!"#$%&'#$()*$+,&# 2020

Contents

The Meiji Group’s Vision

Contents
Introduction

Introduction
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

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

and to always be there to brighten their daily lives.
Our responsibility as “Food and Health” professionals is
our customers’ needs, today and tomorrow.

Our Value Creation Story
8 Achieving Our Goals
in 2026 Vision
10 Laying the Groundworkfor the Future
12 The Meiji Group’s Process
for Value Creation
14 Value Chain Initiatives
16 Response to Climate Change

Our Value Creation Story

to continue finding innovative ways to meet

18 Financial and
Non-Financial Highlights (Main Indices)
20 Message from Our CEO
26 Overview by Business26 Food Segment
30 Pharmaceutical Segment

34 The Meiji Group Sustainability
36 The Meiji Group
38
40
44
46
50

Value Chain Sustainability
Progress on Materiality
Healthier Lives
Caring for the Earth
A Richer Society
Sustainable Procurement

Our Activities for Sustainability

Our Activities for Sustainability
52 Directors and Audit & Supervisory Board Members
54 Responsibilities of Members of the Board
and Audit & Supervisory Board Members
56 Dialogue: Murayama, Independent Outside Director
Spoke to Mr. Era, Managing Director, BlackRock Japan

60 Corporate Governance
67 Compliance
68 Risk Management

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

Corporate Information

Standard Table

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

Our Website > sustainability > Standard Table

Investors
Our Website > Investors

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

ESG Data

Financial and Non-Financial Section

Financial and Non-Financial Section
70 Financial and Non-Financial Highlights (11 Years Summary)
72 MD&A (The Management Discussion and Analysis)
78 Consolidated Financial Statements
115 Independent Auditor’s Reporthttps://www.meiji.com/global/sustainability/standard-table/

Sustainability Information
Our Website > Sustainability

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

Our Website > sustainability > ESG Data

Editorial Policy

Using the Integrated Report 2020

Since 2018, Meiji Holdings Co., Ltd. (the Company) has been issuing an
Integrated Report and will continue to replace the Annual Report. Aftercelebrating 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

This report is based on the performance results from FY2019 (fiscal year
ended March 2020). Some content from FY2020 (fiscal year ending March
2021) is also included. The content is compiled based on information thatis available at the time when the Company created the Integrated Report2020. Therefore, please note that the actual results may be diﬀerent fromthe Company’s forecast. The information in the report unless otherwise
specified is current as of August 2020.

Corporate Information

Corporate Information

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

120 Operating Bases and Group Companies
122 Corporate Data / Stock Information
123 Independent Practitioner’s Assurance of
CO2 Emission Volume & Water Consumption Volume

Meiji Holdings Co., Ltd.｜Integrated Report 2020

1

Contents

At a GlanceGroup Organization(As of March 31, 2020)

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, 2020)
The number of group companies is the number of consolidated companies and entities accounted for by the equity method.
The number of employees includes all consolidated companies.

The U.S.

Europe

3
571

4
333

companies

Asia/Oceania

23
4,363

companies

peoplecompanies

peoplepeopleOur Value Creation Story

Meiji Holdings is a pure holding
company that was established in 2009
after integrating the management for
Meiji Seika Kaisha, Ltd. and Meiji Dairies
Corporation. The company was thenreorganized into its current Groupstructure in 2011. KM Biologics 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
Health and Reassurance by providing a wide range of products that are essential in people’s lives, suchas dairy products, confectioneries, nutritional products and pharmaceuticals.

Overseas Group Companies

30

KM Biologics Co., Ltd.

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

Japancompanies

12,304FY2019 (Fiscal Year Ended March 2020) Business Results

Net Sales

Operating Income

DOWN 0.1%

UP 4.4%

Food Segment

Food Segment

83.7%

year on year

UP 0.2pt
2Introduction

84.6%

Profit Per Share%companies* Including Meiji, Meiji Seika Pharma,
KM Biologics and Meiji Business Support Co., Ltd.

¥ 464.04

Food Segment

Pharmaceutical Segment

4.6

21.3

year on year

year on year

UP 0.1pt

UP 0.7pt%%

Recognized for
Outstanding Health Management
for the Fourth Consecutive Year
The Nippon Kenko Kaigi runs a Certified Health &Productivity Management Outstanding Organizations
Recognition Program as part of the Japan Revitalization
Strategy 2016. Meiji Holdings, Meiji, and Meiji Seika Pharma
have been recognized by the Nippon Kenko Kaigi for the
fourth consecutive year as White 500 organizations in the
program’s large enterprise category This program recognizes
and cites 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

12.4

peopleOverseas Sales Ratio (FY2019)

15.4%

ROE

17,57135

year on year

Pharmaceutical
Segment

16.3%

Number of Group Employees*

Financial and Non-Financial Section¥102.7billion

Pharmaceutical
Segment

peopleDomestic Group Companies¥1,252.7billion
year on year

Our Activities for Sustainability

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

year on year

UP 8.8%

Meiji Holdings Co., Ltd.｜Integrated Report 20203

Contents

Product and Market Presence
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.

Pharmaceutical Segment
Since

1958

Food Segment

Systemic
Antibacterial Drugs
No.1 in Japan

18.0%

Since

1926

Copyright © 2020 IQVIA.
Source: Calculated based on JPM 2020 Mar MAT Market
scope as defined by Meiji Seika Pharma* Reprinted with permission

No.1 in Japan

24.2%

4.6%

Source: CRECON RESEARCH &CONSULTING, INC., FY2019

Since

Based on INTAGE Inc., SRI (yogurt market)
April 2019–March 2020 market share (money amount)

1999

Camembert CheeseNo.1 in Japan

1980

48.8%

Since *

1999

* Started processedcheese productionin 1932

Based on INTAGE Inc., SRI (camembert cheese market)
April 2019–March 2020 market share (money amount)

Antidepressant &Atypical Antipsychotic Drugs
No.4 in Japan

8.2%

Copyright © 2020 IQVIA.
Source: Calculated based on JPM 2020 Mar MAT Market
scope as defined by Meiji Seika Pharma* Reprinted with permission

Based on Meiji data
as of March 2020

Other
Products

4

Introduction(Agricultural Chemicals)

Delicious fresh chilled milk
selling in the China market

Nutritional product for easy
and tasty replenishment ofimportant nutrients for the body

37.1%

Source: Based on Handbook of
Agricultural Chemicals -2019-,
Japan Plant Protection Association

Chocolate snacklaunched in Japan in 1979
and now sold inover 40 countries worldwide

Anti-allergy drug that is eﬀective in reducing
allergic symptoms, including pollinosis withless drowsiness and less eﬀects on the ability to work.

Poultry vaccine forpreventing infection andcontrol of infection-related
decline of egg-laying rates

Corporate Information

Kaju Gummy with 100% juice
concentrate (equivalent to fresh juice)and no artificial colorings

Since

1958

Shipping data of Rice blast preventives
No.1 in Japan

Other
Products
Protein drink formulated witha rapidly absorbed milk protein
processed with our own uniquemanufacturing method

Rice Blast Preventives

Financial and Non-Financial Section

44.6%

No.1 in JapanSince

Our Activities for Sustainability

41.9%

Powdered &Granulated Protein

1998

No.4 in Japan

Yogurt No.1 in Japan
Since

Since

Generic Drugs

Based on INTAGE Inc., SRI (chocolate market)
April 2019–March 2020 market share (money amount)

1950

Our Value Creation Story

Chocolate

Biological tissue adhesion used mainly
for bonding and closing wounds during surgery

Overseas
Environment-friendly insecticide for rice seedling trays,
developed by Meiji and launched in 2020

Seasonal influenza vaccine launched in 1972
Meiji Holdings Co., Ltd.｜Integrated Report 2020

5

Contents

History
Introduction

The Meiji Group has built a history that spans more than 100 years. Throughout this time, we have identified thediversifying needs of society and our customers to create progressive value through innovations in Food andPharmaceutical fields, and to stimulate new demand. This ability to create markets is the source of our growth.

1910

1920

1930

1940

1950

1960

1970

1980

1975

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

Meiji Seika launches
Milk Chocolate.

1996
Meiji Seika
Meiji Seika launches
launches
Kaju Gummy. new-texture chocolate Galbo.

2010

2002

2014

Meiji Seika launches
Amino Collagen.

Meiji launches
Meiji The Chocolate.

1997

2015

Meiji Seika
launches Xylish Gum.

Meiji launches
SAVAS Milk.

1998

2017

Meiji launches
Meiji Spreatable.

Meiji Seika launches
the high cocoa content
chocolate Chocolate Kouka.

2019

Meiji launches liquid infant formula
Meiji Hohoemi Rakuraku Milk.

Confectioneries
Pharmaceuticals

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

1990

1946

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

Pharmaceutical business is started.
Penicillin research was started during World War II
in 1944 and succeeded in fermentation. Set up
mass production system and launched ourpharmaceutical business.

1950
1946

The agriculturalchemical product
ORYZEMATE
is launched.

The antibiotic
STREPTOMYCIN MEIJI
is launched.

1994

The antibiotic
MEIACT is launched.

1988

Geneticallymodified hepatitis
B vaccine
Bimmugenis launched.

1958

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

Meiji Seika and Meiji Dairies
establish Meiji Holdings Co., Ltd.
(Meiji Holdings), joint holding
company, and integrate
the management.

Integration Reorganization
2008

Influenza HA vaccine
is launched.

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

1999

2009

1996

Tokyo Confectionery launches
the Condensed Milk Meiji Merry Milk.

1992

2000

2011

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

1923

The infant formula Patrogenis created.

1928

Meiji Dairies launches Meiji Milk.

6

Introduction

1971
1950

Meiji Dairies launches
Meiji Honey Yogurt.

1951

Meiji Dairies launches
Soft Curd Meiji
Infant Formula.

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

1994

2002

2015

2007

2016

1973

Meiji Dairies
launches
Meiji Bulgaria Yogurt.

2009

Anti-allergy drug
Bilanoa is launched.

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

1995

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

Meiji Dairies launches
the drinking milk
Meiji Oishii Gyunyu.
Meiji Dairies launches the world’s
first infant formula in cube form
Meiji Hohoemi Raku Raku Cube.
Meiji Dairies
launches
Meiji Yogurt R-1.

KM Biologics Co., Ltd. joins the Meiji Group.
* KM Biologics - formerly The Chemo-Sero-Therapeutic
Research Institute which was established in 1945.

The liquid formula
ZAXA herbicide is launched.
The generic antibiotic
TAZOPIPE MEIJI
is launched.

2020

Lydia Granules,
insecticide
for rice seedlings,
is launched.

Corporate Information

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

Meiji Dairies launches
Meiji Probio Yogurt LG21.

Pharmaceutical Segment

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

2018

Meiji Dairies launches
Meiji Hokkaido Tokachi Cheese.

Food Segment

2011

The antidepressantdrug REFLEX
is launched.

The antidepressant
DEPROMEL
is launched.

Dairy
1921

The food company Meiji Co., Ltd.
begins operation.

Financial and Non-Financial Section

Penicillin
formulation
manufacturing
is launched.

1975

2011

2009

Our Activities for Sustainability

1916

1917

2020

Our Value Creation Story

Meiji Seika launches
Marble Chocolate.

1962

2000

1988

1961

1926

1990

Treatment for
schizophrenia
SYCREST is launched.

Meiji Holdings Co., Ltd.｜Integrated Report 20207

Contents

Achieving Our Goals in 2026 Vision

2026

Meiji Group
2026 Vision

Our promiseand commitment

2023

Our Promise and Commitment
for the 2026 Vision

Beyond meiji

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

The 3rd stage

Beyond meiji
The 2nd stage

2018

Beyond meiji
The 1st stageCEO
President and Representative Director

Overseas
Sales Ratio Target at

20%
Maintain 10% or more

ROE

Structure of the Meiji Group 2026 Vision
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
VisionSustainability Management
VisionVision• Establish functional, strategic
management system to growsustainably in Japan and globally• 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 growthProfit Increases for the 8th Straight Term
Operating Income Tops JPY 100 Billion
Message from Our CEO
Kazuo Kawamura

Op. Income Mid to highsingle-digit growth
CAGR

Our Activities for Sustainability2020- above imagination ‒Our Value Creation Story

We will carry out three Medium-Term Business Plans
to realize the 2026 Vision. We coined the slogan“Beyond meiji - above imagination –” for this vision.
Our slogan was created to stop doing what we always do,
identify issues by ourselves and resolve them, so that
the Meiji Group can break out of its shell and grow further.

The Meiji Group 2026 Vision
The Meiji Group will combine the strengths, wehave 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.

Roadmap to Realize the 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
and achieve this vision successfully. Accordingly, we will improve our corporate value
over the medium- and long-terms.

For details, please see page 20-25.

Noteworthy Areas
in Business Climate

8

Our Value Creation Story

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

2 More health conscious and focused on prevention• Rise in diseases and disorders due to changes
in lifestyle and dietary habits• Increasing awareness and focus on
prevention and living longer, healthier lives

3 Larger middle class all over the world• Rising level of income in emerging countries
such as China and India• Growing demand for non-essential or luxury grocery items
and health related products

Beyond meiji The 1st stage
Basic Concept

2020 Medium-Term Business Plan

Address strategic issues continuously
and challenge for the further growth

Corporate Information

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

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 sustainability

Meiji Holdings Co., Ltd.｜Integrated Report 20209

Laying
the Groundworkfor the Future

Contents

A research environment with state-of-the-art
equipment. Eﬀective research environment
encourages researchers to pursue unique value
creation

We are Challenging Ourselves to Create New Health Values
by Combining Our Strengths Fosteredin the Food and Pharmaceutical Businesses.

Food–Pharmaceutical
Synergies

provide benefits for human health. As population aging is
accelerating in Japan and around the world, people will
become extremely health-conscious. New challenges in thehealth value domain is one of the key strategies for the
Meiji Group in the 2026 Vision and we will contribute toresolving social issues caused by aging society. Specifically,
our Co-Creation Center, a Group-wide research laboratory,

Food
Business

PharmaceuticalBusiness

is driving eﬀorts to integrate know-how accumulated in
the Food and Pharmaceutical businesses. We areof materials, including lactobacilli, and knowledge about
nutrition from the Food segment, as well as expertise inpharmacological evaluation, synthesis and biologics fromthe Pharmaceutical segment. We also promote open
innovation incorporating cutting-edge technology from• Nutrition
science expertise• Milk, lactobacillus,
cocoa research• Nutritionengineering
technology etc.

PromoteOpen
Innovation• Pharmacologicalexpertise• Synthetic technology• Microbial andbio-pharmaceuticaltechnology etc.

outside the company to create new value unique to the
Meiji Group. Using results gained from these eﬀorts,beyond our conventional domains, we will create new andinnovative businesses needed to address social issues andimprove corporate value.
10

Our Value Creation Story

The Meiji Group views synergy between Food and Pharmaceuticals
as an important output of the value creation process.
See page 12 -13 for “The Meiji Group’s Process for Value Creation”

Researchers are developing new evaluation
methods to realize longer, healthier lives

Co-Creation Center

A New Research Center, Where We Workon New Challenges in the Health Value Domain
The Co-Creation Center is a new research facility established at the
Meiji Innovation Center in April 2019. Cross-functional teams arecomposed of researchers with diﬀerent expertise and back grounds
from across the Meiji Group, Meiji, Meiji Seika Pharma and KM Biologics.
They are working on new research subjects while maintaining close
cooperation with R&D units across the Group. At the same time, we arepromoting open innovation to adopt the world’s most advanced
knowledge. One example is where we send researchers to the Pasteur
Institute in France to participate in joint research on
exopolysaccharides (EPS) produced by lactobacilli.

Innovation for a World Changed
the COVID-19 Pandemic
The world is fast embracing digital technology
and technological innovation is well underway
in the health value domain. Today, we can get
real time health information from wearable
devices incorporating artificial intelligence,
Internet of Things (IoT) technology and 5G
mobile communications. Due to the COVID-19
pandemic, needs for enhancing immunity andvisualizing one’s health status
are increasing. The Meiji Grouppicks up on trends in the
post-pandemic world andgenerates new businessthrough highly imaginative
innovation, free fromestablished concepts. This is
our Beyond meiji approach.

Corporate Information

conducting new research through the sharing of a wealthResearchers with diﬀerent expertise and backgrounds gather to share information

Financial and Non-Financial Section

The Meiji Group’s Food and Pharmaceutical businesses

Diet
The Meiji Group wants to help realize a world where everyone can lead a
TherapyHumanhealthy life to the full. We believe that extending healthy life expectancy, with
Microbiome
a focus on disease prevention, is one of the most important challenges for(intestinal
society. To realize longer, healthy lives, the Co-Creation Center focuses on threebacterial flora)interrelated areas: ageing, diet therapy and the human microbiome.
Ageing of society is a global phenomenon, and while average life expectancy continues
to increase, the number of years that people will spend in poor health is also on the rise. We areworking to clarify the mechanisms of ageing and conduct research diet therapy not only from the perspective of nutritional
supplementation but also that of improvements in recovery after a disease or surgery. Additionally, we are advancing research
to maintain and improve health through controlling the composition of the human microbiome. Recent studies have revealed
the human microbiome plays an essential role in lifestyle diseases, dementia and immunity. Japan is already seen as asuper-aged society, a phenomena unprecedented in other societies, and knowledge gained here can be applied to elsewherein the world.

Our Activities for Sustainability

The Meiji Group grew its business successfully through tireless eﬀorts to create new value.
Currently the world is facing a lot of social issues.
We will continue to draw on synergies between Food and Pharmaceutical businesses
to create new value and to help find solutions as only we can.
We will enhance corporate value while contributing to the society of the future.

AgeingOur Value Creation Story

Resolving Global Social Issues
through Food–Pharmaceutical Synergies

Live Longer,
Healthier Lives

Introduction

Longer, Healthier Lives Matterto the Meiji Group.
Research for Ageing, Diet Therapy
and the Human Microbiome Gathers Speed

Hirofumi Nakamura
General Manager,
Co-Creation Center
Meiji Holdings Co., Ltd.

Meiji Holdings Co., Ltd.｜Integrated Report 202011

Contents

The Meiji Group’s Process for Value Creation

Social Issues the Meiji Group is Addressing

Page 38• Increase in lifestyle related diseases
and antimicrobial resistance• Food shortage• Increase in medical expenses• Access to pharmaceuticals and nutrition

Making Healthier Livesby Creating Valuethat Exceeds
the Customers’
Expectations

Our Value Creation Story• Change in social structure due to aging population• More health conscious and focused on prevention• Larger middle class all over the world• Fighting against malnutrition

Our Contribution to
Address Social Issues

Introduction

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

OutputValuable Information Related to Food and Health

Input

Business Model

Social Capital

Creating Markets with a Strong Value Chain• Basic research andaccumulated knowledge• Development
technologies, productcommercialization
expertise andmanufacturing
technologies• Sound financial structure• High profitability

Food Business
Procurement
ResearchandDevelopment• Yogurt• Drinking milk
• Chocolate• CheeseStrengths
and Featuresof the Meiji Group
Page 14

Human Capital• Personnel who embrace
the meiji way• High motivation

Sales andCommunication

Page 10

Production
andDistribution• Antidepressant& atypicalantipsychotic drugs• Systemic
antibacterial drugs• Generic drugs• Production anddistribution sites in Japanand all over the world

12

Our Value Creation Story• Vaccines• Blood plasma products• Rice blast preventives(agricultural chemicals)• Herbicides,
insecticides

Pharmaceutical Business

Safe and Reassuring Quality

Corporate Information• Wealth of resources• Sports nutrition(sports protein)• Enteral formula• Infant formula• Lead healthy, fulfilling lives• Live longer, healthier lives• Reduce environmental impact• Establish a workplace environment
where each employee candemonstrate their strengths and skills• Accumulate financial capitaland steady return to stakeholders

Food–Pharmaceutical Synergies

Manufactured Capital

Natural Capital

Variety of Products for Improving Health and Nutrition

Value for Stakeholders

Financial and Non-Financial Section

Financial Capital

Capital Distribution

Intellectual Capital

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.

• Public awarenesson diseases and prevention• Promote proper useof pharmaceuticals• Scientific data and articles

Our Activities for Sustainability• Trust in the Meiji brand• Meiji brand power• Partnerships with farmers
and related groups• Features that help
improve health• High quality nutrition• Oﬀer new food culture
and cuisine

Page 43

Governance

Page 60

Human Capital

Page 46

Meiji Holdings Co., Ltd.｜Integrated Report 202013

Contents

Value Chain Initiatives
Introduction

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

Research andDevelopment

In both the Food and Pharmaceutical segments, we areworking to secure stable procurement of quality materials,
and improve reliability. To achieve these results, we assess
risks of raw material suppliers based on our own standards. In
addition, we perform regular inspections and provide
guidance to suppliers. Furthermore, we are supporting dairy
farmers and cocoa farmers to ensure sustainableprocurement.

In the Food segment, we have our own strict hygiene management
systems in place, and we have built production systems to manufacture
products according to product specifications. We have distribution
channels to supply markets with products in all temperature ranges. In the
Pharmaceutical segment, we have established production systems in all
domestic and overseas plants to provide stable supply of high-quality
products at aﬀordable prices. In addition, we have built production systems
to manufacture and supply 57 million doses of novel influenza vaccines.

We are creating new markets in the health value domain by appropriately
communicating new value to our customers and implementing two-way
communication to use their feedback in subsequent value creation. In the
Food segment, we are providing information through fun interactiveclasses for dietary education and other measures. In the Pharmaceuticalsegment, our medical representatives are providing information andobtaining feedback for new drug development.

• Accumulated expertise drawn from basic research (lactobacilli, cocoa,
microbial fermentation, biotechnology and drug discovery research)• Collection of microorganisms (lactobacilli and actinomycetes)• Chemical library (synthetic compounds and microbial metabolites)• Excellent R&D capability, product commercialization expertise,manufacturing technologies and related patents• Network with dairy farmers• Cooperation with cocoa farmers• Network with related groups• Cost-competitive and stable procurement of drugs using a
global supply chain• Quality control system (ensure product quality and safety)• Distribution network designed to cover all temperature ranges (roomtemperature, chilled and frozen)• Unique manufacturing methods to ensure tastiness• Superior drug production technologies and many advanced drug
formulation technologies• Respond to a super-aged society and contribute to maintaining the
National Health Insurance Systems (stable supply of aﬀordable,
high-quality generic drugs, etc.)• Reliable Meiji brand and brand strength• High market share• Two-way communication and strong, close relationships with business
partners and customers• Drugs covering prevention and treatment, as well as comprehensive
customer support• Educate about drug-resistant bacteria• Provide health value from prevention to cure
• Product categories that cover the entire life cycle from infants to the elderly• Build supply chains that meet social expectations andare environment-friendly• Manufactured capital• Intellectual capital• Social capital• Intellectual capital• Create new markets• Cultivate a corporate culture that encourages challenges
through Beyond meiji• Social capital• Intellectual capital• Merge expertise in Food and Pharmaceutical businesses• Human capital• Social capital• Financial capital

For details, please see page 36-37.

Sustainability

Main Challenges
and Future Initiatives
Our Value Creation Story• Maximize the Meiji Group synergies• Create unique value that will extend healthy life expectancy• Combat drug-resistant bacteria• Increase recognition of the Meiji Group 2026 Vision• Enhance employee engagement• Human capital• Human capital• Ensure stable procurement of high-quality raw milk in China• Build global supply chains for bulk drugs and raw materials• Audit and improve quality of bulk drug and raw material
suppliers (education and guidance from dedicateddepartment)• Enhance production capacity for value-added products (SAVAS,
Camembert cheese, Chocolate Kouka)• Develop high-quality, eﬃcient production systems globally (low-cost,high-mix, high-volume production at overseas subsidiaries that use
Japan’s robust quality management systems)• Optimize production and distribution systems in Japan and overseas(production eﬃciencies, labor savings, cost reductions, stable supplies)• Improve distribution eﬃciency and reduce costs by consolidating
distribution sites• Run marketing campaigns and sales promotions to provide information
on product attributes or features• Provide complete information extending from prevention through totreatment (dedicated medical representatives in the areas of antibiotics,
vaccines, CNS disorders)• Enhance network of medical specialists and the Meiji Group (pediatrics,
ENT, internal medicine, psychiatry, hematology)• Expand the Meiji Group’s drug sales networks established in Asia andEurope (Thailand, Indonesia, China, U.K., Spain)• Promote Meiji Dairy Advisory (MDA) (provide management
support to dairy farmers in Japan)• Promote Meiji Cocoa Support (support cocoa farmers,
increase amounts of sustainable cocoa beans)• Secure bulk drug suppliers and have multiple suppliers(contributing to stable supply of drugs)• Obtain Global Food Safety Initiative (GFSI) certification• Ensure stable supply of drugs (clinically important antibiotics, etc.)• Promote renewable energy• Introduce energy-eﬃcient equipment• Improve data accuracy using an environmental data management
system• Disseminate information to promote health and nutrition• Oﬀer new food culture and cuisine• Improve access to medicines (China and Southeast Asia)• Provide infection control expertise to agriculture and livestock industries• Improve access to nutrition in emerging countries• Support famine relief in emerging countries• Implement Human Rights Due Diligence• Support the TCFD and join the Consortium• Join the UN Global Compact• Ensure procurement of raw materials in accordance withhuman rights and environmental impact (cocoa, palm oil,paper, raw milk, bulk drugs)• Continue Meiji Cocoa Support and MDA• Train and develop executives, innovators and personnel with a global mindset• Raise awareness of innovation driven through the value chain• Expand new value products with Meiji quality into overseas
markets• Accelerate decision making and implement optimal
marketing programs by reforming production,
sales and distribution systems• Increase production capacity for high health value products• Pursue the value and benefits of protein and increase protein intake• Reduce the environmental impacts resulting from product development
through to disposal• Plan and implement energy-saving and water risk programs• Ensure stable supply of environment-friendly agricultural chemicals• Respect diversity• Create a safe and healthy workplace environment

Corporate Information• Develop products that contribute to healthy diets (lactobacillus, cocoa,
reduced sugar, low fat)
• Develop value-added nutrition products (sports nutrition, infant/toddler
nutrition)• Develop products that contribute to a super-aged society (medical
nutrition)• Improve productivity for agriculture and livestock industries and address
global food shortages (develop environment-friendly agriculturalchemicals, etc.)• Natural capital

Financial and Non-Financial Section

Business Activities

Initiatives to Enhance Strengths• Develop new value (use evidence-based ingredients and technologies)• Discover and develop novel drugs• Establish evidence through clinical development and post-marketingsurveillance• Use open innovation and industry-academia alliances• Implement new R&D approaches in our Co-Creation Center• Human capital• Manufactured capital

Our Activities for Sustainability

Strengths and Featuresof the Meiji GroupWe are developing products that provide new health value in the Foodsegment based on our unique intellectual assets. In the Pharmaceuticalsegment we are conducting specialized research and development inareas such as infectious diseases, CNS disorders and vaccines.
Furthermore, in our Co-Creation Center, we are merging the expertisedeveloped in the Food and Pharmaceutical businesses to generate new
approaches and apply them for creating health value.

• Foster a sense of One Company, One Team• Promote diversity, improve employee engagement and build a fair HR system

14

Sales andCommunication

Our Value Creation Story

Overview
Capital (Input)
in Value
Creation Process

Production andDistribution

Procurement• Promote food and health value through e-commerce channels• Successfully penetrate overseas markets through Meiji quality and unique
value• Introduce and diﬀuse a new food culture into overseas markets• Increase sales of drugs manufactured at overseas sites in the Japan market• Expand environment-friendly agricultural chemicals• Expand vaccines overseas, especially to Asia

• Conduct social contribution activities through community activities,
emergency aid and support, and our products
Meiji Holdings Co., Ltd.｜Integrated Report 202015

Contents

Response to Climate Change
We simulated a 4˚C scenario and a 2˚C scenario in the year 2100, and analyzed the impact of changes
in the global environment on our business activities for dairy ingredients in 2040 and infectious diseases in 2050.

Dairy Ingredients 2040 World View

In accordance with the Meiji Group Sustainability 2026 Vision formulated
in 2016, the Meiji Group has identified materiality in the impact ofclimate change on our business activities, and we set and pursue material issues.

Board of Directors
Executive Committee
Group Sustainability Committee

Important Financial Impacts and Levels of Impact
Increased cattle barn operation expenses(feed expenses, heat mitigation expenses)

16

2˚C

Infectious Diseases

High

ー

Increased purchase prices for dairy ingredients

Low

ーIncreased losses due to water risks

MediumーIncreased logistics costs due tonatural disasters and severe weather

LowーIncreased costs associated with carbon taxes

Low

High

Increased costs associated with plastics regulationsー

Low

Decreased demand due to ethical consumptionーLowExpansion of new demand(thirst-quenching beverages, etc.)

Low

Low - Medium

Our Value Creation Story

Increased transition risks
and physical risks due toclimate change lead todestabilization of
the supply-demand balanceof dairy ingredients

Supply• Introduction of carbon taxes• Response toplastic container regulations

2050 World View

+ 4°C
Increased demand for antimicrobials
and vaccines due to widespread
infectious disease epidemics• Increased opportunities for developmentof new antimicrobials and vaccines• Increased demand for antimicrobials due toincreased bacterial infections• Increased demand for vaccines due toincreased viral infections

Demand: Up

Lost opportunities due to site shutdowns
caused by natural disasters

Risks Increased electricity costs

Opportunities

4˚C

Infectious Diseases• Increased production of raw milk in Hokkaido• Increased dairy product imports

Supply Costs: Up

Current+ 2°C• Trends to decreased antimicrobials use
due to implementation of appropriate use• Trends to increased demand for vaccines
due to increase in the number ofroutine vaccines• Rapid increase in awareness of
infection prevention due to
COVID-19 pandemic

Increased production costs
due to carbon taxes

DemandDemand• Status quo, little impact on demand

Corporate Information*1 Intergovernmental Panel on Climate Change (IPCC): Shared Socioeconomic Pathways, etc.
*2 International Energy Agency (IEA): Sustainable Development Scenario, New Policies Scenario, etc.

*
Meiji Partner• Increased heat mitigation and feed costs
for dairy farmers• Increased procurement, production
and logistics costs due tointensified severity of natural disasters

Demand: Down

Financial and Non-Financial Section

In FY2019, we analyzed the impact of climate change on dairy ingredients and infectious diseases, two important businessareas, and we investigated countermeasures. Using scenarios developed by the IPCC*1 and IEA*2, we analyzed two scenarios;
a 4 degree scenario assuming a global temperature rise of 4°C by 2100 compared to pre-industrial levels, and a 2 degree
scenario assuming the temperature rise of 2°C or less.

