream) and products for professionaluse all rose steadily. Specifically, sales for functional yogurt
unfortunately did not meet its target, but the SAVAS Milk Protein
grew more than expected and is showing tremendous potential.
In international business, business in mainland China, a priority
region in the 2020 Plan, turned a profit and its growth isaccelerating. Thanks to structural reforms such as streamlining our
production system (including plant shutdowns) and introducing
added value products, we are seeing better results for the drinking
milk business‒one of our key business areas.

Our pioneering functional yogurt carved out its own market, enjoyed a booming
growth period and is now leveling off. Thanks to this success, many of our customers
now recognize and purchase Meiji Probio Yogurt LG21 and Meiji Probio Yogurt R-1. We
are looking to develop active marketing to achieve stable sales growth. We haveregistered Meiji Probio Yogurt PA-3 as a “Food with Functional Claim” (Consumer Affairs
Agency). This claim refers to the bacterial strain and its ability to keep the blood uricacid levels from rising. We will promote this functional value and expect it to create a
new market. Blue (LG21), red (R-1) and yellow (PA-3) packaging will be used to makean effective display in retail outlets. We will differentiate these products from otheryogurts and establish a solid position to ensure sustainable growth.
The Meiji Bulgaria Yogurt is the top brand in the yogurt market. Our marketingstrategy is to appeal to its health value as our classic plain yogurt, but not reduce theretail price. We will also focus our sales on products with high added value, such as
zero fat, or calcium and iron fortified yogurt.
Finally, we will stimulate the overall yogurt market by introducing new yogurt
categories, such as rich and highly nutritious Meiji The Greek Yogurt and our dessert
yogurt Meiji Yogurt Dolce Torokeruto.

Our Activities for Sustainability

FY2018 in Review

Introducing Highly Anticipated Products,
and Growing the Overall Market Including Functional Yogurt

Our Value Creation Story

Katsunari Matsuda

Yogurt(Sports Nutrition, SAVAS Milk Protein)(Billions of yen)

25.8
21.6

29.6

6.1

8.6

19.7

21.0

2.5
19.1

FY2017FY2018Sports Nutrition

FY2019(Plan)SAVAS Milk

* Sales of SAVAS Milk Protein are includedin the sales of Fresh and Fermented
Dairy Business
Meiji Holdings Co., Ltd.｜Integrated Report 201923

Contents
Overview by Business

Food Segment

CheeseIntroducing Innovative Productsin the Traditional Ice Cream Market

Products for Professional Use

36.6

37.3

FY2017FY2018FY2019(Plan)Net Sales(Billions of yen)

43.0

45.1

44.9

The milk business is improving steadily. Meiji Oishii Gyunyu is one of ourstaple products and well regarded by many for its delicious and fresh taste,
giving us a good position to stay out of a price war. In FY2019, due to therising cost of raw milk procured from the dairy farmers, we had to raise theprice of milk and yogurt, but it did not really impact sales. We were able tocommunicate and justify the cost adjustment to the consumers anddistributors. We also adopted a lightproof package and improved thesealing cap, thereby increasing the value of the product. This enabled us tomaintain our sales despite the price hike.
In addition, in April 2019 we launched an innovative product Meiji
Oishii Low Fat, which uses the world’ s first Freeze concentration
manufacturing method that can reduce the fat content of milk while
preserving its rich flavor. We also launched Meiji Oishii Milk Calcium topromote and market three products together for the Meiji Oishii series,
which will raise the consumer perception of product on the market andboost sales more.

Cap Improvement

Conventional
outer lid

Conventional
inner lid

Meiji Oishii
Low Fat (Left)
Meiji Oishii
Milk Calcium (Right)
New cap

Top Commitment
FY2017FY2018FY2019(Plan)Net Sales(Billions of yen)

58.6

59.1

59.7

FY2017FY2018FY2019(Plan)(Billions of yen)

43.4

FY201747.1

FY201853.4

FY2019(Plan)

What the market expects from us are: produce uniquevalue in the product using Meiji’ s technology, and carveout new product categories and new markets. To achievethis, we need to strengthen product development andrevise the sales system.
Since I joined the Group, I have been involved withsales for a long time, and I believe that we cannot beat out
the competition any more using the traditional sales
model. It is important to roll out added value products into
the market as fast as we can, and that is something sales
must focus on. For that reason, I pushed for a major
reorganization in order to drive growth in FY2018. I thinkthat this has raised the level and effectiveness of the entire
organization. At the same time, I have encouraged
employees to change their mindset and awareness. I
would like to build a positive working environment within
the company, offering an atmosphere where each
employee can set a challenging target based on their own
motives and feel free to carry that out without any fear of
failure.
It is important to have a healthy sense of urgency andcreate a resilient organization especially when business isgood. I firmly believe that this leads to sustainable growthand helps the Group create new markets.

Supporting the Olympic and Paralympic Games Tokyo 2020 with
Dairy Products & Confectionery
Meiji Co., Ltd. entered into a sponsor agreement with The Tokyo
Organizing Committee of the Olympic and Paralympic Games to become
a Tokyo 2020 Gold Partner (Dairy Products & Confectionery). Meiji has been
an official sponsor of the Japan Wrestling Federation since 1996 andJapan national volleyball teams under the Japan Volleyball Association
since 2011. In addition, Meiji is an official supplier for the Japanesenational basketball teams for both men and women. Meiji has also
provided nutritional management support for the Japan national rugby
union teams for both men and women as well as for the Japan national
baseball team (Samurai Japan). As a Tokyo 2020 Gold Partner (Dairy
Products & Confectionery), we would like to deliver the Joy of Sports andImportance of Food to our customers through our dairy products andconfectioneries. We will use this opportunity to support the health ofboth the athletes and all of our customers.

Corporate Information

Net Sales

Making Bold Changes in the Organization and Working Atmosphere for Future Growth

Financial and Non-Financial Section

Our Value Creation Story

35.2

Strong Dairy Business in China, andIntroducing Japanese Quality Overseas

Expanding international business is a major challenge for us to ensure further growth.
China is a priority region in the 2020 Medium-Term Business Plan. Demand for chilled
milk and plain yogurt is increasing due to the increased income of consumers and arising health consciousness in China. We will increase our production capacity, andexpand our business faster and in a dynamic way.
Not only in China but around the world, we will work on introducing our products
such as chocolate, yogurt and nutritional products, which are our core products inJapan. We will tailor them to fit each country’ s market by using our unique
technology.

24(Billions of yen)

Meiji will Offer Unique Value and Products inthe Expanding Markets for Ready-Made Meals and Dining Out

Compared to other major food manufacturers, sales in our products for professionaluse account for a small part of the overall sales in the Food segment. With the recent
rise in the elderly, the markets for ready-made meals and dining out are expanding
and we believe that there will be a growing need for products for professional use. We
will enhance marketing activities in this field where we see great potential for growth.
We are looking to secure a certain market share by introducing unique products by
Meiji.

International Business

Net Sales

Boosting Sales and Raising Revenue with the Meiji Oishii Series

Our Activities for Sustainability

Frozen dessert products is our new marketing category replacing ice cream. We arelooking to revolutionize traditional ice cream and create a new market. The traditional
selling space of ice cream has not changed for a long while, and now, we would liketo introduce innovative desserts that go beyond the framework of conventional ice
cream.

Milk Business

Our Value Creation Story

Frozen dessert

Growth Strategy From FY2019

Accelerating Growth with Products Supported by
Meiji’ s Unique Technology

Our basic approach with cheese, frozen dessert products and products for
professional use, is to create new markets by increasing products with unique value.
Meiji Hokkaido Tokachi Smart Cheese is processed cheese that utilizes the features andadvantages of natural cheese. Meiji Hokkaido Tokachi Camembert Cheese is tailored to
the Japanese palate. It is very popular among Japanese customers and we expect
further sales growth.
We will continue launching products supported by Meiji’ s unique technology,
offering value not found anywhere else. The cheese market is growing steadily, andwe intend to actively invest in our production capacity to meet increasing sales.

Introduction

Growth Strategy From FY2019

WEB POWER! One Bite
https://www.meiji.co.jp/power (Japanese only)

Meiji Holdings Co., Ltd.｜Integrated Report 201925

Contents

Overview by BusinessPharmaceutical Segment
Introduction

Growth Strategy From FY2019

We will utilize a variety of strengths
to grow more globally

President andRepresentative Director
Meiji Seika Pharma Co., Ltd.

Bilanoa launched in 2016 and there are surveys from patients as well as ear, nose andthroat (ENT) specialists that show favorable results. Our plan is to use the clinicalbenefits of Bilanoa to increase sales to JPY 10 billion by 2020 following the
Medium-Term Business Plan.
We are also strong in the area of central nervous system (CNS) disorders. SYCREST
launched in 2016 and has recorded a big jump in YoY sales for FY2018. July 2019
marks 3 years since its launch and we will use this opportunity to increase its brandvalue. We will actively provide the latest data from postmarketing drug-use survey anddevelop it into the best-in-class drug.

Generic Drugs

Big Jump in Domestic Business Sales and Profits,with International Business on Track for Growth

168.4

198.6

Operating income

11.0

14.2

+17.9％+30.2+29.2％+3.2

Breakdown of Consolidated Op. Income (Billions of yen)

11.0

FY2017

-12.1
+2.4
+9.0

Decrease due to NHI drug
price reduction
Sales growth of mainstay products, increase due to
newly selling the influenza vaccine
Cost reductions and favorable variancefrom inventory reevaluation due toa production site closing
Decrease in R&D expenses+1.7
and promotion expenses
Consolidation of+2.2
KM Biologics Co., Ltd.

14.2

FY2018

Japan

*2

*3

Overseas

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

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

Growth/ReformNew

Immune system and inflammatory disorders
Hematologic cancer/PDT *4

Agricultural chemicals(distributed by Meiji)

ExportVeterinary drugs

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

26

Our Value Creation Story

5.3

FY2018FY2019FY2020

Copyright © 2019 IQVIA.
Calculated based on JPM 2019 Mar MAT
Market scope as defined by
Meiji Seika Pharma Co., Ltd.
Internal estimate for FY2019 and FY2020* Reprinted with permission

Applying Our Selection and Concentration Strategy to
Meet Growing Demand and Weather the NHI Drug Price Revisions

The generic drug business is an important driver for our growth. As the ageing
population expands in Japan, the risks of disease and illness also increase. Accordingly,
we believe demand for drugs to treat lifestyle related diseases will increase. However,the drug price will continue to decline because of the NHI drug price revisions. Basedon this business climate and related factors, we will drive our selection andconcentration strategy in the generic drugs business further. In this strategy, we will
focus on products such as antibiotics, drugs for CNS disorders and lifestyle relateddiseases, and our medical representatives (MRs) will be visiting and targeting internal
medicine, pediatrics, ENT and neurology departments.

Vaccines

10.0
8.0

Net Sales (Japan)(Billions of yen)

46.7

46.9

FY2017FY2018Embracing a Sense of Urgency and Responsibility
to Ensure the Supply of Essential Drugs

In FY2019, Meiji Seika Pharma Co., Ltd. started full-scale sales operations for vaccines
manufactured by KM Biologics Co., Ltd. We will deliver influenza vaccines, our mainstay
product, to medical institutions ahead of the flu season to show our customers that canrely on us. In addition, KM Biologics Co., Ltd. supplies many single supply products*1 andorphan drugs*2. As a supplier of drugs that are essential to public health, we embrace a
sense of urgency and responsibility in our mission to advance our vaccine business.
*1 Products available in Japan only manufactured by KM Biologics Co., Ltd., without any alternatives
manufactured by other pharmaceutical companies*2 Drugs designated by the Ministry of Health, Labor and Welfare for diseases or conditions that havefewer than 50 thousand patients with therapeutic needs in Japan

International Business

50.2

FY2019(Plan)Net Sales (Japan)(Influenza vaccine)(Billions of yen)

14.3
3.9
FY2017FY2018FY2019(Plan)

Corporate Information

Agricultural Chemicals and Veterinary Drugs

Overseas *1

Infectious diseases/VaccinesCore

Net sales

YoY Change

KM Biologics Co., Ltd. Q2-Q4 Results (Non-consolidated)
Net sales JPY 31.2 bn, Op. income JPY 3.4 bn

Ethical Pharmaceuticals
Japan

FY2018Results(％)

Financial and Non-Financial Section

It was a big year for the Pharmaceutical segment in FY2018. While
there was a significant impact from the National Health Insurance(NHI) drug price revision in April 2018, the segment ultimately
recorded an increase in sales and profits.
Despite a rough start for the fiscal year, the domestic sales
recovered from the second quarter. Two factors contributed to thisrecovery: the Meiji Group acquiring KM Biologics Co., Ltd. in July 2018
and launching sales for the influenza vaccine in September 2018. In
addition, Bilanoa (anti-allergy drug) and SYCREST (antipsychotic drug),
both launched in 2016, together lifted the segment’ s performance inthe second half of the year. This offset the negative impact of the NHI
drug price revisions in the domestic business.
In the international business, stable production was realized inMedreich Ltd., the Indian company acquired in 2014. The productsales for the Japanese market are slowly increasing and we expect a
steady growth path going forward.

Pharmaceutical Business

FY2017
Results(Billions of yen)in systemic anti-allergic drug

Our Activities for Sustainability

FY2018 in Review

Target market share for Bilanoa

Our Value Creation Story

Daikichiro Kobayashi

Developing Bilanoa and SYCREST into Best-in-Class Drugs

Brand-name Drugs

Expanding the CMO/CDMO Business Globally at Medreich

Medreich develops our CMO/CDMO business*3 and is an important subsidiary to leadthe international business. With an increase in orders from existing customers and apush to acquire new customers, we are eyeing steady growth globally.
Medreich also manages production of generic drugs for the Japanese market.
Though the government’ s goal is to have an 80% usage rate of generic drugs, thegeneric drug price has been dropping significantly due to revisions in the NHI pricing
system. In light of this particular climate, it is imperative for us to establish a stablesystem in Medreich that delivers quality and inexpensive products.
*3 CMO: Contract Manufacturing Organization
CDMO: Contract Development and Manufacturing Organization

Net Sales (Medreich Group)(Millions of U.S. dollars)

186

FY2017225

201

FY2018FY2019(Plan)

Meiji Holdings Co., Ltd.｜Integrated Report 201927

Contents
Overview by Business

R&D Pipeline

Pharmaceutical Segment

Four New, Promising Agricultural Chemicals
in the Pipeline, with Big Profit Earning Expectations

Agricultural Chemicals and Veterinary Drugs

Japan JPY 30 bn
India JPY 60 bn (CAGR 12%)Europe & Americas JPY 200 bn

Japan JPY 20 bn
Overseas JPY 300 bn

Japan JPY 10 bn
Europe JPY 150 bn* Meiji Holdings Co., Ltd.’ s estimate

Promoting Open Innovation with New Promising Drug Candidates
Joint R&D examples
Drug discovery research on
autoimmune disease and cancer
Joint development with the Foundationfor Biomedical Research and Innovation at Kobe

Japan Agency for Medical Researchand Development
CiCLE: Cyclic Innovation for
Clinical Empowerment

R&D on antifrailty drugs and treatment
Japan Agency for Medical Researchand Development
CiCLE: Cyclic Innovation for
Clinical Empowerment

Top Commitment

28

Our Value Creation Storyand in us.
Up until now, the Meiji Group has been a leadmanufacturer of antibiotics in the treatment of infectious
diseases. After entering the vaccine business last year, we havebecome involved with the prevention of infection andrecognize our responsibility in supplying drugs that are
essential to public health. While the business atmosphere inpharmaceuticals can be quite challenging and tough, we will
work to grow more globally as a company that is essential tosociety.

OP0595 Nacubactam [β-lactamase inhibitor] ●Phase I
Single agent

ME2125 Safinamide *[Anti-Parkinson’ s disease](Overseas)
Phase I
with β-Lactams

Phase II/III

AppliedME2112 Ziprasidone
SP-02L Darinaparsin

Approve

Phase II

[Relapsed and refractory peripheral T-cell lymphoma (PTCL)][Trastuzumab biosimilar] *Joint development with Dong-A Socio Holdings

Apply

Phase III

[Antipsychotic]

DMB-3111

Approve

Out-licensing

Apply(Phase I finished)

KD-370 ●Phase III[Pentavalent vaccine against diphtheria, tetanus,
pertussis, polio, and haemophilus influenza type b]

KD-382 [Quadrivalent vaccine against dengue fever] ●Phase I

KD-404(Overseas)

Phase I/II

[Egg-derived inactivated whole virus influenza vaccine] ●Joint development with Hokkaido University[Indication expansion for chronic inflammatory
demyelinating polyneuropathy andmultifocal motor neuropathy]
Joint development with Teijin Pharma Limited

KD5-71[Indication expansion for optic neuritis (orphan drug)]
Joint development with Teijin Pharma Limited

Phase III

AppliedPhase III

Approve

AppliedApprove

KD-371[Indication expansion for microscopic polyangiitis(orphan drug)]
Joint development with Teijin Pharma Limited

Phase IIIKD2-305 ●Suppression of bleeding tendency in patients withblood coagulation factor VIII or factor IX deficiency
who have coagulation factor inhibitors

ME5382 [Insecticide/Flupyrimin] ●Phase II/III

Applied(Overseas)

AppliedApprove

ME5343 [Insecticide/Afidopyropen] ●Licensing agreement with BASF
Discovered in a research collaboration between
Meiji Seika Pharma Co., Ltd. and The Kitasato InstituteApplied(Overseas)

Approved(Overseas)

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

Approved

ME5223 [Fungicide/Fenpicoxamid] ●Joint development with Corteva Agriscience

Applied

ME4129 [Injectable antibacterial drugs]
Indication expansion

AppliedApprove

ME4136 [Injectable antibacterial drugs]

AppliedApprove(Overseas)

Approved(Overseas)

Approve

AppliedME4204 [Oral anthelmintics]

Corporate Information

Our number one priority is ensuring our businessdevelopment stays focused on customers. To stay focused on
customers, we will maintain an appropriate number of MRs in
the field. Because we handle a wide range of products
including generic drugs, the MRs’ activities go beyond justproviding information related to our pharmaceuticals andconfirming their safety. We believe the MR has an importantrole in providing a broad range of detailed and useful
information to the doctors, such as combinations of both our
products and generic drugs, prescriptions and adverse events.
By carrying out this mission, we can build trust in our products

Phase Ib

ME4137 [Injectable antibacterial drugs]
Veterinary drugs

Staying Customer-Focused and Fulfilling our Responsibility
in Supplying Drugs Essential to Public Health[Hospital Acquired Bacterial Pneumonia/
Ventilator Associated Bacterial Pneumonia
treatment (HABP/VABP)] ●Financial and Non-Financial Section

R&D on the novel β-lactamase
inhibitor OP0595

Agricultural chemicals

In the ethical pharmaceuticals, our product pipelines include promising candidates
such as ME2125 Safinamide and ME1111 (see the table on the next page for details). In
addition, DM Bio Ltd., the joint enterprise established in Korea, succeeded incommercial level production of biosimilars (biologic medical product that is almost an
identical copy of an original product) and will start clinical development in Europe.
With our sales volume, the R&D expenses are naturally limited, but we believe thatcreating a new drug is not necessarily related to the R&D budget. What is importantand critical is a good researcher. Therefore we are sending researchers to external
institutes, such as the Foundation for Biomedical Research and Innovation at
Kobe/Institute of Biomedical Research and Innovation, to develop good researchers.
We will continue to promote open innovation by collaborating closely with leading
research institutes, creating a network of researchers and developing new productpipelines.

ME1100 Arbekacin

KD6-71
Blood plasma products

Green chemicals manufactured by innovative fermentation technology

Phase II

Our Activities for Sustainability

ME5223 Fungicide

ME1111 [Antionychomycosis] ●FY2020Our Value Creation Story

ME5343 Insecticide

Human vaccines

ME5382 Insecticide

OthersMarket Size* for New Agricultural Chemicals

Ethical Pharmaceuticals

We started antibiotic R&D just before the end of the World War II. In our quest to discover useful compounds, we have established thebasic technology that purifies and assesses the activity and profile of microbial metabolites in bacterial cultures. Our agricultural chemicals
business was created from developing this technology and that strength is incorporated into our current products and product pipelines.
The rice blast preventative ORYZEMATE has been our best seller for the last 40 years. We will continue to secure its profitability going
forward. There are currently four new, promising agricultural chemicals in the development pipeline. In particular, we believe theagricultural insecticide ME5382 is very promising. It has already been registered in Japan, and we are seeking to register it in India’ s massive
market by FY2020. Registration in Europe and the U.S. for the agricultural insecticide ME5343 and the agrochemical fungicide ME5223 ismoving along smoothly, and we will seek registration in other locations overseas beyond 2020 as well.
In our veterinary drugs business, we expect the corporate synergy with KM Biologics Co., Ltd. will have a positive effect. Thus far, ourmain products have been antibiotics that have primarily targeted cows and pigs. KM Biologics Co., Ltd. has been developing and selling
vaccines for chickens. We believe that there is much more room to grow the business by allocating resources more effectively in bothcompanies.

R&D Pipeline

Infectious diseases CNS disorders

Growth Strategy From FY2019

FY2019Introduction

FY2018R&D Pipeline

Apply

Indication expansion

ME4406 [Feed additives]

Apply

ME4624 [Vaccine]

AppliedKD-390 [Vaccine for poultry use]

AppliedKD-377 [Vaccine for swine use]

AppliedKD-386 [Vaccine for swine use]

AppliedApprove
Approve
Approve
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/results-and-presentations/pharmaceutical-pipeline/

Meiji Holdings Co., Ltd.｜Integrated Report 201929

Contents

Special Feature

Introduction

Working Toward
Sustainable Cocoa Production
What is Meiji Cocoa Support?
Current Status of Cocoa

Continuing to Support Farmers and Activities for Sustainable Cocoa Production

Our Value Creation Story

The amount of chocolate consumption keeps increasing globally. Cocoa
is the main ingredient of chocolate and cocoa producing countries arelimited to only some equatorial regions. There is concern about thesustainable cocoa production. Cocoa farmers are facing a number ofchallenging issues and conditions, such as ageing trees, not enoughsaplings and fertilizer, and inadequate knowledge of cultivation
techniques. To address these issues, the Meiji Group started Meiji Cocoa
Support, a cocoa farmer support activity, in 2006. It is designed to help
the farmers resolve these challenges to produce cocoa sustainably.

SupportSupporrt CocCocoa
coa Farm
Farmers
mers Throug
Throughgh Me
Meiji
eiji CocoCocoa
oa SupSupport
pport
2.

3.

4.

5.

6.

7.

R
Republic
bli off
Ghana

Th
The S
Socialist
i li tRepublic ofVietnamR
Republic
b off
bli
Peru

R
Republicb off
bli
Ecuador

B li i
Bolivarian
Republic ofVenezuela

Th U
The
Unitedit dDominican
D
i i
Mexican States Republic

Our Activities for Sustainability

1.

8.

F d tiFederative
Republic of
Brazil

7
6

2

5

1

Realize Sustainable Cocoa Production
While Building a New Chocolate Culture in Japanand Supporting Farmers in Cocoa Producing Countries

SDGs forMeiji Cocoa
Support30

Our Value Creation Story

3

As of 2019, Meiji Cocoa Support covers eight counties around the world. This
program’ s goal is to help cocoa farmers earn more income and help build a society
for steady cocoa farming.

Chocolate Market in the Worldand in Japan

Global supply anddemand of cocoa beans

The global demand for cocoa has been
increasing recently, and the chocolate
production volume in Japan is rising as
shown in the figure. We are focusedmore on the environment the farmers
are facing, and achieving sustainablecocoa production is becoming asocietal issue.

[1,000 t]
5,000

Production
Grinding

Chocolate production in Japan[1,000 t]

4,530

275

4,500

225

4,587

200

3,000

175

2,500
2,000

252

250

4,000
3,500

Corporate Information

Cocoa is the raw ingredient that gives chocolate its flavor and is one essential
resource in the Meiji Group’ s Food segment. The Group offers Meiji Cocoa
Support, a support program for farmers in cocoa producing countries, and at
the same time, is seeking to diversify the conventional image of chocolate
among customers who enjoy chocolate in Japan. By doing this, we will link
the producing countries with the consuming countries to achievesustainable cocoa production.

Financial and Non-Financial Section

8
4

1
5
3
2
7
0
9
6
4
*) (Year)/0 /1 /1 /1 /1 /1 /1 /1 /1 8(
08 09 10 11 12 13 14 15 16 /1 * Expected
20 20 20 20 20 20 20 20 20 2017150

08 09 10 11 12 13 14 15 16 17 (Year)20 20 20 20 20 20 20 20 20 20

Source: Chocolate & Cocoa Association of Japan

Meiji Holdings Co., Ltd.｜Integrated Report 201931

Contents
Special Feature

Working Toward Sustainable Cocoa Production
Introduction

Meiji Cocoa Support
Meiji’s Unique Support Activities

Employees Onsite and Engaging
in Direct Support Activities

Holding Art Classes

Securing daily water is an important
issue, so we dig wells at various
locations and donate them. To preventthe spread of malaria, we also provided
mosquito nets to local families.