Management Entity Level of Impact• Slight decrease in raw milk production• Pass on costs for climate change measures
to product prices• Increase in ethical consumption,and decrease in demand for dairy productswith high environmental impact

Enhancement ofEnvironmental Protection Measures
SupplyWEB
Practical guide for
Scenario Analysis in linewith the TCFD
recommendations
http://www.env.go.jp/
policy/policy/tcfd/
TCFDguide_2nd_EN.pdf

Results in Scenario Analysis

Dairy Ingredients• Increased demand for cheese and yogurt• Steady demand for drinking milk

DemandSupply: Slightly Down

* An international organization of representatives ofcentral banks, financial supervisory agencies, andfinance ministries in the world’s major countries and regions.

• Shared and discussed scenario analysis at the Executive Committee and Board of Directors

Increased production costs due tocarbon taxes and decreasein demand for dairy ingredients

Our Activities for Sustainability

Jun 2020

Well-balanced supply
and demandfor dairy ingredients

Supply Costs: Up

Group TCFD Committee
Relevant divisions from Meiji Holdings, Meiji,
Meiji Seika Pharma and KM Biologics

Jan–May 2020 • Conducted second-stage scenario analysis for further discussion of first-stage findings

Slightly decreased productionof dairy ingredients andincreased costs due to physical risks

Rise in Atmospheric Temperatures/
Climate Change

Sustainability Secretariat• Shared and discussed scenario analysis at the Executive Committee+ 2°C

Demand: Slightly Down

Achievements in Scenario Analysis

Oct 2019

Current• Pass on costs for climate change measures
to product prices• Demand tends to increase due to risingatmospheric temperatures

Climate Change-relatedGroup Sustainability Promotion System

Aug–Oct 2019 • Participated in the support program for companies to analyze their own climate risks
and opportunities in line with the TCFD recommendations, which is a project
supported by the Ministry of the Environment.

+ 4°C

Our Value Creation Story

Climate Change Thinking and Approach to TCFD
The business of the Meiji Group is based on the abundant gifts ofnature. The impact (risks and opportunities) of climate change on ourbusiness is a significant issue for the Group. International frameworks
such as the Paris Agreement and the Sustainable Development Goals(SDGs) call for increased eﬀorts to address climate change. The MeijiGroup agreed to join the TCFD (Task Force on Climate-Related
Financial Disclosures), which was established by the Financial Stability
Board* in 2019. We also joined the TCFD Consortium established by
the Ministry of Economy, Trade and Industry, the Ministry of theEnvironment, and the Financial Services Agency.
We established the Group TCFD Committee in March 2020 todiscuss policies and measures and to review the progress towardachievement of KPIs.
We report the results of those discussions to the Group
Sustainability Committee twice a year and the Executive Committee
and Board of Directors as necessary.

Introduction

Analyzing Scenarios Based on
TCFD Recommendations andReflecting Risks and Opportunities
in Business Activities

Management Entity Level of Impact*
Meiji Partner

4˚C

2˚C

High

ー

Rise in Atmospheric Temperatures/
Climate Change
Supply Costs: Up

Enhancement ofEnvironmental Protection Measures
SupplySupply Costs: Up

Risks Increased water procurement costs due to water risks
Increased electricity costs

MediumMediumIncreased costs associated with carbon taxes

Low

High

MediumーOpportunities Spread of infectious diseases due toclimate change* Impact on partners in the supply chain may aﬀect the Meiji Group

SupplySupply• Increased procurement, production andlogistics costs due to intensified severityof natural disasters and water risks

Increased physical risks
due to climate change
may lead to increasein demand for antimicrobials
and vaccines• Introduction of carbon taxes• Increased electricity costs

Meiji Holdings Co., Ltd.｜Integrated Report 202017

Contents

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

Operating Profit/Operating Profit Margin
Operating profit (Left scale)Operating profit margin (Right scale)(Billions of yen)(Billions of yen)

1,400

120

1,223.7

1,242.4

1,240.8

1,254.3

1,252.7

1,200
90

1,000

88.3

60

102.7

6.4

7.1

(%)
12

(10,000 t-CO2)

100
67.8

9

(t-CO2/100 million of yen)

80
65.0

62.9

62.3

60.4

60

6

30

40

3

20

0

0

55.4

52.4

50.6

FY2015FY2016FY2017FY20180

FY2019Profit Attributable to Owners of Parent/ROE

FY2015(Billions of yen)

18

600

62.5

60.7

13.1
61.2

12.2

FY201967.3

47.8

12.4 12

400

61.8

408.8

50.8

448.9

52.5

487.3

52.5

40

8

FY2017FY2018FY2019640

6.6

FY2016FY2017FY2018FY2019FY2015FY2016FY2017FY2018FY2019

0

6.2

5.4

5.4

6.5

5.4

4.6

Payout ratio (Left scale)Free cash flows

108.7

112.1

114.1

81.8

(%)

(％)

50

15

4

30.8

32.3

5.8 6

15,000

Japan
4
6.5

10,000-100.2-70.8

FY2017FY2018FY20190

Global

FY2015FY2017FY2018FY2019

30

0

5,000

0

0

22,305 22,056 21,822(1,000 m3/100 million of yen)
24,082 23,483
23,239 10
Overseas Overseas Overseas
1,777
1,427
1,418
8

Japan
22,305

Japan
22,056

Japan
21,822

6
4

1.92

1.89

1.88

FY2016 FY2017 FY2018 FY2019

1.94

FY2017

1.87

1.86 2FY2018 FY2019

Japan

0

GlobalLost Time Injury Frequency Rate (LTIFR) *5

3.4

4.0

4.0

4.0

FY2017FY2018FY20192.6
2.1

Global

0.69

0.57
0.47
Japan

0.4

0

Overseas 1.72
Japan
0.57

0.71

0.6

5

0

0.96

1.0
0.8

1

FY2016FY2016(％)

2.0*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.
Past data has been revised.
The Kumamoto Plant of KM Biologics Co., Ltd. was included in the calculation from FY2018, and all of the company’s sites were included from FY2019.
*2 Applies to the domestic Meiji Group. The per production units are calculated from domestic consolidated sales.
The Kumamoto Plant of KM Biologics Co., Ltd. was included in the calculation from FY2018, and all of the company’s sites were included from FY2019.
*3 Applies to the domestic Meiji Group. The per production units are calculated from domestic consolidated sales.
The global data; applies to the Meiji Group (the domestic Meiji Group and 12 overseas production plants).
The Kumamoto Plant of KM Biologics Co., Ltd. was included in the calculation from FY2018, and all of the company’s production plants were included from
FY2019.
Our Value Creation Story

Japan

3

10

-64.3

FY201522.4

Corporate Information

44.2

FY2019

2

2
3.8

21.1

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

20,000FY2015 FY2016 FY2017 FY2018 FY2019

10

21.2
3.4

FY2016

32.8

26.6

20

20.7

2.07

3.1

30

11.8

0

Overseas
0.88

Ratio of Female Managers *4

(%)

43.2

44.3

21.0

Dividends on equity (DOE/Right scale)

40
37.5

0

21.7

Financial and Non-Financial Section

FY20150

Payout Ratio/Dividends on Equity (DOE)

Cash flows from operating activities
Net cash used in investing activities(Billions of yen)
105.1
120
95.3
100
80
60
40
20
0
-20
-9.8
-40
-60
-80
-100

0

10

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

10

7.2
6.3

5.6

20

200

60

Water consumption volume (Left scale)
Water consumption volume per unit of sales (Right scale)2

FY20150(t/100 million of yen)

7.6

4

Cash Flows18

FY2016

Industrial Waste Volume/
Industrial Waste Volume per Unit of Sales *3(10,000 t)

20

0

FY2015

60

562.7

527.3

20

20

(%)

40
6

80

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

56.4

24.0

90

26.0

24.6

Our Activities for Sustainability

(%)

80

60

FY2018

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

14.2

FY2017

Shareholders’ Equity/Shareholders’ Equity Ratio

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

16.1

FY2016

24.5

48.3

49.7

200
0

(kl/100 million of yen)

30
24.9

60

7.8

(Fuel oil conversion: 10,000 kl)

Our Value Creation Story

400

98.3

8.2
7.6

Energy consumption volume (Left scale)
Energy consumption volume 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

800
600

94.6

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

Introduction

Net Sales

0.2

FY2015FY2016FY2017FY2018FY20190.0

FY2016FY2017FY2018FY2019*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 For FY2016 through FY2018, applies to all plants and research laboratories in the Meiji Group in Japan including consolidated subsidiaries(but excluding KM Biologics Co., Ltd., Meiji Feed Co., Ltd. and OHKURA Pharmaceutical Co., Ltd.).
For FY2019, applies to the Meiji Group in Japan (excluding non-production Group companies) and production Group companies overseas.
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 202019

Contents

Message from Our CEO
Introduction

We Are Evolving into a Corporate Group
that Achieves Good Growth
by Addressing the World’s Social Issues

Profit Increased for the 8th Straight Term Despite the COVID-19 Pandemic
The ongoing global coronavirus (COVID-19) pandemic has

October 2019. Two additions to our portfolio in recent

hit the world economy hard. Global GDP in 2020 isyears—generic drugs manufacturer Medreich Ltd. in India

expected to contract from the previous year, pushing us

and vaccine manufacturer KM Biologics Co., Ltd. —into a recession bigger than the 2008 global financial crisis.

contributed to the increases in sales and profit.
While we are not fully satisfied with the results because

has been limited so far. Financial results for FY2019, which

both segments missed initial targets, we secured profit

ended during the COVID-19 pandemic, showed profits

growth while overcoming some diﬃculties, regardless ofincreasing for the eighth straight year and operating profit

the tough conditions.

Our Value Creation Story

Fortunately, the impact of COVID-19 on the Meiji Group

topped the JPY 100 billion milestone for the first time.
Return on equity (ROE) increased 0.2 percentage points
from FY2018, showing improved profitability.
In the Food segment, sales of yogurt, one of our corebusinesses, increased year on year in the second half,
providing a solid indication that it has overcome the

Our Activities for Sustainability

stagnation of the past few years. Nutritional products are
anticipated to grow further and sales of sports nutrition
and infant formula enjoyed stable increases. Although, theprice of raw milk, the ingredient we use most in the Foodsegment, and logistics costs increased, we were able toabsorb the rising costs and record a profit increase.
In the Pharmaceutical segment, both sales and profit
increased despite Japan’s NHI drug price revisions in

Medreich, which joined the Meiji Group in 2015, established a
production system* to manufacture high quality and low-cost genericdrugs. It generates high returns producing generic drugs.
* Medreich received GMP compliance certification from Japan’s MHLW.

Financial and Non-Financial Section

Put Top Priority on Protecting Employees from COVID-19 While Maintaining the Supply Chain

CEO
President andRepresentative Director

20

Our Value Creation Story

products, leading to the risk of discarding raw milk. We

COVID-19. The food and pharmaceuticals we supply areprocessed surplus raw milk to storable dairy products such

essentials for people. While doing everything to protect

as nonfat dry milk, butter and cheese at our plants to help

employees from infection with COVID-19, we continue ourdairy farmers and avoid emergency discarding of raw milk.

business, maintaining the supply chain to ensure stable

As people’s activities resumed with time, demand

supply.

recovered and the supply chain steadily returned toSecuring the supply chain protects the lives of thosenormal.

producing ingredients and people who sell our products.

To protect employees from COVID-19, we have

We should care about raw milk, because it is one of thecontinued with teleworking after the state of emergency

vital ingredients for us. When a state of emergency was

was lifted and employees are advised to work staggered

declared in Japan in spring 2020, mass school closures andhours to minimize the infection risk in going to work. We

voluntary suspension of food service businesses greatly

will prepare guidelines for sales and other activities anddiminished the demand for drinking milk and dairy

quickly establish a productive teleworking system.

Meiji Holdings Co., Ltd.｜Integrated Report 2020

Corporate Information

Kazuo Kawamura

Our immediate challenge in FY2020 is coping with21

Contents

Message from Our CEO
Introduction

Create New Markets, Stimulate Demand and Overcome the COVID-19 Pandemic

us. It has substantial impacts on malnutrition andinfectious disease, which are closely related to ourgreatly increased because they have had to stay at homebusiness. Therefore, we believe this is a business

Functional yogurt, health-conscious chocolates and sports

for long periods during the COVID-19 pandemic. We will

opportunity and will put forward innovative ideas tonutrition are examples of high-added-value products

secure solid growth for sports nutrition products throughaddress such issues. Tackling climate change is well worth

where we created markets that were ahead of the times.

active promotion that will stimulate demand. For example,

doing, although it is certainly very hard to accomplish.

That is why they are so profitable and we can be thewe are airing TV commercials featuring Major League

However, the Meiji Group’s founding spirit included

market leader. Amid the COVID-19 pandemic, we will strive

Baseball player Shohei Ohtani, a regular user of SAVAS. Meiji

making breakthroughs against issues related toto create unique markets.

registered dietitian is supporting his nutrition program.

malnutrition and infectious disease, and this is imprinted in

Our Value Creation Story

The Meiji Group has been creating new markets.

our DNA.

The COVID-19 pandemic may result in an excessive

The TCFD scenario analysis covers all elements required

slump in demand. To avoid decreasing sales of productswith growth potential, we will stimulate demand. People

to enhance business sustainability. Sharing it withbecame more health-conscious due to the COVID-19

employees, we will be able to understand what climate

pandemic. Yogurt is our biggest product category with thechange means to us. We should make sustainability ourleading share in the domestic market and interest in theown issue so that we can address it in our work.

KM Biologics is working to develop an inactivatedvaccine against COVID-19. The company’s Koshi
Production Center (pictured) will produce vaccine
formulations (See page 42 for details).

health value of yogurt is growing. Our strategy is to
Our Activities for Sustainability

Strengthen Group Management and Pursue Greater Synergies

capture this trend as actual demand and expand sales.
Further market expansion is expected in the sports
nutrition business. In the previous fiscal year, sales of theready-to-drink SAVAS Milk Protein more than doubled,
indicating that the product is in a growth phase.
Meanwhile, we built a new plant in Kurashiki City, Okayama
Prefecture, to manufacture SAVAS powder products withKurashiki Plant (annual capacity: approx. 11,000 tons)
started operation in November 2019 to produce powder
products such as SAVAS and Amino Collagen.

diﬀerentiated features. People’s interest in exercise has

selection and concentration strategy, or productMedium-Term Business Plan is use of return on invested

categories will expand and the portfolio will become

capital (ROIC) as a management indicator. This has twodiluted. ROIC is the optimal indicator to prevent suchmain objectives. One is for personnel responsible for ourdilution as well as to enhance competitiveness andbusiness portfolios to judge returns based on capital costaccomplish sustainable growth.

and the balance sheet. Until now, the Food and

The third concept of the 2023 Medium-Term BusinessPharmaceutical segments have used diﬀerent indicators toPlan is strengthening Group management. A decade has

measure profit or make investment decisions. Setting ROIC

passed since management integration and it is time for us

as a common indicator for the entire Group, we canto become “One Team” in the true sense. The Meiji Groupadequately evaluate the business portfolios of eachconsists of the Food segment and Pharmaceutical

FY2020 is the final year of our 2020 Medium-Term Businessmeaningful contributions to social issues. Naturally, we

segment. The other objective is to narrow down andsegment and they each engage in their own distinct line ofPlan and the 2023 Medium-Term Business Plan will start

should address issues such as the environment and human

optimize the business portfolio. It is vital that we focus

business. We are a relatively unique corporate groupfrom April 2021. We will incorporate three concepts forrights. But on top of that, we should pursue a sustainability

management resources on a carefully selected businessworldwide and we believe this is our advantage. But unlessaccelerating growth in the 2023 Medium-Term Businessprogram unique to the Meiji Group and meet society’s

portfolio for further profit growth. We should follow a

we clarify our strategy, we will drift apart. We pursue

Plan as we realize the Meiji Group 2026 Vision.

expectations. Thus far, we prioritized investment insynergies and demonstrate togetherness so that we growbusiness activities, but we have decided to establish aand reach our next business success.

The first is to integrate sustainability eﬀorts with ourframework for ESG (environmental, social and governance)

We introduced a chief oﬃcer system in June 2020. Thistargets combining sustainability and business goals.

investing. Our plan is to spend around JPY 30 billion in ESG

will make Meiji Holdings’ management more strategic andSustainability is never supplementary to corporate value.

investment over the three years through FY2023.

strengthen Group management. Under the leadership of a

Instead, we should build sustainability eﬀorts into

We will address climate change activities. Based on thechief executive oﬃcer (CEO), chief operating oﬃcers

management so that we can secure corporate growthrecommendations released by the Task Force on(COOs) were assigned to the Food and Pharmaceuticalwhile working on social issues.

Climate-related Financial Disclosures (TCFD), we assessedsegments. In addition, a chief financial oﬃcer (CFO) and athe potential impacts of climate change-related risks andchief sustainability oﬃcer (CSO) were assigned. This teamsuch as improvement of nutrition, the aging society,

opportunities in both the Food and Pharmaceuticalof chief oﬃcers, headed by the CEO, will clarify the Group’s

support for agriculture and the fight against infectious

segments and released our scenario analysis. Climate

diseases. Through innovation, we want to provide

change provides both risk and a business opportunity to

We have been coping with important social issues

Our Value Creation Story

Corporate Information

business growth. We will set integrated management

Financial and Non-Financial Section

Integrate Sustainability with Business Growth22

The second concept to be incorporated into the 2023

Researchers from the Food and Pharmaceutical segments (some ofthem are pictured) work together at the Co-Creation Center to takeon new challenges in the health value domain (See page 10 for details).

strategic direction and generate togetherness andsynergies.

Meiji Holdings Co., Ltd.｜Integrated Report 202023

Contents

Message from Our CEO

To Contribute to Society Through Continued Innovation
We need to continuously innovate to grow our business

To be such a company, we need to keep thinking

Medium-Term Business Plan. Until now, the Meiji Group’s

financial condition. With this strong financial foundation,

sustainably. My biggest responsibility is to boost employee

about what society needs from us and what we can do tofinancial strategy has been to balance investment in future

we will shift focus onto investment in further growth andmorale across the Group so that employees can

support society. If a company does not contribute to

growth, returns to shareholders and ensuring a solid

returns to shareholders under the 2023 Medium-Termdemonstrate their full capabilities and, in this way, inspire

society, it has no reason for existing. Now that we have afinancial base. Since FY2017, we have consistently

Business Plan.

innovation that creates new markets and improves society.

history of more than 100 years charted by ourgenerated operating cash flow of more than JPY 100
billion. The forecast for FY2020 is around JPY 120 billion.

Our policy is to make capital investment within

One business philosophy of the Meiji Group founder,

Our Value Creation Story

The debt-to-equity (D/E) ratio is 0.19, implying a soundWe will revise financial strategy under the 2023

Introduction

Investing in Growth While Observing Financial Discipline

predecessors, I will stand at the helm and drive the Meiji

Hanji Soma, is “Contributing to the Country throughGroup toward becoming a company that generates

production capacity according the plan. We recognize that

Nutrition.” Since I joined the Company, I have seen,

innovation and makes great strides forward.

the Food segment’s low overseas ratio is a significant

through this philosophy, the many social aspects of the

management issue. The Meiji Group 2026 Vision sets an

Meiji Group business and I feel pride in my work. Now,

overseas sales ratio target of 20% of overall sales.

more than a century on from the Company’s founding, I

Accordingly, investment in overseas business will bethink it is time for us to revisit this philosophy and take aessential to achieve that goal. Although this is upfront

few steps forward. This means that the Meiji Group should

investment for medium- to long-term growth, thestrive to be a company that contributes significantly to theinvestment must be made in a timely manner for the

resolution of today’s social issues.

Our Activities for Sustainability

operating cash flow and we will invest in boostingtarget market. If we miss investment opportunities, we
may fail to realize the Vision. In this uncertain businessWe expanded our product lines for drinking milk, yogurt andother products in China. We are making aggressive investmentin production capacity expansion at Suzhou, starting fromspring 2021, and will launch a new plant in Tianjin in 2022.

environment caused by the COVID-19 pandemic, we will
invest properly, maintaining financial discipline and paying
close attention to cash flow and short-term liquidity.

Strengthening Governance for Business Growthinterconnected elements—the Business Vision,

implementation of succession planning.
The proportion of Outside Directors in the Board of

Sustainability Vision and Management Vision. We will

Directors increased from FY2020. While the total number

strengthen each of these to achieve our targets. To realizeof Outside Directors has not changed, there are fewer

the Management Vision, strengthening corporate

Directors from inside the company so the proportion of

governance will be crucial. We should set a robust

Outside Directors exceeds one third. We have three

governance framework so that continued innovation leads

Outside Directors and two Outside Audit & Supervisory

to business growth.

Board members. They readily pose questions to the Board

The Meiji Group commenced succession planning inof Directors and make valuable suggestions. We have2019. The Nomination Committee deliberates and advises

started individual interviews between the chairperson of

on the appointment and career development plan of

the Board of Directors and Outside Directors. Meanwhile,potential successors for the president at Meiji Holdings,

we closely monitor the Board of Directors and have

Meiji and Meiji Seika Pharma. The Board of Directors thenimproved the operation of its meetings. An important

discusses the matter. I understand the selection process is

mission of the Board of Directors is to encouragemuch more transparent as a result, although the rationality

improvement of performance and greater corporate value.

and suitability of candidate selection will need to be

By providing suﬃcient quantity and quality of information

further improved. We appreciate opinions and suggestions

to Outside Directors so that they understand the Meiji

from Independent Outside Directors to improve theGroup better, we will enable them to perform at their best

operation of the Nomination Committee andlevel.

Our Value Creation Story

Corporate Information

24

Financial and Non-Financial Section

The Meiji Group 2026 Vision consists of three

Meiji Holdings Co., Ltd.｜Integrated Report 202025

Contents

Overview by Business

Food Segment

Katsunari Matsuda

President and Representative Director
Meiji Co., Ltd.

Profit Increases and Growth Continues Despite Missing Targets

As a Corporate Group that Brightens Customers’
Daily Lives and Well-being, We Will Fulfill
Our Responsibilities Through Our Business
Activities During the COVID-19 Pandemic

Core Businesses(Billions of yen)

FY2018Results

FY2019Results

YoY Change

Net sales

1,056.6

1,049.5

−0.7％
−7.0

84.7

87.3

+3.0％
+2.5

Operating profit

Breakdown of Consolidated Op. Profit (Billions of yen)
FY2018

84.7
+5.6
-2.3

FY2019Impact of price increase,increased sales of sports nutrition
products and infant formula, etc.
Increased costs of raw milkin Japan and packaging materials-2.0

Increased sales promotion
and distribution expenses+1.3

Increased profit from subsidiaries

87.3

Food Business(including functional yogurt)

Chocolate

26

GrowthCheeseFrozen dessert

Reform Milk
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 profit
through structural reforms

Our Value Creation Storyfor professional use are sluggish due to temporary restraint
in the food service industry. In response to the changes inthe society due to the COVID-19 pandemic, we will strive
to increase sales of products that are declining and tofurther maintain sales of products that have been doingwell.
Our products contribute to the physical health andemotional well-being of our customers. Through foods, wehope to stimulate conversation, improve atmosphere, andlighten the mood. Also, through our marketing we willshow how Meiji confectionery can return smiles to thefaces of people feeling depressed in the COVID-19
pandemic. We will run sales promotions that encourage
people to eat functional yogurt for self-managing theirhealth and take SAVAS to address lack of exercise due tothe stay-at-home orders.

Maintaining Strong Sales due toIncreased Health Awareness, and
Accelerating Growth by Launching
New Products and Rebuilding Brands

YogurtDue to the COVID-19 pandemic, people’s awareness of healthmanagement is rising, and demand for yogurt is growing because of its high healthvalue. From the second half of FY2019, sales of Meiji Probio Yogurt R-1, a functional
yogurt, have been strong thanks to eﬀective marketing activities. Since being
relaunched as a food with functional claims, our Meiji Probio Yogurt PA-3 sales are
growing strongly year on year. In FY2020, we launched a product with a new value
proposition. Meiji Skin Care Yogurt - Suhada no Mikata protects the skin from ultraviolet
rays when consumed, the first yogurt drink with such functional claims, other than
supplements and nutritional drinks.
Chocolate Sales of health-conscious chocolates are strong. Chocolate Kouka, inparticular, saw increased sales in FY2018 owing to steadily accumulating evidence
supporting the potencies of cocoa polyphenol. We believe there is room for further
growth in this market, and we will promote its health value and raise awareness of thebrand. In addition, we will rebuild the brand of specialty chocolate, Meiji The Chocolate,pursuing the unique value for consumers of enjoying the taste of cocoa itself. Cocoa
beans have diﬀerent flavors depending on the country of production. Since we arehighlighting these characteristics of the cocoa beans, we believe, our specialty chocolates
are as good as any sold in specialty shops. We will develop new markets by creating
environments for consumers to enjoy our specialty chocolates at reasonable prices.
Nutritional Products Sales of sports protein SAVAS are enjoying strong growth.
Once the COVID-19 pandemic has settled down, we will be moving to the new normal
and new ways of life. Accordingly, we expect further growth in the sports nutritionbusiness because people will become more health conscious. We introduced a new
production method that achieves a non-clumping, more easily soluble protein powder
and launched the renewed SAVAS. We will improve marketing of this popular productand achieve strong business growth.

Net Sales (Functional Yogurt, Yogurt)(Billions of yen)

203.5

197.8

195.3

205.4

84.1

84.9

84.4

87.9

119.4

112.9

110.9

117.5

FY2017 FY2018 FY2019
Functional yogurt
YogurtFY2020(Plan)Net Sales (Chocolate)(Billions of yen)

104.0

FY2017

95.4

97.1

100.0

FY2018FY2019FY2020(Plan)* Sales are adjusted to include the sales pricereduction due to commercial transaction
system revision in April 2018

Corporate Information

Due to the COVID-19 pandemic which started at the beginning of 2020, the whole society was suﬀering harsh conditions as it
faced unprecedented times. To fulfill our responsibilities as a manufacturer that provides products essential for healthy life tocustomers in such an environment, we continued production at all our plants in Japan and overseas as we strived to maintainstable product supply. I would like to express my appreciation for the tremendous eﬀorts that every one of our employees ismaking in this diﬃcult situation. They have shouldered great responsibility in their work and help maintain people’s social lives.

Core Yogurt

I believe that the keys to success during the COVID-19
pandemic are how we interpret potential changes in the
future and how we reflect that understanding in our
promotional activities and sales policies.
Over the past century, Meiji has been growing by
responding to changes in society, such as the aging ofsociety. In the current COVID-19 pandemic, we will pursue
value unique to Meiji in our core businesses and growthbusinesses. Since the keyword for us is Health, and weshould contribute to people’s healthier lives.
Due to the COVID-19 pandemic, lifestyles are changing
and sales trends are changing accordingly. Sales of dairy
products are growing as health awareness increases
among consumers, and sales of drinking milk are also
increasing as more people eat at home understay-at-home orders. On the other hand, sales of products

Financial and Non-Financial Section

Our plan for FY2019, as the middle year of the 2020 Medium-TermBusiness Plan, was to significantly grow our businesses to achieve
the targets. However, despite increasing profit year on year, we
missed those initial targets. This was because we failed to introduce
strong new products. In addition, recovery in sales of our mainstay
functional yogurt products was delayed. Although demand fromhealth-conscious consumers increased from the fourth quarterdue to the COVID-19 pandemic, net sales of functional yogurt andyogurt over the full fiscal year decreased. Overall though, theimpact of COVID-19 on business performance was limited.

Improving Business Performance
Through Promotions Adapted to Changes in the Market

Our Activities for Sustainability

FY2019 in Review

Confronting
the COVID-19 Pandemic

Our Value Creation Story

COO (Food Segment)
Member of the Board and Executive Oﬃcer
Meiji Holdings Co., Ltd.

Introduction

By Applying New Ideas,
Create Products that Contribute to
Healthy Minds and Bodies
and Continue to Grow

Growth Strategy from FY2020

Net Sales (Sports Nutrition,
SAVAS Milk Protein, Nutritional Products)(Billions of yen)

74.5

81.1

52.8

55.2

2.5
19.1

6.1
19.7

FY2017FY2018

92.7

94.8

58.7

60.5

13.4

13.7

20.5

FY201920.6

FY2020(Plan)

Sports Nutrition
SAVAS Milk Protein
Nutritional Products (Infant Formula and liquid diet)* Sales of SAVAS Milk Protein are includedin the sales of Fresh and Fermented Dairy Business
Meiji Holdings Co., Ltd.｜Integrated Report 202027

Contents

Overview by Business

Food Segment

Grow and Reform Businesses

Growth Strategy from FY2020

Expanding Markets and Driving Structural Reformby Pursuing Value Unique to Meiji

Milk
Through focusing management resources on our Meiji Oishii Gyunyu series of products and driving
structural reform of the business, we are aiming to become profitable by FY2021. In addition to existing Meiji Oishii Gyunyu
products, sales of the newly launched Meiji Oishii series, Meiji Oishii Low Fat Milk and Meiji Oishii Milk Calcium, are steadily
increasing. At the same time, we are driving structural reform of our drinking milk business and have already discontinued
many products. We are also restructuring plants to build an optimal production system. Altogether, through these initiatives,
we will achieve profitability in our drinking milk business.

28

Our Value Creation Storybusiness alone is not suﬃcient to ensure stable profit.
Therefore, we will expand our sports nutrition businessoverseas as well. We established Meiji New Zealand as abase to supply SAVAS products to the China market.
China's gym and fitness market is just starting oﬀ, and webelieve it will soon expand further. While adapting to more
active and healthy lifestyles in China, we will launch our
products through the most appropriate ways of promoting
them. As our ice cream and confectionery businesses are
growing steady, we are expanding production capacity.
Thus we accelerate business expansion in China to achieve
the Meiji Group 2026 Vision.
As announced recently, we have entered into abusiness partnership with Danone for cube-type infant
formula, which is Meiji’s patented technology. We willdevelop markets for cube-type infant formula in Europe
with Danone, which has strong sales capabilities.

Key Strategies
in the Meiji Group 2026 Vision
For details, please see page 8.

Meiji TANPACT, a diverse series of products(See page 41 for details)

Commitment from Top Management

Making Bold Changes Internally and Leveraging the Unique Valuethat Only Meiji Can Provide to Compete Globally
To achieve sustainable growth, we must deliver value
unique to Meiji through products that contribute tohealthier lives. We should bring innovative ideas that shakeup conventional thinking to those products. For years,
Meiji has established vertical organization for its productcategories and managed the business in this way. Thenfrom 2018 to 2019, we reorganized according to business
functions—development, marketing and sales—in orderto generate innovative ideas. I am now asking our people
to put Meiji foremost in their conversations. They still speakfrom the perspective of product categories, and productdevelopment in the new organization is only at the level ofsimple addition. However, we can achieve far more newvalue when we create synergy. We can see signs of that
happening, so I hope we can bring creative ideas into
innovative products that are unique to Meiji.
I believe that Meiji can compete with globally famousfood manufacturers, but we are still a little behind them.
The world is changing dramatically due to the COVID-19
pandemic. Therefore we need to develop people whotake on diﬃcult challenges, be bold enough to reform thecompany, and change ourselves. I intend to contribute toachieving the Vision through attaining sustained growth of
Meiji.

Corporate Information

One of the key strategies in the Meiji Group 2026 Vision is
to expand our overseas business. To achieve our targets,
we will put our utmost eﬀorts into investing as we build
solid foundations in new overseas markets.
China is one of the key areas for our overseas business.
The drinking milk and yogurt businesses made profits in
FY2018. Our sales are growing steadily because the qualityof Meiji products is widely accepted by Chinese
consumers. In addition, the chilled milk market isexpanding. Our plan is to expand production capacity at
the Suzhou Plant, which is already operating, and thenstart operations at a second plant in Tianjin in FY2022 anda third plant in Guangzhou in FY2023. To secure stableprocurement of high-quality raw milk for the long term, in
July 2020, we acquired shares of AustAsia Investment
Holdings Pte Ltd., which operates farms in China.
On the other hand, the drinking milk and yogurt

The Meiji Group 2026 Vision sets out new challenges in the health value domain as oneof its key strategies. In other words, we will help address health-related social issues
through our businesses. One of the social issues in the future is addressing
presymptomatic disease states, which including the prevention of illnesses and theirdevelopment. We need products to extend healthy life expectancy so that everyone
can enjoy life, resulting in reduced medical expenses. We will therefore develop a
range of products that will create new markets help address social issue.
Protein is essential nutrition for building a healthy body. Surprisingly, one of therecent social issues in Japan is low nutrient condition due to insuﬃcient protein
intake. We believe we should address this issue. Hence, we launched the Meiji
TANPACT series sequentially from March 2020. The Meiji TANPACT series extends acrossseveral categories; frozen foods such as frozen dessert; chilled foods, including chilled
milk and cheese; room temperature foods such as confectionery. The products in thisbroad series are suited to customers looking for an additional 10 g/day of highly
eﬀective milk protein in their diet.

Financial and Non-Financial Section

Actively Invest in Developing the China Market,
and Enter into European Markets in Partnership with Danone

Launching New Products to Address Low Nutrient Condition
due to Insuﬃcient Protein Intake, a Social Issue in Our Modern Lives

Our Activities for Sustainability

Frozen Dessert Frozen dessert is the new marketing category that was formally ice cream.
While the Meiji Essel Super Cup brand still accounts for a large proportion of our sales, we would
like to create new markets that go beyond just ice cream. In FY2019, we launched Meiji Cold
Cacao at some shops. This new product, providing a new way to enjoy the taste of cocoa, is theresult of our research on cocoa. The product is a perfect example in the frozen dessert category,
and we hope it becomes the catalyst for creating new markets.

New Challenges

Our Value Creation Story

Cheese
The cheese category is expected to grow for years to come. On the other
hand, the Japan-EU Economic Partnership Agreement (EPA) removes and reduces tariﬀs oncheese. Therefore, we need new products that can compete with imported products. We arecommitted to pursuing unique value-added products and to expand our markets through thatcommitment. In addition to processed cheese, we will focus on natural cheese because we are
expecting further market growth in Japan. Meiji Hokkaido Tokachi Camembert Cheese is a typicalexample of our natural cheese products. We have already built the leading share in thecamembert cheese market in Japan, and will expand our product line in the natural cheesecategory. Our unique natural cheeses product line includes the authentic smoked Camembert
product we launched in 2019. We will leverage our special technologies and high quality todevelop processed cheese products, such as Meiji Hokkaido Tokachi Smart Cheese made with fresh
raw milk from Tokachi in Hokkaido, that are clearly distinguished from imported products.

Overseas Business

Introduction

Growth Strategy from FY2020

We actively strive to develop our human capital to bringout the abilities of every one of the Meiji Group's
employees (See page 46 for details).

Meiji Holdings Co., Ltd.｜Integrated Report 202029

Contents

Overview by BusinessPharmaceutical Segment
Growth Strategy From FY2020
Response in Confronting
the COVID-19 Pandemic(See the Meiji Group Sustainability—Infection prevention and control on page 42 for details about novel coronavirus vaccine development)

President and Representative Director
Meiji Seika Pharma Co., Ltd.
Core Businesses

Sales and Profits Increased, with Vaccine Sales Contributing

14.2

15.9

Impact of NHI drug
price revisions

+1.9
-1.9
+1.9
+3.3

15.9

FY2019

Increased sales of vaccines
Cost reductions, gains from changes in inventory
valuation due to revisions in the production
system in the previous fiscal year
Loss from disposal of products,
decrease in R&D expenses, etc.
Increased profits by overseas
subsidiaries, decreased goodwill
depreciation for Medreich, impact
from KM Biologics becoming
a consolidated subsidiary, etc.

Japan

*3

*4

Overseas

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

Generic drugs (distributed by MSP/CMO and CDMO)
Biopharmaceuticals

Immune system and inflammatory disorders
Hematologic cancer/PDT *5

NewAgricultural chemicals(distributed by MSP)

ExportVeterinary drugs

Healthcare solutions*1 Core area: ASEAN and Europe, Growth/reform area: Mainland China *2 MSP: Meiji Seika Pharma*3 Contract Manufacturing Organization *4 Contract Development and Manufacturing Organization30

Our Value Creation StoryNet Sales(Our Mainstay Products in Japan)
52.6
46.2

(Billions of yen)

31.9
3.9

25.7

26.1

30.2

7.2

10.6

4.3

5.2

8.6

6.6

FY2019FY2020

7.4

3.2
2.8

3.7

16.9

19.7

FY2017FY2018REFLEXBILANOA(Plan)SYCREST
Vaccines* Sales of REFLEX includes generic drugs
from FY2018* A drug that inhibits β-lactamase, which is one of the causes of antimicrobial resistance.

CNS Disorders Central nervous system (CNS) disorders are another area where we show our strengths. We have a wide
range of drugs for depression and schizophrenia, both brand name and generic drugs. In addition, we have medical
representatives who specialize in those areas to provide in-depth and competitive information. We will pursue the uniquevalue that we provide by utilizing the foundations we have established over the years and expand this business.
Generic Drugs We manufacture generic drugs in Indonesia and Thailand and at
Medreich in India. In Indonesia and Thailand, we have been operating for more than 40
years, and Medreich joined the Group in 2015. We adopt strict quality management
systems in all manufacturing sites and achieve excellent quality that comply with thehigh Meiji quality standards. In that way, we have established a cost structure that is
profitable as a contract manufacturer. Accordingly, we are receiving more inquiries forcontract manufacturing from generic drug manufacturers in Japan, as the prices ofgeneric drugs are falling in Japan due to the NHI pricing revisions.
As the global population is growing in developing countries, it becomesincreasingly important to improve access to drugs in these countries and regions. We
have entered into South Africa markets through a joint venture. We will also supply
aﬀordable and high-quality generic drugs to the countries in Africa and Southeast Asiaand grow the generic drugs business across the world. We believe this is our mission.

Net Sales (Generic Drugs)(Billions of yen)

46.7

FY
2017

46.9

FY
2018

48.6

FY
2019

Corporate Information

Agricultural Chemicals and Veterinary Drugs

CNS disorders

Growth/Reform

+2.9%
+5.6
+12.2%
+1.7

14.2
-3.5

Infectious diseases/VaccinesCore

Operating profit

FY2018Overseas *1
*2

204.3

Breakdown of Consolidated Op. Profit (Billions of yen)

Ethical Pharmaceuticals
Japan

198.6

YoY Change

Infectious Diseases and Vaccines We provide a stable supply of injectablepenicillin antibiotics in Japan, where we hold a market share of approximately 50%.
Injectable penicillin antibiotics have become increasingly important lately in the fightagainst the threat of antimicrobial resistance (AMR), which requires appropriate doseand duration. At the same time, we will fulfill our responsibilities through ensuring
stable supply. In addition, we are currently developing OP0595 as a new β-lactamase
inhibitor* funded by the Japan Agency for Medical Research and Development(AMED). Due to its unique mechanism of action and potential medical needs for thetreatment of AMR infections, we are currently accelerating the development process.
One major challenge is to manufacture useful drugs and active pharmaceuticalingredients domestically, rather than depending solely on foreign sourcing. Especiallyin circumstances such as the COVID-19 pandemic, distribution from overseas could beterminated and lead to a health crisis. Vaccines and antibiotics are useful drugs. That is
why we will build systems that cover the value chain, from development through to
production, and implement them in Japan to ensure stable supplies.

Financial and Non-Financial Section

Pharmaceutical BusinessNet sales(Billions of yen)

Leveraging Our Strengths to Contribute to Infection Prevention
and Control and Improvement of Access to drugs

Our Activities for Sustainability

FY2019 in Review

FY2019Results

Our Value Creation Story

COO (Pharmaceutical Segment)
Member of the Board and Executive Oﬃcer
Meiji Holdings Co., Ltd.

FY2018Results

Focusing on Developing the COVID-19 Vaccine,
Our Urgent Task

Responding to the COVID-19 pandemic is a significant health challenge that the world should overcome. Therefore, we arerushing to develop the COVID-19 vaccine. KM Biologics has considerable vaccine-related expertise and suﬃcient production
capacity to meet the demand for vaccines to respond to novel influenza pandemics. Accordingly, we are participating in a joint
industry-government-academia project to develop an inactivated vaccine. We have also started discussing contract
manufacturing (formulation) and distribution of new vaccines being developed overseas to secure a stable supply within
Japan. We expect that more people will get influenza vaccines due to the spread of the COVID-19. We are therefore working
hard to achieve a stable supply of influenza vaccines to meet that demand.

Daikichiro Kobayashi

The NHI drug price revisions took place on October 1, 2019,accompanying the consumption tax increase. Drug price revisions,especially the large price reductions for generic drugs, impacted
business performance in FY2019. Sales of antidepressant drug REFLEX
decreased due to expiry of the patent. From the beginning of 2020,
patients stayed at home to avoid the risk of the COVID-19 in hospitals,
resulting in sales of the anti-allergy drug BILANOA, for pollinosis,
missing the initial target. In the agricultural chemicals business, sales
decreased because we could not manufacture suﬃcient amount of
products due to supply problems from Chinese supplier leading toshortages in active ingredients ahead of the peak demand period.
On the other hand, Meiji Seika Pharma started selling the majorityof human vaccines manufactured by KM Biologics from FY2019. Salesof influenza vaccines grew steadily and contributed significantly tobusiness performance.
Amid the harsh business environment, we secured increased sales
and profits overall.

Introduction

We are Improving the Valueof the Pharmaceutical Segment
by Contributing to Addressing
Social Issues

51.3

FY
2020
(Plan)FY
2023(Plan)

Meiji Seika Pharma
Me Pharma
Drug Supply to Other Companies*5 Photodynamic Therapy
Meiji Holdings Co., Ltd.｜Integrated Report 202031

Contents

Overview by Business

List of New Products Under Development

Pharmaceutical Segment(As of August 12, 2020)

Grow and
Reform Businesses

Infectious diseases CNS disorders

Growth Strategy From FY2020

Meeting Unmet Medical Needs
and Expanding Our Agricultural Chemical Business Globally

Immune System and Inflammatory Disorders We will expand sales of the anti-allergy drug BILANOA. We will capture the top
market share in FY2020 by promoting its benefits, which include less drowsiness and less eﬀects on the ability to work. As for
our R&D for immune system and inflammatory disorders, we will refocus our resources from atopic dermatitis and psoriasis toinfectious diseases related topics, and we will carry out exploratory research targeting vaccines and antibody drugs.

(Billions of yen)

−0.8

FY
2019

(Target for (Actual)
Medium-Term
Plan)(Plan)

Achieving Our Vision by Addressing Social Issues Through Our Businesses

Our Value Creation Story

Phase II

HBI-8000 Tusidinostat

Phase II

SP-02L Darinaparsin

Phase II

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

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

KD-382 [Quadrivalent vaccine against dengue fever]KD-404[Egg-derived inactivated whole virus influenza vaccine][Indication expansion for chronic inflammatory
demyelinating polyneuropathy (CIDP) andmultifocal motor neuropathy (MMN)]

KD5-71[Indication expansion for optic neuritis (ON)(orphan drug)]

KD-371[Indication expansion for microscopic
polyangiitis (MPA) (orphan drug)]

Approve

Apply(Phase I finished)Phase I

ME5343 [Insecticide] ●Licensing agreement with BASF
Discovered in a research collaboration between
Meiji Seika Pharma Co., Ltd. and The Kitasato InstituteANM-138 [Insecticide] ●Phase I

Approved

Approved

Phase III
Phase II/III

Apply

Approved
Approved

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

Approved

ME4129 [Injectable antibacterial drugs]

Approved(Overseas)(Overseas)

Approve(Overseas)(Overseas)

Approve
AppliedApprove

ME4406 [Feed Additive]

Apply

ME4204 [Oral Anthelmintic] Expanded indication

Applied

ME4624 [Vaccine]

AppliedKD-390 [Vaccine for poultry use] ●Approved

KD-377 [Vaccine for swine use] ●AppliedKD-386 [Vaccine for swine use] ●AppliedKD-395 [Vaccine for swine use] ●Approve

Extension study

Approved

ME4137 [Injectable antibacterial drugs](Overseas)

Phase I/II

Joint development with Nippon Kayaku

Expanded indication

Apply

Phase II

[Suppression of bleeding tendency in patients with blood
coagulation factor VIII or factor IX deficiency who havecoagulation factor inhibitors]

ME5382 [Insecticide/Flupyrimin] ●(Overseas)

Phase IIIKD2-305

ME4136 [Injectable antibacterial drugs]

Meiji Seika Pharma’s advertising focuses on its mission
to protect people from the risks of infectious diseases

Apply

Corporate Information

32

Group 2026 Vision with the strong will and passion tocontribute to addressing social issues.

(Plan)

Veterinary drugs

Japan’s pharmaceutical market has been seriously
damaged by the COVID-19 pandemic. Still, we have a
responsibility to address social issues through ourbusinesses. We believe we can increase our corporate
value by steadily addressing each of these social issues.
We will focus on the vaccine and antibiotics
businesses, and contribute to infection prevention andcontrol through prophylaxis and treatment, to protect
people from the risks of infectious diseases. We will work to
improve access to drugs globally. In addition, we will
strengthen our environmentally friendly agriculturalchemical business to improve the global food crisis as
populations grow. Combining the management resourcesof Meiji Seika Pharma and KM Biologics we will create greatsynergy. Every one of us will try hard to achieve the Meiji

HBI-8000 Tusidinostat[Plaque psoriasis, Psoriatic arthritis, Crohn’s disease]

Agricultural chemicals

Commitment from Top Management

Phase III

[Antipsychotic]

Financial and Non-Financial Section* Honeybees play an important role in plant pollination, and mass deaths of honeybees due to neonicotinoid
insecticides are becoming a serious problem worldwide. Use of neonicotinoid insecticides is almost
completely banned in Europe and their use is restricted extensively in the U.S. during the flowering stage.

ME2112 Ziprasidone

KD6-71
FY
2023

with β-Lactams

DMB-3115 Ustekinumab biosimilar

+0.8

FY
2020

Phase I[β-lactamase inhibitor] ●[Breast cancer, Gastric cancer]

Blood plasma products

FY
2000

OP0595 Nacubactam

Our Activities for Sustainability+2.6(Overseas)

Our Value Creation Story

Improved incomein the agricultural chemical
and veterinary drug business(compared to FY2017)

Phase Ib

FY2022

DMB-3111 Trastuzumab biosimilar

Human vaccines

The agricultural chemical business is expected to growconsiderably in the future. Flupyrimin is a novel insecticide that we have successfully
developed in-house. This is eﬀective in controlling two major insect pests, planthoppers
and stem borers. Flupyrimin is less toxic to honeybees and has minimal environmental
impact*. In Japan, we have registered Flupyrimin as single and mixed formulations with therice blast preventive ORYZEMATE. In partnership with India’s UPL Limited, we will register it
in India in FY2020. We have four compounds discovered in-house, including Flupyrimin, andwill expand these innovative new agricultural chemicals across Japan, India, the U.S. andEurope. On the other hand, to address the issue of procuring active ingredient that we
faced in FY2019, we are making capital investments in the former Kitakami Plant tomanufacture active ingredients and other chemicals. Construction will be complete by theend of FY2020. This will ensure stable supply in combination with contract manufacturing
and our own production, and will reduce costs. In that way, we will accelerate the growthof this business.

OthersAgricultural Chemicals[HABP/VABP] ●[Relapsed or refractory Adult T-cell leukemia/
lymphoma (ATLL)]

Ethical Pharmaceuticals

Hematologic Cancer
The hematology field has the largest usage share of antibiotics from Meiji Seika Pharma and bloodplasma products from KM Biologics. Although we are providing many basic anticancer drugs, we believe we can make further
contributions to this field. We will address unmet medical needs for rare diseases with clinically beneficial and competitive
drugs.

ME1100 Arbekacin inhalation

FY2021Introduction

FY2020

Products

Approve
Approve

Approve
Approve
Apply

Approve● : compounds discovered in-house* Out-licensed substances. 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 202033

Contents

The Meiji Group Sustainability

Business
VisionSustainability Management
VisionVisionPolicy: Social contributions• Healthier Lives• Caring for the Earth• A Richer Society

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 Sustainability 2026 Vision.

The 13 Main SDGs the Meiji Group Can Address

Our Value Creation Story

The basis of the Meiji Group’s approach to sustainability is tofulfill its corporate social responsibility (CSR). Accordingly, we
practice the Group Philosophy on a day-to-day basis in ourbusinesses and continue to be a corporate group that is truly
indispensable to society. Promoting sustainability is one of
the highest priority areas in the Meiji Group 2026 Vision,
which sets out goals for the Group. We thus created the MeijiGroup Sustainability 2026 Vision to address social issues.

Group Sustainability System

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.

We have established the Group Sustainability
Committee with the CEO, President andRepresentative Director of Meiji Holdings at its helm.
Accordingly, we are promoting sustainability
activities following the directions of this Committee.
The Committee meets twice annually. It monitors the
progress of activities to achieve KPIs in the MeijiGroup Sustainability 2026 Vision and establishes
sustainability policies. The Committee sharesoutcomes of activities conducted by each operatingcompany and reports twice annually to the Board of
Directors. We have established a Sustainability

Outline of Vision
Areas of
Activity

Domains

Board of Directors
Executive Committee* KPI: Key Performance IndicatorGroup Sustainability Committee (meets two times per year)
Group Sustainability Secretariat (meets monthly)

Progress of the Meiji Group Sustainability 2026 Vision• Began discussions to establish vision
Mr. Peter David Pedersen, Mr. Hidemi Tomita• Established the Vision• Identify materiality• Revised how the vision’s activities in each area are related to the SDGs

2019

• Joined UN Global Compact• Discussions with outside experts
Mr. Peter David Pedersen• Established Sustainable Management Department at Meiji Holdings• Revised human rights policy and procurement policy,
and established a new marketing policy

34

Our Activities for Sustainability

Chairman: CEO, President and Representative
Director, Meiji Holdings Co., Ltd.
Vice chairmen: President and representative
directors of three operating companies

Head of the secretariat:
CSO, Meiji Holdings Co., Ltd.

Meiji Holdings Co., Ltd.

Meiji Co., Ltd.

Meiji Seika Pharma Co., Ltd.

KM Biologics Co., Ltd.

Sustainability staﬀ

Sustainability staﬀ

Sustainability staﬀ

Sustainability staﬀ

Related departments

Related departments

Related departments

Related departments

Group Environmental MeetingGroup Human Rights Meeting

Corporate Information

2018

Financial and Non-Financial Section

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

Secretariat that meets monthly and its members are
sustainability staﬀ from Meiji Holdings and theoperating companies. In FY2019, we established theGroup Human Rights Meeting and the Group TCFD
Committee alongside the Group Environmental
Meeting, which is linked to the Sustainability
Secretariat. We strengthened our systems forconsidering concrete measures and launched anumber of initiatives including scenario analysis
based on TCFD recommendations and conducting
human rights due diligence.

Our Activities for Sustainability

The Meiji Group Sustainability 2026 Vision

2017

Introduction

Approach Toward SDGs

Creating a Future Where Everyone
Around the World is Happy and HealthyGroup TCFD Committee

We established the Sustainable Management Department in October 2019 under Meiji Holdings to further
accelerate sustainability activities across the Group. Then in June 2020 we introduced a Chief Oﬃcer system andinstalled a Chief Sustainability Oﬃcer (CSO) who will oversee the sustainability activities of the whole Group andwill promote integration with management.
Meiji Holdings Co., Ltd.｜Integrated Report 202035

Contents

The Meiji Group Sustainability
Introduction

The Meiji Group Value Chain Sustainability
In managing our business activities, we identify important sustainability issues to address in accordance with the MeijiGroup Sustainability 2026 Vision. We then consider the impact they have on society and the environment throughout
the value chains: R&D, Procurement, Production and Distribution, and Sales and Communication. By addressing theseissues, we can help solve social issues and achieve sustainable growth.

Research andDevelopment

Caringfor the Earth▲ We named the forest near KM Biologics’

eliminate pests and keep
beneficial insects such as
honey bees

Kikuchi Research Center Kumamoto Komorebi No Moriand protect the local ecosystem

Procurement

Production andDistribution

For details, please see
page 44-45.

Production andDistribution• Cut food loss through eﬃcient production
and distribution management• Donate our products to food banks• Use lighter and thinner plastic container packaging and switch toalternative materials (paper, etc.)• Promote the 3Rs* (use returnable bottles for home deliveries, etc.)

Procurement

Production andDistribution• Support the TCFD and join the consortium• Secure and develop human resources• Implementing Human Rights Due Diligence• Enhance employee engagement

For details, please see
page 50-51.

36

Our Activities for Sustainability• Procurement based on
Procurement Policies and Guidelines• Strengthen partnerships with dairy farmers• Promote Meiji Cocoa Support(support cocoa farmers, cooperate with WCF,
increase amounts of sustainable cocoa beans)• Shift to 100% RSPO-certified palm oil• Use eco-friendly paper raw materials• Conduct supplier audits• Secure bulk drug suppliers
and have multiple suppliers• Conduct thorough testing of incoming raw milk at plants• Conduct taste assessments and disseminate information(train taste testers for raw milk, etc.)

Discussing
Meiji Dairy Advisory▲• Initiatives for stable procurement of premium quality
raw milk (physical and chemical analysis of raw milk
and development of new testing techniquesto evaluate the quality of raw milk)• Conduct social contribution activities throughcommunity activities, emergency aid and support
in aﬀected areas, and our products (including
stable supplies of special milk, donating our
products to food banks, Meiji Happiness Fund,hosting Tohoku 3-Prefecture Fair to support areas
struck by the Great East Japan Earthquake in 2011)

Corporate Information• Promote diversity and inclusion• Employee-friendly workplaces(encourage personal healthmanagement)

Sales and Communication

For details, please see
page 46-49.

Sustainable
Procurement▲ Paddy field flooding

facilities* Reduce, Reuse and Recycle
Research andDevelopment

A Richer Society

Procurement▲ Solar power generation

Financial and Non-Financial Section• Extend the expiration dates of food products,
changing food expiration labels from year-month-date toyear-month formats
Research andDevelopment• Promote renewable energy• Introduce energy-eﬃcient equipment• Promote replacement with CFC substitutes
and natural refrigerants• Manage chemical substances properly• Reduce industrial waste• Appropriate Water Management and Water Risk
Management (introduce RO membranes,
recirculate gray water, etc.)• Improve data accuracy using an environmental data
management system• Activities to protect forests• Biodiversity conservation

Our Activities for Sustainability▲ Develop insecticides that

• Disseminate information to promote health and nutrition(nutritional support through sport, education activities on
eﬀects of poor nutrition, etc.)• Improve access to nutrition in emerging countries (JICA)• Support famine relief in emerging countries• Oﬀer new food culture and cuisine• Improve access to pharmaceuticals (mainly in China
and Southeast Asia)• Educate about drug-resistantbacteria• Provide hygiene education(washing hands, etc.)• Provide infection control
expertise to agriculture and▲ Dietary education
livestock industries

Wells donated tococoa farmers to
improve thestandard of living

For details, please see
page 40-43.

• Develop environment-friendly agricultural chemicals• Eﬀorts to obtain Global Food Safety Initiative (GFSI)
certification• Ensure the sustainable supply of pharmaceuticals(important antibiotics, etc.)• Ensure stable supplies of agricultural chemicals
and veterinary drugs▲• Develop value-added nutrition products(sports nutrition, infant nutrition)• Develop products that contribute toa super-aged society (medical nutrition)• Develop novel pharmaceuticals
and vaccines for Infectious Disease• Superior quality management of clinical trials
and clinical data

• Technical support and livelihood support
for farmers through Meiji Cocoa Support(technical guidance on fermentationand cultivation, donations
for building wells, etc.)• Farm management support programfor dairy farmers in Japan(Meiji Dairy Advisory: MDA)Sales andCommunication
Our Value Creation Story• Develop products that contribute tohealthy diets (lactobacillus, cocoa,
reduced sugar and low fat, etc.)

Healthier Lives

Production andDistribution

Procurement▲ Donate infant formulas to homes

for infants and orphanages• Disseminate information about raw milk and cocoa, etc.

▲ Plant tour, Meiji Naruhodo ▲ Hello, Chocolate by meiji

Factory in Tokachi,
Hokkaido
Meiji Holdings Co., Ltd.｜Integrated Report 202037

Contents

The Meiji Group Sustainability

After dialogues with experts outside of the company, we identified materiality and set KPIs. We are promoting
sustainability activities to achieve our targets and we report on our progress each year. In FY2020, we set up new
KPIs and updated targets adapted to changes in business environment and progress of our activities.

Water

Securewater resources

Performance

NEW New KPIs and updated targets from FY2020
Global: the Meiji Group sites including those overseas

Identified materiality related to social issues
Domestic: the Meiji Group sites in Japan

Biodiversity

Healthier Lives
Social Issues

Healthand Nutrition

Contribute tohealthy diets
Respond toa super-aged society• Improve nutritionin emerging countries• Ensure the sustainablesupply of pharmaceuticals• Measures against
infectious diseases

NEW

45

407,000

Areas/SDGs

NEW

87%

ReduceCO2 emission volume• Eliminate the use of
specified fluorocarbons

NEW

Performance

Societyenvironmental burdenNEW

Our Activities for Sustainability

2.28 %The ratio of employees with disabilities
At least 2.2% * From April 1, 2018
For details, please see page 46.

Achieve 100% participation of new employees andnewly promoted managers for human rights training(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)
Performance

100 %Domestic CO2 Emission Volume(10,000 t-CO2)

58.2 52.3 50.4

49.5

Shared Themes

48.4 45.7

Areas/SDGs
FY2013 FY2016 FY2017 FY2018 FY2019 FY2030[Base year][Target]1. Reduce group-wide CO2 emission volume (Scope 1 and 2)
by at least 40% compared with FY2015 baseline by FY2030
2. Increase the share of renewable energy to at least 50%
of group-wide power usage by FY2030

Reduce domestic plastic usage, including container packaging,by at least 25% compared with FY2017 baseline by FY2030
and increase use of biomass plastics and recycled plastics
For details, please see page 45.

38

Respect andpromote human rights• Communicate
with stakeholders• Promotephilanthropic activities

For details, please see page 44.

Circular Economy • Reduce

3.4 % Female leaders 189

Continued on page 39

Sustainable
Procurement

Social Issues
Procure raw materials
with consideration
toward human rights
and the environment• Stable procurement

KPIs & FY2019 Performance
1. Improve traceability of cocoa
2. Use 100% RSPO*-certified palm oil by FY2023* RSPO: Roundtable on Sustainable Palm Oil

NEW

Performance

Same usage
amount as FY2018

Performance

Approximately

Corporate Information

21.5% reduction

Female managers

Statutory Employment Quota

KPIs & FY2019 Performance* The domestic Meiji Group,
excluding KM Biologics Co., Ltd.

* Leader: Manager and assistant manager(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)

Obtain third party Global Food Safety Initiative (GFSI)
certification, which includes HACCP, at all domestic food plants
by FY2020 and all global food plants by FY2021

Performance(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)

2. Raise the ratio of employees with disabilities above
the statutory employment quota* HACCP: Hazard Analysis and Critical Control Point

Reduce total domestic
CO2 emission volume
by at least 15% comparedwith FY2013 baseline by FY2030

1. Raise the ratio of female managers from 2.6% in FY2017
to at least 10% by FY2026. Triple the number offemale leaders* to at least 420 by FY2026

Financial and Non-Financial Section

Climate Change

KPIs & FY2019 Performance

Performance

Caring for the Earth
Social Issues

Promote diversity
and inclusion,and develop
human resources• Employee-friendly
workplaces

For details, please see page 41.

For details, please see page 43.

Areas/SDGs

Reduce group-wide water consumption volume(per unit of sales) by at least 20% compared with FY2017
baseline by FY2030

Social Issues

Obtain Global Food Safety Initiative (GFSI) certification, which includes
HACCP*, at all domestic food plants by FY2020
Performance

FY2015 FY2016 FY2017 FY2018 FY2019 FY2030[Base year][Target]Our Activities for Sustainability

Ensure productquality and safety2

2. Enroll a total of 500,000 participants into nutrition andhealthy diet education within three years from FY2018 to FY2020(FY2019: 212,000)

1.70

A Richer Society

Human
Resources
Total

2.13 2.07 1.92 1.86
1.82

For details, please see page 45.