We started cocoa-themed art classes
for the local children to enjoy drawing
pictures and making crafts and to help
deepen their understanding aboutcocoa. The classes are quite popularand well-received by students andparents.

Initiatives to Improve Cocoa Farmers’ Productivity and Income

Educational Support with Donations of
School Equipment and Supplies

We are donating school equipment andsupplies to the local schools near thecocoa farms, such as writing materials,
blackboards, shelving, maps and fans. We
believe improving the education level ofthe local residents will enrich the people’ s
lives in the area over the long term.

Our Activities for Sustainability

Donated Wells and Mosquito Nets

Our Value Creation Story

In order to understand the current status of cocoa
production areas, we cannot overstate the value ofbeing onsite and speaking directly with the cocoa
farmers through Meiji Cocoa Support. We are able tocheck and identify what is actually needed and thencan determine the appropriate support. Through these
activities, we want to help improve cocoa production
and stabilize the farmers’ lives.

Initiatives to Enhance the Living Environment of the Cocoa Farmers

Support Activities through the World Cocoa Foundation
Workshops on Technical Assistance such as Meiji Fermentation Process, and Distribution of Fertilizer

Sampling Center to Provide Saplings for Free

Farmer Training School

Cocoa Farm Equipment Center

Since there is a limit to how much support the Meiji Group alone can provide, we joined
the World Cocoa Foundation* (WCF) in 2006 and have been participating in their activities.
There are more than 100 companies participating in the WCF, and we, along with 15 othercompanies, have contributed funds to the Cocoa Livelihoods Program, a flagship programthat helps raise the income of farmers in western African countries such as Ghana.
In 2017, we also joined the Cocoa & Forests Initiative, a program led by the WCF thathelps prevent deforestation caused by cocoa farming. We will stay involved in these
activities while working alongside local governments and related organizations.

Financial and Non-Financial Section

Fermentation is a crucial part of chocolate production that brings out the rich flavor of the cocoa beans. Meiji offers a cocoa-specificfermentation method and this unique method produces high quality fermented cocoa, supporting farmers both technically andfinancially. In addition, we are engaged in other activities like the free distribution of fertilizer for cocoa cultivation.

Funding a Program to Raise Farmers’ Incomes
and Working to Prevent Deforestation in Cocoa Producing Countries

WEB
World Cocoa Foundation
http://www.worldcocoafoundation.org* NPO that provides agricultural support for making the cocoa economy sustainable

Future of Meiji Cocoa Support

We opened a sapling center close to
the cocoa farms and provided highquality saplings to the cocoa farmers inthe surrounding area.

32

Our Value Creation Story

We hold some seminars for the cocoa
farmers. We provide instructions on
cultivation methods to increase yield,
appropriate use of fertilizer andagricultural chemicals and also healthmanagement.

We opened a Cocoa Farm Equipment
Center to relieve some of the financial
burden on cocoa farmers. The centerloans out farm equipment (free ofcharge) for pruning, weeding andspraying pesticide. The repair andmaintenance of equipment can also bedone at the center.

Since we started Meiji Cocoa Support, I myself have been to a number ofcocoa producing countries. Every time I receive a welcoming smile from thefarmers, I realize the importance of those activities. In recent years, younger
staff from our R&D team also have been visiting these countries to provide
skills and knowledge to the farmers. This program also focuses on farmmanagement training to increase the farmers’ income so that they cancontinue to pass on the business to the next generation. We believe this willcontribute toward promoting sustainability in the cocoa sector.

Corporate Information

Promoting Sustainability in the Cocoa Sector andBuilding Societies Where Quality Cocoa Production
is Passed Down to the Next Generation

Yoshinori Doi
Associate General Manager
Technology Dept.
Production Div.
Meiji Co., Ltd.

Meiji Holdings Co., Ltd.｜Integrated Report 201933

Contents
Special Feature

Working Toward Sustainable Cocoa Production
Introduction

Using Cocoa’s Appeal to Build a New Chocolate Cultureure
Goals for Meiji The Chocolate

Expanding the Japanese Chocolate Market

Supplying Both Products & Information for Adults
to Enjoy Premium Chocolate as a Special Treat

Another goal of Meiji Cocoa Support is also to help
realize the production process Bean to Bar and Farm toBar. Meiji The Chocolate was produced using this process
by carefully selecting the cocoa to maximize its
characteristics and flavor. By offering customers a new
aspect of enjoying chocolate, we will stimulate demandfor premium cocoa and redistribute profits to cocoa
farmers.

The chocolate consumption per person in Japan is roughly
one-sixth compared to Germany. In Europe, chocolate islikened to wine and coffee and is considered a premium
product in daily life for adults. In order to build a similar
culture in Japan, we should supply information with our
products to effect change. We will actively disseminate
useful information about cocoa including its health benefits.
This will help expand the chocolate market and at the sametime support sustainable cocoa production.

The flavor and aroma of cocoa vary depending on the
producing region and production method. We have separated
the aromas of cocoa beans into three unique categories:
Nutty, Fruity and Floral, so that we can offer our customers
different aromas and selections for Meiji The Chocolate. These
products with different aromas will set new criteria for
selecting chocolate, providing more than just simple sweetand bitter options.

Three Aromas

We designed various shapes and complex patterns on thesurface of Meiji The Chocolate. With this new makeover, ourcustomers can enjoy a change in flavor as the chocolate meltsin their mouths. We also created new package designs tomatch aromas and flavors. This customer approach is quite
different from traditional chocolate products and has
garnered a lot of attention.

Meiji The Chocolate Offers Various Shapeswith Different Flavors
Softens thebitterness andtaste

Dome shape

Nutty

FruityFloralPleasant andsavory like a nut

Tart and fresh
like a fruit

Abundant aroma andfragrant like a flower

Enhancesthe richness ofmilk chocolates

Meiji The Chocolate’ s uniqueness has gained
recognition all over the world. In 2018, Meiji The
Chocolate received the Superior Taste Award fromthe International Taste Institute (formerly iTQi).
This product also has received many other awards
from the ICA (International Chocolate Awards),
from the Great Taste Awards in England hosted by
the Guild of Fine Food as well as from theAcademy of Chocolate Awards‒which bestows
and distinguishes the world’ s best chocolate.
34

Our Value Creation Story

Makes the cocoa
aroma standout more

Stick shape
For enjoying
strong flavors

Customers Experiencing Cocoa Cultivationand Harvesting Through Virtual Reality

Japan

Since 2015 we have been an exhibitor at the
chocolate fair Salon du chocolat held every
year in Paris, France. In addition to productsales, we also focus on introducing initiatives
such as Meiji Cocoa Support and Bean to
Bar/Farm to Bar, and our presentation has
been well-received every year. We will workat spreading this chocolate culture offocusing on cocoa beans throughout Japanand beyond.

Providingopportunities tolearn thecharacteristics of
chocolateVirtual reality
experience using goggles

Partial Proceeds Earmarked for Supporting Cocoa Farmers

Meiji booth
crowded withvisitors

Meiji Cocoa Support is also introduced at Hello, Chocolate by meiji and some ofthe proceeds are earmarked to purchase saplings for supporting the cocoa
producing regions. Visitors are able to empathize with the activities of Meiji
Cocoa Support, and it connects consumers with cocoa producers.

Initiatives to Create New Markets

Enhance Communication with Customers
to Make Cocoa Part of Our Everyday Lives

International
Chocolate Awards

As part of the Meiji Cocoa Support program, our marketing and sales
representatives visit cocoa farmers to deepen understanding about cocoa. We
will improve our communication with our customers, by having representatives
convey their experience and enjoyment of cocoa and chocolate. We will
provide our customers with the experience of actually making chocolate fromcocoa and pairing it with beverages to enjoy its delightful taste and flavors. This
experience will be more than just eating chocolate. In the future, we would liketo build a culture where we cast off the traditional idea of chocolate andcelebrate cocoa in daily life, and thus create new markets.

Academy of
Chocolate Awards[UK]

NorwayMeiji Looks to Build a Cocoa Culture
in Japan and Throughout the World

iTQi Superior
Taste Award[Belgium]

Great Taste Award[UK]
Received the Superior Taste Award fromthe International Taste Institute for threeconsecutive years from 2016 to 2018

German Switzerland

Source: Chocolate & Cocoa Association of Japan

Corporate Information

Meiji The Chocolate received international awards

Jaggedmaze-liketexture9.4

Financial and Non-Financial Section

Mini blocks(kg/year)

2.0

Opened an Interactive Customer Center:
Hello, Chocolate by meiji

Hello, Chocolate by meiji was opened in
November 2018 as an interactive center forcustomers and to disseminate information
about chocolate. Here, customers can get anew, fresh perspective about cocoa andchocolate, offering them a life-like experience
visiting cocoa producing regions through avirtual reality program. We provide anotherprogram that mimics and shows thedifferences in flavors and aromas throughimages and sounds.

10.2

▼

Changing How We See Chocolate with
New Shapes and Packaging

11.7

Our Activities for Sustainability

Paradigm Shift Where Consumers Choose
Chocolate with Their Favorite Aromas■ Annual chocolate consumptionin each country per capita (2015)

Our Value Creation Story

The New Aspect of Enjoying Chocolatethat Meiji Cocoa Support Brings%

Hidekazu Hagiwara
General Manager
Cacao Marketing Dept.
Marketing Div.
Meiji Co., Ltd.
Meiji Holdings Co., Ltd.｜Integrated Report 201935

Contents

Meiji Group’s Approach to CSR
Approach Toward SDGs

— A Corporate Group Essential to and Trusted by Its Stakeholders

Business
VisionCSR
VisionManagement
VisionSocial contributions• Healthier Lives• Caring for the Earth• A Richer Society

The Group CSR System

Meiji Group CSR 2026 Vision

Outline of Vision
Areas of
Activity

The Group CSR Committee (meets two times per year)
Chairman: President and representative director, Meiji Holdings Co., Ltd.
Vice chairman: President and representative director, Meiji Co., Ltd.
Vice chairman: President and representative director, Meiji Seika Pharma Co., Ltd.
Vice chairman: President and representative director, KM Biologics Co., Ltd.
Committee members: Managing officers and full-time Audit &Supervisory Board members, Meiji Holdings Co., Ltd.
Managing officer in charge of CSR from
Meiji Holdings Co., Ltd. and operating companies

Domains

The Group CSR Committee

Head of the secretariat:

CSR Secretariat (Secretariat meetings held monthly) General Manager, PR & IR Department* KPI: Key Performance Indicator

Progress of CSR 2026 Vision

2019• Established vision• Identify materiality• Revised how the vision’ s activities in each area
are related to the SDGs

• Joined UN Global Compact• Discussions with outside experts
Mr. Peter David Pedersen

36

Our Activities for Sustainability

Joined UN Global Compact
The Meiji Group pledged its support to the UN
Global Compact (UNGC) in April 2019. We areworking to improve our employees’
understanding about the Ten Principles of the
UNGC, which cover the fundamental
responsibilities in the area of human rights,
labor, environment, andanti-corruption. In FY2019,
we are focusing ourefforts particularly onhuman rights and theenvironment as well as
pursuing and achieving asustainable society.

Meiji Holdings Co., Ltd.

Meiji Co., Ltd.

Meiji Seika Pharma Co., Ltd.

KM Biologics Co., Ltd.

CSR staff

CSR staff

CSR staff

CSR staff

Related departments

Related departments

Related departments

Related departments

Feedback from Experts

Corporate Information2018• Began discussions to establish vision

Financial and Non-Financial Section

The Meiji Group CSR 2026 Vision is broken
down into three themes: Healthier Lives,
Caring for the Earth and A Richer Society,plus the shared theme: Sustainable
Procurement. Here, we identify and set
materiality issues and KPIs*. Based on thisframework, shown in the figure, we
promote specific CSR activities andaddress social issues.

We have established the Group CSR Committee, with the President and Representative Director of Meiji Holdings
Co., Ltd. at its helm, and will continue to engage in activities following this committee’ s direction. This committee
meets twice annually. It monitors the progress of activities to achieve KPIs in the Meiji Group CSR 2026 Vision andalso establishes CSR policies. There is a CSR Secretariat that meets monthly and is made up of the CSR
representatives from Meiji Holdings Co., Ltd. and the operating companies. We share information to address issues,
such as climate change and sustainable procurement, while staying on target with the SDGs. The progress of theseGroup CSR activities is reported twice annually at the Board meetings.

Our Activities for Sustainability

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.

2017

The 13 Main SDGs the Meiji Group is Targeting

The Sustainable Development Goals(SDGs) are a collection of the 17 goals
adopted by the United Nations in 2015
for the year 2030. In our endeavors, wehave identified 13 primary goals that willcontribute to society in the Meiji Group’ sbusiness activities. We are working toachieve our goals as outlined in the MeijiGroup CSR 2026 Vision.

Our Value Creation Story

The basis of the Meiji Group’ s Approach to CSR is to fulfill
corporate social responsibility (CSR) by putting the Group
Philosophy into practice on a day-to-day basis in mainstay
businesses and by remaining a corporate group society needs.
We have created the Meiji Group CSR 2026 Vision. It represents
the goals and image our Group is striving for, and promoting
CSR is one of our highest priority areas within that vision. The
Meiji Group CSR 2026 Vision was designed specifically to carryout Social contributions.

Introduction

Our Target Prof ile

In April 2019, Mr. Peter David Pedersen and Mr. Kawamura from Meiji Holdings Co., Ltd. discussed theGroup’ s CSR. Their dialogue covered a frank and lively exchange about a number of topics, including
challenges the Group should prepare for after the Meiji Group CSR 2026 Vision as well as CSR activities
unique to the Meiji Group. Use the link below to see the details of this discussion.
WEB 2019 Stakeholder Dialogue https://www.meiji.com/csr/stakeholder-dialog/2019/ (Japanese only)

What to Expect from the Meiji GroupThe global population is expected to balloon to ten billion people by 2050, with 3 billion expected to live
in slums and 52% of the population facing water stress or water scarcity. Social problems in the future
can be viewed as a potential business chance so to speak. Therefore, it is important to weigh social issues
appropriately and change them to business opportunities.
I believe, the Meiji Group can be classified as one of those companies that is essential to daily life. The
Group must define the social issues that people face. It is my hope that the Group will bring employees
together and successfully actualize innovation, solve problems as well as ensure growth globally.

▲ The left side of the picture

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

Meiji Holdings Co., Ltd.｜Integrated Report 201937

Contents

Meiji Group’s Approach to CSR

After conferring with experts outside of the company, we identified materiality and set KPIs. As wecontinue to promote CSR activities to achieve our KPIs, we shall report on our progress each year.

A Richer Society

Red font: Identify materiality issues

Healthier Lives
Areas/SDGs

1. Develop products that contribute to healthy diets anda super-aged society
ResultThree years from FY2018 to FY2020
Total

ResultDomestic food plants
with GFSI certification
by FY2020%

TargetMore than
reduction
by FY2030

15 %Result2. Raise the ratio of employees with disabilities above the statutory
employment quota

196,000(The combined total targets for Meiji HD Co., Ltd., Meiji Co., Ltd. and Meiji
Seika Pharma Co., Ltd. alone, excluding affiliates)
TargetResultOur Activities for Sustainability

The ratio of employeeswith disabilities
More than%

Result2.2

2.29 %

From April 1, 201850 %Society(New: 6 plants,
Total: 24 plants)• Respect andpromotehuman rights

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

100 %Result100 %Shared Themes

Domestic CO2 Emission Volume(10,000 t-CO2)

40

0

58.2

52.3

50.4

48.4

49.5

FY2013 FY2016 FY2017 FY2018 FY2030[Base year][Target]Reduce domestic water consumption volume (per unit of sales) by
more than 20% compared with FY2015 baseline by FY2030

More than
reduction
by FY2030

ResultAreas/SDGs

Social Issues

KPIs & FY2018 Results

60

Sustainable • Procure raw
Procurement materials withconsideration toward
human rights andthe environment• Provide stableprocurement

1. Improve traceability of cocoa
ResultReason: Did not meet chocolate usage targets

2. Use 100% of RSPO*-certified palm oil by FY2023* RSPO: Roundtable on Sustainable Palm Oil
TargetVolume20 % Domestic Water Consumption(per Unit of Sales)

12.2

10

Approximately% reductionin usage from previous year

Use

100 %

by FY2023(1,000 m3/100 million of yen)

2.5
2.0

1.5
% reduction 1.0
0.5
The domestic
0.0
Meiji Group, excluding

2.13

2.07

1.92

1.87

1.70

FY2015 FY2016 FY2017 FY2018 FY2030[Target]ResultUsing
approximately

2%

Plan

Use
approximately

10 %by FY2019

3. Use 100% paper raw materials from forests certified forsustainability practices (FSC®, PEFC) and/or from recycled paper
by FY2020
Target[Base year]

Corporate Information

The domestic
Meiji Group, excluding
KM Biologics Co., Ltd.

KM Biologics Co., Ltd.

38

171

420

• Communicate withstakeholders• Promote CSR activities

16.8 % reduction 20

Compared to FY2015• Secure local
biodiversity

3.1%

Female leaders

Female leaders* in FY2026
Minimum of

Reduce total domestic CO2 emission volume by more than 15%
compared with FY2013 baseline by FY2030

TargetBiodiversity

Female managers

Financial and Non-Financial Section• Secure water
resources

ResultKPIs & FY2018 Results

Compared to FY2013

Water

10

More than%female managers
by FY2026

Our Activities for Sustainability

500,000* HACCP: Hazard Analysis and Critical Control Point• Eliminate the Use ofSpecified Fluorocarbons• Reduce
environmental
impact(The combined total targets for Meiji HD Co., Ltd., Meiji Co., Ltd., Meiji Seika
Pharma Co., Ltd. and KM Biologics Co., Ltd. alone, excluding affiliates)
TargetCaring for the Earth

Circular Economy• Employee-friendly
workplace

6

32

100

• Reduce CO2
emission volume

1. Raise the ratio of female managers from 2.6% in FY2017 to greaterthan 10% by FY2026. Triple the number of female leaders* tomore than 420 by FY2026

Obtain Global Food Safety Initiative (GFSI) certification, which
includes HACCP* for all domestic food plants by FY2020
TargetClimate Change• Promote diversity
and inclusion

2. Enroll a total of 500,000 participants into nutrition and healthy dieteducation within three years from FY2018 to FY2020• Ensure productquality and safety

Social Issues

KPIs & FY2018 Results* Leader: Manager and assistant manager

TargetAreas/SDGs

Social Issues

Health-conscious Nutritional products Products for
productswith added
a super-agedvalue
society47• Improve nutrition in
emerging countries• Ensure the sustainablesupply of pharmaceuticals• Measures against infectious
diseases

Quality and
SafetyHuman
Resources

KPIs & FY2018 Results• Contribute tohealthy diets• Respond to asuper-aged society

Areas/SDGs

Our Value Creation Story

Health andNutrition

Social Issues

Introduction

Progress on Materiality

Use

100 % by FY2020 Result 55.3 %Packaging paper for products
manufactured domestically

The domestic Meiji Group,
excluding KM Biologics Co., Ltd.

Meiji Holdings Co., Ltd.｜Integrated Report 201939

Contents

Meiji Group’s Approach to CSR
Introduction

Healthier Lives

Policies & Plan

Fight Against Infectious Diseases

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 to the elderly live a healthierand richer lifestyle in both Mind and Body.

SDGs for Health and Nutrition

We use our strengths developed in the food and pharmaceutical businesses as well as our expertise from the nutrition andhealthcare areas in order to address social issues: more specifically, contribute to healthy diets, respond to a super-aged society,improve nutrition in emerging countries, ensure the sustainable supply of pharmaceuticals and fight against infectious diseases.

Infant and Toddler Nutrition
Contributing to Healthy Growth with Our Infant Formula Featuring More Added Value

Meiji Hohoemi
Raku Raku MilkWEB
Meiji Hohoemi Brand Site
https://www.meiji.co.jp/baby/
hohoemi/ (Japanese only)

We are securing a stable supply of special milk formulas for babies with food allergies or metabolic disorders. We started thisbusiness in 1980, and we are manufacturing and providing a free, stable supply (through government subsidy) of 12 registeredspecial formulas for children with inborn errors of metabolism and also a free, stable supply (through corporate sponsorship) of
6 unregistered special formulas for children with disorders not listed above.

Promoting Shokuiku Activities (Food and Nutrition Education)

Our Activities for Sustainability

Countermeasures to fight against AMR is an urgent global issue, and it was discussed
at the G20 Osaka summit in June 2019. In Japan as well, the National Action Plan on
Antimicrobial Resistance was drawn to promote the research and development of new
preventive, diagnostic and treatment techniques to battle against infection caused bydrug-resistant bacteria. The Meiji Group has developed the new β-lactamase inhibitor
OP0595 and it was selected as part of a national program, Cyclic Innovation for ClinicalEmpowerment (CiCLE). CiCLE is a program to conduct R&D and innovate new drugs
through industrial, academic and governmental collaboration. OP0595 possesses
unique characteristics not found in conventional β-lactamase inhibitors and is
expected to provide effective treatment for multidrug-resistant bacteria. Clinicaldevelopment is already underway in Japan, and we are continuing R&D and targetingoverseas applications.

What is a β-lactamase inhibitor?
There are a number of antibiotic
resistance mechanisms inbacteria. One type is a bacteriathat produces an enzyme called
β-lactamase to withstand theantimicrobial activity. The
β-lactamase inhibitor blocks orinhibits the β-lactamase tomaintain antimicrobial activity.

Meiji’s Specific Expertise and Research with Infection Helping Pave the Way for AMR Countermeasures

A fun interactive class at a school
through the Tokyo 2020's Education
Programme. These classes provide
information about exercise andnutrition as well as build andbroaden global understanding using
chocolate and yogurt.

WEB Meiji’ s Shokuiku, Tokyo 2020's Education Programme
https://www.meiji.co.jp/meiji-shokuiku/tokyo2020/(Japanese only)40β-Lactamase Inhibitor R&D

Two posters created by Japan Pharmaceutical Manufacturers Association
as a part of public awareness activities that promote understanding
about AMR

As one of the group leaders in the AMR Stewardship project sponsored by the Japan
Pharmaceutical Manufacturers Association, I worked alongside a number of companies,
who develop, manufacture and sell antibiotics, and created Stop AMR posters andvideo. We are collaborating with many institutes and related organizations to roll out
public awareness activities in order to communicate messages, such as Learn about
antibiotics and use them appropriately = Stop the spread of drug-resistant bacteria as wellas What you can do to Stop AMR. Thanks to Meiji’ s expertise in infection, we are using
this valuable opportunity to contribute to society.

Tomoko Morita

Corporate Information

Meiji has been active in food and nutrition education since 2006, and we visit schools andteach elementary and junior high school students through fun interactive classes. In
FY2018, we had 196 thousand students participate in these classes. In Meiji’ s food andnutrition education program, we also created a learning program for the Olympics andParalympics with the goal of stimulating children’ s interest in sports and at the same time
giving them a broader global perspective and understanding.
Through the activities in the Tokyo 2020's Education Programme, Meiji is helping
develop the next generation of people lead healthier and richer lives.

As one of the Meiji Group’ s initiatives, we are carrying out
public awareness activities in collaboration with relatedorganizations. We have joined the AMR Stewardship projectsponsored by the Japan Pharmaceutical Manufacturers
Association and have created posters and video under the
keyword Stop AMR. We have asked healthcare relatedorganizations to put up our posters and show our video tohelp raise public awareness. We are also involved in otheractivities that help disseminate information on AMR tomedical institutions.

Financial and Non-Financial Section

Securing a stable supply of special formulas for babies that cannot be breast fed or drink typical infant formulas

Public Awareness Activities
Concerning Antimicrobial Resistance (AMR)

Our Activities for Sustainability

Since first launching in Japan a vitamin B1 fortified infant formula in 1923, the Meiji Grouphas been committed to the infant and toddler nutrition business to promote their healthy
growth. We are currently supporting health in babies and toddlers by focusing on Meiji
Hohoemi, which can be used as a breast milk replacement for infants, and on Meiji Step,
which helps provide suitable nutrition for toddlers up to age 3. In addition, we developed
the world’ s first infant formula in cube form to help in the child rearing process. It is
designed for anyone to prepare the baby formula easily even for late night feedings, so thateveryone in the family can participate in child rearing. In March 2019, we also launched aformula in liquid form that can be stored and fed at room temperature and offers a longshelf life. This is not only convenient when feeding outside of the home but gives mothers
peace of mind as an emergency supply in the event of a disaster or emergency situation.