1. Develop products that contribute to healthy diets and a super-aged society
Performance Health-conscious Nutritional products Products fora super-aged
productswith added valuesociety

20(per Unit of Sales)(1,000 m3/100 million of yen)

14.7% reduction* The domestic Meiji Group,
excluding KM Biologics Co., Ltd.
* Past data has been revised

KPIs & FY2019 Performance

Performance

Qualityand Safety• Protectionof local biodiversity

Domestic Water Consumption Volume

Our Value Creation Story

Areas/SDGs

Reduce domestic water
consumption volume (per unit ofsales) by at least 20% comparedwith FY2015 baseline by FY2030

Introduction

Progress on Materiality

10%
1. Increase procurement ratio ofsustainable cocoa beans to 100% by FY2026
2. Use 100% RSPO-certified palm oil globally by FY2023

3. Use paper raw materials with 100%
forest certified (FSC®, PEFC)
and/or recycled paper by FY2020

Performance

60.3%
For details, please see page 50-51.

Meiji Holdings Co., Ltd.｜Integrated Report 202039

Contents

The Meiji Group Sustainability

Social Issues

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

Introduction

Healthier Lives

Contribute to healthy eating habits
Responding to a super-aged society

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

Developing Products That Help to Address Poor Nutrition
Materialities

Social Issues

SDGs
for Health and Nutrition

Improving nutrition in emerging countries

Poor nutrition is a serious issue in emerging countries. The Meiji Group is implementing a number of initiatives globally toaddress this issue. We increase interest in eating habits by providing information on nutrition and promoting appropriate
products in cooperation with relevant organizations.

Project to Improve Nutrition for Female Factory Workers in Vietnam

Nutrition awareness seminar andtaste-testing MEI-LIFE nutritionallyfortified milk for female workers infactories operated by Japanesecompanies

Providing Nutritional Support
to Female Factory Workers
with JICA Support

Nutritionists at Meiji Hanoi Oﬃce

40

Our Activities for Sustainability

Nutritionallyfortified
milk
MEILIFE

Protein Intake per Person in Japan (grams/day)
(g)
80
70
60
Source: National Nutrition Survey (1947–1993), National Nutrition Survey (1994–2002),
National Health and Nutrition Survey (2003–Present), Ministry of Health, Labour and Welfare

Expanding Nutrition Education

1960

1970

1980

1990

2000

2010

2017 (Year)See page 38 for details on progress

JICA

As a Gold Partner of the Tokyo 2020 Olympic andParalympic Games, we are working with athletes on a
project to communicate the importance of nutrition toparents and their children. Participants exercise withathletes and find the importance of having a dream.
Furthermore, they attend nutrition education to learn theimportance of nutrition. We held the Meiji Tokyo 2020 Fes
event 11 times around Japan between 2017 and 2019.
Participants enjoyed playing sport and recognized theimportance of food. Our nutritionists are supporting the
Father-child Challenge Academy by giving nutrition
education.
We will run the Meiji Dream Kids for Tokyo 2020
program during the Tokyo 2020 Olympic and Paralympic
Games, which is currently planned for 2021. The two-night,
three-day tour includes nutrition education, watching
Olympic/Paralympic game and special experiences thatwill create lifelong memories for the children.

Wrestling class by wrestler Takuto Otoguro, and a talk show on
Yume (dreams) by speed skater Miho Takagi,
at Meiji Tokyo 2020 Fes

Corporate Information

We are conducting health management seminars,
focusing on nutrition, in industrial estates and otherlocations. Our goal is to create environments where people
personally improve their nutrition by raising the awarenessof low-paid female factory workers and their employers.

Meiji TANPACT brand site
https://www.meiji.co.jp/products/brand/tanpact/(Japanese only)

Nutrition Education Activities(Supporting the Growth of Children)

Nutrition
education

Companies
employingfemalefactory workers

WEB

1950

Vietnam

Femalefactory workers
withmalnutrition

Launched in March 2020, there are 17 Meiji TANPACT available,
such as yogurt, jelly beverages, cheese, chocolate, chilled soup
and frozen foods (as of July 2020).

Financial and Non-Financial Section

One of the social issues that the world is currently facing, mainly in emerging countries,
is maternal and child health. To address this issue, we have proposed a business plan to
improve health among female factory workers in Vietnam. This business plan was
selected as an SDG support enterprise by the Japan International Cooperation Agency(JICA). According to Vietnam’s National Institute of Nutrition, as many as 30% of female
factory workers in the country have problems of malnutrition. Another serious issue is that
accurate knowledge of nutrition is not available to the country’s citizens, including
women of child-bearing age. Therefore, we are developing a nutrition improvementbusiness model using MEI-LIFE, a nutritionally fortified milk. Its formulation is based on
MEIJI MAMA, a milk product currently sold in Vietnam. Under this project, companies inVietnam purchase MEI-LIFE for their female factory workers and we provide dietaryeducation to improve their nutritional status. We started a survey to find out thenutritional status of local female factory workers in September 2019. The Meiji Group willcontinue such unique activities around the world to address nutritional issues using milkin emerging countries.

Poor nutrition is an issue not only in emerging countries
but also in developed countries. Currently, reduced protein
intake is a problem in Japan. All generations areexperiencing insuﬃcient nutrition, for example, women
who are dieting excessively and the elderly who are eatingand exercising less. In fact, the average daily protein intake
per person in Japan has fallen to that of the 1950s. For
more than 65 years, we have been developing protein
products and successfully expanding the value of protein
through products such as infant formula, yogurt and sports
supplements. Using that knowledge, we developed Meiji
TANPACT, new products containing a good balance ofessential amino acids that people consume in milk proteinin their daily lives. We will continue to address poor
nutrition by promoting the enjoyment of food and oﬀering
many Meiji TANPACT products. Consumers enjoy milk
protein anytime and anywhere throughout the day.

Our Activities for Sustainability

Providing Information and Products to Improve Nutrition in Emerging Countries

Launched Meiji TANPACT
to Overcome Reduced Protein Intake

Our Value Creation Story

Health and Nutrition

See page 38 for details on progress

Lunch meeting on nutrition education by Meiji nutritionists
at Meiji Tokyo 2020 Fes

Meiji Holdings Co., Ltd.｜Integrated Report 202041

Contents

The Meiji Group Sustainability

Materialities

Infection prevention and control

Quality and Safety

Prevention and control of COVID-19 is an important social issue. To address this issue, we have started developing aninactivated vaccine and are discussing contract manufacturing of a third party COVID-19 vaccine. We also provide information
about appropriate use of antibiotics to patients and medical institutions.

R&D for New Vaccines

SDGs
for Quality and Safety

Ensuring product quality and safety

As the Meiji Group operates in both the Food and Pharmaceutical businesses, one of the most important issues for us is
ensuring the high quality and safety of the products in these businesses. We will continue to enhance quality management
and quality communication, and contribute to customers’ healthy lives.

Prevention and Control of COVID-19

Pursuing Safety to Strengthen Trusted Quality and Brands

See page 38 for details on progressObtaining GFSI Certification at All Food Plants
Filling line at Koshi Plant which canhandle 57 million doses ofpandemic influenza vaccine
formulation

Appropriate Use of Antibiotics

The Meiji Group has already introduced HACCP-based hygiene management controls at all food plants. We plan to obtain
Global Food Safety Initiative (GFSI) certification, a global third-party food safety management system certification that includes
HACCP, at all food plants in Japan by FY2020 and all food plants globally by FY2021.

Obtaining Anti-doping Certification for Sports Nutrition Products
The Meiji Group has obtained Informed Choice certification, a global anti-doping
certification program, for the majority of our sports nutrition products. Based on the
program, through analysis using advanced technologies and manufacturing process
audits, products are checked to ensure they are not contaminated with any banned
substances. We will continue providing certified products for athletes so that they canconsume without concern as they strive to achieve their goals, and also for sports lovers.

SAVAS Whey Protein
100 (cocoa flavor),
with Informed
Choice certification

Efforts to Control Infectious Diseases Caused by Vancomycin-resistant Bacteria
Quality Training for Sales Staff
We provide trainings to our employees in manufacturing. Through these eﬀorts we will
constantly improve product quality. Furthermore, we hold seminars on quality for oursales staﬀ twice a year. All 1,480 sales staﬀ attended the seminars in FY2019. We willcontinue these seminars to ensure that we properly communicate the quality, safety andreassurance of our products to our customers.

Seminar to promote understanding of
quality among sales staﬀ

* Bacteria that have become diﬃcult to control or kill with antibiotics

Stable supply of pharmaceuticals

Enhanced Safety Disclosure

As the leading company in systemic antibacterial drugs, we have created a system so that we can appropriately assess risks andrespond flexibly to unexpected situations. We will further strengthen the stability of the supply system by securing multiple
bulk drug suppliers and utilizing manufacturing sites in Japan and overseas.

Strengthening Stable Supply System for Five Key Drugs* The Japanese Society of Chemotherapy, the Japanese Association for Infectious Diseases, the Japanese Society
for Clinical Microbiology, and the Japanese Society for Infection Prevention and Control
42

Our Activities for Sustainability

Expiration Date Labelling on Ice Cream for the Consumer Market
Meiji has recently been receiving an increasing number of customer inquiries about thebest-before date labelling of ice cream. In a consumer survey that we conducted in
November 2019, respondents chose “Safe to eat” as being second only to “Tastiness” aspriorities when choosing food products. “Safe to eat” was also the priority that increased
the most for consumers over the previous year (see chart). In the survey, 75% of
respondents answered that ice cream with expiration labels “Provides confidence” and67% answered that they “Want expiration date labeling.” Although the regulations allow
best-before date labelling to be omitted from ice cream, Meiji has started to include
best-before dates in labelling from June 2020 to respond to the requests of customers
who prioritize food safety. We will apply best-before labelling to all Meiji ice cream for the
consumer market, such as Meiji Essel Super Cup, by April 2021.

Priorities When
Choosing Food Products
Priority(%)

Increase over the past year

Tastiness

29

Price

20

63
61

23

Made in Japanor locallyTrusted manufacturer
or brand73

21

Safe to eat

Healthy

Filling process for sulbacillin(PT. Meiji Indonesia
Pharmaceutical Industries,
Bangil Plant)

Corporate Information

Stable Supply of Antibiotics

Due to the bulk drugs manufacturing problems at an overseas manufacturer, supplies ofcefazolin were in diﬃculty in Japan. Additionally, supplies of substitute drugs were in shortage. This resulted in unavoidable impacts on the treatment of infectious diseases in many
medical institutions. From the perspective of appropriate use of drugs, medical institutions
need a stable supply of essential antibiotics to properly treat infectious diseases. Thus, four
associations* designated 10 antibiotics (injectable) as “Key Drugs” that are clinically importantand for which stable supplies are essential. Meiji Seika Pharma is supplying five of those Key
Drugs—PENICILLIN G, SULBACILLIN, TAZOPIPE, MEROPENEM and VANCOMYCIN.

Financial and Non-Financial Section

The risk of infectious diseases caused by drug-resistant bacteria* is increasing globally partly due to inappropriate use ofantibiotics. One such example is the infectious diseases caused by vancomycin-resistant bacteria. These infections have been
increasing because vancomycin has been widely used to treat infection with methicillin-resistant Staphylococcus aureus (MRSA).
To prevent the spreading of these drug-resistant bacteria, the Ministry of Health, Labour and Welfare (MHLW), the Japan
Antibiotics Research Association and pharmaceutical companies established the Vancomycin Study Group. Meiji Seika Pharma
has worked as the organizer of the Association since it was established in 2002, leading many eﬀorts to achieve appropriate useof vancomycin. Collaborating with relevant organizations, the Study Group continues to monitor drug quantities used in orderto check and understand changes or any signs of increase in drug resistance. The Study Group reports survey results to the
MHLW and provides that information to medical institutions.

Our Activities for Sustainability*1 The National Institute of Infectious Diseases, The Institute of Medical Science at the University of Tokyo, and The National Institutes of Biomedical Innovation,
Health and Nutrition.
*2 Public R&D project adopted by the Japan Agency for Medical Research and Development (AMED)*3 The vaccine jointly developed by AstraZeneca and Oxford University

Social Issues

Our Value Creation Story

KM Biologics is working with national research institutes*1 to rapidly develop an inactivatedvaccine*2, leveraging the expertise acquired over the years of developing vaccines. Aftercompleting non-clinical studies, the company hopes to move to clinical studies as soon as in
FY2020. We already have production facilities to manufacture and supply 57 million doses ofpandemic influenza vaccine in about six months. We consider utilizing these facilities toquickly supply suﬃcient quantities of the COVID-19 vaccine when it is ready.
Meanwhile, Meiji Seika Pharma and KM Biologics have agreed to start discussions with
AstraZeneca on achieving a stable domestic supply of the COVID-19 vaccine*3 that
AstraZeneca is planning to introduce in Japan. According to the plan, AstraZeneca will supply
the vaccine bulk, KM Biologics will undertake the further production, and Meiji Seika Pharma
will handle the distribution and supply management.

Social Issues

Introduction

Social Issues

Healthier Lives

39
34

7
15

32

Source: Meiji survey (15–17 November 2019)2,400 people across Japan aged 20 to 69
Meiji Holdings Co., Ltd.｜Integrated Report 202043

Contents

The Meiji Group Sustainability

Circular Economy

We, the Meiji Group, in recognition of the fact that our business operations originate
from the bounty of nature, will contribute to the creation of a sustainable society.
To this end, we intend to harmonize our business activities
with the global environment and manage the Group in a way that protects the environment.

Social Issues

Materialities

SDGs
for a Circular Economy

Reduce environmental burden

In order to preserve and protect the Earth’s limited resources, we are reducing industrial waste based on the 3Rs approach:reduce, reuse, recycle. The Meiji Group is already enacting a range of environmental policies that span the entire lifecycle of the
product from the design stage to the end-of-life stage.

Climate Change
Social Issues

Reduce CO2 emission volume

Energy-Saving Measures

See page 38 for details on progress

We are working to save energy in all stages of our business activities.
At our production sites, we are switching to low CO2 emission fuels andinstalling highly energy-eﬃcient equipment.

At our operating sites, we are switching fromheavy oil to city gas and installingco-generation systems to reduce CO2
emissions. In addition we are working to saveenergy by adopting energy-eﬃcientequipment and reducing operating time by
improving the operational eﬃciency ofequipment.

Domestic

222
Scope2280
Scope3 3.035
Scope1

thousandtons-CO2
thousandtons-CO2
million *tons-CO2

Overseas

26 thousand
tons-CO
76 thousand
tons-CO
219 thousand
tons-CO2(Domestic)
Scopes 1 and 2 are calculated based on the Act on Promotion of Global
Warming Countermeasures. The scope of the CO2 emission volume that areincluded is noted on p.123.
Scope 3 is calculated based on the Basic Guidelines on Accounting forGreenhouse Gas Emissions throughout the Supply Chain.
Scope 3 Categories included in calculation: 1. Purchased Goods andServices, 2. Capital Goods, 3. Fuel- and Energy-Related Activities Not
Included in Scope 1 or Scope 2, 4. Upstream transportation and distribution,
5. Waste Generated in Operations, 6. Business Travel, 7. Employee
Commuting, 9. Downstream transportation and distribution, 12. End-of-Life
Treatment of Sold Products* Database of Emissions Unit Values for Calculation of Greenhouse Gas
Emissions, etc., by Organizations Throughout the Supply Chain (Ver. 3.0)

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

have been assured by an

Meiji Probio Yogurt
R-1 Drink that uses
a thinner plastic
bottle design

2* Category 1: 2.343 million tons-CO2

Category 1: Calculated by multiplying Emissions Unit Values* by thepurchase price for main raw materials and packaging materials (paper,
plastic, cardboard, steel, aluminum and glass bottles) used in the food andpharmaceutical businesses.

Energy-eﬃcienttransformer at Meiji Seika
Pharma’s Gifu Plant

2

In October 2019, the Meiji Group introduced acloud-based environmental data management
system to identify the integrated
environmental impact in overall operatingsites of the domestic Meiji Group andaccurately and quickly track our performanceagainst targets. Using this system we canreduce input errors and thus collect andcalculate data eﬃciently. Accordingly, we will
introduce the system in our overseas
operating bases from October 2020.

Water
Social Issues

SDGs
for Water

Secure water resources

Water is essential for the Meiji Group’s business operation. Water
resources management is important to realize sustainable society. The
Meiji Group is installing equipment to save and use water eﬃciently
and manage the quality of wastewater. We use the latest version of
AQUEDUCT, the water risk assessment software launched by the World
Resources Institute (WRI). In addition to these results, we evaluatedwater consumption volumes, water quality and manufactured products
among our production plants in Japan and overseas and identified
high-risk sites. We will clarify priorities for countermeasures toimplement, prepare schedules, and then systematically carry them out.

Water Consumption Volume for FY2019
Domestic

21,822 m

thousand3

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

See page 39 for details on progress

Corporate Information

Installing and Using Renewable Energy Equipment
To reduce annual CO2 emissions by approximately 6,000 tons (compared to FY2019) by FY2028,
Meiji will gradually introduce solar power generation equipment at its plants for internal energy
consumption. While introducing solar power generation equipment across the Group, we will
investigate alternatives to solar.
Our Activities for Sustainability

thousandSee page 38 for details on progress

Use of renewable energy from the sun, wind, biomass and other sources reduces use of ourlimited natural resources, such as oil, and it also reduce greenhouse gas emissions. We haveestablished a target for the Group, including overseas sites, of increasing renewable energy toat least 50% of total power usage by FY2030.

44

1,418 mThe scope of the water consumption volume that are included is noted on p.123.
The numerical data indicated withhave been assured by an independentpractitioner.

Water-Saving Initiatives in Detail
Promoting Use of Renewable Energy

Overseas

Financial and Non-Financial Section

Energy-Saving Initiatives in Detail

CO2 Emission Volume for FY2019

Environmental DataManagement System

Our Activities for Sustainability

Eﬀorts to decrease CO2 emission against global warming is very
important to the Meiji Group. We have established a long-term target
for the Group, including overseas sites, of reducing CO2 emissions by atleast 40% by FY2030 (compared to FY2015). To reach this target, we aresystematically reducing greenhouse gases emitted through ourbusiness activities while achieving steady growth. Through these eﬀorts
we will contribute to realizing a decarbonized society.

Marine pollution caused by plastic garbage
contamination is a social issue. To address this issue,
we are recycling plastic resources. We established the
Meiji Group Plastic Policy in July 2020 to reduce plastic
usage by 25% (compared to FY2017) by FY2030. In linewith the policy, we are reducing the weight of the PET
bottles for our products. We are reusing and recycling
the plastic containers for storage and transport. Also,
we are increasing use of biomass plastics derived fromorganic resources, and recycled plastics, for the
packaging and plastic straws attached to our products.

Our Value Creation Story

Reducing Plastic Usage
SDGs
for Climate Change

Introduction

Caring for the Earth

Solar power generationequipment, which started
operation in April 2020
at Meiji’s Kyushu Plant

We have established a target for the Meiji Group, including overseas
sites, to reduce water consumption volume (per unit of sales) by at least
20% by FY2030 compared with FY2017 baseline. To achieve this goal
we are implementing measures including a circulating usage systemfor chilled water for cooling, use of rainwater for toilets at our headoﬃces and research laboratories, and use water-saving nozzles. We arealso working to reduce water consumption by reviewing our coolingprocesses. At Meiji’s Toda Plant, for example, we examined various flow
rates of industrial water used for cooling when transferring raw
materials from fermentation tanks to liquid storage tanks and found an
optimized flow rate, which reduced water usage by approximately
2,900 m3/month.

Water Saving at Meiji’s Toda Plant

by Optimizing the Flow Rate for Cooling Water

Fermentation
tank

43℃

(109°F)

Cooling
unit #1

Cooling
unit #2(industrial water)(chilled water)

Supply/Wastewater

Circulation

Liquid storage
tank

5℃

(41°F)

reduction
30 %(approx.)

Meiji Holdings Co., Ltd.｜Integrated Report 202045

Contents

The Meiji Group Sustainability
Introduction

A Richer Society

Employee Engagement

Being involved in the Food and Health business, the Meiji Group considers 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 shallcomply with the laws and regulations of all related countries and regions and run our businesses while
being respectful of the diﬀerent cultures and customs. In addition, we will interact with local
communities as good corporate citizens and contribute to society.
Materialities

To achieve the Meiji Group 2026 Vision and be a company that can grow sustainably, we believe improving employee
engagement is essential. Therefore, we conducted the “Employee Opinion Survey” in 2019 and 9,740 employees responded tothe survey. The results revealed that the Meiji Group’s engagement score is higher than the average score of other companies andthat our organization is in a good state. However, there are some issues, such as the “Sense of togetherness within the Group”
and “Our autonomous and precedent-setting initiatives toward the future.” Based on this survey results, we will improve
employee engagement through education and training. Also we will strive to strengthen employees’ sense of ownership andresponsibility in achieving the 2026 Vision and meeting tough challenges.

Our Value Creation Story

Having a Sense of Ownership Over the Group’s Future: Going Above and Beyond

Human Resources
Social Issues

Following the results of the Survey, we have established “having a sense of ownership over theGroup's future: going above and beyond” as our challenge for organizational reform, and we havespread awareness of it throughout the Group. We have set three specific tasks and are working hardto achieve them: improve communication, reform management, and increase employee motivation.

SDGs
for Human Resources

Promote diversity and develop human resources

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. Thus, we focus on developing human resources andimproving the workplace environment to support this approach.

1 Improve Communication Enhancing Group-wide communication
2 Management Reform

Enhancing our function as a communication hub that links
management to workplaces and workplace members to each other

3 Employee Motivation

Provide opportunities for every employee (especially young
employees and leaders) to engage in challenging work

Our Activities for Sustainability

Promoting Women in the Workplace to Improve Business Competitiveness明 治 グル ープ

社員意識調査結 果 報 告 書 2019

See page 39 for details on progress

We will improve the vitality of the Meiji Group by establishing a healthy work-life balance and motivating women to thrive in avariety of positions. We have implemented career development training and job rotations to support these initiatives.

Raising Awareness Through the Information Website “CHEER FOR WOMEN”
Meiji operates CHEER FOR WOMEN, an informational website for women. It shares the President’s Message and information on
systems for childbirth and childcare, and introduces women who are thriving in a variety of positions, and more. Thus, we areworking to help women create career development plans and increase their motivation.

As part of its diversity promotion initiatives, Meiji Seika Pharma holds “Kirameki Juku” sessions for women to support their careerdevelopment and change their mindsets for a successful career. Additionally, we are working on initiatives for women to feel asense of accomplishment in their work in the Pharmaceutical Sales Div., where many female MRs are employed.

Presentation Session for Cases Demonstrating Corporate Philosophy/Action Guidelines
held to encourage employees to take the initiative
KM Biologics holds a Presentation Session for Cases Demonstrating Corporate
Philosophy/Action Guidelines every year. Employees take the lead in introducing
activities that embody our Corporate Philosophy and Action Guidelines, and share
the results with all the employees. In the 2020 Session, over 100 activities wereentered from various departments. The top award was given for the task
improvement activities by part-timers. They took the initiative in preventing incorrect
operations and improving tasks by enhancing tools and apparatus. These sessions
increase not only employee motivation, but also the company’s competitiveness.

Financial and Non-Financial Section“Kirameki Juku” Held to Support Career Development and Change Mindsets for a Successful Career

Improve Engagement: KM Biologics

Top award-winning members of the
Quality Control Dept. at Kikuchi Factory

Participating in “Kirameki Juku” Motivated Me to Improve My Career

Naoko Imai (joined 2007)

Employee Communication Initiative for A Richer Society
The Meiji Group established the Meiji Happiness Fund, an in-house fund-raising
scheme, in March 2020. Employees of the Meiji Group voluntarily participate in thisactivity, which aims to raise employee awareness about sustainability and have
employees feel a sense of ownership over social issues. In April 2020, most schools
closed due to the COVID-19 pandemic. During this time, to help families who needed
food assistance, we donated approximately 100,000 confectioneries through the Meiji
Happiness Fund and a donation from Meiji Holdings to 30 food banks belonging to the
All-Japan Food Bank Promotion Council. This is one of the initiatives used to raise
employee awareness about social issues included in the SDGs aimed at eliminating
poverty and hunger that Meiji is addressing.

Corporate Information

I took part in “Kirameki Juku” in 2017. Female group leaders told us about how they approached their jobs, kept their groups
running smoothly, and so on. I learned various management styles, such as driving group members forward, supporting theireﬀorts, and entrusting them with work so that they experience success and grow.
Also, I realized that I don’t have to do everything myself. If I keep all tasks to myself I have to work
longer hours and my work takes over my entire life. Nowadays, I entrust tasks to the group members andestablish a healthy work-life balance. Accordingly, I feel more fulfilled in my life.
I think it would be great if women’s mindsets changed even further. Since everyone has diﬀerent
values, pursuing a career does not necessarily mean being active. Still, it is true that if I take on more
responsibility, I could engage in new challenges and I would be more satisfied. I like to contribute tobe best of my abilities to creating a workplace where women can succeed in management roles.

We donated confectioneries to Food
Bank Yamanashi for Children’s Day on
May 5, 2020

Pharmaceutical Sales Div., Marketing Planning & Strategy Dept., Oncology Group
Meiji Seika Pharma Co., Ltd.

46

Our Activities for Sustainability

Meiji Holdings Co., Ltd.｜Integrated Report 202047

Contents

The Meiji Group Sustainability

A Richer Society

Materialities
Introduction

Society

Identifying Human Rights Risks and Prioritizing

SDGs
for Society

In FY2019, we reviewed our entire value chain in the Food and Pharmaceutical Businesses and identified the existing humanrights risks. We evaluated risks objectively using external evaluators.

Social Issues

Respect and promote human rights

Identifying Important Human Rights Issues in Value Chains

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

R&D

WEB
Meiji Group Policyon Human Rights
https://www.meiji.com/
global/sustainability/
policies/• Discrimination • Harassment • Freedom of association and right to collective bargaining• Fair labor conditions and wages • Occupational Health and Safety • Working hours • Rights of foreign workers

Group Sustainability Committee• Identified six ingredients that are essential
to business and pose human rights concerns

Raw
milk

Cocoa

Palm
oil

Paper

Soybeans

Sugar• Created a list of Meiji primary suppliers

Human Rights Issues
in Raw Materials Procurement for Pharmaceuticals• Identified country and region of bulk drug suppliers• Created a list of primary suppliers for Meiji Seika Pharmaand KM Biologics

Issue of Human Rights of Foreign Workers• Created a list of foreign workers in the Group companies in Japan• Conducted and analyzed a survey of eight Meiji group companies
to understand the current situation

Group Human Rights Meeting
Consists of representatives from the sustainability
divisions and human resources divisions of Meiji Holdings,
Meiji, Meiji Seika Pharma, and KM Biologics

Monitoring

ReportFollow-up evaluation
to review eﬀectivenessTimely and appropriate
information disclosure

Developing a Responsible Supply Chain
In recent years, there has been international demand for fair andfree competition, fair transactions, and responsible procurement.
Therefore, we should fulfill our corporate social responsibility
throughout the supply chain, including both the Group and ourbusiness partners. Also, we should address social issues such as
child labor, forced labor, and environmental degradation. In the
Meiji Group Procurement Policy, we commit to procurement thatconsiders human rights and the global environment. We will
maintain responsible procurement with our business partners andstrive to prevent and reduce risks. We established the Meiji Group
Supplier Code of Conduct for our business partners in June 2020. We
will understand the current situation using surveys concerning
sustainable procurement, and work with our business partners to
improve issues found in the surveys.

Supplier Code of Conduct
1. Human Rights and Labor
Respecting the rights of employees, prohibitionof forced labor and child labor, etc.
2. Safe and Hygienic Workplace Environments
Protection for employees, ensuring safety, etc.

Corporate Information

Our Activities for Sustainability

High Priority Issues Addressed in FY2019

Financial and Non-Financial Section

Sustainability Secretariat

We started the human rights due diligence in FY2019 and it forms our commitment to human rights based on the Meiji Group
Human Rights Policy. We make constant eﬀorts to communicate with external stakeholders by: assessing the impact on humanrights caused by the Meiji Group’s corporate activities and identifying issues; incorporating these evaluation results into
procedures and implementing them for meaningful improvements; follow-up evaluations to review eﬀectiveness; andtimely and appropriate information disclosure. By continuous improvement through these processes, we will achieve bothrespect for human rights and sustainable businesses growth.

48

We chose three high priority issues in FY2019. We established subcommittees for each issue, discussed specific measures,and understood the current situation.

Board of Directors
Executive Committee• Healthy lifestyle for local
residents, access to water

Our Activities for Sustainability

Human Rights Management System

Implementing Human Rights Due Diligence

Assessing the negative Implementing improved
impacts on human rights
procedures based on
caused by the Meiji Group’s the assessment results
corporate activities• Customer
and user health

Human Rights Issues
in Ingredient Procurement for Food Products

System for Promoting Respect for Human Rights

Our Value Creation Story

We established the Meiji Group Policy on Human Rights in 2016 and have been spreading awarenessand implementing human rights initiatives. Subsequently, we revised it to the Meiji Group Human
Rights Policy in February 2020 and are enhancing our initiatives on human rights. The new policy
includes: international codes for supporting and respecting human rights, a ban on discrimination
based on sexual orientation and gender identity, and performing human rights due diligence.

Disposal• Considering impacts ofmarketing on children• Healthy lifestyle for local residents,
access to water

Revision of the Group’s Human Rights Policy

Action• Forced labor• Privacy rights

The Meiji Group has declared respect for human rights in its Corporate Behavior Charter, and it manages its businesses basedon the strong belief that all people are inherently free and deserve equal respect and rights. We will promote respect forhuman rights throughout the Group and fulfill the Group’s obligations.

We launched the Group Human Rights Meeting in July 2019 as across-organizational meeting and began human rights due
diligence. The meeting aims to deal with a variety of human rights
issues that society requires companies to address, based on the
Framework for Business and Human Rights approved by the United
Nations Human Rights Council. Through this initiative, we will meetthe expectations of society. The meeting consists of representatives
from the sustainability divisions of each operating company as wellas the human resources divisions. The issues raised in the meetingare reported to the bi-annual Group Sustainability Committee. The
Executive Committee and the Board of Directors review themappropriately and incorporate them into business management.

Sales, Distribution,
and Consumption

Manufacturing• Child labor• Access to
information

The Meiji Group’s Basic Approaches to Human Rights

ImpactAssessment

Procurement

3. Fairness
Preventing corruption, protection of
intellectual property rights, etc.
4. Environmental Friendliness
Reducing greenhouse gas emissions,eﬀective water usage, etc.
5. Sustainable Procurement
Environmentally friendly raw materials procurement, etc.
6. Development of Relief System
and Prohibition of Retaliation
Customer service line for complaints and reports
7. For Pharmaceutical Companies
Compliance with pharmaceutical-related laws
and regulations, animal welfare, etc.
Meiji Holdings Co., Ltd.｜Integrated Report 2020

49

Contents

The Meiji Group Sustainability

Palm Oil and Paper 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 andreassuring high-quality products.
Based on this Procurement Policy, we always consider fairness, transparency and compliance with laws
and regulations, and take into account our corporate social responsibility, including human rights andthe environment.
Materialities

Responsible procurement of raw materials toward
human rights and the environment

Social Issues

Sustainable Cocoa Bean Procurement

See page 39 for details on progress

Procuring 100% Sustainable Cocoa Beans by FY2026

Providing support to cocoa farmers invarious ways through Meiji Cocoa
SupportMeiji employees surveying Madagascar
cocoa farmers’ current situation(environment and quality)

Support Cocoa Farmers Through Meiji Cocoa Support

Republicof Ghana

4.

The Socialist
Republicof Vietnam

Republicof Peru

NEW

2

Republicof Ecuador

5.

6.

Bolivarian
Republicof Venezuela

7.

The United
Dominican
Mexican States Republic

7

1

6

5
4
3

9

8

Raw Milk Procurement
The Meiji Group believes it is important to support environmentally conscious dairy farming and to care about the cows’ health,in addition to pursuing tastiness in its drinking milk production. We established the Dairy Procurement Guidelines in October
2019 and upheld feeding management that considers the “Five Freedoms” animal welfare policy. In addition to responding to
ethical considerations, we will drive the sustainable development of dairy farming and the dairy industry in cooperation with
relevant parties.

8.

Federative
Republicof Brazil

Meiji Organic Milk, our special milk product, is certified
under Japan Agricultural Standard (JAS) for Organic
Environmentally
Cultivation
Raisedfriendly soilof organic
gently andAgricultural Products. We use only raw milk from cows
maintenancefeedstuffs
with careraised on the basis of organic farming methods at adesignated ranch in the town of Tsubetsu, Abashiri
District, Hokkaido Prefecture.
Meiji began examining the development ofRich soil
ProvideCreatedrinking milk that is friendly to both the cows and theorganic
returned
feedstuffs
feedstuffs
to farmland
naturally
environment from 1997. Accordingly, we started
developing organic drinking milk in collaboration with
Making effective use of excrement
dairy farmers in Tsubetsu, where they were practicing
environmentally conscious circular dairy farming at the time. After much trial and error, five farmers obtained JAS for
Organic Agricultural Products certification in 2006, and we began selling Meiji Organic Milk, our specially prepared
drinking milk. The organic farming is the foundation for Meiji Organic Milk; cows are reared with environmentally friendly
feedstuﬀs in a cow friendly environment. The Meiji Group will provide the value of new drinking milk to our customers
while supporting dairy farming that is friendly to both the environment and the cows’ health.

Corporate Information

We have conducted Meiji Cocoa Support in eight countries—Ghana, Peru, Ecuador,
Venezuela, Mexico, the Dominican Republic, Brazil, and Vietnam—and expanded these
activities to include Madagascar in 2019. This was supported by Japan International
Cooperation Agency (JICA) as a “Popularization, verification, and business creation
project” related to creating the foundation for a sustainable cocoa industry. We willdevelop a system to produce and purchase high-quality cocoa, applying the know-how
we have accumulated thus far, and help the cocoa business in Madagascar to becomesustainable.

We visited plantations in Malaysia, apalm oil-producing country, twice in
FY2019

Example of Initiative for Sustainable Development of Dairy Farming and the Dairy Industry: Meiji Organic Milk

Started Meiji Cocoa Support in Madagascar, the Ninth Country to Receive Support

3.

Expanding Use of Eco-friendly Paper

Financial and Non-Financial Section

Since 2006, Meiji has been conducting the Meiji Cocoa Support program, which deepens
partnerships with cocoa farmers overseas and supports the high-quality and sustainableproduction of cocoa beans. We have decided to expand the Support program andestablished a new target of 100% procurement of sustainable cocoa beans (cocoa beans
produced in regions where we provide support) by FY2026. As cocoa bean production
regions and farmers are confronted with deforestation, child labor, and lack of cultivation
techniques, we will solve these issues by achieving this procurement target andcontribute to sustainable cocoa bean production.

2.

The Meiji Group, including overseas subsidiaries, is aiming to use 100% certified palm oilthat includes Roundtable on Sustainable Palm Oil (RSPO)-certified palm oil by 2023. We
started using certified palm oil at eight factories in Japan in FY2019. In addition, we arevisited plantations in Malaysia, a palm oil-producing country, to achieve our targets.

Our Activities for Sustainability

The Meiji Group procures cocoa, palm oil, and paper and performs supplier audits taking into account human rights and theenvironment. In addition, we have been conducting Meiji Cocoa Support and support for dairy farmers in Japan. Thus weachieve sustainable procurement of cocoa and raw milk.

1.

Systematic Shift Toward Certified Palm Oil

We are procuring paper in compliance with the Paper Procurement Guidelines
established in 2018. We are expanding the use of FSC® and PEFC paper for productcontainers and packaging as well as various printed materials, and are aiming to use 100%
eco-friendly paper by FY2020. We replaced approximately 60% of the paper used in our
product containers and packaging in FY2019.

SDGs
for Procurement

See page 39 for details on progress

Our Value Creation Story

Procurement

Introduction

Sustainable Procurement

Organic Dairy Farmers Share Their Story
After receiving the proposal from Meiji, and realizing that we should practiceenvironmentally conscious dairy farming, we began working to produce organic drinking
milk. We didn’t have any know-how at the beginning, and we struggled to produce
feedstuﬀs without chemical fertilizers and agricultural chemicals. But now that things aregoing smoothly, we believe more than ever that organic farming is meaningful. Therefore,
we would like to continue our eﬀorts to produce organic drinking milk with Meiji.
And we hope that someday customers will purchase drinking milk because it is madefrom raw milk produced in a way that is friendly to both the environment and the cows.

Mr. Kenichi Ishikawa
and his wife
Chairman, Tsubetsu Organic Dairy
Farming Society

Republic of Madagascar

50

Our Activities for Sustainability

Meiji Holdings Co., Ltd.｜Integrated Report 2020

51

Contents

Directors and Audit & Supervisory Board Members(As of Jun 26, 2020)

Introduction
Our Value Creation Story

6

8

5

12

4

2

1

1 Kazuo Kawamura

2 Daikichiro Kobayashi

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

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

Significant Concurrent Positions

Significant Concurrent Positions

Significant Concurrent Positions

Member of the Board, Meiji
Member of the Board, Meiji Seika Pharma
Chairman, All Nippon Kashi Association
President, Japan Dairy Association (J-Milk)

President and Representative Director,
Meiji Seika Pharma

President and Representative Director,
Meiji

4 Koichiro Shiozaki

5 Jun Furuta

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

6 Tomochika Iwashita*4

Significant Concurrent Positions

Significant Concurrent Positions

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

Member of the Board, Meiji

Member of the Board (Outside)
Independent director

Member of the Board (Outside)
Independent director

3

8 Mariko Matsumura

Member of the Board (Outside)
Independent director

99 Mineo Matsuzumi

Audit & Supervisory Board Member

Significant Concurrent Positions

Significant Concurrent Positions

Significant Concurrent Positions

Visiting Professor,
Faculty of Science and Engineering,
Waseda University

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

Audit & Supervisory Board Member,
KM Biologics

10 Hiroyuki Tanaka

Audit & Supervisory Board Member

11 Hajime Watanabe
Audit & Supervisory
Board Member (Outside)
Independent director

12 Makoto Ando

Audit & Supervisory
Board Member (Outside)
Independent director

Significant Concurrent Positions

Significant Concurrent Positions

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

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

Corporate Information

CFO
Member of the Board
and Senior Executive Oﬃcer
Managing Executive Oﬃcer(Financial & Accounting Dept.)
Senior Managing Executive Oﬃcer(HR & General Aﬀairs Dept.)*3

7 Tohru Murayama

11

Financial and Non-Financial Section

CEO
President and Representative Director
President (Corporate Develop Dept.)
President (Co-Creation Center)*1

10

Our Activities for Sustainability

7*1 CEO (Chief Executive Oﬃcer): Oversees management of entire Group*2 COO (Chief Operating Oﬃcer): Oversees business operations for Food segment and Pharmaceutical segment*3 CFO (Chief Financial Oﬃcer): Oversees Group financial strategy and operational management*4 CSO (Chief Sustainability Oﬃcer): Oversees Group sustainability strategy, sustainability activities
52

Our Activities for Sustainability

Meiji Holdings Co., Ltd.｜Integrated Report 202053

Contents

Introduction

Responsibilities of Members of the Board andAudit & Supervisory Board Members (As of Jun 26, 2020)
Members of the Board
Attendance at meetings (FY2019)

Name

Positions and areas of
responsibility in the Company

Kazuo KawamuraCEO
President and Representative Director

Board of Directors

Number of years
as Member ofthe Board

Number of
the Company’s
shares held *16/16

8 years

35,32416/16

6 years

Katsunari Matsuda

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

16/16

2 years

Koichiro Shiozaki

CFO
Member of the Board
and Senior Executive Oﬃcer

16/16

5 years

Jun Furuta

CSO
Member of the Board
and Senior Executive Oﬃcer

16/16

6 years

shares

16/16

4 years

shares

16/16

4 years

shares

16/16

2 years

sharesNumber of years as
Audit & Supervisory
Board Member

Number of
the Company’s
shares held *Career summary/Ex-Representative Director and President
and Ex-Director and Chairman, Accenture Japan Ltd.

HR

Legal aﬀairs

Nomination
Committee

Compensation
Committee

Chairperson

Chairpersonshares9,492

shares

11,248shares

4,906

1,049

697

217

Financial and Non-Financial Section

Member of the Board (Outside)
Independent director

Accounting

Our Activities for Sustainability

Mariko Matsumura

Member of the Board (Outside)
Independent director

IT

Corporate
communication

Our Value Creation Story

OutsideTohru Murayama

Career summary/Ex-Executive Vice President,
Tokio Marine & Nichido Fire Insurance Co., Ltd.
Ex-President, Tokio Marine & Nichido Life Insurance Co., Ltd.

Sales
Marketing

11,334

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

Tomochika Iwashita

GlobalbusinesssharesDaikichiro Kobayashi

Member of the Board (Outside)
Independent director

Advisory body members to the Board of Directors

Main expertise and backgroundManagement
strategies

Audit & Supervisory Board Member
Attendance at meetings (FY2019)

Positions and areas of
responsibility in the Company

Mineo Matsuzumi

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

16/16

15/15

3 years

sharesHiroyuki Tanaka

Audit & Supervisory
Board Member

16/16

15/15

3 years

sharesHajime Watanabe

Audit & Supervisory
Board Member (Outside)
Independent director

15/16

14/15

7 years―

Makoto Ando

Audit & Supervisory
Board Member (Outside)
Independent director

16/16

15/15

3 years

sharesBoard of Directors Audit & Supervisory Board

Globalbusiness

Sales
MarketingIT

Accounting

Our Activities for Sustainability

HR

Legal aﬀairs

Corporate
communication

Nomination
Committee

Compensation
Committee

3,641

7,372

1,431

* As of the end of May 2020

54

Advisory body members to the Board of Directors

Main expertise and backgroundManagement
strategies

Corporate Information

OutsideName

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

Dialogue:
Introduction

Murayama, Independent Outside Director
Spoke toMr. Era, Managing Director, BlackRock JapanThe Stance of an Independent Outside Director
Era
What has been your involvement inmanagement of the Meiji Group during four years as anindependent outside director?

Investor Insight into the Meiji Group’s Possibilities

Era
What did you consider important during
formulation of the 2026 Vision?

Murayama To be honest, I initially felt that the MeijiGroup management lacked speed of strategy
execution. I was a bit frustrated; why was overseas
expansion taking so long? But now I understand there
are many limits for a food company, in particular, togrow overseas business through exports. As foods
impact human health, we must comply withregulations in each country. For that reason, the MeijiGroup thinks that it’s important to procure raw
materials locally and produce products locally for local
consumers. I also learned that hastily prepared plans
threaten quality and safety. When the company placesemphasis on social responsibility, doing business takestime.

Our Activities for Sustainability

Era
As investors, one of our key expectations
towards independent outside directors is to conduct anobjective evaluation of the management and to share
their independent views. For example, what you havementioned about the time frame of businessdevelopment by management is highly convincing
coming from a third-party perspective. Knowing thatsound debate goes on in the Board of Directors makes
the company reliable.

Financial and Non-Financial Section

Murayama In management, it is important tovisualize the big picture. Leaders should present
employees a big picture and encourage their actions
and thus achieve major growth. During the formulation
process, I suggested the bigger the Vision the better.
But, the bigger the picture, the harder it is to realize. You
will need a well-thought-out plan. While we must
continue improving on a day-to-day basis, I believe thatmanagement should consider how we can get to thegoal and show what is to be done, to what degree andby when to accomplish. The Meiji Group management
is advancing three steps to achieve major growth, thatis, formulate the 2026 Vision, a three-year Medium-TermBusiness Plan and a business plan for each fiscal year. I
am certain that the management is aware that a
bird’s-eye view is crucial to accomplish the Vision.

Our Value Creation Story

Major changes are underway as the Meiji Group goes about realizing its 2026 Vision.
Independent outside director Mr. Tohru Murayama discusses progress in activities andchallenges with Mr. Akitsugu Era, who oﬀers an investor’s standpoint as managing director atBlackRock Japan Co., Ltd., part of one of the world’s largest asset management enterprises.

Murayama Management of the Meiji Group is basedon medium- and long-term visions. I joined the MeijiGroup during formulation of the 2026 Vision and luckily
I participated in discussion about the Vision. Knowing
the background to the Vision and its underlying
intentions, I am examining management’s consistency
with the Vision as an independent outside director.

EraLong term vision and business plan are
not easy to achieve. It requires time and resources. It issometimes diﬃcult for us investors to measure progressof the developments, so I appreciate your insight into
the current state of management as an independent
outside director.

Achieving the Meiji Group 2026 Vision

56

Tohru Murayama

Mr. Akitsugu Era

Independent Outside Director

Managing Director, Investment
Head of Investment StewardshipBlackRock Japan Co., Ltd.

Our Activities for Sustainability

Murayama The Meiji Group is about to enter a newphase. Following management integration, the initialrole of Meiji Holdings was to supervise themanagement of both operating companies and tobuild a common platform for functions like personnel
evaluations and compliance. The holding company
spearheaded management of the Group during this firstphase. Now the evolution continues with Meiji Holdings

beginning to assume a true leadership role to pull along
the entire Group. This is evident in regard toenvironmental, social and governance (ESG). Meiji
Holdings set up the Sustainable Management
Department to advance a full program of activities inthis area. Despite concerns that ESG activities may push
up costs and lower productivity in the short term, Meiji
Holdings demonstrates strong leadership here,
knowing the eﬀorts will improve the Group’s corporate
value in the future.

Corporate Information

Era
At BlackRock, we take a long-term view.
Thus we are interested in the Meiji Group’s medium- tolong-term growth. Please tell us about the Meiji Group’s
strategy to achieve the 2026 Vision.

The Meiji Group operates two
Erabusinesses—Food and Pharmaceutical—and because
Meiji Holdings Co., Ltd.｜Integrated Report 202057

Contents

Dialogue: Murayama, Independent Outside Director Spoke to Era, Managing Director, BlackRock JapanThe Co-Creation Center was set up within
Meiji Holdings. Is that to create a new business domain?

Murayama The Co-Creation Center is a good example
of human development. The Center is authorized to set
up projects and task forces. It pulls together young
talent from across the organization to work on
cross-organizational projects.
I believe the Vision is crucial to develop humancapital. Talented people will demonstrate their fullcapabilities once top management shows the Vision
clearly and provides the necessary funding andenvironment. The 2026 Vision outlines a general
direction and time frame, the basis for specific research
themes and timelines. Personnel who accomplish the
project should be evaluated properly and incorporated
into succession plans as future oﬃcer candidates. And I
believe management shares this view. Once
momentum picks up, the Meiji Group will do somereally interesting things while human capital get togrow.
Mr. Kawamura, President and CEO, has said he will
create a number of projects and task forces. I think heshould make public and personally, looking forward toseeing what can be achieved.

Meiji Group GovernanceEra
How do you rate the Meiji Group’s Boardof Directors as an independent outside director?
58

Our Activities for Sustainability

Murayama I believe the Group’s Board of Directors is
conducive environment to in-depth debate.

Era
Such communication is eﬀective because
there is trust between the management and the

Murayama More thoughts should go into thecomposition of the Board of Directors. I think there
should be a higher ratio of independent outside
directors and the Meiji Group should appoint more
females and non-Japanese directors from a diversity
perspective.
Era

There is no one size fits all answer
regarding the composition of a Board of Directors. Eachcompany will have their own structure which work bestfor them. The most important thing is that the roles andresponsibilities of the Board and individual directors aretaken very seriously and the governance practices arewell thought-out and transparent.

Issues for the Meiji Group Amid the COVID-19 Pandemic
Murayama The world is facing the diﬃculties of
COVID-19 now, creating tough conditions for many
companies. When consumer demand vanishes but you
still have to keep the business running and protect jobs,
the most important thing is financial stability. I think weshould rethink ROE-focused management. What is your
view?
Era
Focusing on ROE is a valid approach toaddress the issue of poor capital eﬃciency due to excess
cash or other assets on balance sheet. Although at
BlackRock, we take a cautious view towards corporate
behaviors pursuing short-term returns by relying on
excessive use of financial leverage. I believe in theimportance of ensuring financial stability, in order toovercome times of crisis without sacrificing investments
for the future. This also means that we are focusing on

how companies utilize its cash and assets to set backcourse after things are more visible. What is the impactof the pandemic on the Meiji Group’s plans to achieve
its long-term vision?
Murayama The sense I get from discussions in the
Board of Directors is that management is ready for
future-oriented activities. In fact, it is me who is moreconservative. In the meeting, I keep checking, asking
questions, including management’s present scenarios
to secure the financial soundness under thesecircumstances. The management team is prepared tofight the COVID-19 situation, but of course we learned
from the current pandemic that unexpected things
happen. Sometimes it is the job of independent outside
directors to apply the brakes.

Meiji Holdings Co., Ltd.｜Integrated Report 2020

Corporate Information

Murayama Yes. The Co-Creation Center unites
expertise from Food and Pharmaceutical businesses tofurther research in the health value domain. It also
promotes open innovation. The 2026 Vision calls for
new challenges in the health value domain. Meiji
Holdings drives these activities, drawing talent from theresearch labs of both operating companies. It issomething new to me, when I first I became an
independent outside director I didn’t see such an
attempt. New businesses may result in a new operating

Human capital will be key to such
structural reform. What kind of eﬀorts is Meiji Groupmaking on human capital development?

independent outside directors. Very interesting.

Financial and Non-Financial Section

Era

Era

A gathering of only independent outside directors andindependent outside Audit & Supervisory Board
members takes place every three months and weadvise the director in charge of corporate development
about issues to be discussed more with the Board of
Directors. Our advice has been followed each time
without delay, which is wonderful. In the meantime,
independent outside directors should receive feedback
from management. Thus we asked for a request,
resulting in one-on-one dialogue with Mr. Kawamura
from last year. My discussions with Mr. Kawamura werevery worthwhile. He explained exactly what he expects
from me and what he wants me to consider. In turn, I
feel free to comment with my own views.

Our Activities for Sustainability

Murayama The management of the Meiji Group
recognizes the importance of structural reform. Meiji
Holdings is striving hard to eﬀectively combine its
businesses to enhance corporate value. Indeed, this is
the second phase of Meiji management. Some results
will be incorporated in the 2023 Medium-Term Business
Plan currently under development. Structural reform of
the Meiji Group is no longer the reconfiguration of thecurrent business portfolio. The Meiji Group should
establish a new business domain and deliberate thebest portfolio. Accordingly, we need to consider very
carefully; in the next phase, which domains the Groupshould pursue, how the Group can contribute tosociety, in what business areas can the Group augment
its corporate value?

company alongside Meiji, Meiji Seika Pharma and KM
Biologics. To realize each target of the 2026 Vision, Meiji
Holdings is looking to take a big step forward,
reinventing itself as a company that leads the Group,
rather than supervises.

As Investors, We Expect
Independent Outside Directors to Deliver
an Objective Assessment of Managementthat Makes a Company Easier to Trust

Our Value Creation Storyof that, it could be complicated for investors in grasping
the overview of the business strategy. What is your viewon this point?

Introduction

Even During the Novel Coronavirus
Disease (COVID-19) Pandemic,
the Meiji Group is Pursuing
Sustainable Growth.
Independent Outside Directors are
Responsible for Keep Questioning andChecking the Validity of Business Decisions

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Corporate Governance

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 to widen theworld of Tastiness and Enjoyment, and meet all expectations
regarding Health and Reassurance in order to brighten ourcustomers’ 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. are: promote
Groupwide management strategies; create an optimal

WEB

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

Features of the Meiji Group Corporate Governance
Since the Meiji Group was established in 2009, we have beenbuilding and strengthening our corporate governance system
suitable for the Group’s management structure. We haveintroduced an executive oﬃcer system to separate oversightand execution of business management and improveeﬀectiveness. We have also introduced a Chief Oﬃcer system
to enhance the Group corporate governance. Management
is particularly committed to sustainable improvement ofcorporate value, focused on our medium- to long-term
management policy developed on the basis of the MeijiGroup Philosophy.

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

Corporate Governance System (As of June 26, 2020)
Group Management
Structure

General Meeting of Shareholders
Election, Dismissal

Meiji Holdings Co., Ltd.

Directors: 8(Including Outside Directors*1 : 3)

Nomination Committee

Appointment, Dismissal,
Supervision

Compensation Committee
4 Member System
Outside Directors*1 : 3Internal Director: 1

President andRepresentative Director

ReportAudit & Supervisory Board
Audit & Supervisory
Board Members: 4(Including
Outside Auditors*1 : 2)

Election, Dismissal

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

Collaboration

Audit Department

Collaboration

Internal Audit

Institutional
DesignFrom FY2015
2018 • KM Biologics Co., Ltd. joined the Group
2020 • Introduced

2009 • Established Meiji Holdings

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

2009 • Became a company

with an Audit & Supervisory Board

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

PolicySupport System
for Directors’
Independence

2009 • Independent outside directors: 2

Nomination2009 • Nomination Committee

2015 • Meetings of independent outside directors and auditors:
2–3 times/year

2016 • Independent outside directors: 3

Financial& Accounting
Department

HR &General Aﬀairs
Department

PR & IR
Department

Sustainable
Management
Department

Group Companies

Co-Creation
Center

Accounting Audit
Internal Control Audit

Financial and Non-Financial Section• Tours of operating bases
by outside directors and auditors: 2–3 times/year
2020 • Total number of
directors: 8(Percentage of independent
outside directors: 37.5%)

Executive Committee

Corporate
Development
Department

Chief Oﬃcer system

Our Activities for Sustainability

Board of Directors

Election, Dismissal

Audits Conductedby Audit &Supervisory
Board Members

In 2016, members of the Board of Directors spent a large
amount of time discussing the Meiji Group’s promise andcommitment on what we will strive for by 2026, and weformulated the Meiji Group 2026 Vision. We also incorporate
the outside directors’ and auditors’ opinions into managementand drive governance reform. Thus, we improve theeﬀectiveness of the Board of Directors and the transparency ofmanagement.

Our Value Creation Story

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 andoperates a corporate governance system including a Boardof Directors. Meiji Holdings Co., Ltd. is a company with Audit& Supervisory Board. Oversight by the Board of Directors
and auditing by the Audit & Supervisory Board enhance theobjectivity and transparency of the business management.
The Meiji Group’s basic approach to corporate governanceis available at the following link.

Introduction

Basic Views

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

2018 • Established development policies

for succession planning for the Group2019 • Implemented

Corporate Governance Data

succession planning(As of June 26, 2020)

Items related to corporate governanceContent
EstablishedCompany with Audit & Supervisory Board
1 yearPresident
8 (3 Outside Directors*1, including 1 female Director)
16 times (FY2019)100% (FY2019)
4 (2 Outside Auditors*1, including 1 female Auditors)
96% (FY2019)
Board of Directors, Executive Committee*2, Audit & Supervisory
Board, Audit Department Liaison Meeting, and others
15 times (FY2019)96% (FY2019)
5 (3 Outside Directors, 2 Outside Auditors)
Ernst & Young ShinNihon LLC
Audit Department

Compensation2009 • Compensation Committee
2015 • Established rules of the Compensation Committee
2011 • Established rules for director
2017 • Introduced Restricted Stock Compensation Planand executive oﬃcer compensation

2015 • Eﬀectiveness evaluation of the Board of Directors

Board of Directors
EffectivenessEvaluation
Other

Corporate Information

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 &
Supervisory Principal meetings auditors attend
Board
Number of Audit Committee meetings
Attendance of Outside Auditors at Audit Committee meetings
Election of Independent Director
Accounting Auditor
Audit department (internal auditing)(questionnaire): Once/year

2019 • Individual interviews between

Chairperson of the Boardand outside directors: Once/year

2009 • Formulated the Meiji Group’s
System of Principles

2010 • Formulated

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

2017 • Formulated the Meiji Group 2026 Vision*1 Designated as independent directors *2 Attended only by full-time members of Audit & Supervisory Board

60

Our Activities for Sustainability

Meiji Holdings Co., Ltd.｜Integrated Report 2020

61

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Corporate Governance• Appointing senior managers
We nominate persons who can drive the Group towardsustainable growth based on past achievements. To
implement our corporate philosophy and promote ourcorporate value, we look for the following qualities:• Eﬀective decision-making ability: Transparent bold businessdecisions swiftly and impartially.
• Group management: Achieve optimal group-wide
management.

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

Tomochika Iwashita
Tomochika Iwashita served as Executive Vice President of Tokio Marine& Nichido Fire Insurance Co., Ltd. and as President of Tokio Marine &Nichido Life Insurance Co., Ltd., and has a prolific career and abundantinsight as a corporate manager. We elected him as an Outside
Member of the Board so that he can advise the Group’s managementfrom a broad perspective and appropriately supervise the executionof its business operations.

Tohru Murayama
Tohru Murayama served as Representative Director and President,
and Director and Chairman of Accenture Japan Ltd, a management
consulting firm headquartered in the U.S., and has been involved inmanagement reforms of various global companies. We elected him
as an Outside Member of the Board so that he can advise the Group’s
management from a global perspective and appropriately supervise
the execution of its business operations.

Outside Audit & Supervisory Board Members
Hajime Watanabe
Hajime Watanabe has a prolific career as an attorney at law and has
deep expertise in international business transactional law areas. We
elected him as an Outside Audit & Supervisory Board Member so that
he can supervise the execution of the Group’s business operations
from an objective and impartial perspective.

Makoto Ando
Makoto Ando has built a prolific career and gained deep expertise inboth the private sector, working in major audit firms and accounting
firms in Japan and overseas as a certified public accountant, andthe public sector. We elected her as an Outside Audit & Supervisory
Board Member so that she can supervise the execution of the Group’sbusiness operations from an objective and impartial perspective.
(Notes) All outside director and auditors are designated as independent directors.

Succession Planning for the CEO and Other Top Executives
The Nomination Committee recommends the appointments
and dismissals of top executives. This committee is comprisedof at least three members, and the majority are independent
outside directors. The members also consider the succession
planning for the CEO. We established a set of Leadership
Values for our executives (see below), which were reviewed byboth the Nomination Committee and the Board of Directors
before being adopted by the Board in January 2018. In orderfor the Meiji Group executives to lead the Group towardachieving the Meiji Group 2026 Vision, we believe it is critical
for them to instigate change and lead reform eﬀorts.
In addition, the development policy for our succession
planning was discussed and decided by the Board meetingin March 2019 after consideration by the Nomination

Leadership Values, Competencies
for managers who drive the Group forward

Committee. Candidate screening and nomination for the nextpresidents of the Company and major group companies are to
be discussed by the Nomination Committee.
Following these policies, we created an annual timeline
covering gathering of information on candidates for discussionin Nomination Committee and implemented it from FY2019.
In January 2020, the Nomination Committee discussed theappointment and dismissal of an incumbent president andrepresentative director, as well as the nomination of successor
candidates and a successor talent bench for the position. The
progress of succession planning in FY2019, which was thefirst year of planning, was reported and discussed at the May
2020 Board of Directors meeting. The nomination of executive
candidates was also discussed and decided at the meeting.

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

Ability to instigate change and lead reform efforts
Strategy/Execution

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

Draws out and improves thepotential capabilities of theorganization, takes advantage
of surroundings with an
open-minded approach, andleads the organization

Imagination

Ability to communicate and convince

Decisiveness

Ability to motivate

Ability to achieve breakthroughs

Magnanimity for others’ mistakes

Ability to channel creative energies

Ability to develop others’ talents
Personal

Ability to recognize and channel diverse talents

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

Details

Corporate Information• Nominating method
The Board of Directors makes the final decision on who
to nominate as candidates for the Board of Directors andAudit & Supervisory Board and who to appoint as senior
managers. Audit & Supervisory Board Member candidates
are selected by the Board of Directors following approval by
the Audit & Supervisory Board.
On this matter, it first consults the opinion of theNomination Committee, which comprises three outside
directors and one internal director.

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

Outside Member of the Board of Directors

Mariko Matsumura has a prolific career as an attorney at law. We
elected her as an Outside Member of the Board so that she can advise
the Group’s management from a sophisticated and professional
perspective, and appropriately supervise the execution of its
business operations. While she has not been involved in corporate
management in the past, except as an Outside Member of the Boardor an Outside Audit & Supervisory Board Member, we concluded that
she would be able to perform her duties appropriately as an Outside
Member of the Board for the reasons mentioned above.