Our Value Creation Story

Health and Nutrition

Depending on the economic climate, public health system and access to pharmaceuticals throughout the world, patients can’ t
always be administered the appropriate antibiotics for the right dosage and/or for the appropriate treatment period. This is oneof the reasons for the emerging antimicrobial resistance (AMR). Asia and Africa in particular are more at risk to infections causedby drug-resistant bacterium, and more than 10 million fatalities are estimated to be caused by these infections in 2050. The
Meiji Group will use our expertise to reinforce countermeasures to fight against drug-resistant bacteria and to address thissocial issue.

Manager
Infection Product Management Group
Marketing Planning & Strategy Dept.
Meiji Seika Pharma Co., Ltd.
WEB Japan Pharmaceutical Manufacturers Association > Global Health > Antimicrobial resistance (AMR)
http://www.jpma.or.jp/english/globalhealth/infectious_diseases/amr/#stop_amr
Meiji Holdings Co., Ltd.｜Integrated Report 201941

Contents

Meiji Group’s Approach to CSR
Introduction

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, willcontribute to the creation of a sustainable society. To this end, we intend to harmonize our business activities withthe global environment and manage the Group in a way that protects the environment.
WEB Meiji Group Environmental Policy https://www.meiji.com/global/sustainability/policies/#Policies01_04

Initiatives for Recycling Plastic Resources

The Group CSR Committee
CSR Secretariat
The Group Environmental Meeting
Pharmaceuticals

Food
Meiji Co., Ltd.

Environmental Committee• Meets monthly

Climate Change

Meiji Seika Pharma Co., Ltd.

Environmental Committee

KM Biologics Co., Ltd.

General Affairs Department• Environmental representatives from Meiji Co., Ltd.,
Meiji Seika Pharma Co., Ltd. and KM Biologics Co., Ltd. as well as
CSR representatives from Meiji Holdings Co., Ltd.

CO2 Emission Volume for FY2018
Domestic(Domestic)

35 thousand
tons-CO86 thousand
tons-CO2

2* Category 1 2.437 million tons-CO 2

Scopes 1 and 2 are calculated based on the Act on Promotion of Global WarmingCountermeasures.
The scope of the CO2 emission volume that are included is noted on p.107.
Scope 3 is calculated based on the Basic Guidelines on Accounting for Greenhouse Gas
Emissions throughout the Supply Chain.

Category 1: Calculated by multiplying Emissions Unit Values* by the purchase price formain raw materials and packaging materials (paper, plastic and cardboard) used in thefood and pharmaceutical businesses.

42

Our Activities for Sustainability

Meiji America Inc.
Santa Ana (CA) Plant* Database of Emissions Unit Values for Calculation of Greenhouse Gas Emissions, etc.,
by Organizations Throughout the Supply Chain (Ver 2.4)

(Overseas)
12 overseas production plants are included in the calculation. Scope 1 uses the emission
factors from the Act on Promotion of Global Warming Countermeasures and Scope 2 uses
the emission factors from the IEA, Emissions from Fuel Combustion.
The numerical data indicated with

Water Consumption Volume for FY2018
Domestic

Overseas

22,056 m

thousand3

1,427 mthousand3(Domestic)
The scope of the water consumption volume that are included is noted on
p.107.
The numerical data indicated withhave been assured by anindependent practitioner.

(Overseas)
12 overseas production plants are included in the calculation.

Water Intake

2

Scope 3 Categories included in calculation: 1. Purchased Goods and Services, 2. Capital
Goods, 3. Fuel- and Energy-Related Activities Not Included in Scope 1 or Scope 2, 4.
Upstream transportation and distribution, 5. Waste Generated in Operations, 6. BusinessTravel, 7. Employee Commuting, 9. Downstream transportation and distribution, 12.
End-of-Life Treatment of Sold Products

Meiji Co., Ltd. Osaka Plant

SDGs for Water

have been assured by an independent practitioner.

Corporate Information

228
Scope 2
282*
Scope 3 3.189 million
tons-COOverseas

thousandtons-CO 2
thousandtons-CO 2

Water resources are essential for operations in the Meiji Group, andmanaging water resources to ensure a sustainable society isextremely important. We are not only installing equipment toconserve water and use it efficiently but also managing the qualityof wastewater. In order to evaluate the risks related to water
resources and their impact on operations, we use AQUEDUCT(international water risk assessment software launched by theWorld Resources Institute) at all of our domestic and overseas
production sites to perform risk assessments and collect onsite
information. We will identify production sites with potential risks
and then prepare specific countermeasures and carry them out.

Meiji Probio
Yogurt R-1 Drinkthat uses athinner plastic
bottle design

Financial and Non-Financial Section

Introducing Renewable Energy

Scope 1

Massive amounts of plastic garbage contaminating the oceans causing marine
pollution has become a global concern. The Meiji Group has been addressing the
problem of plastic debris littering our oceans. In the Food segment, we establishedthe Plastic Recycling Action Statement and are focusing on product designs that use
less plastic, such as lightweight or thinner plastic packaging, containers and bottles.
In addition, we are working with recycling companies to promote recycling for any
plastic waste generated from our production processes. Beyond that, we are cleaning
the riversides and coastal areas to reduce the plastic waste that flows into the oceans
and help protect the marine environment.

Water

SDGs for a Climate Change

Implementing countermeasures against global warming such as reducing CO2 emission volume are essential andurgent issues for businesses and companies. We have set long-term targets for FY2030 in the Meiji Group CSR 2026
Vision in order to do our part to help battle global warming. We are planning and carrying out a number ofenergy-saving measures at various stages in our operations to facilitate achieving a decarbonization.

Using renewable energy such as solar power helps
prevent global warming. The Meiji Group is using
renewable energy and has installed large solar panels at
the following locations: Osaka Plant and Aichi Plant inJapan (domestic Food business), and Santa Ana (CA) Plant
in the U.S. (Meiji America Inc.). The Group has plans to
introduce and expand our power facilities for renewableenergy at both domestic and overseas locations.

In order to preserve and protect the Earth’ s limited resources, we have adopted initiatives to reduce waste basedon the reduce, reuse, recycle (3Rs) approach. We are already enacting a range of environmental policies that spanthe entire lifecycle of the product from the design stage to the end-of-life stage.

Our Activities for Sustainability

There is The Group Environmental
Meeting, which is made up ofrepresentatives from our Food segment
and Pharmaceutical segment as well as
the CSR representatives from Meiji
Holdings Co., Ltd. Under this system,
the Meeting sets a long-term vision,plans specific measures as well as
carries out risk management, andessentially oversees the environmental
management for the whole Group.

SDGs for a Circular Economy

Our Value Creation Story

Environmental Management System

Circular Economy

The Meiji Group has been conserving water and is re-using and/or recycling water resources. For example, at someof our sites we engage in efficient water practices such as using rain water to flush toilets and re-using cooling water.

Paddy field flooding at KM Biologics Co., Ltd.
KM Biologics Co., Ltd. uses groundwater for production and waterlogs fields(saturate the soil with water) as part of a program to reduce the impact on theenvironment. We replenish and recharge the groundwater by diverting waterfrom the Shirakawa River nearby and flood the fields with water for about 3
months before planting crops. We have been doing this since 2005 and havebeen recharging approximately 500 thousand tons of ground water annually,
which is more than what is used at the head office and the Kumamoto Plant.

Flooded paddy field

Meiji Holdings Co., Ltd.｜Integrated Report 201943

Contents

Meiji Group’s Approach to CSR
Introduction

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 andrun our businesses while being respectful of the different cultures and customs. In addition, we will interact with local
communities as good corporate citizens and contribute to society.
SDGs for Human Resources

Human Resource Development Policy and System
WEB
Mission and Visionhttps://www.meiji.com/global/
about-us/mission-and-vision/

In order to develop personnel with the qualities and skills that the Meiji Group seeks, wehave an employee development system to promote growth in each employee as well as
career development based on our Basic policies for developing the capabilities of personnel.

Basic policies for developing
the capabilities of personnel
https://www.meiji.com/global/
sustainability/a_richer_society/human_resources/

Young
employees

Training for career track employees
Training for clerical workers

New
employees

Training for
new employees

Rank-based training
Objectives

Training for managers
with female subordinates
Globaltraining• Language training• e-learning• Training throughoverseas
assignments

Support to create individualcareer paths for women

Training for top management

Training fornext-generation
leaders

Training at business schooland external venues• Management school• Interaction with andexposure to other industries• Developing managers

Division-specific training:• R&D• Quality• Manufacturing technologies• Logistics• Sales• Marketing• Global• Admin• CSR• Information systems• MR

Training for Group company employees: New employees
Business management (fundamentals and practice)Self-development support: e-learning,
Open college, Distance learning,Video archives

Global training
Diversity management

Developing
next-generation leaders

Division-specific and group company training
such as self-development• Develop personnel to work overseas• Strengthen diversity management• Fostering innovation• Developing next-generation leaders• Developing next-generation managers• Raise the level of expertise specific to a division• Strengthen group companies• Self-development support

Employee-Friendly Workplaces
Work-style Reform
We believe it is our corporate responsibility to create a safe and healthy environment at the workplace. To achieve this, we are
creating a positive and comfortable work environment to promote a good work-life balance.

44

Improving long working hours

Encouraging employees to take paid leave

Promoting flexible work-style• Reporting and managing working hours appropriately• No-overtime days (once per week)• Improving productivity by implementing
a work-focus time strategy• More effective meetings to increase productivity• Streamlining work tasks at each workplace to improve efficiency• Encourage employees to take paid leave
for five consecutive days
• President advocates employees taking
consecutive paid leave• Schedule vacation at the beginning of the year
and share it at work
• Follow up with employees who do not take paid leave• Implement work-at-home programs and flextime system• Support male employees who wish to take childcare leave• Run programs to help employees continue
their jobs during life events• Expand applicable time periods to work
short shifts to accommodate childcare

Our Activities for Sustainability

CSR secretariat
Group Human Rights Meeting
Primary participants are CSR representatives from
Meiji Holdings Co., Ltd., Meiji Co., Ltd.,
Meiji Seika Pharma Co., Ltd. and KM Biologics Co., Ltd.

The Meiji Group has adopted the United Nations Global Compact. We have also implemented human rights initiatives based on
the Meiji Group Policy on Human Rights and encourage our employees and supply chain to follow suit. Before implementing thehuman rights due diligence, we finished identifying and assessing risks at each stage of the value chain for both the Food andPharmaceutical segments as part of an ongoing risk management process in FY2018.

Social Contribution Activities
Infant Formulas for National Council of Homes for Infants
As a leading company in infant formulas, we wanted to help promote healthy growthof infants and toddlers, and therefore we started donating Meiji Hohoemi in June 2019
to infant homes and orphanages nationwide through the National Council of Homes
for Infants. We donated more than 1,200 cans of Meiji Hohoemi (800 gram/can) to 135
facilities, and have plans to donate once more this year.

Donating to the Children’ s Future Support Fund
Poverty in children is a major social issue and it is said that 1 in 7 children under 17
years old lives in poverty (according to the Comprehensive Survey of Living
Conditions conducted in 2016 by Ministry of Health, Labor and Welfare). The Cabinet
Office earmarked measures against child poverty as a future investment. The office iscollecting donations from companies and individuals and other resources under theChildren’ s Future Support Fund and is also managing the Future Support Network Projectto support groups and organizations nationwide that help provide academic support
and food for children. The Meiji Group has pledged its support to this cause since2017 and donates every year to the Children’ s Future Support Fund.

Corporate Information• Train young employees• Develop promoted employees• Develop management skills

Group CSR Committee

Financial and Non-Financial Section

Training for newly
promoted managers
Training for promoted employees

Human Rights Management System

WEB Meiji Group Policy on Human Rights https://www.meiji.com/global/sustainability/policies/#Policies01_01

Skills Development StructureManagers

In FY2019, the Meiji Group launched an inter-organizational Group
Human Rights Meeting to address a broad range of human rights
issues concerning the overall Group. The meeting reviews issues
prioritized in the risk assessment of each business and weighs
specific preventive measures and mitigation strategies. Having
regular meetings will raise awareness of human rights throughout
the Group. We will also have a system in place to address various
issues domestically and abroad.

Implementing Human Rights Due Diligence
WEB

Human Resource Development

The Meiji Group Human Rights Meeting

Our Activities for Sustainability

Based on the meiji way Action Guidelines as noted in the Meiji Group's System of Principles,
we seek personnel who take the initiative in setting ambitious innovation-oriented goals. Further,
we want our personnel to be capable of drawing on their expertise and the Group’ s strength toachieve these goals.

As a company, it is our fundamental duty to ensure human rights are promoted and respected. Therefore, the Meiji Groupmanages its operations considering all of our stakeholders’ rights. To help build a richer society, we stay active in community
activities, providing emergency aid and support as well as providing our products to welfare facilities.

Respect and Promote Human Rights

On an organizational and individual level, we believe embracing diversity and maximizing the energy, skills and potential ofeach employee will help ensure sustainable growth for the Meiji Group. As a result, we focus on developing human resources
and improving a workplace environment to support this approach.

Working in the Meiji Group

SDGs for Society

Our Value Creation Story

Human Resources

Society

Infant home, Tokyo Keimei Gakuen Nyuji-bu

WEB Measures against child poverty- Children’ s Future Support
National Movement
https://www.kodomohinkon.go.jp(Japanese only)
Meiji Holdings Co., Ltd.｜Integrated Report 201945

Contents

Meiji Group’s Approach to CSR
Introduction

Sustainable Procurement

Policies & Plan

Partnership with Domestic Dairy Farmers to Ensure Stable Raw Milk Procurement

When procuring raw materials and basic ingredients for our corporate activities, the Meiji Group has established the Meiji Group
Procurement Policy in order to provide our customers with safe and reassuring high-quality products. Based on this policy, wealways consider fairness, transparency and compliance with laws and regulations, and take into account our corporate social
responsibility, including human rights and the environment.

Dairy farmers

SDGs for Procurement

Milk producers association

Milk plant

Cooler station

The Meiji Group takes into consideration human rights and the environment when procuring raw materials, such as cocoa,
palm oil and paper from suppliers and when performing supplier audits. In addition, the Group is involved in support programs
like Meiji Cocoa Support (see page 30 for details) and one for domestic dairy farmers to ensure the stable supply of cocoa and raw
milk. We are also helping improve food productivity by providing a stable supply of agricultural chemicals and veterinary drugs,
including research and development of environmentally benign drugs and chemicals (green chemicals).

Based on the Meiji Group Procurement Policy, the Meiji Group formulated Procurement Guidelines in September 2018 for cocoa,
palm oil and paper in order to ensure human rights and the environment are taken into consideration during the procurementof raw materials. We disclosed these guidelines on our website and disseminated them both inside and outside the company.
By working with our business partners, we ensure our procurement practices and those of our partners take into accounthuman rights and the environment.
WEB Meiji Group Procurement Policy https://www.meiji.com/global/sustainability/policies/#Policies01_03

Cocoa Procurement Guideline

Palm Oil Procurement Guideline
We joined the Roundtable on Sustainable Palm Oil (RSPO) in 2016. We will increase the amount of RSPO-certified palm oil andour goal is to use 100% of this oil by 2023.

Paper Procurement Guideline
For product packaging, containers, printing and copy paper and other paper-based materials, weare striving to use 100% paper raw materials from forests certified for sustainability practices(such as FSC®*) and/or from recycled paper by FY2020.

Initiatives for stableprocurement ofpremium quality
raw milk

Production sites

Research laboratory• Check feed and environment for breeding cows
• Hold seminars for the milk producers
association on raw milk flavor• Physical and chemical analysis of properties andingredients for maintaining and improving quality• Conduct taste assessment and disseminate
information• Technology development for more accurate andquicker inspections

Receiving at plants• Train taste testers and ensure thoroughincoming inspections

Support dairy farmers using our unique operations support for producers
In domestic dairy farming, there are concerns about the raw milk production baseweakening, and dairy farmers are having problems, such as a lack of labor force and/or
training that labor force. To address these issues, the Meiji Group is currently pouringresources into the Meiji Dairy Advisory (MDA), which is our own farm management
support program designed to help improve farms’ productivity.
The goals of the MDA are to increase work efficiency and to improve work
satisfaction for the employees. For management, the goals are to raise theDiscussion on production base support
productivity of the farm overall and to attract and secure good workers. To be more
specific, the Meiji Group has assigned specialized advisory staff and is creating asystem that provides continuous and various support. That support includes building a sense of ownership in each employee,
reducing waste or loss on the farm and standardizing work processes or tasks. Thanks to the help of the Meiji Feed Co., Ltd., ourGroup company who is building a close relationship with producers nationwide, this MDA initiative will be developed evenmore. Accordingly, we hope to secure sustainable dairy production by improving work on farms and developing management
skills.

Corporate Information* Forest Stewardship Council®

Direct delivery

Financial and Non-Financial Section

The Meiji Group complies with all the laws and regulations in the producing countries or regions, and ensures that the working
environment and conditions do not infringe on human rights and preserves local biodiversity. The Group also continues its
own farmer support program Meiji Cocoa Support, collaborates with the World Cocoa Foundation and engages in other cocoa
procurement activities that take into account human rights and the environment.

Raw milk
deliveryRaw
milk

Our Activities for Sustainability

Formulating and Disclosure of Procurement Guidelines

MDA is helpful in seeing management issues more clearlyUsing the FSC®-certified Paper and Displaying the Logo on Our Products

After participating in the Meiji Group’ s MDA program, I understand the importanceof standardization and feel comfortable delegating tasks to others. I have more freetime and can see the different management issues more clearly. At the same time, I
also feel more confident as a farm manager. Going forward, I hope that morefamily-operated dairy farms begin using MDA to strengthen the production base andimprove production efficiency.

Yosuke Tomita

Limited private company Kao-Tomita Farm,
Kumamoto prefecture

FSC® logo on
the back of Kinoko no Yama▼

Based on our Paper Procurement Guideline, we are striving to use 100%
paper raw materials from forests certified for sustainability practices(FSC®, PEFC) and/or from recycled paper by FY2020. Since FY2019, we
have been increasing the use of environmentally-friendly paper (such as
the one certified by FSC®) and recycled paper specifically in our productpackaging, containers, printing and copy paper as well as otherpaper-based materials. We will increase the visibility and familiarity of the
FSC® logo through our participation in the FSC® Forest Work 2019 (Jul –Sep) and by displaying the logo on our product packaging.

Raw milk delivery and quality control
Our Value Creation Story

Procurement

By closely working with dairy farmers, the Meiji Group is supporting stable and high quality milk production in order to deliver
our customers delicious and quality milk.

46

Our Activities for Sustainability

Meiji Holdings Co., Ltd.｜Integrated Report 201947

Contents

Directors and Audit & Supervisory Board Members(As of June 27, 2019)
Introduction
Our Value Creation Story
Our Activities for Sustainability
Financial and Non-Financial Section

Audit & Supervisory
Board Member (Outside)

Member of the Board andManaging Executive Officer

Member of the Board(Outside)

Member of the Board(Outside)

Audit & Supervisory
Board Member (Outside)

Member of the Board andSenior Managing Executive Officer

Member of the Board(Outside)

Member of the Board andManaging Executive Officer

Audit & Supervisory
Board Member

Hiroyuki Tanaka

Hajime Watanabe

Koichiro Shiozaki

Tomochika Iwashita

Mariko Matsumura

Makoto Ando

Michiro Saza

Tohru Murayama

Jun Furuta

Mineo Matsuzumi

Our Activities for Sustainability

Member of the Board

President andRepresentative Director

Chairman and
Representative Director

Member of the Board

Katsunari Matsuda

Kazuo Kawamura

Masahiko Matsuo

Daikichiro Kobayashi

Meiji Holdings Co., Ltd.｜Integrated Report 2019

Corporate Information

48

Audit & Supervisory
Board Member

49

Contents

Introduction

Responsibilities of Members of the Board andAudit & Supervisory Board Members (As of June 27, 2019)
Members of the Board
Attendance at meetings (FY2018) Number of years

Number of
the Company’ sshares held (Shares)

Name

Positions and areas of
responsibility in the Company

Masahiko Matsuo

Chairman and Representative Director
Chairman and Director, Meiji Seika Pharma Co., Ltd.
Chairman and Representative Director, KM Biologics Co., Ltd.
Member of Nomination Committee
Member of Compensation Committee

16 /16

10 years

26,396

Kazuo Kawamura

President and Representative Director
Member of the Board, Meiji Co., Ltd.
Member of the Board, Meiji Seika Pharma Co., Ltd.
Chairperson of Nomination Committee
Chairperson of Compensation Committee

16 /16

7 years

31,246

Michiro Saza

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

16 /16

7 years

12,455

Koichiro Shiozaki

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

16 /16

4 years

sharesJun Furuta

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

15/16

5 years

sharesDaikichiro Kobayashi

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

16 /16

5 years

shares

Katsunari Matsuda

Member of the Board
President and Representative Director, Meiji Co., Ltd.

12 /12*

1 yearsharesBoard of Directors

as Member ofthe Board

Main expertise and backgroundManagement
strategies

Globalbusiness

Sales
MarketingIT

Accounting

HR

Legal
affairs

Corporate
communication

sharessharesOur Value Creation Story

shares

9,906

3,966

Our Activities for Sustainability

9,334

7,298

Career summary
Member of the Board (Outside)
Independent director
Member of Nomination Committee
Member of Compensation Committee

16 /16

3 years

Tohru Murayama

Member of the Board (Outside)
Independent director
Member of Nomination Committee
Member of Compensation Committee

16 /163

years

sharesMariko Matsumura

Member of the Board (Outside)
Independent director
Member of Nomination Committee
Member of Compensation Committee

12 /12*

1 year65

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.

723

shares

Ex-Representative Director and President andEx-Director and Chairman, Accenture Japan Ltd.
Visiting Professor, Faculty of Science and Engineering,
Waseda University

530

Financial and Non-Financial Section

OutsideTomochika Iwashita

Attorney at Law
Outside Audit & Supervisory Board Member,
Adastria Co., Ltd.

shares* Attendance since appointment to Member of the Board on June 29, 2018

Audit & Supervisory Board Member
Attendance at meetings (FY2018)

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 Co., Ltd.

16 /1615 /152 years

sharesHiroyuki Tanaka

Audit & Supervisory Board Member

16 /1615 /152 years

sharesBoard of Directors Audit & Supervisory Board

Main expertise and backgroundManagement
strategies

Globalbusiness

Sales
MarketingIT

Accounting

HR

Legal
affairs

Corporate
communication

3,152

Corporate Information

6,973

Career summary

OutsideHajime Watanabe

Audit & Supervisory Board Member(Outside)
Independent director

16 /1615 /15

6 years―

Makoto Ando

Audit & Supervisory Board Member(Outside)
Independent director

16 /1615 /152 years

800

shares

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

Certified Public Accountant
Unaffiliated Auditor,
Nippon Concrete Industries Co., Ltd.

WEB Governance https://www.meiji.com/global/investors/governance/
50

Our Activities for Sustainability

Meiji Holdings Co., Ltd.｜Integrated Report 201951

Contents

Three Outside Directors Discuss the Meiji Group
Introduction
Our Value Creation Story

Attorney at Law (Shinwa Sohgoh Law Offices)
Outside director

Mariko Matsumura

Outside director

Outside director

Tohru Murayama

Tomochika Iwashita

Achieve sustainable growth by staying on track in 2026 VisionMatsumura It was the first fiscal year of the 2020
Medium-Term Business Plan last year. Despite increased
sales and profits, the Group did not reach the initial
targets. And, the results fell short of the stakeholders’expectations.

52

Our Activities for Sustainability

Murayama Of course, emphasis on businessperformance for each fiscal year is important. However,achieving sustainable growth is key for the Meiji Group.
For this reason, we established the Meiji Group 2026
Vision (the 2026 Vision). I believe that we, as outside
directors, should monitor and ensure that the MeijiGroup manages its businesses in line with this Vision.
In the Food segment, strengthening the marketing

MatsumuraI started working as an outside director
for Meiji Holdings Co., Ltd. a year ago. In the Board
meetings, the directors are quite active in thediscussions, and I was surprised to see how themeetings always went beyond the scheduled time
period. I feel that the exchange between all the directors
is frank, which makes the discussions very fruitful.

As the Meiji Group progresses into the 2nd stage of management integration,
the Co-Creation Center stands out as a symbol
Iwashita
I have high expectations for the
Co-Creation Center, which was the research laboratory
established in April 2019. Since the 2026 Vision wasestablished, I suggested that One of Meiji’ s biggest
advantages is having both Food and Pharmaceuticalsegments. Integrating or combining these segments would
produce tremendous value. Establishing the Co-Creation
Center was a major step in our strategy to combine
resources and realize synergy.

management integration. We successfully created a
new management system in the 1st stage, merging two
management departments to reinforce that new
system, which was well received in the stock market.
Now in the 2nd stage, both the Food andPharmaceutical segments must be combined to create
a new business platform. The Co-Creation Center is a
stepping stone and embodies the 2026 Vision’ s slogan
Beyond meiji.