Financial and Non-Financial Section• Nominating Audit & Supervisory Board member candidates
For our Audit & Supervisory Board members to properly
audit the Group’s operations for lawfulness andappropriateness, and to bring any issues to our attention
from an objective and impartial perspective, we nominate
persons with the following qualities:• Upstanding character• Excellent insight• Specialist expertise• High moral standards
At least one of the candidates must have solid grounding in
finance and accounting.

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

Mariko Matsumura

Our Activities for Sustainability• Nominating outside director candidates
We nominate persons with the following qualities:• Ability to analyze the company’s business operations
objectively and from multiple perspectives• Ability to strictly monitor whether the management ismaking sound decisions• Character, insight, and ability to express one’s views andopinions as necessary
All such candidates must meet our Criteria for Independence.

Criteria for Independence of Outside
Members of the Board and Outside
Audit & Supervisory Board Members

Reasons for Nominationof Outside Directors and Auditors

Our Value Creation Story• Nominating internal director candidates
We nominate persons who are major executives and aresenior managers in major operating companies. All suchcandidates must have the following qualities:• Extensive experience• Specialist expertise• Business sense• Upstanding character• Dismissals
If a director, Audit & Supervisory Board member, or senior
manager commits a dismissible oﬀense, the Nomination
Committee will convene a special meeting to discuss
the matter and issue its recommendation to the Boardof Directors. The Board of Directors will consider thisrecommendation, and then if it concludes that the person
should be dismissed, it will propose the person’s dismissal(if the person is the Board of Director or Audit & Supervisory
Board member) or dismiss the person (if the person is asenior manager). Any dismissal of the Board of Director or
Audit & Supervisory Board member will be pursuant to theCompanies Act and other relevant legislation.

Introduction

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

Imagination
Decisiveness
Ability to achieve breakthroughs
Ability to channel creative energies
Ability to communicate and convince

Organizational Ability to motivate
leadership
Magnanimity for others’ mistakes
skillsAbility to develop others’ talents

Character

Ability to utilize diverse talents
Upstanding character

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

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

PeriodPosition

Role

Achievement Evaluation

Department manager

Upstanding character
62

Our Activities for Sustainability

Meiji Holdings Co., Ltd.｜Integrated Report 202063

Contents
FY2018 Challenges

Corporate Governance

Effectivenessof the Board of Directors
Plans to improve the effectivenessof the Board of Directors

Meetings of outside directors and auditors
Outside directors and auditors met three times during
FY2019. Some topics for the meetings were as follows:

Self-assessment questionnaire categories
Self-assessment categories are set from the following
perspectives.
• Corporate Governance Policy
Roles of the Board (setting strategic direction,
overseeing company, preparing succession plan,
discussing/deliberating/reporting on business matters)
and composition of the Board• Performance of the Board of Directors
Chairperson’s performance, quality of meeting
materials and presentations, and secretariat’s
performance• Challenges from the previous fiscal year
Progress in achieving challenges set in the previous
fiscal year(2) Individual interviews
between the Chairperson of the Boardand independent outside directors

Outside directors and auditors toured facilities twice in
FY2019.

From FY2019, the Chairperson had individual interviews
with independent outside directors. In the meetings, they
discussed roles, composition and performance of the Boardand considered the Board’s ideal state for the Meiji Group toachieve sustainable growth.

Evaluation of the Board of Directors

Our Activities for Sustainability

Based on the results of the Board members’ self-evaluationquestionnaires, individual interviews between the Chairperson
and independent outside directors, and the Board meeting
records, the Board is considered to be operating eﬀectively.
According to the self-evaluations, there are some issues
for improvement, namely appropriate implementation of the
Meiji Group succession planning, and the quality of meeting
materials and presentations. The Board will therefore exercise
more eﬀective supervision for proper implementation andexecution of the Meiji Group succession planning. To improvethe meeting materials, we will clarify the importance ofthe meeting topics in medium- to long-term management
strategies and thus enhance discussions by the Board.
According to the individual interviews between the
Chairperson and independent outside directors, reporting on
the progress of business operation should be more strategyfocused. We will improve the quarterly business reporting.

• Appropriate implementation of the
Meiji Group succession planning• Improving the quality of meeting
materials and presentations• Reporting on business operations ina strategy-focused manner• Enhancing supervision to confirm that
the Meiji Group succession planning is
executed properly• Clarifying the importance of meeting
topics with articulate meeting materials• Enhancing quarterly reporting ofbusiness operations

Executive Remuneration
The amount of compensation for a director falls within atotal amount of remuneration that is decided at the General
Meeting of Shareholders. The amount is calculated basedon an evaluation of the company’s performance and theindividual’s performance, while referencing the standard
compensation level at other companies obtained throughexternal research.

Director Remuneration(Excluding Outside Directors)
The remuneration of directors (excluding outside directors) iscomprised of the following 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 andindividual’s performances from the previous fiscal year
3. Stock compensation as a medium- to long-term incentive,
which is based on the Company’s stock price movement
The base compensation and performance-linked
compensation are paid in cash, and stock compensationis allocated as restricted stock. The fixed (base)compensation and variable compensation (performancelinked compensation and stock compensation) have anapproximate 6:4 ratio of the overall remuneration. The variable
compensation is designed to pay out more for higher positions.

The metrics of company performance are consolidated
net sales and consolidated operating income, which represent
milestones on the path to achieving the Meiji Group 2026
Vision. Performance-linked compensation reflects how well
the Company met its targets for these two metrics, how well it
performed in these metrics compared to the previous year, andhow well the relevant director performed. The performancelinked compensation for the Chairman and Representative
Director, and the President and Representative Director isbased entirely on the two metrics.

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

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

Breakdown of Director Remuneration (FY2019)
Information is disclosed such as the total amount of remuneration for each type of director, the total amount for each type ofcompensation and the number of oﬃcers that are paid.
In addition, the individual remuneration is disclosed for any director who has a total compensation of JPY 100 million or higher.
The details of the remuneration for each type of director during FY2019 are as follows.
Monetary Compensation
Total
Amount ofRemuneration

Stock Compensation

Performance-linked
Compensation

Base Compensation
Total Amount

Numberof Officers

Total Amount

Numberof Officers

Total Amount

Numberof Officers

Directors(other than outside directors)¥401 million¥196 million

8¥155 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

3

—

—

—

—

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

2

—

—

—

—

Total

¥526 million¥321 million

15¥155 million

6¥49 million

6(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 2020

Corporate Information

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

2. Results of analyzing/evaluating the effectivenessof the Board in FY2019, and initiatives for FY2020• Starting the succession planningaccording to the development policy
and reporting on progress andperformance• Supporting preparation of meeting
materials and presentations that
focus on the most important points

Financial and Non-Financial Section

Facility tours
by outside directors and auditors• Meiji Seika Pharma: Pharmaceutical Research Center,
CMC Research Laboratories, Agricultural & Veterinary
Research Laboratories (Yokohama City, Kanagawa
Prefecture)• Meiji: Tokachi Plant and large dairy farmer (Shintoku
Town, Kamikawa District, Hokkaido)

64

In compliance with the Corporate Governance Policy, the MeijiGroup has conducted self-assessments for the eﬀectiveness of
the Board once each year since FY2015. We use a questionnaire
prepared by the Board’s secretariat. Based on the survey
results, we analyze and evaluate the Board and identify issues
for improving its eﬀectiveness. The questionnaire to evaluate
the Board for FY2019 was conducted in May 2020.

• Execution of the Meiji Group
succession planning development
policy• Improving the quality of meeting
materials and presentations

Individual interviews between
the Chairperson and independent
outside directors (from FY2019)

Our Activities for Sustainability• The role of Meiji Holdings in promoting growthstrategies• Recent ESG trends and the Meiji Group initiatives• The Meiji Group’s governance framework for overseas
operations• Ideal dairy business in Japan• Issues in sustainable procurement of raw milk andprice-setting process for raw milk
(information provided by Meiji)(1) Self-evaluation questionnaires
by all members of the Board of Directors

FY2020 Plan

Our Value Creation Story

The Board of Directors generally meets once a month. Meeting
materials are distributed in advance to facilitate substantive
and lively discussions. If necessary, independent outside
directors are given prior briefings to clarify points of meetings.
To improve the eﬀectiveness of the Board of Directors,
independent outside directors and auditors hold regularmeetings. In the meetings, they exchange objective ideas
and share information, and increase their understanding ofsegment-specific business. Also, outside directors and auditors
tour major facilities a few times a year.

1. Method for analyzing/evaluating effectivenessof the Board in FY2019

FY2019 Challenges

Introduction

Self-evaluation using
questionnaires (from FY2015)

FY2019 Initiatives

65

Contents

ComplianceCorporate Governance

We hold cross-shareholdings when we consider it would:
1) Accelerate the Group’s financial operations
2) Strengthen our relationship with our group companies
3) Strengthen the Group’s transactional relationships
4) Be reasonable in light of our responsibility to shareholders

Constructive Dialogue
with Shareholders• General communication with shareholders is managed
by the PR & IR Department, which is managed by
the director in charge of Public Relations & Investor
Relations.

66

Our Activities for Sustainability• Comments and feedback collected through investor
relations activities are summarized into reports. The
director in charge of Public Relations & Investor
Relations reports to the Executive Committee and theBoard of Directors regularly.
• Dialogue with shareholders is held in accordance with
the Rules Concerning the Prevention of Insider Trading,which outlines the handling of important information.
Due care is also given to insider information duringcommunication. We set quiet period.

The Meiji Group formulated the Meiji Group AntiCorruption Policy in March 2019 in order to remain atransparent and sound corporate group that is trusted bysociety. In May 2019, we became a signatory to the UN
Global Compact and we comply with Principle 10: Businessshould work against corruption in all its forms, including
extortion and bribery. We translated this policy into English,
Chinese, Spanish, Thai, Indonesian and Hindi to raise
employee awareness, not only in Japan but overseas aswell. We will continue internal training and other eﬀorts toimprove employee understanding.

Management System
The Meiji Group has Compliance Regulations as well as
related rules and committees in place, and implements/
introduces a whistle-blowing system.
At Meiji Co., Ltd., our approach is based on the ideathat risk management and compliance are closely related
to one another, and we have set up a Compliance & Risk
Management Committee to promote a variety of activities
and programs. We promote activities to nurture and foster
compliance awareness to ensure that compliance is thecornerstone of our operations and that 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 abusiness and with products that concern the health andlives of people, we require all executives and employees toact in accordance with high ethical standards.
The KM Biologics Co., Ltd. is accelerating the project
to win back trust in order to raise compliance awarenessamong workers on site. We implemented a structuralreform in 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 member of the Meiji Group, we will
establish compliance system with higher standards.

Tax Compliance
Regulatory compliance and risk management arebecoming increasingly important as the Meiji Group
becomes more globalized and conducts more internationaltransactions, and tax authorities in each country strengthen
taxation. We therefore pay taxes properly and comply
with Transfer Pricing Guidelines. We formulated the MeijiGroup Tax Policy in March 2019 to comply with the tax
laws and regulations of each country and region in which
we conduct business. We communicate this information
to relevant departments and Group companies, make theinformation publicly available, pay appropriate taxes andminimize tax-related risks. Our tax staﬀ attend external
training to increase their knowledge about taxation.

Corporate Information• To support shareholder dialogue, the director in
charge of the PR & IR Department organizes meetings
with other departments, including Corporate
Planning, Finance and Accounting, General Affairs andSustainable Management, to share information.

• We provide information via our website forshareholders and investors. Types of information wepost on our website are:Investment securities reports, Financial statements(Japanese and English), Integrated reports (Japaneseand English), Presentation materials (Japanese andEnglish) and video streaming (Japanese) of earnings
conferences for analysts and institutional investors,
and Q&A summaries (Japanese and English).
We also post photos of briefings for individual
investors and events for individual shareholders.

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.

Financial and Non-Financial Section

Meiji Holdings positively and voluntarily engages withshareholders and holds constructive dialogue with them.
General communication with shareholders is managed by
the PR & IR Department, which is managed by the director in
charge of Public Relations & Investor Relations. We implement
the following measures to hold constructive dialogue withshareholders.

• We are promoting ESG dialogue with investors. We
hold one-on-one meetings with institutional investors
and conferences for institutional investors andsecurities analysts.

Anti-Corruption

Our Activities for Sustainability

Following its September 2019 review, the Board of
Directors concluded that the Company should continue
holding 31 of the brands.
As a rule, we will exercise our voting rights in a company
respecting the judgment of the stock issuing company’s boardof directors. However, we will decline to do so if we think that
it would negatively impact the business relationships between
group companies or if it would clearly harm the common
interests of shareholders.

• We work to promote dialogue with individual
shareholders and to inform them about the Group’sbusinesses. In FY2019, we held briefings for individual
shareholders in Kansai and Tohoku. We gave individual
shareholders guided tours of Sakado plant in Saitama.
We will work to increase dialogue and provide Group
information to individual shareholders to foster
understanding of the Group.

Basic Views

Our Value Creation Story

Meanwhile, the Board of Directors reviews all the brands
the Group is holding and determines whether the company
should continue holding them or dispose of them. For eachbrand, the Board considers the following factors:• The rationale for holding the brand• The transactions for the brand in the past year
• The medium-to-long term outlook for the brand• The amount of dividend• In addition to one-on-one meetings, the Company
holds earnings conferences twice-yearly forinstitutional investors and securities analysts toannounce the second quarter and the fiscal year
results, as well as small meetings led by the Company
President. We also hold conference calls withinstitutional investors and securities analysts at the endof the first and third quarter.

Introduction

Cross-Shareholdingof Listed Companies

Meiji Holdings Co., Ltd.｜Integrated Report 202067

Contents

Risk Management

The Meiji Group recognizes that risk management is notjust for responding when emergencies or disasters occur
and they severely impact business activities. It is also
important for taking measures that help to control andmitigate risk.
Following this approach, we have developed risk
management systems that are suited to the Food andPharmaceutical businesses. We have created systems forquickly sharing risk information across the company, which
includes risks common to all our businesses and risks that
impact on the whole Group*, and we strive to identify,
evaluate and treat risks promptly.

We are in the process of further strengthening our business
continuity plans and developing our systems. In the eventof a major earthquake, pandemic or other large-scaledisaster, our obligation as a corporate group involved
in Food and Health is to restore operations as quickly
as possible so that we can fulfill our mission to supply
necessary pharmaceuticals and food products.
* WEB

See the “Securities Report (FY2019)” on p.15.
(Japanese only)
https://www.meiji.com/investor/library/securities/2020/
pdf/securities_2020_04.pdf

The Meiji Group Business Management Risks• Rapid changes in society, or outbreaks of war or
terrorism• Revisions of the systems that greatly exceed
expectations in various countries• Gather information, and investigate and implement
countermeasures early• Create product supply systems from multiple
locations◎

Business plans, etc.

• Failure to achieve the Visions or Medium-TermBusiness Plans due to change in business conditions• Growth slowdowns in Core Business, or failure toachieve targets for overseas markets or new businessdomains• Impairment losses on non-current assets or goodwill• Fluctuations in foreign exchange or interest• Enhance unique value and search for new value• Provide unique value in overseas markets• Manage business portfolio from the perspectives of
profitability, growth and productivity• Make decisions and monitor investment and M&Aplans appropriately• Use foreign exchange contracts and borrow at fixedinterest rates

○

Risks

Countermeasures

Importanceto theGroup• Respect for the environment in corporate activities• Reduce CO2 emissions and prevent fluorocarbon
leaks, switch to renewable energies, appropriately
treat wastewater and industrial waste, and conduct
initiatives in compliance with ISO 14001• Manage supply and demand, and decrease food loss
• Comply with policies related to the environment○

Sustainability-related Risks

Caringfor the Earth

Visions. The Executive Committee combines these businessrisks with the Group visions and evaluates and confirms
them. We thus build a risk management system that also
adapts to changes in the business environment.
Risks are assessed taking into account the likelihood of occurrence andthe level of impact on the Group.
◎ : Risks of greater importance

Climate change• Address climate change• Analyze climate change scenarios according to the
TCFD framework, formulate strategies and release
information○

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

○

Countermeasures

Importanceto theGroup• Make business decisions in a timely andappropriately manner• Internal or external non-compliance• Improve effectiveness of the Board of Directors• Enhance corporate governance systems• Provide education on compliance and social media
usage, and comply with internal and external policies○

For information on the Meiji Group 2026 Vision,please see page 8-9.

Business Risks
Risks

Management-related Risks• Establish solid Proofs of Concept (POC)• Gather information on market trends• Develop products that are friendly to theenvironment and society• Create products and services unique to Meiji that
address social issues• Appropriately disseminate relevant information
about products and materials

○

Risks
Governance

The majority ofprofits comes from
specific products• Sluggish sales of products that account for aconsiderable portion of sales and profits• Implement promotions that maximize unique value• Improve product portfolio management• Explore new markets and new business domains◎

Damageto the Meiji brand• Pursue quality and safety• Communicate appropriately with each stakeholder

Supply chains• Insufficient or excess procurement or price increasesof raw materials• Difficulties in procuring raw milk
• Cessation of production due to production problems,
etc.
• Unstable product supplies due to distribution
problems• Gather information on raw materials markets andpromote procurement strategies• Diversify suppliers and consider alternative materials• Strengthen coordination between production andsales divisions• Improve distribution efficiency through labor-saving/
automation• Product recalls or withdrawals from the market
due to quality defects or unexpected side effects ofpharmaceuticals, etc.
• Unexpected harmful rumors about the Meiji Groupor its products○

Human capitaland culture• Recruit and develop human capital required forcorporate growth• Employee engagement• Effects of business environment on productivity• Appropriately implement succession planning• Improve employee training• Enhance employee engagement• Enhance health and productivity management andcreate comfortable work environments◎

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

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

Laws
and regulations• Revisions that significantly impact corporate activities• NHI drug price revisions• Obtain information about system revisions early andimplement countermeasures• Make appropriate approaches to relevant
government authorities• Expand portfolio of products that are not affected by
NHI drug price revisions

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

Our Activities for Sustainability○◎

Corporate Information

68• Abandon to launch planned product• Changes in customer lifestyles and values• Negative rumors about the Meiji Group’s corematerials (milk, cocoa, etc.)

Importanceto theGroup

Financial and Non-Financial Section

Sale and supplyof products
and services

Countermeasures

Our Activities for Sustainability

We appropriately identify risks from a companywide
business management perspective, and we develop
countermeasures according to the impact of those risks. In
this way, we not only minimize risks, but we also achievesustainable growth and gain new growth opportunities.
We outlined the three visions—the Business Vision,
Sustainability Vision and Management Vision—in the MeijiGroup 2026 Vision. We have identified the Meiji Group
Business Management Risks according to those three

Overseas
expansion andoverseas Group
companies

Our Value Creation Story

Strengthening
Our Business Continuity Planning (BCP)

Introduction

Basic Views and Management System○

Meiji Holdings Co., Ltd.｜Integrated Report 2020

69

Contents

Financial and Non-Financial Highlights (11 Years Summary)Financial information
For the fiscal year:

FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2019Unit *1

1,106,645

1,114,095

1,109,275

1,126,520

1,148,076

1,161,152

1,223,746

1,242,480

1,240,860

1,254,380

1,252,706

11,510,668

Thousands of U.S. dollars

Millions of yen

ー988,854

986,319

1,001,551

1,015,265

1,021,806

1,061,398

1,082,115

1,073,655

1,056,637

1,049,559

9,644,024

Thousands of U.S. dollars

Pharmaceuticals Millions of yen

ー124,202125,274

127,361

135,105

141,338

164,542

161,620

168,466

198,688

204,354

1,877,743

Thousands of U.S. dollars

Food

Millions of yen

ー

ー

ー

ー

29,097

29,41838,35338,191

43,47447,182

48,422444,931

Thousands of U.S. dollars

Pharmaceuticals Millions of yen

ー

ー

ー

ー

17,32523,961

41,961

38,731

39,485 *13

41,00943,507399,775

Thousands of U.S. dollars

Gross profit

Millions of yen

371,970

381,234

370,774

382,684

394,062

403,386

445,561

461,326

454,882456,569

462,523

4,249,958

Thousands of U.S. dollars

Operating profit

Millions of yen

28,78628,873

20,18925,85936,496

51,54377,781

88,395

94,673

98,383

102,708

943,752

Thousands of U.S. dollars

Profit before income taxes
Profit attributable to owners of parent

Millions of yen

24,10017,925

14,58825,21433,68748,657

95,21089,192

91,07994,586

97,747898,169

Thousands of U.S. dollars

Millions of yen

13,088

9,552

6,805

16,646

19,06030,89162,58060,786

61,27861,86867,313

618,516

Thousands of U.S. dollars

Capital expenditures *2
Research and development costs

Millions of yen

ー40,511

38,324

37,66847,03864,34742,35450,417

71,777

71,243

71,109653,587

Thousands of U.S. dollars

Millions of yen

22,693

23,41823,823

26,19926,067

26,10527,30826,162

26,507

29,182

31,446288,951

Thousands of U.S. dollars

Depreciation *3

Millions of yen

39,087

41,34540,87140,821

40,972

41,88542,07745,872

46,511

43,033

46,185424,382

Thousands of U.S. dollars

Cash flows from operating activities (A)Millions of yen

47,70457,99530,59750,622

63,84786,487105,155

81,888

108,775

112,100

114,103

1,048,453

Thousands of U.S. dollars

Cash flows from 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)(70,811)(650,660)

Thousands of U.S. dollars

Cash flows from 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)(30,287)(278,302)

Thousands of U.S. dollars

Free cash flows (A+B)

Millions of yen

14,06625,555(13,716)

11,11816,553(6,335)

95,346

37,59744,38011,89843,291

397,792

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

998,637

9,176,119

Thousands of U.S. dollars

Interest-bearing debt
Shareholders’ equity

Millions of yen

199,400

192,810205,261

205,394

198,376

221,480

147,828

129,497

119,102116,385

106,764

981,025

Thousands of U.S. dollars
Thousands of U.S. dollars

Segment
Segment（Overseas）

At fiscal year-end:

Per share data *4

Millions of yen

289,886

287,782

291,589

313,383

320,447

370,341

408,874

448,901

487,310527,310562,747

5,170,885

Profit (EPS)
Net assets (BPS) *5

Yen

88.87

64.82

46.19

112.99129.40209.79425.06413.11422.15426.61464.04

4.263

U.S. dollars

Yen

1,966.53

1,953.18

1,979.12

2,127.28

2,175.98

2,515.26

2,777.28

3,064.91

3,360.70

3,635.79

3,879.14

35.644

U.S. dollars

Cash dividends
Return on Equity (ROE)

Yen

40.00

40.00

40.00

40.00

40.00

50.00

90.00

110.00130.00140.00150.001.378

U.S. dollars

%

4.6

3.3

2.3

5.5

6.0

8.9

16.1

14.2

13.1

12.2

12.4

Return on Assets (ROA)

%

3.9

4.2

3.0

3.8

5.0

6.5

9.4

10.2

10.6

10.3

10.3

Equity ratio

%

39.7

40.2

38.9

39.9

41.1

42.2

47.8

50.8

52.5

52.5

56.4

Payout ratio

%

45.0

61.7

86.6

35.4

30.9

23.8

21.2

26.6

30.8

32.8

32.3

̶

̶

48.4

52.4

58.2

56.8

55.0

23.6

23.0

22.8

22.2

28.7

27.4

28.2

28.0

̶

̶

̶

̶

̶

̶

̶

̶

203.5

318.9

303.5

̶

̶

̶

̶

̶

̶

4.1

0.5

0.3

0.5

0.5

Our Activities for Sustainability

RatiosFood

Our Value Creation Story

Unit
Millions of yen

Net sales

Introduction

Consolidated Balance Sheet

Non-financial information
CO2 emission
volumeJapan

Scope1 *6
Scope2 *6

10,000 t- CO 2

Scope3 *7

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

Scope1

10,000 t- CO 2

Scope2

10,000 t- CO 2

The U.S. andEurope *10

Scope1

10,000 t- CO 2

Scope2

10,000 t- CO 2

Combined *14

Scope3

10,000 t- CO

2

̶

̶

̶

̶

5.3

5.5

5.2

4.7

1.1

1.3

1.1

1.1

0.9

0.9

0.9

0.7

̶

̶

̶

̶

̶

̶

̶

̶

̶

21.9

1,000 m3

̶̶23,67422,902

22,723

20,14824,375

24,10422,30522,056

21,822

Overseas Mainland China *8
Asia *91,000 m3

̶

̶

̶

̶

̶

̶

̶

̶

1,192

878

903

1,000 m3

̶

̶

̶

̶

̶

̶

̶

̶

511

487

459

1,000 m3

̶

̶

̶

̶

̶

̶

̶

̶

74

62

56

Japan *11

1,000 m3̶

̶21,652

20,864

20,566

16,504

21,214

20,255

17,914

19,702

18,423

Overseas Mainland China *8
Asia *91,000 m3

̶

̶

̶

̶

̶

̶

̶

̶

̶

696

790

1,000 m3

̶

̶

̶

̶

̶

̶

̶

̶

̶

141

180

The U.S. and Europe *10

1,000 m3

̶

̶

̶

̶

̶

̶

̶

̶

̶

47

53

Energy consumption
volumeJapan *12

Fuel oilconversion:
10,000 kl

̶

̶

25.9

25.8

25.6

25.3

24.9

24.5

24.0

24.6

26.0

Industrial Waste
VolumeJapan *12
Overseas *14

10,000 t

̶

̶

8.7

8.1

7.2

7.4

7.6

5.4

6.3

6.2

6.5

10,000 t

̶

̶

̶

̶

̶

̶

̶

̶

̶

̶

0.8

U.S. dollar amounts are provided solely for the convenience of readers based on an exchange rate of US$1 = ¥108.83, the exchange rate prevailing on March 31, 2020.
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 FY2015 retroactively.
The Kumamoto Plant of KM Biologics Co., Ltd. was included in the calculation from FY2018, and all of the company’s sites were included from FY2019.

Financial and Non-Financial Section

2.6

Corporate Information

̶Japan *11

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

̶

2.2
1.0

10,000 t- CO 2

Total water
discharge volume

̶

6.1

2.5
1.1

̶

The U.S. and Europe *10

̶

̶

3.0
1.3

̶

Water
consumption
volume

̶

̶

3.5
1.5

Financial and Non-Financial Section

Overseas Mainland China *8 Scope1
Scope2
Asia *970

10,000 t- CO 2

*7 Category 4 (Upstream transportation and distribution) and Category 9 (Downstream transportation and distribution) have been added and are included in the calculationfor 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 of KM Biologics Co., Ltd. was included in the calculation, and all of the company’s production plants were included from FY2019.
*8 Five production plants *9 Four production plants *10 Three production plants. Past data has been revised.
*11 Meiji Co., Ltd. and Meiji Seika Pharma Co., Ltd. up until FY2014, and the domestic Meiji Group from FY2015.
The Kumamoto Plant of KM Biologics Co., Ltd. was included in the calculation from FY2018, and all of the company’s production plants were included from FY2019.
*12 The domestic Meiji Group. The Kumamoto plant for KM Biologics Co., Ltd. was added and included in the calculation from FY2018. From FY2019, all of the company’s sites
were included in the calculation for energy consumption and all of the company’s production plants were included in the calculation for industrial waste volume.
*13 The standard used for calculating the overseas sales was revised from FY2017. *14 Twelve production plants in Mainland China, Asia, the U.S. and Europe

Meiji Holdings Co., Ltd.｜Integrated Report 202071

Contents

MD&A (The Management Discussion and Analysis)

72

Financial and Non-Financial Section

Operating profit totaled JPY 102.708 billion (up 4.4% year
on year) with an operating profit margin of 8.2% (up 0.4
percentage points year on year). Analysis of consolidated
operating profit is shown in the waterfall chart below.
(Billions of yen)
FY2018Due to increased/
decreased sales
Decrease due to
NHI drug price reduction
Change in cost of goods sold

Change from theprevious fiscal year

1,082.1

1,073.6

1,056.6

1,049.5-0.7%

Cost of sales

701.4

703.3

698.9

687.4

-1.6%

Gross profit

380.7

370.3

357.7

362.0

+1.2%

Selling, general andadministrative expenses

297.7

286.1

272.9

274.7

+0.6%

Net sales(Carriage and storage charges)

46.9

43.9

45.7

45.3

-1.0%

(Sales promotion expenses)

124.6

117.4

105.6

108.9

+3.2%

(Labor cost)

55.5

56.1

57.0

56.6

-0.7%

Operating profit

82.9

84.1

84.7

87.3

+3.0%

In the Nutrition business, operating profit increased
year on year primarily due to increased sales of mainstay
products, including infant formula and sports nutrition
products, and due to price increase.

Net sales were largely unchanged year on year. Net sales
increased year on year in the Processed Food business,
Nutrition business and Overseas business. Net sales in the
Fresh and Fermented Dairy business and the Confectionery
business were largely unchanged year on year. Net sales in
the other domestic subsidiaries decreased year on year.
Net Sales (Left scale)Fresh and(Billions of yen) Fermented Dairy

Operating Profit Margin (Right scale)Operating profit (Left scale)

Processed Food

Confectionery

Nutrition

400
16.7

338.5 330.1 327.9

300

15.4

14.5

14.8

15.7

17.4
14.8

15.3

297.8 295.3
282.8

174.1 176.5 178.4

200
100

14.5

Other Domestic
Subsidiaries

Overseas

4.3
52.0

47.8

4.7

48.4
7.4

FY
FY
FY
2017 2018 2019

8.2

84.1

4.7

FY
FY
FY
2017 2018 201915
10

135.5 122.2 121.2

8.3

(%)
20

19.7

20.4

19.0

FY
FY
FY
2017 2018 2019

12.4

85.1

90.6

12.9

15.7

FY
FY
FY
2017 2018 2019

43.4
1.6
7

47.1 48.4
2.6
3.4
12

16

FY
FY
FY
2017 2018 2019

5
1.4
4.3

1.3
3.8

1.3
3.5

FY
FY
FY
2017 2018 2019

0

+7.5
-3.5
-4.2

*1

-0.1 *2

Change in SG&A expenses
Other (incl. change inresults of subsidiaries)

FY2019FY2018(Billions of yen)

0

98.3

FY2017

+4.7

102.7

*1 (Breakdown) Food – Raw milk price (Japan): -2.0,
Packaging materials: -0.4, Other: +0.1
Pharmaceuticals – Gains from changes
in inventory revaluation due torevisions in the production systemin the previous fiscal year: -3.2,
Cost reductions: +1.3
*2 (Breakdown) Food – Increase in selling expenses
and advertising expenses: -1.9,
Increase in logistics cost: -0.8, Other: +0.7
Pharmaceuticals – Loss from disposal of inventory: +1.2,
Other: +0.7

Fresh and Fermented Dairy Business

Processed Food BusinessNet sales overall were largely unchanged year on year.
Net sales of Meiji Oishii Gyunyu were favorable and net
sales of SAVAS Milk Protein grew strongly due to productline extensions. Net sales of functional yogurt and yogurt
decreased on a year on year basis despite demand fromhealth-conscious consumers in the fourth quarter due tothe COVID-19 pandemic.
Operating profit increased year on year. Increased net
sales for SAVAS Milk Protein and price increase compensate
the reduced net sales of functional yogurt and increased
raw material costs.