Murayama I think that the Co-Creation Center has
great appeal and should be publicized more. It is asymbol of Meiji’ s progress into the 2nd stage of

Matsumura International business will also be an
important topic for the Meiji Group. From discussions in
the Board meetings I believe that there is a lot of room
Meiji Holdings Co., Ltd.｜Integrated Report 2019

Corporate Information

I understand that is because the
Iwashita
performance of the Food segment slowed down. On
the other hand, the Food segment also underwent
major reform. The marketing organization wasrestructured, and it is now rearranged according tofunction rather than by business segment. This move
was made to better communicate Meiji’ s unique value
to the customers. Once all employees have a clear
understanding of the reform’ s goal and manage thebusiness accordingly, then it should certainly lead to

substantial results.
Despite a tough business climate, thePharmaceutical segment exceeded the targets andrecorded an increase in sales and profits. This segment
offers an array of unique advantages. When the Group
uses these strengths and acts more quickly, I believe theGroup can grow steadily.

been involved in formulating the 2026 Vision. We will
check to ensure that the Group does follow the pathand policies in the 2026 Vision.

Financial and Non-Financial Section

Meiji Holdings Co., Ltd. welcomes three outside directors with different
specializations to the Board to strengthen the function of the Board of Directors andto establish more effective corporate governance. Here, Mr. Tomochika Iwashita, Mr.
Tohru Murayama and Ms. Mariko Matsumura discuss the issues to achieve the MeijiGroup 2026 Vision targets and provide insight on resolving those issues.

is vital in order to further expand the new markets that
the Group carved out. In light of this, the Group carriedout this radical organizational reform. I believe that thisrestructuring is a well-regarded move . In addition, we
are working toward reforming the business structure in
the Pharmaceutical segment. While the direction of thisrestructuring is clear, the key issue is how do weaccelerate this process.
Currently, I believe that both segments areoperating their business following the course that is
mapped out in the 2026 Vision. Mr. Iwashita and I have

Our Activities for Sustainability

Achieving Targets in the Meiji Group 2026 Vision

53

Contents

Three Outside Directors Discuss the Meiji Groupneed to overcome the inter-organizational, businessand regional obstacles. For the future, it is critical to givethese types of opportunities to the next generation ofmanagement and challenge them. By assigning themprojects that need inter-organizational collaboration,

Murayama I think the Meiji Group should actively
publicize its approach on international business in themarket so that investors understand the Group’ s
strategy.

Matsumura I have heard that becoming morediverse was one of the top business priorities since I
joined the company. Recently, I have been focusing
more on this topic. For example, the current ratio of
female managers is 3 to 4%, and I think the presence of
women is a little behind. It is imperative to have adiverse staff, including people from other countries, inorder to support the different tastes of consumers andthe globalization of business. What we face now is how
we accelerate the Group to be more diverse.

abreast of the progress and improvements they make intheir corporate governance.

Murayama The Meiji Group can achieve sustainablegrowth by following the 2026 Vision and revising thatstrategic plan when necessary. So a succession planshould be linked with it.
In addition, in order to achieve the 2026 Vision, we
54

Our Activities for Sustainability

Murayama I think that the Meiji Group is quite
popular among students who are looking for jobs andhas a strong chance of hiring excellent and capable
young workers. That is why we must not follow
conventional trends with a low ratio of female
employees. Hence, currently the Group is trying toboost female staff systematically, which also translates
into promoting female employees. I hope that we canhelp the female employees to achieve their potential
and become a leading company in the industry.
Matsumura In terms of a work-life balance, the MeijiGroup has incorporated systems such as a flextime
system and a telecommuting system. It would be niceto offer a flexible working style and become a modelcompany for society.
Iwashita
I think that there should be more active
exchange between the Food and Pharmaceuticalsegments. This is also part of our strategy to promote
diversity in workplace. When employees with different
backgrounds work together, it can have a tremendous
impact. I believe certain stress can be an opportunity for
growth. Personnel will learn and grow when they arechallenged to view their own organization or
department more objectively from the outside.
With regard to sustainability, the Group is steadilybuilding up its activities one step at a time through its
main businesses in Food and Pharmaceuticals.

Matsumura Providing opinions from a woman’ s
point of view, I would like to help improve the corporate
value of the Meiji Group. In particular, I can provide a
different take on issues at the workplace. Also, I am
happy to make suggestions as a consumer tocontribute to our business and products.
For the future growth of the Meiji Group,
Iwashita
I believe each employee should always keep the 2026
Vision in mind, and try to work hard almost with a senseof urgency. I will monitor the progress and check for any
deviation or delays, and then report back to the MeijiGroup as necessary.

Corporate Information

Iwashita
The other day, a practical succession
plan was developed. A pending topic over the last few
years was creating a system to screen and selectdirectors, which was finally established. However, first,
we have to focus our efforts in developing potential
candidates for the process leading up to the succession
plan. One thing that the Meiji Group needs for further
growth is to continue to innovate. Innovation means
accumulating various expertise and skills to produce
something new that changes society. Fostering suchinnovation is a vital topic among management. And, I
think a system that develops the next generation ofmanagement early on is a part of that succession plan.

Murayama I think that nowadays the company’ sefforts toward sustainability are directly linked to thecorporate brand value. I am afraid that the current
activities may be lacking from the viewpoint of abranding strategy. We should integrate the meiji way
into our efforts for sustainability. I do hope that eachand every employee learns about the essence ofsustainability and not only participates in activities but
strives for a higher level.

Financial and Non-Financial Section

Matsumura I think that the Meiji Group has aheightened sense of corporate governance. Revising
the Corporate Governance Code made its way quickly
to the Board meeting discussion. There has been a very
active Q&A on the corporate governance of KM
Biologics Co., Ltd., which became part of the Group last
July. All the outside directors visited KM Biologics Co.,
Ltd. last year, and we have had frequent reports fromtheir president in the Board meetings. We are keeping

The Meiji Group should be a leading company for diversity and sustainability

Our Activities for Sustainability

Fostering the next generation of management early on is an important issue

we will train and educate the next generation ofmanagement and broaden their minds. The newly
established Co-Creation Center is a platform where
personnel can gain that experience, and we are hopingthat this center will be a training ground for them.

Our Value Creation Story

Murayama The scale and growth rate of theinternational business may be a little lagging from theperspective of external stakeholders. As outside
directors, we have brought up this point many times.
However, recently I have tried to see this from adifferent perspective.
Since the Meiji Group deals with food products, as aJapanese company it should provide high quality andsafe products to the customers. The Group tries very
hard to deliver products with added value that are both
attractive and delicious to the market. That is the meiji
way and by sticking to this approach, the Group hasgrown enormously in Japan. I know it is important toachieve rapid growth in the international business. But I
also understand that maintaining the meiji way at eachlocation is important. We should balance thesestrategies to optimize international businessdevelopment.

My impression of the Meiji Group’ s
Iwashita
business approach can be described as very devoted
and methodical. The Group does what needs to bedone one task at a time, carefully building up anddeveloping the business. The Group is using this same
approach to develop the international business. Even
though it may take time, it should lead to a successful
business in the long run.

Introduction

for growth in international business. The Food businessin China has continued to grow steadily. I understandthat the Group wants business in China to maintainsteady growth while keeping a close eye on food safety,
rather than just following the market’ s momentum.

Murayama As an outside director, I always question
myself to make sure I have not lost my ability to see
things in a fresh and different way. And to help theGroup stay on track in the 2026 Vision, I will be sure to
draw attention to anything that comes to mind or
anything I see.
Meiji Holdings Co., Ltd.｜Integrated Report 201955

Contents

Corporate GovernanceDirector Remuneration
Groupwide management strategies, create an optimal
operating structure, and oversee the business managementof each company. Responsibility for operational execution isdelegated to the operating companies appropriately. Within
the Group, oversight and execution of business management
are separated.
Accordingly, the Group has established and operates a
corporate governance system including a Board of Directors.
Meiji Holdings Co., Ltd. is a company with Audit & Supervisory
Board members. Oversight by the Board of Directors andauditing by the Audit & Supervisory Board enhance theobjectivity and transparency of the business management.
WEB

Corporate Governance System (As of June 27, 2019)

Corporate Governancehttps://www.meiji.com/global/investors/governance/
corporate-governance/

General Meeting of Shareholders
Election, Dismissal

Election, Dismissal

Board of Directors

Audit & Supervisory Board
Audit & Supervisory
Board Members: 4

Directors: 10
Nomination Committee(Including Outside Directors: 3)

Appointment, Dismissal,
Supervision

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

President andRepresentative Director

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

Election, Dismissal

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

Collaboration

Audit Department

Executive Committee

Collaboration

Internal Audit

HR & General
Affairs Department

PR &IR Department

Group Companies

Targets FY2017¥1.261 trillion

Results fromprevious year (FY2016)¥94.5 billion¥1.24248 trillion ¥88.395 billion

The calculated compensation is then decided by the
Board of Directors based on a recommendation from theCompensation Committee, which is made up of at least 3
members with a majority of independent outside directors.

Information is disclosed such as the total amount of remuneration for each type of director, the total
amount for each type of compensation and the number of officers that are paid. In addition, the individual
remuneration is disclosed for any director who has a total compensation of JPY 100 million or higher.
The details of the remuneration for each type of director during FY2018 are as follows.

Accounting Audit
Internal Control Audit

Monetary Compensation(As of June 27, 2019)

Total
Amount ofRemuneration

Content

Basic views on corporate governance
Organization Form
Directors Term of Directors
Chairperson of the Board
Number of Directors (including Outside Directors)
Number of Board of Directors meetings
Attendance of Outside Directors at Board of Directors meetings
Number of Audit & Supervisory Board Members(including Outside Auditors)
Attendance of Outside Auditors at Board of Directors meetings
Audit &
Principal meetings auditors attend
Supervisory
Board

EstablishedCompany with Audit & Supervisory Board
1 yearPresident
10 (3 Outside Directors, including one female Director)
16 times (FY2018)
100% (FY2018)

Number of Audit Committee meetings
Attendance of Outside Auditors at Audit Committee meetings
Election of Independent Director
Accounting Auditor
Audit department (internal auditing)

15 times (FY2018)
100% (FY2018)
5 (3 Outside Directors, 2 Outside Audit & Supervisory Board members)
Ernst & Young ShinNihon LLC
Audit Department

Our Activities for Sustainability

Results (FY2017)

4 (2 Outside Auditors, including one female Auditors)
100% (FY2018)
Board of Directors, Executive Committee*, Audit & Supervisory
Board, Audit Department Liaison Meeting, and others* Attended only by full-time members of Audit & Supervisory Board

Stock Compensation

Base Compensation

Performance-linked
Compensationof
Total Amount Number
OfficersofTotal Amount Number
OfficersofTotal Amount Number
Officers

Directors(other than outside directors)¥396 million¥204 million

8¥143 million

6¥49 million

6

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

2

—

—

—

—

Member of the Board (Outside)¥43 million¥43 million

4

—

—

—

—

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

2

—

—

—

—

Total

¥522 million¥329 million

16¥143 million

6¥49 million

6

Corporate Information

56

Consolidated
Consolidated
Net Sales
Op. Income¥1.24086 trillion ¥94.673 billion

Breakdown of Director Remuneration (FY2018)

Co-Creation
CenterCorporate Governance Data
Items related to corporate governance

The remuneration of internal directors in the Company iscomprised of three components: 1. Base compensation,
which is fixed according to the position and responsibilities,
2. Performance based compensation as a short-term
incentive, which is assigned according to the Company’s
and individual’s performances from the prior fiscal year,
and 3. Stock compensation as a medium- to long-term
incentive, which is based on the Company’s stock pricemovement. The base compensation and performancelinked compensation are paid out in cash, and stockcompensation is allocated as restricted stock. Note thatthe fixed (base) compensation and variable compensation(performance-linked compensation and stockcompensation) have an approximate 6:4 ratio of the overall
remuneration. The variable compensation is designed 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
within a general range that is decided at the General
Meeting of Shareholders. The amount is calculated basedon an evaluation of the company’s performance and theindividual’s performance, while referencing the standard
compensation level at other companies provided by an

Financial and Non-Financial Section

Financial & Accounting
Department

external research agency.
The metrics of company performance are consolidated
net sales and consolidated operating income, which
represent milestones on the path to achieving the MeijiGroup 2026 Vision. Performance-linked compensationreflects how well the Company met its targets for these
two metrics, how well it performed in these metrics
compared to the previous year, and how well the relevant
director performed. The higher-ranked a director is, themore the company performance metrics count toward
performance-linked compensation relative to the director’s
performance. The performance-linked compensation for
the two top executives (the Chairman and Representative
Director and the President and Representative Director) isbased entirely on the two metrics.
The following table shows the operating results used
to calculate the performance-linked compensation paid in
FY2018.

Our Activities for Sustainability

Meiji Holdings Co., Ltd.

Audits Conductedby Audit &Supervisory
Board Members

Policy on Determining Remuneration
Amounts and Calculation Methods

Our Value Creation Story

As a corporate group in the Food and Health fields, the MeijiGroup's goal is to continue finding innovative ways to meet
our customers' needs, today and tomorrow. In this way, we
aim to achieve sustainable growth and increase corporate
value over the medium to long term. We are working towiden the world of Tastiness and Enjoyment and meet all
expectations regarding Health and Reassurance in order tobrighten our customers' daily lives.
The basic approach to management of the Group is 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 to advance

Corporate Development
Department

Introduction

Basic Views(Notes) 1. As per the resolution of the 1st Ordinary General Meeting of Shareholders held on June 29, 2010, the amount of remuneration for directors is capped
at JPY 1 billion per year (not including the employee portion of remuneration for directors who concurrently serve as employees).
2. As per the resolution of the 1st Ordinary General Meeting of Shareholders held on June 29, 2010, the amount of remuneration for Audit & Supervisory
Board members is capped at JPY 300 million per year.
3. We have introduced a transfer-restricted stock compensation plan for directors other than outside directors. As per the resolution of the 8th Ordinary
General Meeting of Shareholders held on June 29, 2017, the amount of remuneration under this plan is capped at JPY 200 million per year.
4. The total stock compensation is the amount recorded as an expense in the fiscal year being reported.
Meiji Holdings Co., Ltd.｜Integrated Report 201957

Contents

Risk Management

Corporate Governance

1. Method for analyzing/evaluating how
effectively the Board functioned in FY2018

58

Our Activities for Sustainability

Management System
The Meiji Group has risk management systems in placethat are appropriate for both the Food and Pharmaceuticalbusinesses. To help identify risk factors* in our businesses,
we conduct regular information sharing in a threecompany committee structure, which includes Meiji
Holdings Co., Ltd., in order to detect risk early on. We also
address other issues and review our support.
※

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 mission to
supply necessary pharmaceuticals and food 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 Meiji Group sees
these types of changes in the economic or social climate
as growth opportunities that enable us to continue finding
innovative ways to meet our customers’ needs, today andtomorrow.
See p.12 for the “Meiji Group 2026 Vision”
and p.36 for the “Meiji Group CSR 2026 Vision.”

WEB See the “Securities Report (FY2018)” on p.16.
(Japanese only)
https://www.meiji.com/investor/library/securities/2019/
pdf/securities_2019_04.pdf

Compliance
Basic Views
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 Charter andwork to improve internal training. We conduct businessholding ourselves to high ethical standards and shallcontinue to develop to be a company trusted by society.

Management System
The Meiji Group has Compliance Regulations as well as
related rules and committees in place, and also uses aninternal reporting system.
At Meiji Co., Ltd., our approach uses the risk
management and compliance in close conjunction
with one another, and we have a Compliance & Risk
Management Committee to promote a variety of activities
and programs. We promote activities to nurture andfoster compliance awareness so as to ensure complianceis the cornerstone of our operations and to ensure those
operations are conducted fairly and faithfully.
Meiji Seika Pharma Co., Ltd. has established theCompliance Program Guidelines and the Meiji Seika Pharma
Code of 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 inaccordance with high ethical standards.
The KM Biologics Co., Ltd. joined the Meiji Groupin July 2018 and has initiated the Winning Back Trust
project in order to raise compliance awareness among
workers on site. We implemented a structural reformin order to strengthen the auditing function, ensure
independent auditing, clarify responsibilities and authority
by introducing Meiji-style plant management systems andclarify the reporting and communication routes. These
reforms will help the organization identify and address
issues early on. As a new member of the Meiji Group, we
will establish compliance system with higher standards.

Meiji Holdings Co., Ltd.｜Integrated Report 2019

Corporate Information

According to members' self-evaluations and Board meeting
records, the Board is operating effectively.
Issues identified last fiscal year:• Systematize succession planning and develop a
procedure and operational method• Establish criteria for including/excluding topics in theagenda• Manage Board meetings effectively.
These issues were addressed appropriately and the Board
has become more effective.
This evaluation also highlighted some issues fordiscussion in the Board meetings:• Ensuring steady progress of the development policy forour succession planning• Improving the quality of meeting materials andpresentations.

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 Food and
Health fields is to have systems in place to ensure a stablesupply of pharmaceuticals, infant formulas and enteral
formulas is delivered even in times of emergency.

Financial and Non-Financial Section

2. Results of analysis/evaluation

The Nomination Committee recommends theappointments and dismissals of top executives. This
committee is comprised of at least three members, and the
majority are independent outside directors. The members
have a say in the succession planning.
After celebrating our 100th anniversary, the Meiji Group
created a new long-term business plan, the Meiji Group
2026 Vision. Due to the importance of succession planningfor our top executives as per our Corporate Governance
Code and in order to achieve this Vision, we established aset of Leadership Values for our executives. These standards
were reviewed by both the Nomination Committee andthe Board of Directors before being adopted by the latterin January 2018.
In order for Meiji Group executives to lead the Group
toward achieving its vision, we believe it is critical for themto instigate change and lead reform efforts. The Leadership
Values identify ten leadership qualities from the 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 characterIn addition, the development policy for our succession
planning was discussed and decided in the Board meetingin March 2019 as recommended by the Nomination
Committee.
Candidate screening and nomination for the nextpresident of the Company and major group companies areto be discussed in the Nomination Committee.
We will identify and develop new leaders based on
the criteria listed in the succession planning, specificallyby selecting leadership candidates, building their careers
strategically, and building a talent bench.

Strengthening Our Business Continuity
Planning (BCP)

Our Activities for Sustainability

In May 2019, we analyzed/evaluated how effectively
the Board of Directors functioned in FY2018 in line with
our own corporate governance guidelines, which weestablished in October 2015. We used a self-assessment
survey questionnaire (prepared by the Board’s secretariat)
to collect feedback from each director and each memberof the Audit & Supervisory Board.
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.

Basic Views

Our Value Creation Story

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

Succession Planning

Introduction

Evaluation of
the Board of Directors

59

Contents

Financial and Non-Financial Highlights (10 Years Summary)Financial information
For the fiscal year:

Segment（Overseas）

FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2018

Unit *1

Millions of yen—

1,126,520
1,001,551

1,148,076
1,015,265

1,161,152
1,021,806

1,223,746
1,061,398

1,242,480
1,082,115

1,240,860
1,073,655

1,254,380
1,056,637

11,301,744
9,520,177

Thousands of U.S. dollars

Food

1,109,275
986,319

Pharmaceuticals

Millions of yen—

124,202125,274

127,361

135,105

141,338

164,542

161,620

168,466

198,688

1,790,151

Thousands of U.S. dollars

Food

Millions of yen

—

—

—

—

29,097

29,41838,35338,191

43,47447,182425,110

Thousands of U.S. dollars

Pharmaceuticals

Millions of yen—
381,234—
370,774—
382,684

17,32523,961

41,961

38,731

39,485 *13

41,009369,489

Thousands of U.S. dollars

394,062

403,386

445,561

461,326

454,882456,569

4,113,607

Thousands of U.S. dollars

Thousands of U.S. dollars

Gross profit

Millions of yen—
371,970

Operating income

Millions of yen

28,78628,873

20,18925,85936,496

51,54377,781

88,395

94,673

98,383

886,416

Thousands of U.S. dollars

Profit before income taxes
Profit attributable to owners of parent

Millions of yen

24,10013,08817,925
9,552

14,588
6,805

25,214
16,646

33,687
19,06048,65730,891

95,21062,58089,19260,786

91,07961,27894,586
61,868852,205
557,421

Thousands of U.S. dollars

Capital expenditures *2
Research and development costs

Millions of yen

40,511
23,41838,32423,82337,66826,19947,03826,06764,347
26,10542,35427,30850,417
26,162

71,77726,507

71,24329,182641,889
262,930

Thousands of U.S. dollars

Millions of yen—
22,693

Depreciation *3

Millions of yen

39,087

41,34540,87140,821

40,972

41,88542,07745,872

46,511

43,033

387,724

Thousands of U.S. dollars

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

47,70757,99530,59750,622

63,84786,487105,155

81,888

108,775

112,100

1,010,008

Thousands of U.S. dollars

Net cash used in investing activities (B)Millions of yen(33,641)(32,440)(44,314)(39,504)(47,293)(92,822)(9,809)(44,291)(64,394)(100,202)(902,803)

Thousands of U.S. dollars

Net cash used in financing activities

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

4,861(9,411)(18,194)

6,846(85,071)(46,548)(40,121)(13,980)(125,961)

Thousands of U.S. dollars

Free cash flow (A+B)

Millions of yen

14,06625,555(13,716)

11,11816,553(6,335)

95,346

37,59744,38011,898107,205

Thousands of U.S. dollars

Total assets

Millions of yen

730,044716,368

749,985785,514

779,461

877,367

856,115883,895

927,544

1,004,143

9,047,153

Thousands of U.S. dollars

Interest-bearing debt

Millions of yen

199,400

192,810205,261

205,394

198,376

221,480

147,828

129,497

119,102116,385

1,048,611

Thousands of U.S. dollars

Shareholders’ equity

Millions of yen

289,886

287,782

291,589

313,383

320,447

370,341

408,874

448,901

487,310527,3104,750,975

Thousands of U.S. dollars

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

Yen

88.87
1,966.53

64.82
1,953.18

46.19
1,979.12

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

426.61
3,635.79

3.843
32.757

U.S. dollars

Cash dividends

Yen

40.00
2.3

40.00
5.5

40.00
6.0

50.00
8.9

90.00
16.1

110.0014.2

130.0013.1

140.0012.2

U.S. dollars

%

40.00
3.3

1.261

Return on Equity (ROE)

40.00
4.6

Return on Assets (ROA)
Equity ratio

%
%

3.9
39.7

4.2
40.2

3.0
38.9

3.8
39.9

5.0
41.1

6.5
42.2

9.4
47.8

10.2
50.8

10.6
52.5

10.3
52.5

Payout ratio

%

45.0

61.7

86.6

35.4

30.9

23.8

21.2

26.6

30.8

32.8

—

—

48.4

52.4

58.2

56.8

56.7

23.6
28.7

23.0
27.4

22.8
28.2

—

—

—

—

—

—

—

Millions of yen

Yen

Thousands of U.S. dollars

Thousands of U.S. dollars

Our Activities for Sustainability

Ratios

FY20101,114,095
988,854

Our Value Creation Story

Per share data *4

FY20091,106,645

Net sales
Segment

At fiscal year-end:

Unit
Millions of yen

Introduction

Consolidated Balance Sheet

U.S. dollars

Non-financial information
CO2 emission volume

Japan

Asia *9
The U.S. andEurope *10
Water consumption
volume10,000 t- CO 2

Scope3 *7

10,000 t- CO 2

Scope1

10,000 t- CO 2

Scope2

10,000 t- CO 2

Scope1

10,000 t- CO 2

Scope2
Scope1

10,000 t- CO 2

Scope2

10,000 t- CO 2

—

—

—

—

4.1

—

—

—

—

—

—

6.1

—

—

—

—

—

—

2.9

318.9

0.3

0.5

3.5

3.0

2.5

1.5
5.3

1.3
5.5

1.1
5.2

1.4

1.6

1.9

0.9

0.9

0.8

—

23,67422,902

22,723

20,14824,375

24,10422,30522,0561,000 m3

—

—

—

—

—

—

—

—

1,192

878

1,000 m3

—

—

—

—

—

—

—

—

511

487

1,000 m3

—

—

—

—

—
20,566—
16,504—
21,214—
20,25562

1,000 m3—
20,864

74

Japan *11—
21,652

17,914

19,702

Overseas Mainland China *8
Asia *91,000 m3

—

—

—

—

—

—

—

—

—

696

3

1,000 m

—

—

—

—

—

—

—

—

—

141

1,000 m3

—

—

—

—

—

—

—

—

—

47

—

—

21.3

25.8

25.6

25.3

24.9

24.5

24.0

24.6

—

—

4.4

8.1

7.2

7.4

7.6

5.4

6.3

6.2

Japan *12

Fuel oil conversion:
10,000 kl

Industrial Waste Volume

Japan *12

10,000 t

U.S. dollar amounts are provided solely for the convenience of readers based on an exchange rate of US$1 = ¥110.99, the exchange rate prevailing on March 31, 2019.
Figures for capital expenditures represent property, plant and equipment and intangible fixed assets based on the consolidated statement of cash flows.
Figures for depreciation represent property, plant and equipment and intangible fixed assets based on the consolidated statement of cash flows.
A 2-for-1 common stock split was issued on October 1, 2015. This value was retro-actively applied.
Net assets per share = (Total net assets – Non-controlling interests) ÷ (Number of shares of common stock issued – Number of shares of treasury stock)
The domestic Meiji Group. Data was revised from FY2013 retroactively. The Kumamoto plant for KM Biologics Co., Ltd. was added and included in the calculation from
FY2018.

Financial and Non-Financial Section

*7

*8
*9
*10
*11
*12
*13

Category 4 (Upstream transportation and distribution) and Category 9 (Downstream transportation and distribution) have been added and are included in thecalculation for Scope 3 from FY2018. In addition, the calculation for Category 1 was expanded to include the raw materials that make up the majority of what is needed
for production. Note that the Kumamoto plant for KM Biologics Co., Ltd. was added and included in the calculation.
Five production plants Data was revised retroactively because the scope of the calculation was changed.
Four production plants Data was revised retroactively because the scope of the calculation was changed.
Three production plants Data was revised retroactively because the scope of the calculation was changed.
Meiji Co., Ltd. and Meiji Seika Pharma Co., Ltd. up until FY2014, and the domestic Meiji Group from FY2015.
The Kumamoto plant for KM Biologics Co., Ltd. was added and included in the calculation from FY2018.
Meiji Co., Ltd. and Meiji Seika Pharma Co., Ltd. in FY2011, and the domestic Meiji Group from FY2012.
The standard used for calculating the overseas sales was revised from FY2017.

Meiji Holdings Co., Ltd.｜Integrated Report 2019

Corporate Information—

Overseas Mainland China *8
Asia *9

Energy consumption
volume

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

—

203.5

1,000 m3

The U.S. and Europe *1060

10,000 t- CO 2

—

—
0.5

Japan *11

The U.S. and Europe *10
Total water
discharge volume

10,000 t- CO 2

Financial and Non-Financial Section

Overseas Mainland China *8

Scope1 *6
Scope2 *6

61

Contents

MD&A (The Management Discussion and Analysis)

Net Sales

Cost of Sales and Selling, Generaland Administrative Expenses
Gross profit ratio for FY2018 was 36.4% (down 0.3
percentage points year on year), a slight dip from theprevious fiscal year. We worked on cost reduction for all
Group companies. However, the cost of sales rose, primarily
due to a deteriorating sales mix in the Food segment anddue to the impact of the NHI drug price revision in the
Pharmaceutical segment.
Selling, general and administrative (SG&A) expenses
came to JPY 358.1 billion (down 0.6% year on year). After
breaking down the SG&A, the carriage and storage charges
increased to JPY 48.1 billion (up 4.2% year on year). The
sales promotion and advertising expenses decreased to
JPY 122 billion (down 8.7% year on year). In each business,
we worked toward cost control for sales promotion andadvertising expenses in order to cover the rising laborand logistic costs. On the other hand, R&D costs came to
JPY 29.1 billion (up 10.1% year on year). The consolidationof KM Biologics Co., Ltd. increased R&D costs in the
Pharmaceutical segment.

Operating Income and Profit Attributable to
Owners of Parent Company
Operating income came to JPY 98.3 billion (up 3.9% year
on year) with an operating income ratio of 7.8% (up 0.2
percentage points year on year). Analysis of consolidated
operating income is shown in the waterfall chart below.

Financial and Non-Financial Section

Net sales

FY2018FY2017

Change from theprevious fiscal year

1,061.3

1,082.1

1,073.6

1,056.6-1.6%

Cost of sales

700.6

701.4

703.3

698.9

-0.6%

Gross profit

360.7

380.7

370.3

357.7

-3.4%

Selling, general andadministrative expenses

292.4

297.7

286.1

272.9

-4.6%

(Carriage and storage charges)

45.1

46.9

43.9

45.7

+4.1%

(Sales promotion expenses)

124.7

124.6

117.4

105.6

-10.1%(Labor cost)

55.7

55.5

56.1

57.0

+1.5%

Operating income

68.2

82.9

84.1

84.7

+0.7%

Net sales decreased year on year. Net sales of Processed
Food business, Nutrition business, and Overseas businessincreased year on year. Net sales of Fresh and Fermented
Dairy business decreased year on year due to decrease insales of functional yogurt. Net sales of the Confectionery
business decreased year on year due to the change in our
Net Sales (Left scale)Fresh and(Billions of yen) Fermented Dairy
400
300

100

47.8

4.3
7.4

0

FY2017 FY2018

Nutrition
14.8

14.5

174.1

52.0

Confectionery
16.7

338.5 330.1
15.4
14.5

200

Operating Income Ratio (Right scale)Operating Income (Left scale)

Processed Foodcommercial transaction system and the cut in the sales
area for the savory snack.
Overall operating income was largely unchanged year on
year. Sales of functional yogurt decreased, but this wascompensated for by reducing net content of some otherproducts and various expenses.

Overseas

15.3

Other Domestic
Subsidiaries

297.8

295.3

176.5
4.7
8.2

FY2017 FY2018

(%)
20
15
10

135.5

122.2
84.1

19.7

20.4

FY2017 FY2018

12.4

85.1
12.9

FY2017 FY2018

43.4
1.6

47.1
2.6

1.2
0.7
FY2017 FY2018

5

1.3
1.4
3.8
4.3
FY2017 FY2018

0Fresh and Fermented Dairy Business

Confectionery BusinessNet sales decreased year on year. Net sales of Meiji Bulgaria
Yogurt increased year on year thanks to contributions fromrevamped plain yogurt, but net sales of functional yogurt
decreased year on year. SAVAS Milk Protein series grewfavorably thanks to contributions from new flavors.
Operating income decreased year on year due todecreased revenues and increased logistics expenses.

Net sales decreased year on year due to a sales pricereduction (because the commercial transaction system
was revised in April 2018) and a cut in the sales area for thesavory snack.
Operating income increased year on year due toreducing various expenses despite the impact of decline insales.

Processed Food Business

Nutrition BusinessOverall net sales increased year on year. Net sales of Meiji
Hokkaido Tokachi Camembert Cheese and fresh cream forprofessional use were favorable. Net sales of ice creamincreased year on year thanks to contributions from Meiji
Essel Super Cup series.
Operating income increased significantly year on year
due to increase in sales of our mainstay products.

Net sales increased year on year thanks to the favorable
growth of sport nutrition SAVAS and VAAM. Also, Meiji Mei
Balance series increased year on year.
Operating income increased year on year thanks to thehigher revenues from mainstay products despite increasein promotion expenses.

Meiji Holdings Co., Ltd.｜Integrated Report 2019

Corporate Information

62(Billions of yen)

FY2016

Financial and Non-Financial Section

Meiji Group’s consolidated net sales for FY2018 was JPY
1.2543 trillion (up 1.1% year on year). Net sales for the Food(Billions of yen)segment was JPY 1.0566 trillion, down 1.6% year on year.
94.6
FY2017This decrease is attributed to less revenue in functional
Due to increased/-0.8
decreased sales
yogurt and the impact of changes in our commercial
Decrease due to-12.1
transaction system in the Confectionery business.
NHI drug price revision
Change in cost of goods sold+11.3 *1
On the other hand, the Pharmaceutical segment
generated JPY 198.6 billion in net sales, up 17.9% year on
Change in SG&A expenses+4.6 *2
Other (incl. change inyear. Even though the sales were impacted by the NHI+0.7
results of subsidiaries)
drug price revision enacted in April 2018, the growth in
FY201898.3
domestic sales for our mainstay products and the sales*1 (Breakdown) Food segment- Decrease in raw material procurement costs: +1.3,
of KM Biologics Co., Ltd. contributed to a significant sales
Merchandise policy and increasing efficiency: +1.0
increase from the last fiscal year. KM Biologics Co., Ltd. was
Pharmaceuticals – Gains from changes in inventory valuation
due to cost reductions and revisions in the
consolidated in July 2018.
production system: +9.0
*2 (Breakdown) Food segment - Increase in logistic costs: -1.1, Other: +4.0
In addition, consolidated overseas sales was JPY 88.1
Pharmaceuticals – Decrease in R&D costs(excluding KM Biologics Co., Ltd.): +1.1,
billion (up 6.4% year on year). This is attributed to strong
Promotion expenses: +2.5, Other: -1.9
sales for the Food segment in Taiwan and Mainland China.
Net income attributable to shareholders of parent
company was JPY 61.8 billion (up 1.0% year on year). Due tothe Group-wide structural reforms, including restructuring
the production system, we recorded the impairment loss,
and loss on disposal of property, plants and equipment
under extraordinary losses. Gain on negative goodwill
was also recorded under extraordinary gains due to theconsolidation of KM Biologics Co., Ltd.

FY2015

Our Activities for Sustainability

Gains and Losses

Overview by Business (Food Segment)

Our Value Creation Story

It was the first fiscal year of the 2020 Medium-Term Business
Plan last year. We have focused our management resourceson core and growth areas for the Food and Pharmaceuticalsegments based on the basic concept Address strategic
issues continuously and Challenge for further growth. During
FY2018, we increased sales further and developed businessoverseas. Meanwhile, the Food segment faced risinglogistic and labor costs and the Pharmaceutical segment
was severely impacted by the NHI drug price revisions.
Amid this tough economic climate, we have improved
productivity and managed expenses effectively.
These steps resulted in JPY 1.25438 trillion in net sales(up 1.1% year on year), JPY 98.383 billion in operating
income (up 3.9% year on year) and JPY 99.709 billion in
the ordinary income (up 4.0% year on year). Net income
attributable to shareholders of parent company was JPY
61.868 billion (up 1.0% year on year). ROE was 12.2%, andthe EPS was at JPY 426.61.
In July 2018, Meiji Holdings Co., Ltd. and Meiji Seika
Pharma Co., Ltd., our business subsidiary, acquired a stake in
KM Biologics Co., Ltd. to make it a consolidated subsidiary.
KM Biologics Co., Ltd. inherited the main business of The
Chemo-Sero-Therapeutic Research Institute.

Introduction

Consolidated Financial Results

63

Contents

MD&A (The Management Discussion and Analysis)

Net sales increased year on year. Net sales of infant formulain Taiwan were favorable. Also, net sales of businesses in
China increased year on year thanks to favorable growth ofdairy products.
Operating income increased significantly year on year
thanks to subsidiaries in China.

Sales were largely unchanged year on year. Sales of oursugar trade subsidiary and livestock products subsidiarydecreased, but this was compensated for by increased
revenues from logistics subsidiary and feed subsidiary.
Operating income decreased significantly year on year
due to lower revenues from sugar trade subsidiary andlivestock subsidiary.

Overview by Business (Pharmaceutical Segment)
FY2015(Billions of yen)

FY2016

Change from theprevious fiscal year

Net sales

164.5

161.6

168.4

198.6

+17.9%

79.3

80.6

83.6

99.5

+19.1%

85.2

80.9

84.8

99.1

+16.8%

Selling, general andadministrative expenses

75.1

75.1

73.8

84.8

+14.9%

Operating income

10.1

5.7

11.0

14.2

+29.2%Net Sales (Left scale)Operating Income Ratio (Right scale)Operating Income (Left scale)Japan

Overseas

KM Biologics Co., Ltd.

130.6

129.0

10

7.6
5.2

5.1

41.0

39.4

50

0

(%)

11.1

11.2
100

(%)
15

6.6

9.9

FY2017FY2018

5

31.2

4.4

2.1

FY2017FY20183.4
FY2017FY2018

Capital expenditures on a cash basis (includes intangible
assets) for the current term were JPY 71.2 billion (down 0.7%
year on year), with main transactions as indicated below.
・Manufacturing building and chocolate production
facilities (Sakado Plant)
・Protein production plant (Kurashiki Plant)
・Manufacturing building and infant formula production
facilities (Saitama Plant)

The Meiji Group considers stable return to shareholders
an important issue. Our basic policy concerning profit
dividends shall be a consolidated dividend payout ratio ofaround 30%.
The annual dividends for FY2018 were JPY 140 per
share, up JPY 10 in cash dividends year on year. Thistranslated into a consolidated dividend payout ratio of
32.8%.

0

Overseas

Net sales in Japan increased year on year. Sales were
impacted by the NHI pricing revision, but sales of theschizophrenia drug SYCREST and the anti-allergy drug
BILANOA grew significantly. Sales of the influenza vaccine
launched in September 2018 also contributed.
Operating income increased significantly year on year.
Income was impacted by the NHI pricing revision, but westrived to increase revenues from mainstay products and toreview procurement costs.

Net sales increased year on year thanks to the favorable
growth of subsidiaries such as in Indonesia.
Operating income decreased significantly year on year
due to increased costs for export products.

(Billions of yen)
80

Food Segment
Pharmaceutical Segment

61.3

63.8
60
44.3
40

36.5

20

KM Biologics Co., Ltd.
Net sales were favorable for the mainstay influenza vaccine
and the 4-way vaccine Quattrovac.
Operating income was on par with forecasts due tofavorable sales of mainstay products.

Corporate Information

Japan

Financial and Non-Financial Section

Capital Expenditures

Dividend Policy

Financial and Non-Financial Section(Billions of yen)
150

Operating income increased significantly year on year.
Sales growth of our mainstay products, procurement costsavings and cost reduction in promotion expenses offset
the impact of NHI pricing revisions. Operating income fromKM Biologics Co., Ltd. also contributed.

Cash flow from operating activities in FY2018 totaled JPY
112.1 billion thanks to an increase of JPY 3.3 billion fromthe previous fiscal year. While payment increased due toa decrease in trade payables, this is attributed to moreincome from a decrease in trade receivables.
Cash flow from investing activities totaled JPY 100.2
billion in payments, up JPY 35.8 billion year on year. This
is attributed to changes in the scope of our consolidated
companies and therefore an increase in payments foracquiring shares of that subsidiary.
In summary, there was a JPY 32.4 billion decrease infree cash flow year on year, totaling JPY 11.8 billion, whichis the sum of the cash flows for operating activities andinvesting activities.
Cash flow from financing activities totaled JPY 13.9
billion in expenditures, down JPY 26.1 billion year on year.
This is attributed to decreased payments from redemptionof straight bonds.
These results produced a balance of JPY 24.4 billion in
cash and cash equivalents at end of FY2018 (down JPY 2.4
billion from the end of FY2017).

Our Activities for Sustainability

Cost of sales
Gross profit

Net sales increased significantly year on year. Althoughsales were impacted by NHI pricing revision enacted in
April 2018, sales volume for mainstay products grew inJapan. Also, KM Biologics Co., Ltd. consolidated in July 2018
contributed.

64

FY2018FY2017

Total assets at the end of FY2018 came to JPY 1.0041 trillion,
up JPY 78.9 billion year on year. While there was a dip in
goodwill of JPY 10.5 billion, this is attributed to an increaseof JPY 19.5 billion in buildings and structures (net), JPY 19.3
billion in machinery and equipment (net), JPY 18.8 billion
in goods and products, JPY 9.6 billion in construction inprogress, JPY 9.3 billion in raw materials and supplies, andJPY 6.4 billion in notes and accounts receivable.
Total liabilities at the end of FY2018 came to JPY 443.5
billion, up JPY 13.4 billion year on year. While there was adecrease of JPY 16.1 billion in short-term loans payable, thisis attributed to an increase of JPY 13.4 billion in long-termloan payable, JPY 5.3 billion in notes and accounts payable,
JPY 3.4 billion in retirement benefit liabilities, JPY 2.7 billion
in income taxes payable, JPY 2.3 billion in accrued expenses
and JPY 1.0 billion in accrued bonuses for employees.
Total net assets came to JPY 560.6 billion, up JPY 65.4
billion year on year. While the foreign currency translation
adjustments was down slightly by JPY 2.0 billion, this is
attributed to an increase of JPY 41.6 billion in retained
earnings and JPY 25.4 billion in minority interests.
However, the equity ratio was 52.5%, on par with 52.7%
in the previous fiscal year. Debt/equity ratio dropped
from 0.24 in the previous fiscal year to 0.22 due to a moresignificant increase in shareholders' equity than theincrease in total liabilities.

Our Value Creation Story

Other Domestic Subsidiaries

Cash Flows

Introduction

Overseas

Assets, Liabilities and Capital

0

5.7

6.0

7.8

9.7

FY2015FY2016FY2017FY2018

Meiji Holdings Co., Ltd.｜Integrated Report 201965

Contents

Consolidated Financial Statements
Introduction

Consolidated Balance Sheet
Meiji Holdings Co., Ltd./As of March 31, 2019

Thousands of
U.S. dollars

Millions of yen

2019

2019

2018

AssetsThousands of
U.S. dollars

Millions of yen

2019

2018

2019

Liabilities and Net Assets

Current assets:

Current liabilities:

Cash and deposits (Notes 11)¥

Notes and accounts receivable(Notes 11, 17)Inventories (Note 10)
Allowance for doubtful accounts
Total current assets¥ 27,613$ 228,457

Notes and accounts payable (Notes 17)¥ 133,639¥ 131,064$ 1,204,072

210,180203,229

1,893,684

165,924

136,468

1,494,950

33,59749,749302,704

20,162

15,895

181,659

Short-term loans payable(including current portion of long-term loans payable) (Notes 9, 11)
Income taxes payable

21,023

18,253

189,418

(176)

(202)

(1,586)

Accrued expenses

46,28643,919417,029

421,447

383,004

3,797,166

Accrued bonuses for employees

11,895

10,857

107,174

Fixed assets:
334,729

319,894

3,015,848

588,421558,326

5,301,575

Land (Notes 11)

70,76571,454

637,587

Lease assets

2,891

2,710

26,055Construction in progress

31,98822,323

288,210

Accumulated depreciation(595,305)(590,746)(5,363,598)

433,491

383,962

3,905,679

Investments and other assets:
75,26675,048678,138

18,23815,825

164,323

Intangible assets (Note 16)

13,55322,555

122,112Deferred tax assets (Note 12)

14,40915,729129,823

Net defined benefit asset (Note 13)

20,274

20,777

182,665

Other

7,557

8,427

68,095

(94)

(93)

(849)

Total investments and other assets

149,204

158,270

1,344,308

Total fixed assets

582,696542,232

5,249,987¥ 1,004,143¥ 925,237$ 9,047,153

Total assets
See accompanying notes to consolidated financial statements.

6,827

1,943

22,014

41,861

38,569377,162

291,504

294,4292,626,403

Long-term loans payable, less current portion (Notes 9, 11)Deferred tax liabilities (Note 12)82,78869,353745,906

10,65010,371

95,959Net defined benefit liability (Note 13)

53,83050,330485,001

106

148

961

Total current liabilities
Long-term liabilities:

Reserve for directors’ retirement benefits
Other long-term liabilities

4,632

5,426

41,737

Total long-term liabilities

152,008

135,629

1,369,567

Total liabilities

443,512430,059

3,995,970

30,00030,000270,294

Net assets (Note 19) :Shareholders’ equity:
Common stock
Authorized

560,000,000 shares, at March 31, 2018
560,000,000 shares, at March 31, 2019

Issued152,683,400 shares, at March 31, 2018
152,683,400 shares, at March 31, 2019

Capital surplus

100,061

99,841

901,539

Retained earnings

407,943366,276

3,675,499(30,422)(30,521)(274,103)

507,582

465,595

4,573,229

33,26133,188299,676

3

(53)

30

(1,751)(11,785)268(11,689)(15,776)(106,183)

Treasury stock, at cost

7,680,613 shares, at March 31, 2018

Financial and Non-Financial Section

Investment securities (Notes 8)
Investment securities (unconsolidated subsidiaries and affiliates) (Note 14)

Allowance for doubtful accounts

72

2,443

Our Activities for Sustainability

Buildings and structures
Machinery, equipment, vehicles and fixtures (Notes 11)

Total property, plant and equipment (net)757

Allowance for sales rebates
Other current liabilities

Property, plant and equipment:(Notes 11)

Allowance for sales returns

Our Value Creation Story

Other current assets(Notes 11)

25,3567,650,137 shares, at March 31, 2019
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized holding gains or losses on securities
Deferred gains or losses on hedges
Remeasurements of defined benefit plans (Note 13)
Non-controlling interests
Total net assets
Total liabilities and net assets

33,3207,866

300,207560,630

495,177

5,051,182¥ 1,004,143¥ 925,237$ 9,047,153

Corporate Information

Foreign currency translation adjustments

See accompanying notes to consolidated financial statements.

66

Financial and Non-Financial Section

Meiji Holdings Co., Ltd.｜Integrated Report 201967

Contents

Consolidated Financial Statements

Consolidated Statement of Comprehensive Income

Meiji Holdings Co., Ltd./For the year ended March 31, 2019

Meiji Holdings Co., Ltd./For the year ended March 31, 2019

Thousands of
U.S. dollars

Millions of yen

Net sales

2019

2018

2019

¥ 1,254,380¥ 1,240,860$11,301,744

797,811785,978

7,188,137

456,569

454,882

4,113,607

358,185

360,208

3,227,190

98,383

94,673

886,416

Cost of sales (Note 22)
Gross profit
Selling, general and administrative expenses(Notes 21, 22)

Operating income

2019

2018

2019

¥ 63,610¥ 61,962$573,120

Net unrealized holding gains or losses on securities

66

8,071

603

Deferred gains or losses on hedges

58

(50)

531

(1,615)(1,686)(14,558)

Other comprehensive income:

Foreign currency translation adjustments
Equity in affiliates accounted for by the equity method

1,416

1,341

12,762

Interest expenses

(778)

(755)

(7,015)Equity in income of affiliates

(390)

(209)

(3,519)Rent income on real estate

132

137

1,197

Rent cost of real estate

(48)

(56)

(433)

994
13,439

746
7,561

8,961
121,087(18,563)(12,358)(167,251)

94,586

91,079852,205

34,35831,647309,567

Other
Extraordinary gains (Notes 23, 24)
Extraordinary losses (Notes 23, 25, 26)
Profit before income taxes
Income taxes—current (Note 12)
Income taxes—deferred (Note 12)(3,383)(2,529)(30,482)

Profit63,61061,962

573,120

Profit attributable to non-controlling interests

1,742

683

15,698

Profit attributable to owners of parent¥

61,868¥61,278

Yen$

Total other comprehensive income (Note 27)
Comprehensive income

1,715

(762)

788
8,838

(4,713)(18,899)¥ 61,512¥ 70,800$554,221¥ 59,881¥ 70,102$539,522

1,631

698

14,698(Breakdown)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests
See accompanying notes to consolidated financial statements.