Net sales increased year on year. Net sales of ice cream
decreased due to unseasonal weather in summer, but net
sales of Meiji Hokkaido Tokachi Camembert Cheese increased
due to product line extensions.
Operating profit increased year on year primarily due toincreased net sales of cheese and the price increase for ice
cream in March 2019.

Meiji Holdings Co., Ltd.｜Integrated Report 2020

Corporate Information

The Group’s consolidated net sales for FY2019 were JPY
1.252706 trillion (down 0.1% year on year). Net sales for the

Operating Profit and Profit Attributableto Owners of Parent

FY2019FY2016

Financial and Non-Financial Section

Net Sales

Gross profit margin for FY2019 was 36.9% (up 0.5
percentage points year on year) and the cost of sales
decreased. Price increase for drinking milk, yogurt and ice
cream in the Food segment contributed to these results.
The cost of sales in the Pharmaceutical segment increased
due to NHI drug price reduction and expiration of patents
for mainstay products.
Selling, general and administrative (SG&A) expenses
totaled JPY 359.8 billion (up 0.5% year on year). After
breaking down the SG&A, carriage and storage charges
decreased to JPY 47.7 billion (down 0.9% year on year),but sales promotion expenses and advertising expenses
increased to JPY 124.8 billion (up 2.4% year on year). R&D
costs totaled JPY 31.4 billion (up 7.8% year on year).

Overview by Business (Food Segment)

Our Activities for Sustainability

Gains and Losses

Cost of Sales and Selling,
General and Administrative Expenses

KM Biologics recorded in FY2018. However, extraordinary
losses also decreased through impairment loss in the
Pharmaceutical segment recorded in FY2018.

Profit attributable to owners of parent was JPY 67.313
billion (up 8.8% year on year). Extraordinary income
decreased due to the reduced gain on sales of noncurrent assets, and gain on bargain purchase concerning

Our Value Creation Story

Last year was the second fiscal year of the 2020 MediumTerm Business Plan, during which the Meiji Group madesteady progress toward achieving the Plan, following thebasic concepts of Address strategic issues continuously andChallenge for further growth.
The Food and Pharmaceutical segments bothexperienced a tough economic climate, with concerns
about decreasing individual consumption trends in the
Food segment and the NHI drug price reduction in October
2019 in the Pharmaceutical segment. However, we focused
our management resources on core and growth areas,
improved productivity and managed expenses eﬀectively.
Generally, there was only a limited impact on theGroup’s FY2019 consolidated financial results from the
COVID-19 pandemic.
In the Food segment, demand increased for yogurt
and functional yogurt in the Fresh and Fermented Dairy
business, and for frozen food and prepared foods in theProcessed Food business. On the other hand, the Processed
Food business saw a fall in sales of processed food products
for professional use in the food service industry in Japan,
due to the stay-at-home order. There was no comparable
impact on the FY2019 consolidated financial results fromoverseas subsidiaries because their fiscal years ended in
December 2019. Operations were temporarily suspended
at confectionery and ice cream plants in China in January
and February 2020, but the impact on business activities
was minor, because it was for a short period of time.
In the Pharmaceutical segment, sales including antiallergy drug sales decreased because promotion ofdrugs to doctors by medical representatives in Japan wasrestricted, and patients stayed at home to avoid the risk of
COVID-19 in hospitals. Overseas, although a nationwide
lockdown was ordered in India, the impact on businessperformance for our India subsidiary was minor.
These factors resulted in net sales of JPY 1.252706
trillion (down 0.1% year on year), operating profit of JPY
102.708 billion (up 4.4% year on year), and ordinary profit of
JPY 103.324 billion (up 3.6% year on year). Profit attributableto owners of parent company was JPY 67.313 billion (up8.8% year on year). Net sales fell marginally year on year,
but operating profit increased for the eighth consecutive
year and produced a record profit.
ROE was 12.4% and the EPS was JPY 464.04.

Food segment were JPY 1.049559 trillion (down 0.7% year
on year). Net sales of infant formula, liquid diet and cheese
were favorable, but net sales of functional yogurt struggled.
Net sales for the Pharmaceutical segment were JPY
204.354 billion (up 2.9% year on year). This was bolsteredby Meiji Seika Pharma’s full-scale launch of human vaccines
manufactured by KM Biologics, in spite of the impact of the
NHI drug price reduction.
Consolidated overseas net sales were JPY 91.9 billion (up4.2% year on year). Overseas subsidiaries achieved steady
growth in net sales in both the Food and Pharmaceuticalsegments.

Introduction

Consolidated Financial Results73

Contents

MD&A (The Management Discussion and Analysis)
Japan

Overseas

Net sales were largely unchanged year on year. Net salesof Chocolate Kouka, Kinoko no Yama and Takenoko no Satowere favorable, while net sales of gummy products andchewing gum decreased.
Operating profit decreased year on year primarily due
to increased logistics cost and promotion expenses.

Net sales increased year on year due to increased sales ofsubsidiaries in the U.S. and China.
Operating profit increased significantly year on year
due to increased sales of each subsidiary.

Net sales increased year on year. Net sales decreased
significantly due to the impact of the NHI drug pricereduction; decrease in sales of the antidepressantdrug REFLEX, whose patent expired; sales of rice blast
preventative ORYZEMATE. However, net sales exceeded
the previous year’s level due to increased sales volume
for Influenza HA Vaccine KMB and the launch of 4-diseasecombination vaccine Quattrovac and other humanvaccines during the fiscal year.
Operating profit decreased year on year primarily due
to significant decreases in sales of REFLEX and ORYZEMATE,
and the NHI drug price reduction.

Net sales increased year on year thanks to the favorable
growth of Medreich and Meiji Pharma Spain, S.A. Also
exports of the antibacterial drug MEIACT, our mainstay
product, were favorable.
Operating profit increased significantly year on year.
Increased sales in overseas subsidiaries and decreased
goodwill amortization for Medreich both contributed tothis result.

Other domestic subsidiaries

Nutrition BusinessNet sales in Japan increased year on year. Net sales of infant
formula were favorable due to demand from inboundtourists, and net sales also increased for sports protein
SAVAS and liquid diet Meiji Mei Balance.
Operating profit increased significantly year on year
due to increased sales of mainstay products.

Net sales decreased year on year. A meat packing
subsidiary was removed from the scope of consolidation
following the sale of all stock in the company and net salesof our logistic business decreased.
Operating profit decreased year on year due to thelower revenues from our logistic company.

Overview by Business (Pharmaceutical Segment)
FY2017FY2018Change from theprevious fiscal year

(Billions of yen)
Net sales

161.6

168.4

198.6

204.3

+2.9%

Cost of sales

80.6

83.6

99.5

103.7

+4.2%

Gross profit

80.9

84.8

99.1

100.6

+1.5%

Selling, general andadministrative expenses

75.1

73.8

84.8

84.6

-0.3%

Operating profit

5.7

11.0

14.2

15.9

+12.2%Net Sales (Left scale)

1,9.0

1,30.6

Operating Profit Margin (Right scale)

Overseas

KM Biologics

15
11.2

11.1

100
7.6

6.8

5.1
50

0

74

（%）

141.8

5.2
39.4

41.0

10

6.3
43.5

6.6

9.9

9.6

4.4

2.1

2.7

FY
2017

FY
2018

FY
2019

FY
2017

FY
2018

FY
2019

Financial and Non-Financial Section

9.6

40.4

31.2

FY
2017

3.4

3.8

FY
2018

FY
2019

5

Assets, Liabilities and Capital
Total assets at the end of FY2019 totaled JPY 998.637
billion (down JPY 5.506 billion year on year). Increases wererecorded of JPY 15.263 billion in buildings and structures(net) and JPY 12.09 billion in cash and deposits, but thisis attributed to decreases of JPY 22.261 billion in notes
and accounts receivable - trade and JPY 8.906 billion in
investment securities.
Total liabilities were JPY 401.069 billion (down JPY
42.443 billion year on year). This is attributed to decreasesof JPY 13.161 billion in notes and accounts payable - trade,
JPY 8.859 billion in income taxes payable, JPY 6.897 billion
in long-term borrowings, JPY 2.722 billion in short-termborrowings, and JPY 2.528 billion in deferred tax liabilities.
Total net assets were JPY 597.567 billion (up JPY 36.936
billion year on year). While there were decreases of JPY 6.292
billion in valuation diﬀerence on available-for-sale securities
and JPY 2.892 billion in remeasurements of defined benefit
plans, this is attributed to an increase of JPY 45.779 billion
in retained earnings.
As a result, the current ratio at the end of FY2019 was
162.5% (up 17.9 percentage points year on year), the debt/
equity ratio was 0.19 times (down 0.03 percentage points)
and the equity ratio was 56.4% (up 3.9 percentage points).
Liquidity of funds and stability of finances were bothmaintained. Net assets per share at the end of FY2019 were
JPY 3,879.14 (up JPY 243.35 year on year).

Capital Expenditures
Capital expenditures on a cash basis (including intangible
assets) for FY2019 were JPY 71.1 billion, with maintransactions as indicated below.
・Manufacturing building andchocolate production facilities (Sakado Plant)
・Protein production plant (Kurashiki Plant)
・Manufacturing building andinfant formula production facilities (Saitama Plant)(Billions of yen)
80

Food Segment
Pharmaceutical Segment
63.8

61.3

60.2

60
44.3
40

36.5

20
0

5.7

6.0

7.8

9.7

10.7

FY2015FY2016FY2017FY2018FY2019Corporate Information

Japan(Billions of yen)
150

Operating profit (Left scale)Net sales increased significantly year on year. KM Biologics
became a consolidated subsidiary from the second quarterof FY2018. Thus a net increase in sales for the first quarterof FY2019 and sales of pre-pandemic vaccines contributed
to this result.
Operating profit significantly outperformed theprevious fiscal year due to increased sales of humanvaccines and blood plasma products.

Financial and Non-Financial Section

Operating profit increased year on year despite the NHI
drug price reduction as net sales of Influenza HA Vaccines
KMB and overseas subsidiaries increased. In addition,
goodwill amortization for Medreich, our subsidiary in India,
decreased.

Net sales increased year on year despite NHI drug pricereduction in Japan in October 2019. This is thanks tothe addition of earnings to full-year accounting fromKM Biologics, which became a consolidated subsidiaryfrom the second quarter of the previous fiscal year, andincreased net sales of Influenza HA Vaccine KMB andoverseas subsidiaries

KM Biologics Co., Ltd.

Our Activities for Sustainability

FY2019FY2016

Our Value Creation Story

Overseas

Introduction

Confectionery Business

0

Meiji Holdings Co., Ltd.｜Integrated Report 202075

Contents

MD&A (The Management Discussion and Analysis)
Introduction

Cash Flows

Outlook for FY2020
Working capital for business activities in FY2019 was
procured through loans and commercial paper issued byfinancial institutions. The recent COVID-19 pandemic has
not impacted cash flows.
Future impact on cash flows due to the COVID-19
pandemic is expected to be limited. Accordingly there
will be no change in our approach to allocating cash toinvestment for growth and returns to shareholders. If
the impact from the COVID-19 pandemic increases, wewill increase cash and deposits on hand by deferringinvestment and increasing debt as necessary.
The relationship between financing and cash allocation
during FY2019 is detailed below.
Procurement

Allocation

Operatingcash flows
114.1 billion

Returns to shareholders(dividend payments)¥20.9 billion
Interest bearing debt
repayment ¥9.9 billion
Others¥-0.2 billion

Increased cash anddeposits ¥12.6 billionFreecash flows¥43.2 billion(Billions of yen)
FY2019 Results
Due to increased/
decreased sales
Decrease due to
NHI drug price reduction
Change in cost of goods sold

102.7
+6.7
-5.9
-2.7 *1+5.4 *2

Change in SG&A expenses
Other (incl. change inresults of subsidiaries)

Pharmaceutical segment
We will promote the stable supply of antibacterial drugs
and other pharmaceuticals while cooperating with therelevant institutions. With increasing concerns about
infectious diseases, we expect more people will wish toreceive influenza vaccines. Accordingly, we will work to
expand shipment volumes. We have started research
to develop a vaccine against COVID-19, applying ouradvanced technology, facilities, and experience. With thecooperation of research institutions, we will work towardcommercializing the vaccine to overcome the COVID-19
disease. We are also starting discussions about contract
manufacturing and distribution of new vaccines being
developed overseas to supply them within Japan.

FY2020 Plan

+3.8

110.0

*1 (Breakdown) Food – Raw material procurement costs: -2.0,
Ingredient change and optimization: +0.9
Pharmaceuticals – Gains from inventory revaluation
due to revisions in the production
system: -3.5, Cost reductions: +1.9

Our Activities for Sustainability

Investing cash flows(investment
for growth andordinary investment)¥70.8 billion

Food segment
Consumer trends in health and nutrition are expected tobe higher than ever in Japan. We will promote the healthbenefits of functional yogurt and yogurt, and increase
sales of the new Meiji TANPACT series and products in the
nutritionals segment, such as SAVAS. Overseas, we will
accelerate the expansion of production capacity and sales
capabilities, particularly in China. In the meantime, we will
pursue the potential for new businesses.

Our Value Creation Story*2 (Breakdown) Food – Decrease in selling expenses
and advertising expenses: +4.0,
Increase in logistic expenses: -1.1, Other: -0.2
Pharmaceuticals – Decrease in promotion expenses: +0.9,
Other: +1.8

Financial and Non-Financial Section

Cash flows from operating activities in FY2019 totaled JPY
114.103 billion due to an increase of JPY 2.002 billion fromthe previous fiscal year. Although payments increased
due to decreases in trade payables and impairment loss,
this is attributed to more income from decrease in tradereceivables.
Cash flows from investing activities totaled JPY 70.811
billion in payments (down JPY 29.39 billion year on year).
This is attributed to decreased expenditure on purchase ofshares of subsidiaries associated with changes in the scopeof consolidation.
As a result, free cash flow (the sum of the cash flows
from operating activities and investing activities) totaled
JPY 43.291 billion (up JPY 31.393 billion year on year).
The free cash flow generated was allocated for returns
to shareholders paid as dividends, and for paying downinterest bearing debt. As a result, dividends increased
and returns to shareholders were improved. We willcontinue making stable and sustainable profit returns
for shareholders. Total payments as dividends for FY2019
totaled JPY 20.987 billion (up JPY 1.095 billion year on year)
representing a payout ratio of 32.3%.
Cash flows from financing activities totaled JPY 30.287
billion in expenditures (up JPY 16.307 billion year on year).
While repayments of long-term borrowings decreased,
this is attributed to decreased income from proceeds fromlong-term borrowings and proceeds from share issuanceto non-controlling shareholders.
These results produced a balance of JPY 37.11 billion in
cash and cash equivalents at the end of FY2019.

We forecast the Group net sales of JPY 1.253 trillion (nochange year on year), operating profit of JPY 110 billion (up7.1% year on year), and an operating profit margin of 8.8%
(up 0.6 percentage points year on year) for FY2020. The
analysis of operating profit is shown in the waterfall chart
below.

Despite concerns about the significant impact of the
COVID-19 pandemic on the global economy and domestic
consumption trends in FY2020, we will work to growour core businesses and to develop businesses that will
become future growth drivers.

Dividend Policy
Changes in Financial Indices
Changes in financial indices are detailed below.
FY2015Return on Equity (ROE)

16.1%

FY201614.2%

FY201713.1%

FY201812.2%

FY201912.4%

Return on Assets (ROA)

9.4%

10.2%

10.6%

10.3%

10.3%

Earnings per Share (EPS)¥425.06¥413.11¥422.15¥426.61¥464.04

0.36 times

0.28 times

0.24 times

0.22 times

0.19 times(Note) Calculation methods for each index
Return on equity (ROE) = Profit attributable to owners of parent/Shareholders’ equity(average of beginning and end of the year)
Return on assets (ROA) = Ordinary profit/Net assets (average of beginning and end of the year)
Earnings per share (EPS) = Profit attributable to owners of parent/(Number of issued shares – Number of shares of treasury stock)Debt-equity ratio (interest-bearing debt to equity ratio) = Interest-bearing debt/Shareholders’ equity(Note) A 2-for-1 common stock split was implemented on October 1, 2015. Earnings per share (EPS) reflects this stock split.

(Yen)

Financial and Non-Financial Section

Dividend per share (Right scale)130

Changes in dividends and earnings per share (EPS) aredetailed below.

140

150

90

100

600
400
200
0

(Yen)
150

110

800

Payout ratio76

EPS (Left scale)

1,000

For FY2020, we plan to pay a full-year dividend of JPY
150 (JPY 75 first half, JPY 75 year-end) and the consolidated
dividend payout ratio is forecast to be 31.3%.

Corporate Information

Debt-Equity Ratio(interest-bearing debt toequity ratio)

We consider stable return to shareholders an important
issue. Our basic policy concerning profit dividends shall bea consolidated dividend payout ratio of around 30%.
The year-end dividend for FY2019 was JPY 80 per share.
Together with the dividend paid at the end of the first
half, the full-year dividend amount was JPY 150 and theconsolidated dividend payout ratio was 32.3%.

50425.06413.11422.15426.61464.0450

209.79FY2014FY2015FY2016FY2017FY2018FY2019

23.8%

21.2%

26.6%

30.8%

32.8%

32.3%

0

Meiji Holdings Co., Ltd.｜Integrated Report 202077

Contents

Consolidated Financial Statements

Introduction

Consolidated Balance Sheet
Meiji Holdings Co., Ltd. / As of March 31, 2020
Thousands of
U.S. dollars

Millions of yen

2020

2020

2019

ASSETS

Thousands of
U.S. dollars

Millions of yen

2020

2019

2020

LIABILITIESCurrent assets:

Current liabilities:¥ 37,446¥ 125,479$ 1,032,046

202,193

1,653,329

Short-term borrowings (Notes 9, 10)30,87433,597

283,695

111,028

105,757

1,020,196

Accrued expenses

45,45746,286417,691

Work in process

3,729

4,578

34,271

Income taxes payable

12,16421,023

111,771

Raw materials and supplies

58,54255,589537,922

Provision for bonuses

12,09011,895

111,091

Others (Note 10)
Allowance for doubtful accounts

27,45428,149252,267

Provision for sales returns

256

757

2,355

(1,247)(176)(11,462)

Provision for sales rebates

1,908

2,443

17,539Total current assets

416,885

421,447

3,830,608

Others41,45150,021

380,884

Total current liabilities

256,520

291,504

2,357,076

Bonds payable
Long-term borrowings (Notes 9, 10)

20,00055,89020,00062,788

183,772

Deferred tax liabilities

8,122

10,65074,63055,41053,830509,149

121

106

1,112

Notes and accounts receivable-trade(Notes 10, 15)

Merchandise and finished goods (Note 10)¥25,356$

344,082

Notes and accounts payable-trade (Note 15)

Our Value Creation Story¥ 112,317

179,931

Cash and deposits (Note 10)

Non-current assets:
Property, plant and equipment

Non-current liabilities:

Buildings and structures
Accumulated depreciation

Accumulated depreciation

334,7293,251,346(169,035)
165,693(1,588,600)
1,662,745

539,437

533,595

4,956,694

Retirement benefit liability(384,661)(381,789)(3,534,518)

Provision for retirement benefits for directors
Others154,775

151,806

1,422,175

Tools, furniture and fixtures

58,04954,826533,396

Accumulated depreciation(43,478)(42,237)(399,509)

Tools, furniture and fixtures, net

14,57069,363

12,58970,765

133,886
637,357

3,046

2,891

27,997

Machinery, equipment and vehicles, net(Note 10)Land (Note 10)
Leased assets

Total non-current liabilities
Total liabilities

513,556

5,004

4,632

45,988144,549

152,008

1,328,210

401,069

443,5123,685,287

275,659

NET ASSETS
Shareholders’ equity:(2,243)(19,909)

Share capital

30,00030,000

880

648

8,087

Capital surplus

100,245

100,061

921,124Construction in progress

23,64531,988217,265

Retained earnings

453,723

407,943

4,169,102

Total property, plants and equipment

444,191

433,491

4,081,518

Treasury shares(30,288)(30,422)(278,306)

Total shareholders’ equity

553,681507,582

5,087,580

26,96833,261

247,807

53

3

495

Foreign currency translation adjustment(3,279)(1,751)(30,131)

Remeasurements of defined benefit plans(14,677)(11,785)(134,866)

Accumulated other comprehensive income

9,066

19,72883,30534,81933,320319,947

Financial and Non-Financial Section(2,166)

Leased assets, net

Accumulated depreciation

Our Activities for Sustainability

Buildings and structures, net (Note 10)
Machinery, equipment and vehicles

353,843(172,887)
180,956

Intangible assets:
Accumulated other comprehensive income:

Goodwill

680

73

6,257

Others13,333

13,480122,520

Valuation diﬀerence on available-for-sale securities

Total intangible assets

14,014

13,553

128,777

Deferred gains or losses on hedges

Investments and other assets:
84,59893,504

777,345

15,50020,274142,432

Deferred tax assets

16,341

14,409150,153

Others

7,171

7,557

65,894

Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

(66)

(94)

(611)

123,545

135,651

1,135,214

581,751582,696

5,345,511¥ 998,637¥ 1,004,143$ 9,176,119

Non-controlling interests
Total net assets
Total liabilities and net assets

597,567

560,630

5,490,832¥ 998,637¥ 1,004,143$ 9,176,119

Corporate Information

Investment securities (Note 13)
Retirement benefit asset

See accompanying notes to consolidated financial statements.

See accompanying notes to consolidated financial statements.

78

Financial and Non-Financial Section

Meiji Holdings Co., Ltd.｜Integrated Report 2020

79

Contents

Consolidated Financial Statements

Consolidated Statement of Comprehensive Income

Meiji Holdings Co., Ltd. / For the year ended March 31, 2020

Meiji Holdings Co., Ltd. / For the year ended March 31, 2020
Thousands of
U.S. dollars

Millions of yen

Net sales

2020

2019

2020

¥ 1,252,706¥ 1,254,380$ 11,510,668

2020

2019

2020

¥ 69,751¥ 63,610$ 640,918(6,320)66(58,072)

51

58

469

Foreign currency translation adjustment(1,461)(1,615)(13,430)

Remeasurements of defined benefit plans, net of tax(2,608)(84)(23,968)(53)(10,392)(523)(2,097)(490)(95,492)¥ 59,358¥ 61,512$ 545,426¥ 56,651¥ 59,881$ 520,547

2,707

1,631

24,878

Profit (loss)

790,183

797,8117,260,709

462,523456,569

4,249,958

Valuation diﬀerence on available-for-sale securities

Selling, general and administrative expenses (Notes 19, 20)

359,814358,185

3,306,206

Deferred gains or losses on hedges

Operating profit (loss)

102,708

98,383

943,752

Interest income

229

130

2,112

Dividend income

1,326

1,286

12,192

Royalty income

285

331

2,627

Insurance claim income

1,238

—

11,381Others

1,861

2,096

17,101

Total non-operating income

4,942

3,844

45,414

Other comprehensive income:

Share of other comprehensive income of entities accounted for using
equity method
Total other comprehensive income (Note 24)
Comprehensive income(Profit attributable to)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

Non-operating expenses:
717

778

6,588

Foreign exchange losses

546

356

5,018

Share of loss of entities accounted for using equity method

793

390

7,288

Others2,269

992

20,856

Total non-operating expenses

4,326

2,518

39,752

103,324

99,709949,414

1,142

6,516

10,501

—
886

6,584
102

—
8,141

See accompanying notes to consolidated financial statements.

Our Activities for Sustainability

Interest expenses

Our Value Creation Story

Cost of sales (Note 20)

Non-operating income:Thousands of
U.S. dollars

Millions of yen

Gross profit (loss)

Ordinary profit (loss)

Introduction

Consolidated Statement of Income

Extraordinary income:Gain on sales of tangible and intangible assets (Note 21)
Gain on bargain purchaseTotal extraordinary income

1

235

12

2,030

13,43918,654

Financial and Non-Financial Section

Gain on sales of investment securities
OthersExtraordinary losses:
2,549

2,020

23,4302,390

12,242

21,962

Provision of allowance for doubtful accounts

1,096

—

10,076

Others

1,570

4,299

14,429Total extraordinary losses

7,607

18,56369,899Profit (loss) before income taxes

97,747

94,586898,169

Income taxes-current

28,78434,358264,486

Income taxes-deferred(787)(3,383)(7,235)

Income taxes-total

27,99630,975257,250

Profit (loss)

69,751

63,610640,918

Profit (loss) attributable to non-controlling interests

2,438

1,742

Profit (loss) attributable to owners of parent¥

67,313¥

61,868

Corporate Information

Loss on disposal of tangible and intangible assets (Note 22)
Impairment loss (Note 23)

22,402$

618,516

See accompanying notes to consolidated financial statements.

80

Financial and Non-Financial Section

Meiji Holdings Co., Ltd.｜Integrated Report 202081

Contents

Consolidated Financial Statements

Introduction

Consolidated Statement of Changes in Equity
Meiji Holdings Co., Ltd. / For the year ended March 31, 2020
Millions of yen

Millions of yen

Shareholders’ equity

Balance at March 31, 2018

Accumulated other comprehensive income

Number ofcommon shares(Thousands)

Share capital

Capital surplus

Retained earnings

Treasury shares

Total shareholders’equity152,683¥ 30,000¥ 99,841¥ 366,276¥ (30,521)¥ 465,595

Valuation diﬀerence
on available-for-sale Deferred gains or
securities
losses on hedges¥ 33,188¥ (53)

Foreign currencytranslation
adjustment¥

268

Remeasurements Total accumulatedof defined benefit other comprehensive
incomeplans¥ (11,689)¥ 21,714

Non-controllinginterests

Total net assets¥ 7,866¥ 495,177

Changes during period:(19,940)(19,940)(19,940)

61,86861,86861,868Purchase of treasury shares

177

Disposal of treasury shares
Change in ownership interest ofparent due to transactions with
non-controlling interests

(49)

(49)

(49)

148

326

326

42
(261)

Change in scope of consolidation
Net changes in items other thanshareholders’ equity

42

42

(261)

(261)
72

56

(2,019)(96)(1,986)25,453

23,466——

220

41,66799

41,98672

56(2,019)(96)(1,986)25,45365,453

Balance at March 31, 2019
Cumulative eﬀects of changes inaccounting policies

152,683¥ 30,000¥ 100,061¥ 407,943¥ (30,422)¥ 507,582¥ 33,261¥ 3¥ (1,751)¥ (11,785)¥ 19,728¥ 33,320¥ 560,630

Restated balance

152,683

30,000100,061

407,442(30,422)507,081

33,2613(1,751)(11,785)

19,72833,320560,129

Total Changes during period

(500)

(500)

Our Activities for Sustainability(500)

Our Value Creation Story

Dividends of surplus
Profit (loss) attributable to owners ofparentChanges during period:(21,032)

Dividends of surplus
Profit (loss) attributable to owners ofparent67,313(21,032)

67,31367,313

(33)

(33)

(33)

168

313

313

0

0

0

38

38

38

Purchase of treasury shares

145(6,292)50(1,528)(2,892)(10,661)

1,499(9,162)

Total Changes during period

—

—

184

46,280134

46,599(6,292)50(1,528)(2,892)(10,661)

1,499

37,437

Balance at March 31, 2020

152,683¥ 30,000¥ 100,245¥ 453,723¥ (30,288)¥ 553,681¥ 26,968¥ 53¥ (3,279)¥ (14,677)¥ 9,066¥ 34,819¥ 597,567

Non-controllinginterests

Total net assets

Thousands of U.S. dollars

Financial and Non-Financial Section

Disposal of treasury shares
Purchase of shares of consolidated
subsidiaries
Change in ownership interest ofparent due to transactions with
non-controlling interests
Net changes in items other thanshareholders’ equity(21,032)

Thousands of U.S. dollars

Shareholders’ equity

Accumulated other comprehensive income

Number ofcommon shares(Thousands)

Share capital

Capital surplus

Retained earnings

Treasury shares

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

152,683$ 275,659$ 919,432$ 3,748,448$ (279,543)$ 4,663,996

Restated balance

152,683

275,659

919,432

3,743,846(279,543)

4,659,394(4,601)

Valuation diﬀerence
on available-for-sale Deferred gains or
securities
losses on hedges

Foreign currencytranslation
adjustment

Remeasurements Total accumulatedof defined benefit other comprehensive
incomeplans$ 305,624$ 30$ (16,090)$ (108,290)$ 181,273$ 306,165$ 5,151,436

305,62430(16,090)(108,290)

181,273

306,165

5,146,834(4,601)(4,601)(193,260)

Dividends of surplus
Profit (loss) attributable to owners ofparent618,5160

82(193,260)

618,516

618,516

(310)

(310)

(310)

1,547

2,882

2,882

1

1

1

356

356

356

Purchase of treasury shares

1,334

Disposal of treasury shares
Purchase of shares of consolidated
subsidiaries
Change in ownership interest ofparent due to transactions with
non-controlling interests
Net changes in items other thanshareholders’ equity(193,260)(57,816)464(14,041)(26,575)(97,968)

13,781(84,187)

Total Changes during period

—

—

1,692

425,256

1,237

428,185(57,816)464(14,041)(26,575)(97,968)

13,781

343,998

Balance at March 31, 2020

152,683$ 275,659$ 921,124$ 4,169,102$ (278,306)$ 5,087,580$ 247,807$ 495$ (30,131)$ (134,866)$ 83,305$ 319,947$ 5,490,832

Financial and Non-Financial Section

Meiji Holdings Co., Ltd.｜Integrated Report 2020

Corporate Information

Changes during period:

83

Contents

Consolidated Financial Statements

Introduction

Consolidated Statement of Cash Flows
Meiji Holdings Co., Ltd. / For the year ended March 31, 2020
Thousands of
U.S. dollars

Millions of yen

2020

2020

2019

Cash flows from operating activities

Thousands of
U.S. dollars

Millions of yen

2020

2019

2020

¥ (4,487)¥ (8,886)$ (41,231)

Cash flows from financing activities¥ 94,586$ 898,169

Depreciation

46,18543,033424,382

Proceeds from long-term borrowings

358

19,782

3,291

Impairment loss

2,390

12,242

21,962

Repayments of long-term borrowings(4,851)(13,904)(44,575)

48
—

1,641

442

Decrease (increase) in treasury shares(6,584)—

Dividends paid

2,546

1,981

23,401

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

150

473

1,383

1,061

(83)

9,750

298

654

2,743

2,915

3,987

26,790Interest and dividend income(1,556)(1,416)(14,304)

717

778

6,588

793

390

7,288

(1,006)(6,171)(9,249)

(878)

(138)

(8,071)
190,217

Interest expenses
Share of loss (profit) of entities accounted for using equity
methodLoss (gain) on sales of property, plant and equipment
Loss (gain) on sales of investment securities
Decrease (increase) in trade receivables

20,701(773)

Decrease (increase) in inventories(8,685)(4,307)(79,805)

Increase (decrease) in trade payables(11,323)

2,142(104,051)

Others, net(2,554)

1,522(23,475)

Subtotal

149,550

143,959

1,374,162

Interest and dividends received

1,958

17,991

Proceeds from insurance income

1,432

1,426
—

Interest paid

(726)

(782)

(6,678)

Income taxes paid

(38,110)(32,502)(350,182)

Net cash provided by (used in) operating activities

114,103112,100

1,048,453

Purchase of property, plant and equipment(68,217)(67,246)(626,830)

Purchase of intangible assets
Proceeds from sales of property, plant and equipment andintangible assets(2,912)(3,996)(26,757)

2,161

9,850

19,857Purchase of investment securities(2,473)(4,153)(22,725)

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

1,004

322

9,230

—

(33,879)

—

(656)

—

(6,028)

268

263

2,465

(20,987)(19,891)(192,842)

Dividends paid to non-controlling interests
Payments from changes in ownership interests in subsidiaries
that do not result in change in scope of consolidation

(154)

(499)

(1,418)—(7)—

Proceeds from share issuance to non-controlling shareholders

—
(434)

10,200(1,036)—(3,990)(30,287)(13,980)(278,302)

(375)

(393)

(3,447)

Others, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents

12,628(2,475)116,042

Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting from inclusion ofsubsidiaries in consolidation

24,481

26,913

224,953—

43—

Cash and cash equivalents at end of period (Note 18)¥ 37,110¥ 24,481$ 340,995

Our Activities for Sustainability

Increase (decrease) in retirement benefit liability

Net increase (decrease) in short-term borrowings

Our Value Creation Story¥ 97,747

Profit (loss) before income taxes

See accompanying notes to consolidated financial statements.