Our Activities for Sustainability

Interest and dividend income

(84)
(523)
(2,097)

Our Value Creation Story

Remeasurements of defined benefit plans
Other income (expenses):Thousands of
U.S. dollars

Millions of yen

ProfitIntroduction

Consolidated Statement of Income

557,421

U.S.dollars

Profit¥ 426.61¥ 422.15$ 3.843

Cash dividends

140.00130.00

1.261

Financial and Non-Financial Section

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

Corporate Information

68

Financial and Non-Financial Section

Meiji Holdings Co., Ltd.｜Integrated Report 201969

Contents

Consolidated Financial Statements
Introduction

Consolidated Statement of Changes in Net Assets
Meiji Holdings Co., Ltd./For the year ended March 31, 2019

Millions of yen

Millions of yen

Shareholders’ equity

Balance at March 31, 2017

Numbers of sharesof common stock(Thousands)

Common stock

Capital surplus

Retained earnings

152,683¥ 30,000¥ 99,762¥ 322,856

Accumulated other comprehensive income

Treasury stock

Total shareholders’equityNet unrealized
holding gains orlosses on securities¥ (16,607)¥ 436,011¥ 25,120

Deferred gains orlosses on hedges¥ (5)Foreign currencytranslation
adjustments¥ 1,181

Remeasurements Total accumulatedof defined benefit other comprehensive
incomeplans¥ (13,406)¥ 12,890

Noncontrollinginterests

Total net assets¥ 8,289¥ 457,190

Changes during the fiscal period:(17,858)(17,858)

61,278Acquisition of treasury stock170

Disposal of treasury stock
Change in treasury shares ofparent arising from transactions
with noncontrolling shareholders
Change in scope of consolidation
Net changes in items other thanthose in shareholders’ equity
Total changes during the fiscal
periodBalance at March 31, 2018(17,858)

61,27861,278(14,058)(14,058)(14,058)

144

314

314

(91)

(91)

(91)

8,068

(48)

—

—

78

43,420(13,913)29,584

8,068

(48)

152,683¥ 30,000¥ 99,841¥ 366,276¥ (30,521)¥ 465,595¥ 33,188¥ (53)

(912)

¥

1,716

8,824

(422)

Our Value Creation Story

Cash dividends
Profit attributable to owners ofparent

8,401

(912)

1,716

8,824

(422)

37,986268¥ (11,689)¥ 21,714¥ 7,866¥ 495,177(19,940)

Cash dividends
Profit attributable to owners ofparent61,868Acquisition of treasury stock

177

Disposal of treasury stock
Change in treasury shares ofparent arising from transactions
with noncontrolling shareholders
Change in scope of consolidation
Net changes in items other thanthose in shareholders’ equity
Total changes during the fiscal
period(19,940)

61,86861,868

(49)

(49)

(49)

148

326

326

42
(261)

42

42

(261)

(261)
72

—

—

220

41,66799

41,98672

152,683¥ 30,000¥ 100,061¥ 407,943¥ (30,422)¥ 507,582¥ 33,261

56¥(2,019)Balance at March 31, 2018

Capital surplus

Retained earnings

152,683$ 270,294$ 899,550$ 3,300,085

25,453

23,466(2,019)(96)(1,986)25,45365,4533¥ (1,751)¥ (11,785)¥ 19,728¥ 33,320¥ 560,630

Noncontrollinginterests

Total net assets$ 70,878$ 4,461,460

Thousands of U.S. dollars

Shareholders’ equity

Common stock(1,986)

56

Thousands of U.S. dollars
Numbers of sharesof common stock(Thousands)(96)

Financial and Non-Financial Section

Balance at March 31, 2019(19,940)

Our Activities for Sustainability

Changes during the fiscal period:

Accumulated other comprehensive income

Treasury stock

Total shareholders’equityNet unrealized
holding gains orlosses on securities$ (274,995)$ 4,194,935$ 299,025

Deferred gains orlosses on hedges$ (481)

Foreign currencytranslation
adjustments

$

2,418

Remeasurements Total accumulatedof defined benefit other comprehensive
incomeplans$ (105,316)$ 195,645

Changes during the fiscal period:(179,655)
557,421

Acquisition of treasury stock

1,603

Disposal of treasury stock
Change in treasury shares ofparent arising from transactions
with noncontrolling shareholders
Change in scope of consolidation
Net changes in items other thanthose in shareholders’ equity
Total changes during the fiscal
periodBalance at March 31, 201970

Financial and Non-Financial Section(179,655)(179,655)

557,421557,421

(447)

(447)

(447)

1,340

2,943

2,943

384
(2,352)384

384(2,352)(2,352)651

511(18,195)(866)(17,899)229,328

Corporate Information

Cash dividends
Profit attributable to owners ofparent211,428

—

—

1,988

375,413892

378,294651

511(18,195)(866)(17,899)229,328

589,722

152,683$ 270,294$ 901,539$ 3,675,499$ (274,103)$ 4,573,229$ 299,676$ 30$ (15,776)$ (106,183)$ 177,746$ 300,207$ 5,051,182

Meiji Holdings Co., Ltd.｜Integrated Report 201971

Contents

Consolidated Financial Statements
Introduction

Consolidated Statement of Cash Flows
Meiji Holdings Co., Ltd./For the year ended March 31, 2019

Thousands of
U.S. dollars

Millions of yen

2019

2018

2019

Cash flows from operating activities:

Thousands of
U.S. dollars

Millions of yen

2019

2018

2019

¥ (8,886)¥ 8,720$ (80,066)

Cash flows from financing activities:¥ 94,586¥ 91,079

Depreciation and amortization

43,03346,511

387,724

Proceeds from long-term loans payable

19,78213,802

178,239

Impairment loss

12,242

4,214

110,306

Repayment of long-term loans payable(13,904)(22,557)(125,280)

Profit before income taxes$ 852,205

Increase (decrease) in short-term loans payable

1,641

1,641

14,789Proceeds from issuance of bonds—

19,909—(6,584)—(59,321)

Payments for redemption of bonds—(30,000)—

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

1,981

4,726

17,856

Decrease (increase) in treasury stock

473

8

4,268

Cash dividends paid

Increase (decrease) in allowance for doubtful accounts

(83)

(177)

(753)

Increase (decrease) in accrued bonuses for employees

654

356

5,897

Increase (decrease) in net defined benefit liability

3,987

3,944

35,925Interest and dividend income(1,416)(1,341)(12,762)

Cash dividends paid to non-controlling shareholders
Payments for acquisition of shares of subsidiaries that do not
result in change in scope of consolidation
Proceeds from stock issuance to non-controlling shareholders

Interest expenses

778

755

7,015

Equity in loss (income) of affiliates

390

209

3,519

(6,171)(6,403)(55,607)

Loss (gain) on valuation of investment securities

Loss (gain) on sales of property, plant and equipment

(138)

597

(1,250)(773)(12,724)(6,968)(4,307)(3,313)(38,813)

Increase (decrease) in notes and accounts payable

2,142

9,170

19,305

Other

1,522

(497)

13,713

Decrease (increase) in inventories

143,959

138,758

1,297,048

Interest and dividends received

1,426

1,354

12,851

Interest paid

(782)

(775)

(7,051)

Subtotal

Income taxes paid
Net cash provided by operating activities(32,502)(30,562)(292,840)

112,100

108,775

1,010,008(10,208)

2,371(17,835)(179,222)

(499)

(95)

(4,502)

(7)

(833)

(67)

10,200(1,036)—(1,023)91,900(9,334)(13,980)(40,121)(125,961)

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents(393)(2,475)

1
4,260(3,545)(22,301)

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 in scope of
consolidation

26,913

22,624242,485

43

—

391

—

28

—

¥ 24,481¥ 26,913$220,575

Cash and cash equivalents at end of the year

(Note 20)

Our Activities for Sustainability

Loss (gain) on sales of investment securities
Decrease (increase) in trade receivables

Other
Net cash used in financing activities

263(19,891)

Our Value Creation Story

Amortization of goodwill
Gain on negative goodwill

See accompanying notes to consolidated financial statements.

Cash flows from investing activities:(67,246)(69,833)(605,877)(3,996)(1,943)(36,011)

9,850

9,269

88,749Payments for purchases of investment securities(4,153)(1,059)(37,425)

Proceeds from sales of investments securities
Payments for acquisition of shares of subsidiaries that result inchange in scope of consolidation (Note 20)
Proceeds from sale of shares of subsidiaries that result in change
in scope of consolidation

322

746

2,905

(33,879)—(305,244)

—

126

—

Other

(1,098)(1,700)(9,899)¥ (100,202)¥ (64,394)$ (902,803)

Net cash used in investing activities

Financial and Non-Financial Section

Payments for purchases of property, plant and equipment
Payments for purchases of intangible fixed assets
Proceeds from sales of property, plant and equipment andintangible fixed assets

Corporate Information

72

Financial and Non-Financial Section

Meiji Holdings Co., Ltd.｜Integrated Report 201973

Contents

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

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 theincome and expenses of overseas subsidiaries are translated
into Japanese yen using the average exchange rate during
the fiscal year. The translation adjustments are included inforeign currency translation adjustments and non-controllinginterests in the net assets section of the consolidated 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 atthe consolidated fiscal year-end.
Unrealized holding gains or losses, net of the applicable
income taxes, are included directly in net assets, andcost of security sold is calculated using the movingaverage method.
Securities that have no market prices:
Primarily by the cost method based on the movingaverage method.

p) Cash and Cash Equivalents

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

Cash and cash equivalents in the consolidated statement of cash
flows are composed of cash on hand, bank deposits available
for withdrawal on demand and short-term investments withoriginal maturity of three months or less, which have minor risk offluctuations in value.

i) Investments in Real Estate
The straight-line method is primarily used for depreciation.

j) Allowance for Doubtful Accountsl) Allowance for Sales Returns
In order to provide for losses on the returns of goods andproducts sold at some of the Company’s consolidated
subsidiaries, the actual amount of the expected future losses
on returns in the current consolidated fiscal year is recorded as
an allowance (under Allowance for Sales Returns).

d) Derivativesm) Allowance for Sales Rebates

Derivatives are valued by the market value method.

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.

e) Inventories

The accompanying consolidated financial statements include
the accounts of the Company and significant subsidiaries overwhich the Company has power of control through majority
voting rights or existence of certain conditions evidencing
control by the Company. Investments in affiliates over which
the Company has the ability to exercise significant influence
over operating and financial policies of the investees areaccounted for by the equity method. The consolidated
financial statements consist of the Company and its 59
consolidated subsidiaries. All significant intercompany
transactions and accounts have been eliminated. Accountsof subsidiaries whose fiscal year-ends are December 31 havebeen included using financial information at that date withappropriate adjustment where necessary. Investments in

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

f) Property, Plant and Equipment(excluding lease assets)
The straight-line method is primarily used for depreciation.
The estimated useful lives of the assets are as follows:
Buildings and structures
2–60 years
Machinery, equipment and vehicles 2–18 years
Tools, furniture and fixtures
2–20 yearsq) Derivative Financial Instruments(1) Method of hedge accounting
The deferral hedge accounting method is applied underwhich the unrealized gain or loss is deferred as a componentof net assets when certain criteria are met.

For forward foreign exchange contracts, etc., the allocation
method is applied when the relevant criteria are met. Forinterest rate and currency swaps, the integrated method (theshortcut method, the allocation method) is applied when therelevant criteria are met.
(2) Hedge instruments and hedged itemsn) Reserve for Directors’ Retirement Benefits
The Company and its consolidated subsidiaries provide forretirement benefits for directors and corporate auditors basedon the amount required to be paid at the end of the fiscal year
under the Company bylaws.

Hedge instruments:

Hedged items:

Forward foreignexchange contracts
and other instruments

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

Interest rate andcurrency swap
contracts

Interest on loans payable andloans payable

Meiji Holdings Co., Ltd.｜Integrated Report 2019

Corporate Informationa) Consolidation Policy

Financial and Non-Financial Sectionk) Accrued Bonuses for Employees

Finance lease assets whose ownership does not transfer to thelesseeFor the depreciation of lease assets, the straight-line method isapplied based on the lease term as the useful life of the asset
and the residual value of zero.

Financial and Non-Financial Section74

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 amount estimatedto be unrecoverable for individual companies in financial
difficulty.

(1) Method used to attribute expected benefit payments toperiods
In calculating retirement benefit obligation, the benefit
formula basis method is used to attribute expected benefit
payments to the period extending up to the end of the fiscal
year.
(2) Method of amortizing actuarial gains or losses, priorservice costs
Actuarial gains or losses are amortized from the consolidated
fiscal year following the year in which the gain or loss is
incurred by the straight-line method for a certain numberof years (7–15 years) not longer than employees’ averageremaining years of service. Prior service costs are amortizedfrom the time they accrue by the straight-line method for acertain 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 unrecognized priorservice costs are adjusted for tax effect and then recorded inremeasurements of defined benefit plans under accumulated
other comprehensive income in the net assets portion of theconsolidated balance sheet.

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

h) Lease Assetsb) Translation of Foreign Currencyo) Retirement and Severance Benefits

Our Activities for Sustainability

2. Significant Accounting Policiesg) Intangible Assets(Excluding Lease Assets)

Our Value Creation Story

The accompanying consolidated financial statements of
Meiji Holdings Co., Ltd. (the “Company”) and its consolidated
subsidiaries have been prepared from the consolidated
financial statements in Japanese filed with the Kanto Local
Finance Bureau as required by the Financial Instruments
and Exchange Law. The statements conform to generally
accepted accounting principles and practices in Japan (“Japan
GAAP”), which are different in certain respects regarding
the application and disclosure requirements of International
Financial Reporting Standards (“IFRS”). The consolidated
financial statements are not intended to present the financial
position, results of operations or cash flows in accordancewith accounting principles and practices generally acceptedin countries and jurisdictions other than Japan.
In preparing the accompanying consolidated financial
statements, certain reclassifications have been made topresent the information in a form familiar to readers outside
Japan. The accounts and the financial statements of theCompany and its subsidiaries are maintained in Japaneseyen. For the convenience of the reader, the accompanying
consolidated financial statements are also presented in U.S.
dollars by converting Japanese yen amounts at the exchange
rate of ¥110.99 to US$1, the amount prevailing on March
31, 2019. This translation should not be construed as arepresentation that amounts shown could be converted into
U.S. dollars at such rate.
Amounts less than one million yen and one thousand U.S.
dollars have been rounded down. The total Japanese yen and
U.S. dollar amounts shown in the financial statements andnotes do not necessarily agree with the sum of the individual
amounts.
Certain amounts in prior years’ financial statements havebeen reclassified to conform to the current year’s presentation.

six affiliates are accounted for by the equity method. The
difference between the cost and underlying net equity
at acquisition of investments in consolidated subsidiaries
and affiliates is allocated to identifiable assets based on fairvalue at the date of acquisition. The unallocated portion isrecognized as goodwill and amortized over a period of 5–10
years on a straight-line basis.

Introduction

1. Basis of Presenting Consolidated Financial
Statements

75

Contents

Notes to Consolidated Financial Statements(Change in Depreciation Method for Property,
Plants and Equipment)

76

Financial and Non-Financial Section

1) Overview of financial instrumentsa) Overview
The International Accounting Standards Board (IASB) and the
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 theimplementation guidance.
The basic policy behind the ASBJ developing the
Accounting Standard for Revenue Recognition was toestablish a standard, initially taking in the general principle of
IFRS 15 in terms of comparability among financial statements,
which is one of the benefits of ensuring consistency with IFRS
15. Also, when there is an item that should be consideredin the practices that has previously taken place in Japan,
an alternative guidance was to be added insofar as not tojeopardize comparability.

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

c) Impact from Applying New AccountingStandards, etc.
At the moment, impact from adopting “Accounting Standard
for Revenue Recognition,” etc., to the consolidated financial
statements is being assessed.

6. Notes Regarding Lease Transactions
1) Finance lease transactions (lessee side)
Finance lease transactions whose ownership does not transfer(1) Content of lease assets
Property, plant and equipment
Mainly sales of equipment (equipment and fixtures),production facilities in manufacturing plants (machinery andvehicles) 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.”(1) Policy for financial instruments
The Meiji Group (the “Group”) raises necessary funds (primarily
through bank loans and bond issuance) based on its capital
investment and working capital plans, mainly to engage inthe business of manufacturing and selling dairy products,
confectioneries, food products and pharmaceuticals. The
Company manages temporary surplus funds through highly
secured financial instruments and raises short-term operating
funds by issuing commercial paper, etc. Derivatives are used
to mitigate the risks described below. Consequently, theCompany does not enter 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 from operating
businesses globally; these are exposed to currency fluctuation
risk, but some consolidated subsidiaries hedge such risk
using forward foreign exchange contracts, etc. Investment
securities are mainly shares held in relation to business withpartner companies, capital alliances, etc.; these are exposed tofluctuation risk of market 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.
Loans, commercial paper and bonds are mainly used toraise funds for capital investment and working capital. Theirredemption dates are at maximum 9 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 rateand 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 and currency
swap transactions used to hedge interest rate fluctuation risk
related to variable interest rate and currency payments onloans 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”.

Meiji Holdings Co., Ltd.｜Integrated Report 2019

Corporate Information

In the Food segment, the Company had used the decliningbalance method (straight-line method was used for buildings
acquired after April 1, 1998 and for structures and facilities
attached to buildings acquired after April 1, 2016) as adepreciation method for property, plants and equipment ofsome domestic consolidated subsidiaries and confectionary
plants in Meiji Co., Ltd. However, the Company has changed
the depreciation method to the straight-line method startingfrom this consolidated fiscal year.
Based in the 2026 Vision, the 2020 Medium-Term Business
Plan started from this consolidated fiscal year and offers
policies for expanding share and achieving high revenues incore businesses. In particular, as the market for core businesses
expands where the Company has a highly competitive
advantage, such as chocolate sold for health benefits, the• “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).

Financial and Non-Financial Section

3. Changes in Accounting Policies that are
Difficult to Distinguish from Changes in
Accounting Estimates“Partial Amendments to Accounting Standard for Tax EffectAccounting” (ASBJ [Accounting Standards Board of Japan]
Statement No. 28, February 16, 2018. Hereafter, referred toas “Partial Amendments to Tax Effect Accounting.”) takes
effect at the beginning of this consolidated fiscal year. Dueto these changes, the deferred tax assets are categorizedunder investments and other fixed assets, and the deferred
tax liabilities are categorized under long-term liabilities. In
addition, the notes for the tax effect accounting have also
been revised.
As a result, in the consolidated balance sheets from theprevious consolidated fiscal year, the “Deferred tax assets”
under the “Current assets” decreased ¥9.67 billion, and the“Deferred tax assets” under the “Investments and otherfixed assets” increased ¥7.362 billion. In addition, “Deferred
tax liabilities” included in “Other” under “Current liabilities”
decreased ¥0 million, and “Deferred tax liabilities” under “Longterm liabilities” decreased ¥2.306 billion.
Note that the deferred tax assets and the deferred tax
liabilities of the same taxable entity are offset. After thischange, the total assets decreased ¥2.307 billion.
In the notes for the tax effect accounting, (Note 8)(excluding the total for the valuation allowance) and (Note9) in the “Annotations on Implementation Guidance on
Accounting Standard for Tax Effect Accounting” stipulated
in paragraph 3 to paragraph 5 of “Partial Amendments toTax Effect Accounting” have been added. Further, contents
that are relevant to prior consolidated fiscal year are omitted
in accordance with the provisional measure stipulated
in paragraph 7 in the partial amendments to tax effectaccounting.

7. Notes Regarding Financial Instruments

Our Activities for Sustainability

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

4. “Partial Amendments to AccountingStandard for Tax Effect Accounting”

5. Accounting Standards, etc., Not Yet Adopted

Our Value Creation Storyr) Other Important Matters for the Preparation
and Presentation of Consolidated Financial
Statements

Meiji Group plans to concentrate management resources on
those core businesses and make relevant capital investments.
After considering the operations of production equipment,that equipment is expected to be used regularly over the longterm. Therefore, the Company has decided to use the straightline method to evenly distribute the acquisition costs overthe estimated useful lives of the equipment, which is moreaccurately aligned with the future management of the Group.
When compared to the previous method used, this change
has increased the operating income, the ordinary income andthe income before income taxes by ¥4.920 billion ($44.328
million) for the consolidated fiscal year.

Introduction(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 importand export transactions conducted in the normal course ofbusiness. The Company uses interest rate and currency swap
transactions to reduce the interest rate and foreign exchange
rate fluctuation risk involved in procuring funds. The Company
and its consolidated subsidiaries do not use derivatives for
speculative purposes.
(4) Method of evaluating the effectiveness of the hedge
As forward foreign exchange contracts, etc., are used as ahedge against trade payables and receivables denominatedin foreign currencies to fix the yen-denominated future cash
flows, the allocation method is applied, and the requirementsof assessing the effectiveness of the hedge on a periodic
basis are satisfied. For forecasted transactions denominated inforeign currencies, suitability for hedging is investigated withconsideration 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) witha high correlation between the hedged items and hedging
instruments.

77

Contents

Notes to Consolidated Financial Statements

The carrying value, fair value and their difference as of March 31, 2019 and 2018, 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, 2019(1) Cash and deposits(2) Notes and accounts receivable(3) Investment securities:
Other securities

Millions of yen
Carrying value

Fair value¥ 25,356
202,193

Thousands of U.S. dollars
Difference

Carrying value

Fair value

Difference¥ 25,356¥ —$ 228,457$ 228,457$

202,193—

1,821,723

1,821,723——

73,00273,002—657,738

657,738—

300,551

300,551—

2,707,919

2,707,919—(4) Notes and accounts payable

125,479

125,479—

1,130,547

1,130,547—(5) Short-term loans payable

27,771

27,771—

250,216

250,216—

Total assets(6) Accrued expenses

46,286

46,286—

417,029

417,029—(7) Bonds

20,00020,07878

180,196

180,899702(8) Long-term loans payable
Total liabilities

68,61368,724

110

618,198

619,196998¥ 288,150¥ 288,339¥ 188$ 2,596,187$ 2,597,888$ 1,701(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
Long-term loans payable with variable interest rates reflect the market interest rates over short periods. As a result, since the fair value can come close to
the same as the carrying values, that fair value is based on the corresponding carrying value.
Long-term loans payable with a fixed rate is calculated based on the total of the principal and interest discounted by the interest rate that is assumed if
new borrowings were made with similar terms.
In addition, the current portion of long-term loans payable is included in these long-term loans payable.
(Note 2) Unlisted stocks (carrying value on the consolidated balance sheet: ¥20,502 million ($184,723 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.

Millions of yen
Carrying value

Fair value(1) Cash and deposits¥ 27,613¥ 27,613¥ —(2) Notes and accounts receivable(3) Investment securities:
Other securities

195,760

195,760—

Difference

72,811—

296,185—(4) Notes and accounts payable

120,107

120,107—(5) Short-term loans payable

36,48336,483—(6) Accrued expenses

43,91943,919—(7) Bonds

20,00019,994(6)(8) Long-term loans payable

62,61962,020(598)¥ 283,129¥ 282,524¥ (604)

Total liabilities

Corporate Information

72,811
296,185

Total assets

Financial and Non-Financial Section

As of March 31, 2018

Our Activities for Sustainability

For the contract amounts, etc., related to derivative transactionsin the “Derivative transactions” notes, the amounts do not show
the market risk related to the derivative transactions.

2) Matters related to the fair value, etc., of financial instruments

Our Value Creation Story

For investment securities, the Company regularly considers
the fair value and the financial situation of the issuer (business
partner), and continues to review the holdings taking into
consideration the relationship with the business partner.
At some consolidated subsidiaries, each related department
engages in derivative transactions based on derivativetransaction management rules, which establish thetransaction authority and amount limitations.
[3] Management of liquidity risk regarding fund procurement(the risk of becoming unable to make payment on thepayment date)
Based on reports from each business unit, the Group createsand updates cash flow plans in a timely manner, and manages
liquidity risk.
(4) Supplemental explanation of matters related to the fairvalue, etc., of financial instruments
Fair value of financial instruments includes prices based onmarket prices, and prices rationally calculated in cases where
there are no market prices. Variable factors are incorporated
into the calculation of such prices, therefore, different
assumptions could result in different prices.

Introduction(3) Risk management for financial instruments[1] Management of credit risk (risk such as default of contract
by customers)
In accordance with receivables management rules, etc.,
each management department in each business unit of theGroup periodically monitors the status of major customers,
and due dates and balances are managed for each customer.
The Group makes efforts for early detection and reductionof collection concerns due to deterioration in financial
conditions, etc., of customers.
Derivative transactions are only executed with highly rated
financial institutions to reduce counterparty risk.
The maximum credit risk for the consolidated closing dateof the current fiscal year is expressed by the values in thebalance sheet for financial instruments exposed to credit risk.
[2] Management of market risk (the risk of fluctuation in
exchange rates, interest rates, etc.)
For foreign currency-denominated trade receivables andpayables, some consolidated subsidiaries use forward foreignexchange 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.

(Note) Unlisted stocks (carrying value on the consolidated balance sheet: ¥18,062 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.

78

Financial and Non-Financial Section

Meiji Holdings Co., Ltd.｜Integrated Report 201979

Contents

Notes to Consolidated Financial Statements
9. Short-Term Loans Payable and Long-Term Loans Payable

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

As of March 31, 2019 and 2018, short-term loans payable and long-term loans payable are as follows:

1) Held-to-maturity securities

1) Short-term loans payable

As of March 31, 2019
None
As of March 31, 2018
None

Weighted-averageinterest rate2) Other securities with market prices
Millions of yen

Thousands of U.S. dollars

Acquisition cost

Unrealized
gain (loss)

Carrying value

Acquisition cost

Unrealized
gain (loss)¥ 72,416¥ 24,920¥ 47,495$ 652,457$ 224,530$ 427,926

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

2019

2018

0.86%

¥ 27,771¥ 36,483$ 250,216

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

0.82%

5,825

13,26652,488———¥ 33,597¥ 49,749$ 302,704

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

Millions of yen

Stocks

586

711

(125)

5,281

6,411

(1,130)Total¥ 73,002¥ 25,632¥ 47,370$ 657,738$ 230,942$ 426,796

As of March 31, 2018

Millions of yen
Carrying value

Acquisition cost

Unrealized
gain (loss)¥ 24,835

2019

2018
—

—

—

Unsecured bonds due 2021, 0.52% (Note 15, 6th series)

—

—

—

¥ 10,000¥ 10,000$ 90,098

10,00010,00090,09868,61362,619618,198

88,61382,619798,394(5,825)(13,266)(52,488)¥ 82,788¥ 69,353$ 745,906

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
Total long-term loans payable

Securities whose carrying value
exceeds their acquisition cost:¥ 72,078

2019
Unsecured bonds due 2019, 0.51% (Note 15, 4th series)

Our Activities for Sustainability(Note) Unlisted stocks (carrying value on the consolidated balance sheet: ¥2,264 million ($20,399 thousand)) are not included in the table above as their market
prices are not available and it is extremely difficult to determine the fair value.

StocksSecurities whose acquisition costexceeds their carrying value:

2019

Short-term loans payable

Total

Carrying value

Thousands of
U.S. dollars

Millions of yen

Our Value Creation Story

As of March 31, 2019

Introduction

8. Investment Securities¥ 47,243

As of March 31, 2019, the aggregate annual maturities of long-term loans payable are as follows:

Stocks

734

778

(44)

Total

¥ 72,812¥ 25,613¥ 47,199

Fiscal year ended March 31

2019More than one year up to two years¥ 7,973
4,376

39,428More than three years up to four years

24,299218,938

More than five years
Total$ 71,839

4,061

36,59042,077¥ 82,788

379,109$ 745,906

Thousands of
U.S. dollars

Millions of yen

2019

2019

More than two years up to three years
More than four years up to five years3) Other securities sold during the fiscal years ended March 31, 2019 and 2018

Thousands of
U.S. dollars

Financial and Non-Financial Section(Note) Unlisted stocks (carrying value on the consolidated balance sheet: ¥2,237 million) are notincluded in the table above as their market prices are not available and it is extremely difficult
to determine the fair value.

Millions of yen

2019

2018
¥314

¥547

$2,835

Total gains on sales

110

353

995

Total losses on sales

0

1

0

Corporate Information

Sales amounts

4) Securities that were subject to impairment during the fiscal years ended March 31, 2019 and 2018
Impairment loss recorded in the fiscal year ended March 31, 2019, was ¥473 million (other securities: ¥5 million ($4,268 thousand)).
Impairment loss recorded in the fiscal year ended March 31, 2018, was ¥8 million (other securities: ¥8 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.

80

Financial and Non-Financial Section

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Contents

Notes to Consolidated Financial Statements
12. Deferred Tax Assets and Liabilities

Inventories as of March 31, 2019 and 2018, are as follows:

1) The significant components of deferred tax assets and liabilities as of March 31, 2019 and 2018,
are as follows:

Thousands of
U.S. dollars

Millions of yen

2019

2018

¥ 105,757¥ 86,929$ 952,852

Work in progress

4,578

3,344

41,248Raw materials and supplies

55,58946,194500,848¥ 165,924¥ 136,468$ 1,494,950

Goods and products

Total

A summary of assets pledged as collateral for liabilities as of March 31, 2019 and 2018, is as follows:

¥

2019

2018
¥ 146
1,140

174,697

Machinery, equipment, vehicles and fixtures

857

1,505

7,726

Tools and furniture and fixtures

—

51

—

2,910

1,093

26,220

Land
Other
Total

$

1,320

9,572

—

86,250¥ 32,877¥ 3,937$ 296,216

Note that cash and deposits are pledged as collateral in order to guarantee business transactions.

A summary of secured liabilities as of March 31, 2019 and 2018, is as follows:
Thousands of
U.S. dollars

Millions of yen

Long-term loans payableTotal¥ 1,351$ 168,154

Accrued enterprise tax and others

1,361

1,134

12,268

Accrued expenses

2,892

2,247

26,061

Investment securities

1,287

1,191

11,596

Accrued bonuses for employees

3,624

3,318

32,657

Depreciation of fixed assets

4,269

6,025

38,466

Impairment loss

2,004

1,688

18,06420192018¥ 3,720$ 12,174

18,784

2,823

169,245¥ 20,135¥ 6,543$ 181,419

Losses carried forward *

888

732

8,002

3,420

2,741

30,820

Other

8,021

5,578

72,276

Subtotal deferred tax assets

46,43442,431

418,369

Valuation allowance for losses carried forward *(2,604)—(23,465)

Valuation allowance for deductible temporary differences(4,592)—(41,379)

Subtotal valuation allowance(7,197)(6,037)(64,845)

Total deferred tax assets

39,23736,393

353,523

Deferred tax liabilities:
Advanced depreciation reserve for fixed assets(7,521)(7,295)(67,764)

Unrealized holding gains or losses on securities(14,018)(13,915)(126,303)

Net defined benefit asset(5,830)(5,904)(52,528)

Valuation difference due to purchase of investments in subsidiaries(2,824)(2,791)(25,446)

Adjustment account for tax liabilities(4,196)—(37,807)

Other(1,088)(1,128)(9,808)

Total deferred tax liabilities(35,478)(31,035)(319,658)

Net deferred tax assets (liabilities)¥ 3,758¥ 5,358$ 33,865

Financial and Non-Financial Section

2019
Short-term loans payable¥ 17,771

Our Activities for Sustainability

146
19,389Buildings and structures

2019

2018

¥ 18,663

Net defined benefit liability

Unrealized gain
Thousands of
U.S. dollars

Millions of yen

Cash and deposits

2019
Deferred tax assets:

Our Value Creation Story

11. Collateral and Secured Liabilities

2019

Thousands of
U.S. dollars

Millions of yen

2019

Introduction

10. Inventories

Corporate Information

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Financial and Non-Financial Section

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Contents

Notes to Consolidated Financial Statements

Millions of yen
Withinone year

Losses carried forward (a)¥43More than one
year up to two
years

More than two
years up to
three years

More than
three years up
to four years

More than four
years up to fiveyears

More than five
years

¥115

¥107

¥53

¥93

¥3,007¥3,420

Total

Valuation allowance

23

37

36

53

52

2,402

2,604

Deferred tax assets

20

78

70

0

41

605

816

(a) Losses carried forward are the total amount after multiplying by the statutory tax rate.

More than two
years up to
three years

More than
three years up
to four years

More than four
years up to fiveyears

More than five
years

Total

Losses carried forward (a)$393$1,037

$968

$483

$840

$27,097$30,820

Valuation allowance

207

334

331

480

470

21,641

23,465

Deferred tax assets

185

703

636

3

370

5,455

7,355

(a) Losses carried forward are the total amount after multiplying by the statutory tax rate.

2) An analysis of the significant differences between the statutory tax rate and the Company’s effective tax rate
for the fiscal years ended March 31, 2019 and 2018, is as follows:
2019

2018

30.6%

30.9%

2019
¥ 137,1712018¥ 137,722

2019$ 1,235,891

Service cost

5,794

5,741

52,211

Interest cost

765

753

6,900

Actuarial gains or losses(1,629)380(14,683)Retirement benefits paid

(7,666)(7,248)(69,074)

Prior service costs incurred during fiscal year

379

23

3,422

Increase from newly consolidated subsidiary

5,715

—

51,495Ending balance of retirement benefit obligations(107)$ 1,266,056

2) Reconciliation of the beginning and ending balances of plan assets
Thousands of
U.S. dollars

Millions of yen

2019

2018

¥ 107,618¥ 109,768

2019

0.9

Expected return on plan assets

2,479

2,432

22,341(4,631)(906)(41,725)$ 969,621

Dividend and other permanently non-taxable income

(0.1)

(0.1)

Actuarial gains or losses

Per capital inhabitant’s tax

0.4

0.4

Contributions from employer

1,589

1,453

14,317

Tax credit for experimentation and research expenses

(1.4)

(2.1)

Retirement benefits paid

(5,681)(5,065)(51,187)

Increase (decrease) in valuation allowance

1.2

0.5

Increase from newly consolidated subsidiary

5,619

—

50,626

0.6

Other

(30)

(63)

(274)

Ending balance of plan assets¥ 106,963¥ 107,618$ 963,720

Amortization of goodwill, etc.

1.4

Other

(0.2)

0.9

Effective tax rate

32.7%

32.0%

Financial and Non-Financial Section

0.8

(201)
¥ 137,171(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.

Beginning balance of plan assets
Entertainment and other permanently non-deductible expenses(11)¥ 140,519

Other

Our Activities for Sustainability(Changes in presentation method)“Impairment loss” was included in “Other” under the “Deferred tax assets” for the previous consolidated fiscal year, and is disclosed
separately from this fiscal year due to increase in materiality.
In order to reflect this change in the presentation method, ¥7.266 billion presented for “Other” in the previous consolidated fiscal year
has been re-categorized as ¥1.688 billion in “Impairment loss” and ¥5.578 billion under “Other.”Thousands of
U.S. dollars

Millions of yen

Beginning balance of retirement benefit obligations

Our Value Creation Story

More than one
year up to two
years

Statutory tax rate

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 in which
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 havejoined the Smaller Enterprise Retirement Allowance Mutual Aid system. Some consolidated subsidiaries have established retirement
benefit trusts.

Defined benefit plans
1) Reconciliation of the beginning and ending balances of retirement benefit obligations

Thousands of U.S. dollars
Withinone yearIntroduction

13. Retirement and Severance Benefits* Schedule of carryforward periods for tax losses carried forward and corresponding deferred tax assets as of March 31, 2019.

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

84

Financial and Non-Financial Section

Corporate Information(Changes in presentation method)“Amortization of goodwill, etc.” was included in “Other” for the previous consolidated fiscal year, and is disclosed separately from thisfiscal year due to increase in materiality.
In order to reflect this change in the presentation method, 1.5% presented for “Other” in the previous consolidated fiscal year has been
re-categorized as 0.6% in “Amortization of goodwill, etc.” and 0.9% under “Other.”

Meiji Holdings Co., Ltd.｜Integrated Report 201985

Contents

Notes to Consolidated Financial Statements

Thousands of
U.S. dollars

Millions of yen

2019

2018

2019

Retirement benefit obligations of funded plans¥ 134,168¥ 131,320$ 1,208,838

Plan assets(106,963)(107,618)(963,720)

27,20523,702

245,117

6,350

5,851

57,21833,55629,553

302,336

Net defined benefit liability

53,83050,330485,001

Net defined benefit asset
Net amount of liability and asset recorded on the consolidatedbalance sheet(20,274)(20,777)(182,665)¥ 33,556¥ 29,553$ 302,336(1) Major categories of plan assets as a percentage of total plan assets are as follows:
2019

2018

Bonds

35%

42%

Equities

22

20

Alternatives

25

25

Cash and deposits

3

3

Other

15

10

100%

100%

Total

(Note 1) “Alternatives” includes multi-asset management, hedge funds, and investment in real estate and other investments.
(Note 2) The total amount of plan assets includes the retirement benefit trust for corporate pensions funds and the lump-sum severance payment plan
representing 11% 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 allocationsof plan assets and to the current and expected future long-term rate of returns on the various assets that make up the plan assets.

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

Millions of yen

2019

2019

2018

8) Actuarial assumptions¥ 5,794¥ 5,741$ 52,211

Interest cost

765

753

6,900

Expected return on plan assets(2,479)(2,432)(22,341)

Amortization of actuarial gains or losses

3,478

3,492

31,341

23

12

211

(7)
¥ 7,575(9)¥ 7,558(71)$ 68,251

Amortization of prior service cost

Actuarial assumptions are as follows:
2019

2018

Discount rate

0.2–0.9%

0.2–0.9%

Expected future salary increase rate

Principally 1.4%

Principally 1.4%

Long-term expected rate of return on assets

Principally 2.5%

Principally 2.5%

(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.

Defined contribution plans

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

14. Unconsolidated Subsidiaries and Affiliates

The breakdown of items recorded in remeasurements of defined benefit plans in other comprehensive income (before tax effect) is asfollows:

As of March 31, 2019 and 2018, investment securities of unconsolidated subsidiaries and affiliates is as follows:

2018

Amortization of actuarial gains or losses¥ 477¥ 2,225$ 4,297

Amortization of prior service cost
Total

(364)
¥ 112

(10)
¥ 2,215(3,286)$ 1,011

Thousands of
U.S. dollars

Millions of yen

2019

2019
Investment securities (stock)¥18,238

Financial and Non-Financial Section

2019

The amount of required contribution to defined contribution plans for the consolidated subsidiaries is ¥1,230 million ($11,084
thousand) in the current consolidated accounting period and ¥1,300 million in the previous consolidated accounting period.

Thousands of
U.S. dollars

Millions of yen

Our Activities for Sustainability

Service cost

Other
Retirement benefit cost related to defined benefit plans

7) Plan assets

Our Value Creation Story

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

Introduction

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

2018¥15,825

2019$164,323

Corporate Information

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

2019

86

2018

2019

Unrecognized actuarial gains or losses¥ 16,499¥ 16,976$ 148,660

Unrecognized prior service cost
Total

483
¥ 16,982

118¥ 17,095

4,352$ 153,012

Financial and Non-Financial Section

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Contents

Notes to Consolidated Financial Statements
17. Notes receivable/payable due on the consolidated balance sheet date

As of March 31, 2019 and 2018, contingent liabilities are as follows:

Notes receivable/payable due on the consolidated balance sheet date are based on the specified settlement date. Thus, the notes
receivable/payable shown below are included in the balance for the consolidated fiscal year.

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

2019

Employees
Total

¥ 55

¥ 164

$ 500

76

89

691

68
¥ 200

90
¥ 344

616
$ 1,808

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

2019

2019

4th Series of Unsecured Straight Bond

¥ 20,000

6th Series of Unsecured Straight Bond

15,000135,147¥ 35,000$ 315,343

Total

¥ 277

¥ 339

$ 2,497

Notes payable

3,138

3,380

28,273

18. Commitment Line Agreements
The Company enters into commitment line agreements with six financial institutions for the purpose of securing a flexible measure forraising funds and improving capital efficiency.
The unused portion of the commitment line based on these agreements as of March 31, 2019 and 2018, is as follows:
Thousands of
U.S. dollars

Millions of yen

2019¥30,000—¥30,000

Maximum loan amount
Used portion of the commitment line
Balance2018¥30,000—¥30,000

2019$270,294—$270,294

Our Activities for Sustainability

Millions of yen

Thousands of
U.S. dollars

2019

2018

Notes receivable

Our Value Creation StoryPT MEIJI FOOD INDONESIA
Sendai Feed Co., Ltd.

2019

2018

Thousands of
U.S. dollars

Millions of yen

2019

Introduction

15. Contingent Liabilities$ 180,196

19. Net Assets
1) Matters related to types and total numbers of outstanding shares and treasury stock2) Notes receivable discounted and endorsed

2019

2019

2018

Type of shares

$209
309

¥ 6
67

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

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

Increase(Thousands)

Decrease(Thousands)

Number of shares
as of March 31, 2019
(Thousands)

152,683——

152,683

7,680

5

36

7,650

Financial and Non-Financial Section¥23
34

Notes receivable discounted
Notes receivable endorsed

2019

Thousands of U.S.
dollars

Millions of yen(Note 1) The treasury common stock increased by 5 thousand shares due to an increase in the purchase of shares that are less than one unit.
(Note 2) The treasury common stock decreased by 36 thousand shares due to the disposal of 36 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.

16. Goodwill
As of March 31, 2019 and 2018, goodwill is as follows:
Thousands of
U.S. dollars

Millions of yen

2019
Goodwill¥73

2018¥10,590

2018

2019
$659

Type of shares

Increase(Thousands)

Decrease(Thousands)

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

152,683——

152,683

6,218

1,497

35

7,680

Corporate Information

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

Number of shares
as of March 31, 2017
(Thousands)(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 are 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 a decrease in sales of 0 thousand shares that are less than one unit.

88

Financial and Non-Financial Section

Meiji Holdings Co., Ltd.｜Integrated Report 201989

Contents

Notes to Consolidated Financial Statements
Introduction

20. Supplemental Cash Flow Information

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

(1) The following table represents a reconciliation of cash and cash equivalents as of March 31, 2019 and 2018:2019

Resolution

Board of Directors’ meeting
held on May 11, 2018
Board of Directors’ meeting
held on November 7, 2018

Type of shares

Commonstock
Commonstock

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

Dividends per share
U.S.
Yen
dollars¥10,512$98,952¥72.50

$0.65

9,427

88,735

65.00

0.58

Cut-off date

Effective date

March 31,2018
September 30,
2018

June 6,2018
December 6,
2018

Resolution

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

Dividends per share

Millions of yen

Yen

Type of shares

Commonstock
Commonstock¥9,520¥65.00

8,337

57.50

Cut-off date

Effective date

March 31,2017
September 30,
2017

June 7,2017
December 6,
2017Cash and deposits
Time deposits with maturities of more than three months
Securities with maturities up to three months
Cash and cash equivalents

2019¥ 25,356(2,238)1,364¥ 24,481

Resolution

Type ofsharesBoard of Directors’ meeting
held on May 13, 2019

Commonstock

Source ofdividends¥10,877

Retainedearnings$98,004

Dividends per share
Yen

U.S. dollars

Cut-off date

Effective date

$0.67

March 31,2019

June 6,2019¥75.00Current assets
Fixed assets
Current liabilities
Long-term liabilities
Negative goodwill
Non-controlling interests
Acquisition cost of stocks
Cash and cash equivalents
Deduction: Payment for acquisition

Thousands of
U.S. dollars

2019¥ 43,651
32,558(7,913)(4,858)(6,584)(14,352)
42,500(8,620)¥ 33,879

2019$ 393,289
293,342(71,302)(43,775)(59,321)(129,316)
382,917(77,673)$ 305,244

Our Activities for Sustainability

2019
Total amount of dividends
Millions
Thousands ofof yenU.S. dollars

2019$ 228,457(20,171)
12,289$ 220,575(2) Breakdown of main assets and liabilities for a new consolidated subsidiary absorbed into the Group through the acquisition ofstock during this consolidated fiscal year ended March 31, 2019
The following offers a breakdown of the assets and liabilities at the time when KM Biologics Co., Ltd was newly absorbed into theGroup through the acquisition of stock. The acquisition cost of stocks and the corresponding payment (net) for that stock is also
shown.
Millions of yen(2) Dividends with the cut-off date in the fiscal year ended March 31, 2019, and with the effective date in the fiscal year ending
March 31, 20202018
¥ 27,613(2,142)
1,442¥ 26,913

Our Value Creation Story

2018
Total amount of dividends

Thousands of
U.S. dollars

Millions of yen

2018
Total amount of dividends

Dividends per share

Type ofsharesMillions of yen

Source ofdividends

Yen

Cut-off date

Effective date

Board of Directors’ meeting
held on May 11, 2018

Commonstock¥10,512Retainedearnings¥72.50March 31,2018

June 6,2018

21. Selling, General and Administrative Expenses
The major elements of selling, general and administrative expenses during the fiscal years ended March 31, 2019 and 2018,
are as follows:
Thousands of
U.S. dollars

Millions of yen

3) Shareholders’ equity
The Corporation Law of Japan provides that an amount equal to 10% of the amount to be distributed as distributions of capital surplus(other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve and thelegal 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, butneither the capital reserve nor the legal reserve is available for distributions.

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

2019¥ 48,157
101,276
74,874
7,008
5,951
2,443

Financial and Non-Financial Section

Resolution

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

2019
$433,887
912,483
674,605
63,14253,62622,014

Corporate Information

22. 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, 2019 and 2018, are as follows:
Thousands of
U.S. dollars

Millions of yen

Research and development costs

90

Financial and Non-Financial Section

2019¥29,1822018¥26,5072019$262,930

Meiji Holdings Co., Ltd.｜Integrated Report 201991

Contents

Notes to Consolidated Financial Statements
26. Impairment Loss

The major elements of extraordinary gains and losses during the fiscal years ended March 31, 2019 and 2018, are as follows:

Impairment losses for the fiscal year ended March 31, 2019, are as follows:

Thousands of
U.S. dollars

Millions of yen

2019

2018

Type

Location

2019

Other assets

Goodwill

Medreich Limited

Assets in use

Machinery, equipment and intangible fixed assets, etc.

London, UK

Idle assets

Land, etc.

Odawara-shi, Kanagawa Prefecture

Idle assets

Machinery and equipment

Madrid, Spain

Idle assets

Machinery and equipment

Guangzhou, China

Intangible fixed assets

Chuo-ku, Tokyo Prefecture¥ 6,516¥ 6,459$ 58,714

Gain on negative goodwill

6,584

—

59,321

338

1,101

3,051

13,4397,561

121,087

Assets in use

Loss on disposal of fixed assets

2,020

4,753

18,202

Impairment loss

12,242

4,214

110,306

Other

4,299

3,390

38,742¥ 18,563¥ 12,358$ 167,251

We group our assets based on the business types for the
impairment test. In addition, leased assets and idle assets areindividually assessed for impairment.
In the fiscal year ended March 31, 2019, due to a decreasein the profitability of some assets, the carrying values of
those assets were reduced to recoverable amounts, and the
reductions were recognized as “Impairment loss” of ¥12,242
million ($110,306 thousand) under “Extraordinary losses.”
Of this amount, for assets in use, ¥405 million ($3,654
thousand) was machinery, equipment and vehicles; ¥26
million ($240 thousand) was tools, furniture and fixtures;¥1,329 million ($11,975 thousand) was intangible assets.
In addition, for idle assets, ¥7 million ($70 thousand) was
buildings and structures; ¥93 million ($846 thousand) was
machinery, equipment and vehicles; ¥999 million ($9,006
thousand) was land. For other assets, ¥9,379 million ($84,512
thousand) was goodwill.

Total
Extraordinary losses:

Total(Note) “Gain on liquidation of subsidiaries” and “Gain on sale of subsidiaries and affiliates’ stocks” were reported independently under “Extraordinary gains” and“Loss on sale of subsidiaries and affiliates’ stocks” and “Transfer related costs” were reported under “Extraordinary losses” in previous consolidated fiscal year
ended March 31, 2018. However, these items have been included in “Other” under “Extraordinary gains” and “Extraordinary losses” for this consolidated fiscal
year ended March 31, 2019, because the monetary amount has become insignificant.
Amounts disclosed for the fiscal year 2018 in the above schedule has been reclassified in line with the disclosed items for the fiscal year 2019.
As a result, under “Extraordinary gains” in the consolidated statement of income of the fiscal year ended March 31, 2018, ¥464 million for “Gain on
liquidation of subsidiaries,” ¥226 million for “Gain on sale of subsidiaries and affiliates’ stocks” and ¥410 million for “Other” have been reclassified as ¥1,101
million for “Other.” Under “Extraordinary losses” in the same, ¥1,224 million for “Loss on sale of subsidiaries and affiliates’ stocks,” ¥1,662 million for “Transfer
related costs” and ¥503 million for “Other” have been reclassified as ¥3,390 million for “Other.”

24. Gain on sales of property, plant and equipment
Gain on sales of property, plant and equipment for the fiscal years ended March 31, 2019 and 2018
Thousands of
U.S. dollars

Millions of yen

2019

Note that ¥9,379 million ($84,512 thousand) for the
impairment loss in goodwill is the amortization of goodwill as
required by paragraph 32 in the “Implementation Guidance on
Procedure for Capital Consolidation in Consolidated Financial
Statements” (Accounting Practice Committee Report No.7,
February 16, 2018).
The recoverable amounts for assets in use have beenmeasured based on the value in use, but they are valued aszero as the estimated future cash flow is negative.
The recoverable amounts for idle assets have beenmeasured based on the net selling values when measurable
and reduced to memorandum values or expected sales
amounts, etc.

Our Activities for Sustainability

Gain on sales of fixed assets

Our Value Creation Story

Application

Extraordinary gains:

Other

Introduction

23. Extraordinary Gains and Losses

2019

2018

¥ 5,505¥ 5,516

Other fixed assets

1,011

942

$ 49,602
9,112

Total

¥ 6,516¥ 6,459$ 58,714

Financial and Non-Financial Section

Land

25. Loss on disposal of property, plant and equipment
Loss on disposal of property, plant and equipment for the fiscal years ended March 31, 2019 and 2018
Thousands of
U.S. dollars

Millions of yen

2019

¥ 732

$ 2,418

798

1,977

7,196

Other

953

2,043

8,587

Total

¥ 2,020¥ 4,753$ 18,202

Financial and Non-Financial Section

Corporate Information¥ 268

Machinery and equipment

Buildings and structures

92

2019

2018

Meiji Holdings Co., Ltd.｜Integrated Report 201993

Contents

Notes to Consolidated Financial Statements

Type

Location

Assets in use

Buildings and structures

Kasukabe-shi, Saitama Prefecture

Assets in use and Idle assets

Machinery, equipment and buildings, etc.

Kasaoka-shi, Okayama Prefecture

Assets in use

Land

Tsurugashima-shi, Saitama Prefecture

Assets in use and Idle assets

Machinery, equipment and buildings, etc.

Jining Shandong, China

Assets in use

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

Thousands of
U.S. dollars

Millions of yen

2019

2019

2018

Net unrealized holding gains or losses on securities:¥

Amount arising during the year272$

¥ 11,947

2,457

(103)

(329)

(930)

Amount before tax effect169

11,617

1,526

Tax effect(102)(3,545)

(923)

66

8,071

603

Reclassification adjustments for gains and losses included in profit

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

85

(72)

768

Reclassification adjustments for gains and losses included in profit

—

—

—

Asset acquisition costs adjustments

—

—

—

Amount before tax effect

85

(72)

768

Tax effect

(26)

22

(236)

Deferred gains or losses on hedges

58

(50)

531

(1,615)(1,323)(14,558)

—

(363)

—

(1,615)(1,686)(14,558)

Amount arising during the year

(3,370)(1,290)(30,365)

Reclassification adjustments for gains and losses included in profit

3,482

3,505

31,376

Amount before tax effect

112

2,215

1,011

Tax effect

(196)

(499)

(1,773)Remeasurements of defined benefit plans

(84)

1,715

(762)

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

Our Activities for Sustainability

Remeasurements of defined benefit plans:

Equity in affiliates accounted for by the equity method:
(523)

788

(4,713)¥ (2,097)¥ 8,838$ (18,899)

Amount arising during the year
Total other comprehensive income

Financial and Non-Financial Section

structures; ¥749 million was machinery, equipment andvehicles; ¥3 million was tools, furniture and fixtures; ¥21
million was land; and ¥26 million was intangible assets. For
rental assets, ¥45 million was buildings.
Additionally, the recoverable amounts of assets in use withdecreased profitability have been measured based on value
in use. For assets in use in Kasaoka in Okayama Prefecture, thefuture cash flow is calculated by discounting at a rate of 4.20%,
and for assets in use 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 assets in use, 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.

Reclassification adjustments and tax effects relating to other comprehensive income are as follows:

Our Value Creation Story

Application

The asset groupings in the Group are in principle based on thetype of business. Leased assets and idle assets are grouped byindividual asset.
In the fiscal year ended March 31, 2018, due to a decrease in
the profitability of some assets and the decision to dismantle
existing facilities to make way for the new facility construction,
the carrying values of said assets were reduced to recoverable
amounts, and the reductions were recognized as “Impairment
loss” of ¥4,214 million under “Extraordinary losses.”
Of this amount, for assets in use, ¥1,398 million wasbuildings and structures; ¥1,433 million was machinery,equipment and vehicles; ¥30 million was tools, furniture andfixtures; ¥362 million was land; ¥1 million was intangible
assets; and ¥9 million was construction in progress.
In addition, for idle assets, ¥19 million was buildings andIntroduction

27. Comprehensive Income

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

28. Derivative Financial Instruments
Matters related to derivative transactions in the fiscal year ended March 31, 20191) Derivative transactions for which hedge accounting is not applied(1) Currency-related transactions
Millions of yen

Thousands of U.S. dollars

2019Transactions other than market
transactions:
Currency swap contracts
Buy
U.S. dollar
Total

1,209
¥1,209

399
¥399

2019

Fair value

Revaluation
gain (loss)

136
¥136

136
¥136

Portion withmaturityoverContract
amount, etc. one year

10,894$10,894

3,600$3,600Fair value

Revaluation
gain (loss)

1,228$1,2281,228$1,228

Corporate Information

Type of transactions

Portion withmaturityoverContract
amount, etc. one year

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

94

Financial and Non-Financial Section

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Contents

Notes to Consolidated Financial Statements
Introduction(2) Interest rate-related transactions
None

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

2) Derivative transactions for which hedge accounting is applied

Millions of yen

2018(1) Currency-related transactions
Millions of yen

Thousands of U.S. dollars

2019
Primary hedged items

2019
Fair value

Portion with
Contract maturity over
one yearamount, etc.

Fair value

Accounts payable
Accounts receivable¥ 1,582¥—¥5$14,259

$—

$46

—

—

—

—

—

—

Accounts payable
Accounts payable
Accounts payable
Accounts payable

217
—
123
101

—
—
—
—

(Notes)Accounts receivable
Accounts receivable——¥ 2,025——¥—(Notes)(Notes)(Notes)(Notes)

1,960
—
1,116
917

—
—
—
—

(Notes)——$18,253——$—(Notes)180¥180(2) Interest rate-related transactions
None

Millions of yen(Notes)2018(Notes)(Notes)Type of transactions(Notes)¥5(Notes)$46

Primary hedged items¥16,749¥15,7022019
Fair value(Note)

Portion with
Contract maturity over
one yearamount, etc.

$150,911$141,479

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.

Accounts payable
Accounts payable

Fair value¥ 4,251—¥——¥ (80)—

Accounts receivable

12

—

0

Accounts payable
Accounts payable
Accounts payable
Accounts payable

790
35
273
—

—
—
—
—

(Notes)Accounts receivable
Accounts receivable20157¥ 5,541——¥—(Notes)(Notes)(Notes)(Notes)Corporate Information

Long-term loans
payablePortion with
Contract maturity over
one yearamount, etc.

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
Euro
Pound
Australian dollar
Sell
U.S. dollar
Euro
Total

Portion with
Contract maturity over
one yearPrimary hedged items amount, etc.

Financial and Non-Financial Section

Thousands of U.S. dollars

2019

Financial and Non-Financial Section

180
¥180

(1) Currency-related transactions

Millions of yen

96

1,147
¥1,1472) Derivative transactions for which hedge accounting is applied(2) Interest rate-related transactions

Method of hedge accounting:Integrated method(shortcut method, allocation
method) of interest rate andcurrency swap
Interest rate and currency
swap contracts
Fixed rate payments/
variable rate receipts

1,912¥1,912

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

(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.

Type of transactions

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

Fair value

Our Activities for Sustainability

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

Type of transactions

Our Value Creation Story

Type of transactions

Portion with
Contract maturity over
one yearamount, etc.

Portion with
Contract maturity over
one yearamount, etc.

(Notes)¥ (80)(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 thefair value information of the respective accounts payable and accounts receivable.

Meiji Holdings Co., Ltd.｜Integrated Report 201997

Contents

Notes to Consolidated Financial Statements
Introduction(2) Interest rate-related transactions(5) Name of the company after combining businesses
No change.
Millions of yen

2018Type of transactions

Fair value(6) Voting right ratio
49%
KMB Co., Ltd. acquired 100% of the voting rights of KM Biologics Co., Ltd., but after KMB Co., Ltd. and KM Biologics Co., Ltd. merged on
September 2, 2018, the Company’s voting right ratio in KM Biologics Co., Ltd. is now 29% and Meiji Seika Pharma Co., Ltd. is 20%.
(7) Rationale to determine the acquiring company
As KMB Co., Ltd. has gained practical control by acquiring stock in compensation for cash.

Long-term loans
payable¥17,796¥16,749(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.

29. Business combination transactions(1) Acquired company and business description
Acquired company: KM Biologics Co., Ltd.
Description of business: Research, development, manufacturing and supply of biological pharmaceuticals such as vaccines for humanuse, plasma derivatives and vaccines for veterinary use

From July 1, 2018 to March 31, 20193) Overview of subsidiary acquisition(1) Breakdown of cost for acquisition and compensation
Compensation for acquisition by KMB Co., Ltd.; Cash ¥42.5 billion (Acquisition cost ¥42.5 billion ($382.917 million))
Note that the Company and Meiji Seika Pharma Co., Ltd. have ¥9.8 billion ($88.296 million) in common stock and ¥7.5 billion($67.573 million) in non-voting stock of KMB Co., Ltd.
(2) Amounts for acquisition related expenses and their classifications
Acquisition related expenses for the business combination totaled ¥938 million ($8.456 million) (from which ¥818 million ($7.375
million) is applied to this consolidated fiscal year ended March 31, 2019) and is recorded under the “Selling, general and administrative
expenses” in the consolidated statements of income.

4) Gain on negative goodwill and source of gain
(1) Gain on negative goodwill¥6.584 billion ($59.321 million)(2) Source of gain
As the acquired net assets and liabilities exceed the acquisition cost of the stock, that difference is recorded as a gain on negative
goodwill.

5) Breakdown of assets and liabilities acquired on the date of the business combination
Millions of yen(3) Date of business combination
July 2, 2018

Thousands of
U.S. dollars

Current assets
Fixed assets
Total assets¥ 43,651
32,55876,209$ 393,289
293,342686,632

Current liabilities
Long-term liabilities
Total liabilities

7,913
4,858
¥ 12,772

71,302
43,775$ 115,077

Corporate Information(2) Main objectives for combining businesses
In the “Meiji Group 2026 Vision” (hereafter referred to as the “2026 Vision”), the Meiji Group has laid out key strategies. Based on
advanced expertise in health and particularly in the fields of pharmaceuticals and nutrition related to preventative medicine, the MeijiGroup will maximize our unique strengths in the food product and pharmaceutical businesses in order to build up our approach in thefield of “Health and preventative medicine” and provide new nutritional value to Japan and the rest of the world.
Based in Kumamoto Prefecture, Kaketsuken has been engaged in the research, development, manufacturing and supply of
biological agents such as vaccines for human use, plasma derivatives and vaccines for veterinary use in Japan for over 70 years.
For these reasons, we believe that this acquisition will help us achieve our 2026 Vision and increase the corporate value of the MeijiGroup.

Financial and Non-Financial Section

KM Biologics Co., Ltd. succeeded the main business of Chemo-Sero-Therapeutic Research Institute (hereafter referred to as“Kaketsuken”) by transfer through contributions in kind, etc. Further, on March 13, 2018, the Company and its consolidated subsidiary
Meiji Seika Pharma Co., Ltd. entered into a share transfer agreement with Kaketsuken. Thereafter, the Company’s subsidiary KMB Co.,
Ltd. acquired a stake in KM Biologics Co., Ltd. on July 2, 2018 based on this agreement. Consequently, KM Biologics Co., Ltd. became aconsolidated subsidiary of Meiji Group.
Note that KMB Co., Ltd. is a company independently established by Meiji Holdings, Meiji Seika Pharma Co., Ltd., the Kumamoto
Prefecture company consortium (EGAO HOLDINGS Co., Ltd., Kimigafuchi Educational Foundation, Kumamoto Broadcasting Co., Ltd.,
Saishunkan Co. Ltd., Kumamoto Telecasting Corporation, TOMITA Pharmaceutical and The Higo Bank, Ltd.) and Kumamoto Prefecture
for the purpose of this acquisition. Meiji Holdings and Meiji Seika Pharma Co., Ltd. have a voting rights of 49%. After this acquisition,
KM Biologics Co., Ltd. and KMB Co., Ltd. merged on September 2, 2018 and KM Biologics Co., Ltd. became the surviving entity of thismerger.

2) Fiscal period of acquired company included in the consolidated statements of income from this consolidated
fiscal year ended March 31, 2019

Our Activities for Sustainability

Business combination from acquisition
1) Overview of business combinations

Our Value Creation Story

Method of hedge accounting:Integrated method(shortcut method, allocation
method) of interest rate andcurrency swap
Interest rate and currency
swap contracts
Fixed rate payments/
variable rate receipts

Primary hedged
items

Portion with
Contract maturity over
one yearamount, etc.

6) Estimated amount that will impact the consolidated statements of income (assuming that the businesscombination is completed on the start date of the consolidated fiscal year) and the calculation method
Due to the immateriality of the impact, we omit further disclosure.

(4) Legal form of business combination
Acquisition of stock in cash

98

Financial and Non-Financial Section

Meiji Holdings Co., Ltd.｜Integrated Report 201999

Contents

Notes to Consolidated Financial Statements

Millions of yen

2018

Reporting segments of the Group are components of the Group by which separate financial information is available and evaluatedregularly 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 their businessactivities 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 Food segment
and the Pharmaceutical segment.
Millions of yen

Food

Total

Adjustments(Note 1)

¥ 1,056,107
530¥ 1,056,637¥ 84,763
690,914¥ 198,273
415¥ 198,688¥ 14,243
282,855¥ 1,254,380
946¥ 1,255,326¥ 99,007
973,770¥—(946)¥ (946)¥ (624)30,373¥ 1,254,380—¥ 1,254,380¥ 98,383
1,004,143

¥

¥

¥

¥

¥

34,5171,024
6,493
60,127

8,212
11,2186,175
10,86542,73012,242
12,66870,993

302
—
—
175

43,033
12,242
12,6682019
Adjustments(Note 1)

Amount presented
in consolidated
statement of income(Note 2)

$ 1,786,405
3,745$ 1,790,151$ 128,333
2,548,480$ 11,301,744
8,524$ 11,310,268$ 892,039
8,773,496$—(8,524)$ (8,524)$ (5,622)
273,657$ 11,301,744—$ 11,301,744$ 886,416
9,047,153$ 311,000
9,228
107,345

$

$

$

$

541,739

97,900384,996
110,306
164,323
639,640

2,728
—
—
1,585

387,724
110,306
164,323
641,225(Note 1) The adjustments are as follows.
The adjustments in the segment income (negative ¥624 million or negative $5,622 thousand) includes the elimination of expenses for intersegment
transactions (¥14 million or $134 thousand) and the corporate expenses not allocated to each reporting segment (negative ¥638 million or negative$5,756 thousand). The corporate expenses are expenses related to the Company’s (holding company) operations, etc.
The adjustments in the segment assets (¥30,373 million or $273,657 thousand) includes the elimination of intersegmental assets (negative ¥85,387
million or negative $769,323 thousand) and the corporate assets not allocated to each reporting segment (¥115,760 million or $1,042,981 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.

100 Financial and Non-Financial Section¥ 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

¥

¥

¥

¥

¥

40,1881,024
6,029
66,234

6,006
11,2186,028
8,400

46,195
12,242
12,057¥

74,635315——
37

46,511
12,242
12,05774,673(Note 1) The adjustments are as follows.
The adjustments in the segment income (negative ¥541 million) includes the elimination of expenses for intersegment transactions (negative ¥7 million)
and the corporate expenses not allocated to each reporting segment (negative ¥533 million).
The corporate expenses are expenses related to the Company’s (holding company) operations, etc.
The adjustments in the segment assets (¥53.445 billion) includes the elimination of intersegmental assets (negative ¥77,163 million) and the corporate
assets not allocated to each reporting segment (¥130,608 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.

Transactions between the company submitting the consolidated financial statements and the related parties
Officers and principal shareholders (only for individual parties) for the company submitting the consolidated financial statements
and related items

Category

Name ofperson,company,etc.

Commonstock

Description ofbusinessor occupation

Director

MasahikoMatsuo—Chairman and
Representative
Director

Director

Kazuo
Kawamura—

President andRepresentative
Director

Director of
Katsunarisignificant
Matsudasubsidiary

Director of
Daikichirosignificant
Kobayashi
subsidiary——

The Member ofthe Board andPresident andRepresentative
Director of Meiji
The Member ofthe Board andPresident andRepresentative
Director of Meiji
Seika Pharma

Percentage
of voting Relationshiprights held with related Description ofpartiestransaction
(%)

0.0%

—

0.0%

—

0.0%

—

0.0%

—

Contributions
in kind formonetary
compensation
claimsContributions
in kind formonetary
compensation
claimsContributions
in kind formonetary
compensation
claimsContributions
in kind formonetary
compensation
claimsAmount of transaction
Balance at theMillions Thousands
end of theof U.S.
offiscal year
dollarsyen
Account being reported

¥11

$101

—

—

18

169

—

—

14

129

—

—

11

103

—

—

(Note) Transaction conditions and policy for establishing transaction conditions, etc.
This refers to contributions in kind for monetary compensation claims based on the Restricted Stock Compensation Plan.

Meiji Holdings Co., Ltd.｜Integrated Report 2019 101

Corporate Information$ 9,515,339
4,778$ 9,520,117$ 763,705
6,225,015

73,996
101,077
56,978¥ 167,783
683¥ 168,466¥ 11,025
212,702

Financial and Non-Financial Section

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
Impairment Loss
Equity in income of affiliates
Increase in property, plant andequipment/intangible fixed assets

Total¥ 1,073,077
577¥ 1,073,655¥ 84,189
661,397

31. Information About Related Parties

Reporting segments
Pharmaceutical

Adjustments(Note 1)

Total

71,169Thousands of U.S. dollars

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
Impairment Loss
Equity in income of affiliates
Increase in property, plant andequipment/intangible fixed assets

Pharmaceutical

Our Activities for Sustainability

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
Impairment Loss
Equity in income of affiliates
Increase in property, plant andequipment/intangible fixed assets

PharmaceuticalAmount presented
in consolidated
statement of income(Note 2)Food

Our Value Creation Story

2019
Reporting segments

Amount presented
in consolidated
statement of income(Note 2)

Reporting segments

Introduction

30. Segment Information

Contents

Notes to Consolidated Financial Statements

Independent Auditor’s Report
Introduction

32. Significant Subsequent Events
None

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

102 Financial and Non-Financial Section

Meiji Holdings Co., Ltd.｜Integrated Report 2019 103

Contents

Operating Bases and Group Companies (As of July 31, 2019)
Introduction

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

Overseas▼ Food Segment

Meiji Co., Ltd.

1
29

Research Laboratory
Plant▼ Pharmaceuticals Segment

Nishi Shunbetsu Plant

Meiji Co., Ltd.

Meiji Seika Pharma Co., Ltd.

BranchPlant

Group Company

5Group Company 29
BranchPharmaceuticals
Hokkaido Branch
Sapporo Plant

Honbetsu Plant
Nemuro Plant

Head Office

Tokachi Plant

Group Company

2Group Company 11

OfficeNihon Kanzume, Co., Ltd.
Donan Shokuhin Co., Ltd.

Head OfficeGroup Company

2Group Company 18

Office▼ Pharmaceuticals Segment
Meiji Ice Cream (Guang Zhou) Co., Ltd.
Guangdong Meiji Pharmaceutical Co., Ltd.

Meiji Seika Pharma Co., Ltd.
Research Laboratory

Head Office

Research Laboratory

Research Laboratory

Research Laboratory
Plant

16
Group Company
3

1
4

Sales Office

Sales Office

Kyoto Plant
Pharmaceuticals Kyoto Branch
Meiji Oils and Fats Co., Ltd.
OHKURA Pharmaceutical Co., Ltd.
Okayama Plant
KCS Co., Ltd.
Kurashiki Plant
Osaka Plant
Okayamaken
Shokuhin Co., Ltd.

Pharmaceuticals
Chugoku Branch

Kyushu Plant

Hokuriku Plant *1
Three S and L Co., Ltd.
Meiji Sangyo
Co., Ltd.
Karuizawa Plant
Gifu Plant
Meiji Chewing Gum
Co., Ltd.
Tokai Meiji
Co., Ltd.

Kansai Plant
Kansai Ice Cream Plant
Kansai Nutritionals Plant

Kantou Seiraku Co., Ltd.
Gunma Milk Joint Business Cooperatives
Gunma Plant/Gunma Nutritionals Plant
Gunma Pharmaceuticals Plant
Tochigi Meiji Milk Products Co., Ltd.

[ KM Biologics Co., Ltd. ]US OfficeLaguna Cookie Co., Inc.

Meiji Pharma Spain, S.A.
Meiji America Inc.
D.F. Stauffer Biscuit Co., Inc.

Okinawa Meiji Milk
Products Co., Ltd.

Beijing Office
Meiji Pharma(Shandong) Co., Ltd.
Hanoi Office★

Bioscience Laboratories
CMC* Research Laboratories(Ashigara)
Odawara Plant

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

Pharmaceuticals Chiba & Saitama Branch
Veterinary Drugs East Branch

Saitama Plant
Moriya Plant
Ibaraki Plant
Toda Plant
Tokai Nuts Co., Ltd.
Meiji Techno-Service Inc.
Asahi Broiler Co., Ltd.
Chiba Meiji Milk Products
Co., Ltd.
Pharmaceuticals Tokyo Branch
Kitasato PharmaceuticalPharmaceuticals
Nitto Co., Ltd.
Industry Co., Ltd.
Yokohama Branch
Kanto Branch
Kanagawa Plant
Meiji Kenko Ham Co., Ltd.
Meiji Feed Co., Ltd.
Pharmaceutical Research Center
Meiji Logitech Co., Ltd.
CMC* Research Laboratories (Yokohama)
Meiji Fresh Network Co., Ltd.
Agricultural & Veterinary
Meiji Nice Day Co., Ltd.
Research Laboratories

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

PT. Meiji Indonesian
Pharmaceutical Industries*1 Set to close in September 2019
★ The nine subsidiaries of Medreich Limited are not shown.
Unmarked bases are companies and facilities that do not belong to the segment.

Head Office
Meiji Business Support Co., Ltd.
Fresh Logistic Co., Ltd.
Meiji Food Materia Co., Ltd.
Me Pharma Co., Ltd.

[ KM Biologics Co., Ltd. ]Tokyo Sales Office
104 Corporate Information

DM Bio Limited

Chubu Branch
Pharmaceuticals Sakado Plant
Nagoya Branch
Meiji Rice Delica
Corporation
Pampy Foods Incorporation
Co-Creation Center
Meiji Innovation Center

Veterinary Drugs West Branch
Head office
Kumamoto Plant
Kikuchi Laboratory
Kikuchi Plant
Koshi Plant
Aso Plant

Meiji Seika Europe B.V.

Kitanihon Branch
Pharmaceuticals Sendai Branch
Agricultural Chemicals East Branch

Corporate Information

Kansai Branch
Pharmaceuticals Osaka Branch
Agricultural Chemicals West Branch

Zao Shokuhin Kaisha, Ltd.

Tokai Plant
Aichi Plant

Pharmaceuticals
Shikoku Meiji Co., Ltd. Shikoku Branch

Tohoku Plant

Pharmaceuticals Kanto Branch

Plant

1

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

Financial and Non-Financial Section

Nishinihon
BranchPharmaceuticals
Fukuoka BranchGroup Company

BranchKM Biologics Co., Ltd.
Head Office

Plant

Our Activities for Sustainability

Plant

4
2

BranchOur Value Creation Story

Research Laboratory

Head Office▼ Food Segment

Asahikawa Plant* CMC: Chemistry, Manufacturing & Control

Meiji Holdings Co., Ltd.｜Integrated Report 2019 105

Contents

Independent Practitioner’s Assurance of
CO2 Emission Volume & Water Consumption Volume

Corporate Data

Stock Information

Company Name

Major Shareholders

In order to improve the reliability of the data, Meiji Holdings Co., Ltd. obtained the independent practitioner’ s assurance for thedomestic CO2 emission volume (Scope 1, Scope 2 and Scope 3, category 1) and domestic water consumption volume for FY
2018 indicated on p.42 and 43 in the Japanese version of this report by Deloitte Tohmatsu Sustainability Co., Ltd. We will work
hard to improve the reliability of all environmental data.

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

Percentage of
total sharesissued (%)

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

12,905

8.45

Japan Trustee Services Bank, Ltd. (Trust Account)

7,450

4.87

Mizuho Bank, Ltd.

4,617

3.02

JPY 30.0 billion

Nippon Life Insurance Company

3,348

2.19

Number of Group Employees

Resona Bank, Limited

3,047

1.99

17,608The Norinchukin Bank

2,892

1.89

Common Stock Issued

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

2,790

1.82

Meiji Holdings Trading-Partner
Shareholding Association

2,570

1.68

STATE STREET BANK WEST CLIENT - TREATY
505234

2,525

1.65

Meiji Holdings Employee Shareholding Association

2,450

1.60

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

April 1, 2009
Paid-in Capital

152,683,400
Stock ListingTokyo
Fiscal Year-End

March 31
Ordinary General Meeting of Shareholders

Our Value Creation Story

Number ofshares held(Thousands)

Name

Transfer Agent of Common Stock

Our Activities for Sustainability(Notes) 1. The Company holds 7,650,137 shares of treasury stock as of March 31, 2019.
2. The shareholding ratio is calculated by subtracting the treasury stock fromthe total shares of common stock issued.

Late in June
Mitsubishi UFJ Trust and Banking Corporation

Shareholding by Type of Shareholder

Public Notices

Public notices given by the Company
are issued electronically.
URL: https://www.meiji.com/■ Financial Institution

41.03%
23.59%■ Foreign Companies, etc.
23.72%■ Other Companies
9.89%■ Financial Instruments Dealers
1.74%■ 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.

Financial and Non-Financial Section

Stock Price and Trading Volume(index)350

Meiji Group

Trading volume (Thousand
shares)TOPIX

35,00030,000250

25,000200

20,000150

15,000100

10,000

50

5,000

0

0

FY2014FY2015FY 2016(Notes) 1. The closing price as of March 31, 2014 is 100.
2. A 2-for-1 common stock split was issued on October 1, 2015. This value was retro-actively applied.

FY 2017

FY 2018

Scope of domestic CO2 emission volume (Scope 1 and 2) and domestic water consumption volume
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.) , Meiji Seika Pharma Co., Ltd. and group companies (OHKURA
Pharmaceutical Co., Ltd.), and KM Biologics Co., Ltd. (Kumamoto Plant)
Note that CO2 emission volume for Meiji Logitech Co., Ltd. only include the fuel used in company owned delivery vehicles/ trucks. In addition, data for the CO2 emission
volume from company owned vehicles is collected only for Meiji Holdings Co., Ltd., Meiji Co., Ltd., Meiji Seika Pharma Co., Ltd. and KM Biologics Co., Ltd. (Kumamoto plant.)

Scope of domestic CO2 emission volume (Scope 3, category 1)
This scope includes the main raw materials and packaging materials (paper, plastic and cardboard) that will be introduced into the domestic production locations for Meiji
Co., Ltd. and the group companies, Meiji Seika Pharma Co., Ltd. and the group companies, as well as KM Biologics Co., Ltd. (Kumamoto plant).

106 Corporate Information

Meiji Holdings Co., Ltd.｜Integrated Report 2019 107

Corporate Information

300

FY2013Introduction

Corporate Data/Stock Information (As of March 31, 2019)

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

https://www.meiji.com/global