13,158Financial and Non-Financial Section

Cash flows from investing activities

Net cash provided by (used in) investing activities

84

Financial and Non-Financial Section

39

—

361

243

(1,098)2,233¥ (70,811)¥ (100,202)$ (650,660)

Corporate Information

Others, net

Meiji Holdings Co., Ltd.｜Integrated Report 202085

Contents

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

g) Intangible Assets(excluding leased assets)b) Translation of Foreign Currencyh) Leased Assets

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 diﬀerences arising from the translation
are included in foreign currency translation adjustment andnon-controlling interests in the net assets section of theconsolidated balance sheet.

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

d) Derivatives

The straight-line method is primarily used for depreciation.

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

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

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

Derivatives are valued by the market value method.

e) Inventoriesa) Consolidation Policy

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

Financial and Non-Financial Sectionf) Property, Plant and Equipment(excluding leased 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 years

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

n) Provision for Retirement Benefits for Directors
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.

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

q) Derivative Financial Instruments(1) Method of hedge accounting
The deferral hedge accounting method is applied underwhich the unrealized gain or loss is deferred as a componentof net assets when certain criteria are met.

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

Meiji Holdings Co., Ltd.｜Integrated Report 2020

Corporate Information

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
have been included using financial information at that datewith appropriate adjustment where necessary. Investments

86m) Provision for Sales Rebates

2 Significant Accounting Policiesp) Cash and Cash Equivalents

Financial and Non-Financial Section

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

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

Our Activities for Sustainabilityc) Investment Securities

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.

o) Retirement Benefits

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 ¥108.83 to US$1, the amount prevailing on March
31, 2020. 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.

in six aﬃliates are accounted for using equity method. The
diﬀerence between the investment amount and the net assetsof acquired consolidated subsidiaries and aﬃliates is allocatedto identifiable assets based on fair value at the date ofacquisition. The unallocated portion is recognized as goodwill
and amortized over a period of 5 years on a straight-line basis.

Introduction

1 Basis of Presenting Consolidated
Financial Statements

87

Contents

Notes to Consolidated Financial Statements

Some overseas consolidated subsidiaries have adopted
IFRS 16 “Leases” from the current consolidated fiscal year.
The impact on the consolidated financial statements fromadopting this accounting standard is immaterial.

4 Change in Method of Presentation(Consolidated Statement of Income)88

Financial and Non-Financial Section

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.
Also, when there is any practical expedient that should beconsidered in the practices that has previously taken place inJapan, an alternative guidance will be added insofar as not to
impair comparability.

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

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

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

c) Impact from Applying New AccountingStandards, etc.

c) Impact from Applying New AccountingStandards, etc.
The impact on the consolidated financial statementsfrom adopting the “Accounting Standard for Fair Value
Measurement,” etc. has not been determined.

Paragraph 125 of International Accounting Standard 1“Presentation of Financial Statements” (IAS 1), which was
published by the International Accounting Standards
Board (IASB) in 2003, requires that “sources of estimation of
uncertainty” be disclosed. Following a request to also consider
disclosing such sources in notes, as those information are
considered highly useful to the users of financial statements,
the Accounting Standards Board of Japan developed
and published the Accounting Standard for Disclosure of
Accounting Estimates.
The basic policy behind the ASBJ developing the
Accounting Standard for Disclosure of Accounting Estimates
was not to expand individual notes, and only provides generalprinciple (purpose of disclosure), for the companies todetermine specific details to disclose in light of the purposeof this disclosure. In developing the standard, reference wasgiven to the provisions of paragraph 125 of IAS 1.

b) Effective Date
The Company plans to adopt the accounting standard fromthe end of the fiscal year ending March 31, 2021.
• “Accounting Standard for Accounting Policy Disclosures,
Accounting Changes and Error Corrections”(ASBJ Statement No. 24, March 31, 2020).

a) Overview
Following the recommendation that consideration be given
to enhance notes concerning “Accounting Principles andProcedures Adopted if Relevant Accounting Standards, etc.
are not prescribed,” the ASBJ made necessary revisions, andpublished the revised Accounting Standard for Accounting
Policy Disclosures, Accounting Changes and Corrections oferror.
In addition, when enhancing notes concerning “Accounting
Principles and Procedures Adopted if Relevant AccountingStandards, etc. are prescribed,” the provisions of notes toJapanese GAAP (Note 1-2) are to be continuously applied so
as not to aﬀect past practice if relevant accounting standards,
etc. are clearly established.

Corporate Information“Gain on sales of investment securities,” was included in“Others” under “Extraordinary income” for the consolidated
fiscal year ended March 31, 2019, which has been disclosed
independently for the consolidated financial statements forthe current fiscal year as the balance became (quantitatively)
significant. Amounts disclosed for the consolidated fiscal year
ended March 31, 2019 have been reclassified to reflect thischange in method of presentation.

a) Overviewa) Overviewa) Overview

Financial and Non-Financial Section

3 Changes in Accounting Policies• “Accounting Standard for Revenue Recognition”(ASBJ Statement No. 29, March 31, 2020).
• “Implementation Guidance on Accounting Standard for
Revenue Recognition”(ASBJ Guidance No. 30, March 31, 2020).
• “Implementation Guidance on Disclosures about Fair Value of
Financial Instruments”(ASBJ Guidance No. 19, March 31, 2020).

• “Accounting Standard for Disclosure of Accounting Estimates”(ASBJ Statement No. 31, March 31, 2020).

Our Activities for Sustainability

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

5 Accounting Standards, etc.,
Not Yet Adopted• “Accounting Standard for Fair Value Measurement”(ASBJ Statement No. 30, July 4, 2019).
• “Accounting Standard for Measurement of Inventories”(ASBJ Statement No. 9, July 4, 2019).
• “Accounting Standard for Financial Instruments”(ASBJ Statement No. 10, July 4, 2019).
• “Implementation Guidance on Accounting Standard for Fair
Value Measurement”(ASBJ Guidance No. 31, July 4, 2019).
• “Implementation Guidance on Disclosures about Fair Value of
Financial Instruments”(ASBJ Guidance No. 19, March 31, 2020).

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

As a result, ¥338 million, which was presented in “Others”
under “Extraordinary income” in the Consolidated Statementof Income for the consolidated fiscal year ended March 31,
2019, has been reclassified as ¥102 million in “Gain on sales ofinvestment securities” and ¥235 million in “Others.”

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.

b) Effective Date
The Company plans to adopt the accounting standard fromthe end of the fiscal year ending March 31, 2021.

At the moment, impact from adopting “Accounting Standard
for Revenue Recognition,” etc., to the consolidated financial
statements is being assessed.

Meiji Holdings Co., Ltd.｜Integrated Report 202089

Contents

Notes to Consolidated Financial Statements

1) Finance lease transactions (lessee side)

7 Notes Regarding Financial Instruments
1) Overview of financial instruments(1) The carrying value on the consolidated balance sheet, fair value and their diﬀerence as of March 31, 2020 and 2019, 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, 2020

(1) Cash and deposits(2) Notes and accounts
receivable-trade(3) Securities:
Available-for-sale securities(4) Investment securities:
Available-for-sale securities

Millions of yen

Thousands of U.S. dollars

Carrying value

Fair value

Diﬀerence¥ 37,446¥ 37,446¥ —179,931

179,931

1,343

1,343

Carrying value

Fair value

Diﬀerence

344,082$ 344,082$—

1,653,329

1,653,329——

12,341

12,341—$—64,21464,214—590,043590,043—

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

282,935—

2,599,796

2,599,796—

112,317112,317—

1,032,046

1,032,046—(6) Short-term borrowings

22,911

22,911—

210,522

210,522—(7) Accrued expenses

45,45745,457—

417,691

417,691—(8) Bonds payable

20,00019,984(16)

183,772

183,625(147)(9) Long-term borrowings

63,853

63,978

124

586,729

587,872

1,142

264,539

264,648108

2,430,763

2,431,758

995

45

45

—

418

418

—

Total liabilities
Derivative transactions *(10) Derivative transactions forwhich hedge accounting is
not applied(11) Derivative transactions forwhich hedge accounting isappliedTotal derivative transactions

78
¥

124

¥

78

—

124

¥ —

724
$

1,142

724
$

1,142

—
$

—

* Net receivables and payables arising as a result of derivative transactions are stated in net amounts.
(Note 1) Method of calculating the fair value of financial instruments and matters related to securities(1) Cash and deposits, (2) Notes and accounts receivable-trade and (3) Securities
These are valued at the carrying values as they are to be settled within a short period and their fair values are almost equal to the carrying values.
(4) Investment securities
Equity securities are valued at the price quoted in the stock exchange.
Debt securities are calculated based on the present value, which is the total of the principal and interest discounted by an interest rate that takes into
account the credit risk.
In addition, refer to the “Securities” notes for matters related to securities based on their holding purpose.
(5) Notes and accounts payable-trade, (6) Short-term borrowings and (7) Accrued expenses
These are valued at the carrying values as they are to be settled within a short period and their fair values are almost equal to the carrying values.
(8) Bonds payable
The fair value of bonds payable is calculated based on the market price.
(9) Long-term borrowings
Long-term borrowings with variable interest rates reflect the market interest rates over short periods. As a result, since the fair value can come close
to the same as the carrying values, that fair value is based on the corresponding carrying value.
Long-term borrowings 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 borrowings is included in these long-term borrowings.
(10) Derivative transactions for which hedge accounting is not applied, (11) Derivative transactions for which hedge accounting is appliedSee 25. Derivative transactions.
(Note 2) Convertible bonds (carrying value on the consolidated balance sheet: ¥1,096 million ($10,076 thousand) and unlisted Stock (carrying valueon the consolidated balance sheet: ¥20,384 million ($187,302 thousand)) are not included in “Assets: (3) Securities and (4) Investment securities” as theirmarket prices are not available and it is extremely diﬃcult to determine the fair value.

Meiji Holdings Co., Ltd.｜Integrated Report 2020

Corporate Information

Financial and Non-Financial Section2) Matters related to the fair value, etc., of financial instruments

Financial and Non-Financial Section

90

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.

Our Activities for Sustainability(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-trade that are 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-trade that are payables arealmost all payable within one year. Also, some of these areforeign currency-denominated, resulting from the importof raw materials; these are exposed to currency fluctuation
risk, but some consolidated subsidiaries use forward foreignexchange contracts, etc., to hedge such risk.
Loans, commercial paper and bonds are mainly used toraise funds for capital investment and working capital. Theirredemption dates are at maximum 8 years after the balance
sheet date. Some of these have forward foreign exchange
contracts and variable interest rates and currency, thus they
are exposed to interest rate and currency fluctuation risk.
However, the Group uses derivative transactions (interest rateand currency swap transactions) to hedge such risk.

into the calculation of such prices, therefore, diﬀerent
assumptions could result in diﬀerent prices.

(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

Our Value Creation Story

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

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 on
borrowings.
For more information about hedge instruments andhedge items, hedge policy or the method of evaluating theeﬀectiveness of the hedge for hedge accounting, refer toaforementioned “q) Derivative Financial Instruments” under
section “2. Significant Accounting Policies”.
(3) Risk management for financial instruments[1] Management of credit risk (risk such as default of contract
by customers)
In accordance with receivables management rules, etc.,
each management department in each business unit of theGroup periodically monitors the status of major customers,
and due dates and balances are managed for each customer.
The Group makes eﬀorts for early detection and reductionof collection concerns due to deterioration in financial
conditions, etc., of customers.
Derivative transactions are only executed with highly rated
financial institutions to reduce counterparty risk.
The maximum credit risk for the consolidated closing dateof the current fiscal year is expressed by the values in thebalance sheet for financial assets exposed to credit risk.
[2] Management of market risk (the risk of fluctuation in
exchange rates, interest rates, etc.)
For foreign currency-denominated trade receivables andpayables, some consolidated subsidiaries use forward 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.
For investment securities, the Company regularly reevaluates 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.

Introduction

6 Notes Regarding Lease Transactions

91

Contents

Notes to Consolidated Financial Statements(1) Cash and deposits(2) Notes and accounts
receivable-trade(3) Investment securities:
Available-for-sale securities(3) Scheduled repayment of bonds payable, borrowings and other interest-bearing debt after the balance sheet dateMillions of yen
Carrying value

Fair value¥ 25,356¥ 25,356

202,193Diﬀerence
As of March 31, 2020

¥ —202,193—

73,002—

Short-term borrowings

300,551

300,551—

Bonds payable

125,479

125,479—(5) Short-term borrowings

27,771

27,771—(6) Accrued expenses

46,286

46,286—(7) Bonds payable

20,00020,07878

Total liabilities

68,61368,724110¥ 288,150¥ 288,339¥ 188

Derivative transactions *(10) Derivative transactions forwhich hedge accounting is
not applied(11) Derivative transactions forwhich hedge accounting isappliedTotal derivative transactions

Long-term borrowings
Total

¥

—

5

5

—

141

—

141

¥

¥ 22,911¥——

Long-term borrowings
Total

More than two
years up to
three years

¥

—

—

More than three
years up to four
years

¥

—

10,000More than four
years up to five
years

¥

—

More than five
years

—

¥

—

10,000

—

7,963

4,367

14,295

4,059

21,812

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

More than one
year up to two
years

More than two
years up to
three years

More than four
years up to fiveyears

More than five
years

Thousands of U.S. dollars
Withinone year

Bonds payable
136

Withinone year

As of March 31, 2020

Short-term borrowings
136

Millions of yen
More than one
year up to two
years

Our Value Creation Story

73,002

Total assets(4) Notes and accounts
payable-trade(8) Long-term borrowings

Introduction

As of March 31, 2019

$ 210,522

$

—

$

—

More than three
years up to four
years

$

—

$

—

$

—

—

—

91,886—91,886—73,17240,134

131,352

37,297200,430

104,341$ 283,695$ 40,134$ 223,238$ 37,297$ 292,317$ 104,341(Note) Debt for the 6th series of unsecured straight bonds was transferred in accordance with a bond trust-type debt assumption agreement.
Since the Company’s bond redemption obligations to bond holders will remain until the bonds have been redeemed, they are noted on the consolidatedbalance sheet as a contingent liability.

Our Activities for Sustainability* Net receivables and payables arising as a result of derivative transactions are stated in net amounts.
(Note) Unlisted Stock (carrying value on the consolidated balance sheet: ¥20,502 million) are
not included in “(3) Investment securities” as their market prices are not available and it isextremely diﬃcult to determine the fair value.

As of March 31, 2019
Withinone year(2) Scheduled redemption of monetary claims and securities with maturity dates after the balance sheet date
As of March 31, 2020
Withinone yearMore than one
year up to five
years

Total

More than five
years up to ten
years

More than ten
years

—

—

—

179,931———

Securities
1,343

—

—

—

¥ 218,721———

Thousands of U.S. dollars
Withinone yearMore than one
year up to fiveyears

More than five
years up to ten
years

More than ten
years

Cash and deposits$ 344,082———

Notes and accounts receivable-trade

1,653,329———

More than one
year up to two
years

More than two
years up to
three years¥¥¥ 27,771——

More than three
years up to four
years

¥

—

More than four
years up to five
years

¥

—

More than five
years

¥

—

—

—

—

10,000

—

5,825

7,973

4,376

14,2994,061

10,00032,077¥ 33,597¥ 7,973¥ 4,376¥ 24,299¥ 4,061¥ 42,077

Financial and Non-Financial Section¥ 37,446

As of March 31, 2020

Bonds payable
Long-term borrowings

Cash and deposits

Negotiable deposits

Short-term borrowings

Millions of yen

Notes and accounts receivable-trade

Total

Thousands of U.S. dollars

8 Notes regarding Investment Securities
Information regarding securities held by the Company and its consolidated subsidiaries is as follows:

1) Held-to-maturity securities
As of March 31, 2020
None
As of March 31, 2019
None

Corporate Information

Securities
Negotiable deposits
Total

12,341———$ 2,009,753

—

—

—

More than five
years up to ten
years

More than ten
years

As of March 31, 2019

Millions of yen
Withinone year

92

More than one
year up to fiveyears

Cash and deposits¥ 25,356———

Notes and accounts receivable-trade202,193

—

—

—

Total

¥ 227,549———

Financial and Non-Financial Section

Meiji Holdings Co., Ltd.｜Integrated Report 202093

Contents

Notes to Consolidated Financial Statements

As of March 31, 2020

Millions of yen
Carrying value

Acquisition costThousands of U.S. dollars
Unrealized
gain (loss)

Carrying value

Unrealized
gain (loss)

Acquisition cost

As of March 31, 2020 and 2019, short-term borrowings and long-term borrowings are as follows:

1) Short-term borrowings

Securities whose carrying value
exceeds their acquisition cost:
StocksSecurities whose acquisition costexceeds their carrying value:¥ 60,033¥ 20,841¥ 39,191$ 551,626$ 191,506

4,779

(599)

38,41643,920(5,504)

Others

1,343

1,343

—

12,341

12,341

—

5,523

6,122

(599)

50,75756,261(5,504)¥ 65,557¥ 26,964¥ 38,592$ 602,384$ 247,768$ 354,615

2020

1.07%

¥ 22,911¥ 27,771$ 210,522

Current portion of long-term borrowings

0.53%

7,963

5,825

73,172¥ 30,874¥ 33,597$ 283,695

Total2) Long-term borrowings

Carrying value

Acquisition cost

Unrealized
gain (loss)

Securities whose carrying value
exceeds their acquisition cost:2020¥¥ 72,416¥ 24,920

711

(125)

Total

¥ 73,002¥ 25,632¥ 47,370—

10,00091,886

10,00010,00091,88663,853

68,613586,729

83,85388,613

770,502(7,963)(5,825)73,172¥ 75,890¥ 82,788$ 697,329

As of March 31, 2020, the aggregate annual maturities of long-term borrowings are as follows:(Note) The unlisted stocks (carrying value on the consolidated balance sheet: ¥2,264 million) that areclassified as available-for-sale securities are not included as available-for-sale securities in thetable above as their market prices are not available and it is extremely diﬃcult to determine
the fair value.

Millions of yen

Thousands of
U.S. dollars

2020

2020

Fiscal year ended March 31

Thousands of
U.S. dollars

Millions of yen

2020

2020

2019

¥ 1,010¥ 314$ 9,283

Total gains on sales

886

110

8,145

Total losses on sales

8

0

74

More than one year up to two years¥ 4,367$ 40,134

More than two years up to three years

24,295223,238

More than three years up to four years

4,059

37,297More than four years up to five years

31,812

292,317More than five years
Total

11,355¥ 75,890

104,341$ 697,329

Financial and Non-Financial Section3) Available-for-sale securities sold during the fiscal years ended March 31, 2020 and 2019

Sales amounts$

10,000

Total
586

—

Unsecured bonds due 2023, 0.12%
Borrowings from domestic banks, insurance companies,
government agencies and others
Current portion of long-term borrowings

Stocks¥Unsecured bonds due 2024, 0.22%

Subtotal¥ 47,495

2020

2019
—

Our Activities for Sustainability

StocksSecurities whose acquisition costexceeds their carrying value:

Thousands of
U.S. dollars

Millions of yen

Unsecured bonds due 2021, 0.52% (Note 14, 6th series)
Millions of yen

2020

2019

Short-term borrowings(Note) The unlisted stocks (carrying value on the consolidated balance sheet: ¥2,144 million ($19,705 thousand)) that are classified as available-for-sale securities,
as well as convertible bonds (carrying value on the consolidated balance sheet: ¥1,096 million ($10,076 thousand), are not included as available-for-salesecurities in the table above as their market prices are not available and it is extremely diﬃcult to determine their fair values.
As of March 31, 2019

Thousands of
U.S. dollars

Millions of yen

Our Value Creation Story

4,180

Subtotal

Weighted-averageinterest rate

$ 360,120

Stocks

Total

Introduction

9 Short-term Borrowings and Long-term Borrowings

2) Available-for-sale securities with market prices

10 Pledged Assets and Secured Liabilities
A summary of assets pledged as collateral for liabilities as of March 31, 2020 and 2019, is as follows:4) Securities that were subject to impairment during the fiscal years ended March 31, 2020 and 2019

Thousands of
U.S. dollars

Millions of yen

2020

2020

2019

Cash and deposits¥ 146

Buildings and structures

1,427

Machinery, equipment and vehicles¥

146$ 1,347

19,38913,1191,222

857

11,235

Land

—

2,910

—

Others

—

9,572

—

Total

¥ 2,797¥ 32,877$ 25,701

Corporate Information

Impairment loss recorded in the fiscal year ended March 31, 2020, was ¥150 million (available-for-sale securities: ¥150 million ($1,383
thousand)).
Impairment loss recorded in the fiscal year ended March 31, 2019, was ¥473 million (available-for-sale securities: ¥5 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 amountnecessary in consideration of the potential for recovery and other factors.

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

94

Financial and Non-Financial Section

Meiji Holdings Co., Ltd.｜Integrated Report 202095

Contents

Notes to Consolidated Financial Statements

Thousands of
U.S. dollars

Millions of yen

2020
Short-term borrowings
Long-term borrowings
Total

Introduction* Schedule of carryforward periods for tax losses carried forward and corresponding deferred tax assets as of March 31, 2020.

A summary of secured liabilities as of March 31, 2020 and 2019, is as follows:¥—

Millions of yen

2020

2019
¥ 1,351$

Withinone year—

17,201

18,784

158,056¥ 17,201¥ 20,135$ 158,056

More than one
year up to two
years

More than two
years up to
three years

More than
three years up
to four years

More than four
years up to fiveyears

More than five
years

Total

Losses carried forward (a)

¥198

¥170

¥123

¥112

¥89

¥3,099¥3,793

Valuation allowance

184

123

82

82

2,574

3,131

Deferred tax assets

13

84
85

0

30

6

525

662

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

Thousands of U.S. dollars

1) The significant components of deferred tax assets and liabilities as of March 31, 2020 and 2019,are as follows:

2020

Withinone yearThousands of
U.S. dollars

Millions of yen

2020

2019

Deferred tax assets:¥ 18,663$ 184,047

881

1,361

8,095

Accrued expenses

2,721

2,892

25,010Investment securities

1,020

1,287

9,375

Provision for bonuses

3,690

3,624

33,912

Depreciation

5,104

4,269

46,902

Impairment loss

1,400

2,004

12,869Unrealized gain

1,268

888

11,653Losses carried forward *

3,793

3,420

34,861

Accrued enterprise tax and others

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 fiveyears

$1,570$1,136$1,037$818$28,478$34,861

Total

Losses carried forward (a)$1,820

Valuation allowance

1,697

780

1,133

755

755

23,654

28,776

Deferred tax assets

123

789

3

281

62

4,824

6,084

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

2) An analysis of the significant differences between the statutory tax rate and the Company’s effective tax rate
after the adoption of tax-effect accounting for the fiscal years ended March 31, 2020 and 2019, is as follows:

Statutory tax rate

2020
30.6%

2019
30.6%

8,296

8,021

76,232Entertainment and other permanently non-deductible expenses

0.7

0.8

48,20746,434442,958

Dividend and other permanently non-taxable income

(0.1)

(0.1)

Valuation allowance for losses carried forward *(3,131)(2,604)(28,777)

Per capital inhabitant’s tax

0.4

0.4

Valuation allowance for deductible temporary differences(3,948)(4,592)(36,278)

Tax credit for experimentation and research expenses

(1.9)

(1.4)

OthersSubtotal deferred tax assets(7,079)(7,197)(65,055)

Increase (decrease) in valuation allowance

0.7

1.2

Total deferred tax assets

41,12739,237

377,903

Amortization of goodwill, etc.

0.0

1.4

Consolidation adjustments for loss (gain) on sales of shares of subsidiaries and affiliates

(2.2)

—

Advanced depreciation reserve for fixed assets(7,662)(7,521)(70,407)

Valuation difference on available-for-sale securities(11,569)(14,018)(106,307)

Retirement benefit asset(5,439)(5,830)(49,984)

Valuation difference due to purchase of investments in subsidiaries(2,669)(2,824)(24,531)

Adjustment account for tax liabilities(3,234)(4,196)(29,719)(1,088)(21,429)(32,908)(35,478)(302,380)

Net deferred tax assets (liabilities)¥ 8,219¥ 3,758$ 75,523

OthersFinancial and Non-Financial Section

0.4

(0.2)

Effective tax rate

28.6%

32.7%

12 Retirement and Severance Benefits
Outline of the retirement benefit plans adopted by the GroupThe Group adopts employees’ retirement benefit plans, consisting of lump-sum severance payment plans based on retirement
benefits rules, defined benefit plans, defined contribution pension plans and employees’ pension funds. There are also cases in which
additional retirement benefits are paid when employees leave the Group before retirement age.
Some consolidated subsidiaries have established retirement benefit trusts, and some consolidated subsidiaries have joined the
Smaller Enterprise Retirement Allowance Mutual Aid system.

Meiji Holdings Co., Ltd.｜Integrated Report 2020

Corporate Information(2,332)

Total deferred tax liabilities

OthersFinancial and Non-Financial Section

Subtotal valuation allowance

Deferred tax liabilities:

96

More than one
year up to two
years

Our Activities for Sustainability¥ 20,029

Retirement benefit liability

Our Value Creation Story

11 Deferred Tax Assets and Liabilities

97

Contents

Notes to Consolidated Financial Statements

4) Components of retirement benefit cost

2020

2020

2019

2019

2020

Service cost

¥ 6,138¥ 5,794¥ 140,519¥ 137,171$ 1,291,185

Interest cost

767

765

7,049

(2,395)(2,479)(22,008)

2,194

3,478

20,161

39

23

359

(9)
¥ 6,733(7)¥ 7,575(87)$ 61,874

Service cost

6,138

5,794

56,400Interest cost

767

765

7,049

Amortization of actuarial gains or losses

Actuarial gains or losses

1,530(1,629)14,062

Amortization of prior service cost

Retirement benefits paid

(7,695)(7,666)(70,711)

Prior service costs incurred during fiscal year

(1,195)379(10,982)

OthersRetirement benefit cost related to defined benefit plans

Increase from newly consolidated subsidiary

—

5,715

—

Decrease due to exclusion from consolidation

(897)

—

(8,249)

(14)

(11)

(135)

¥ 139,152¥ 140,519$ 1,278,618

Others(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.

$ 56,400

Our Value Creation Story

2020

Expected return on plan assets

Ending balance of retirement benefit obligations

Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

Millions of yen

Beginning balance of retirement benefit obligations

Introduction

Defined benefit plans
1) Reconciliation of the beginning and ending balances of retirement benefit obligations(Note) Includes cost calculated using the simplified method (excluding cost arising from the diﬀerences at transition of accounting standards) and excludes
employees’ contributions to the corporate pensions funds.

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

2) Reconciliation of the beginning and ending balances of plan assets

2020

2019

2020

¥ 106,963¥ 107,618$ 982,847

Expected return on plan assets

2,395

2,479

22,008Actuarial gains or losses(6,166)(4,631)(56,659)

1,686

1,589

15,494Retirement benefits paid

(5,193)(5,681)(47,718)

Increase from newly consolidated subsidiary

—

5,619

—

Decrease due to exclusion from consolidation

(411)

—

(3,779)Others

(31)

(30)

(292)

¥ 99,242¥ 106,963$ 911,901

Ending balance of plan assets¥ (5,425)¥ 477$ (49,851)

Amortization of prior service cost
Total

1,262
¥ (4,162)

(364)
¥ 112

11,599$ (38,251)

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:

2020

Thousands of
U.S. dollars

Millions of yen

Retirement benefit obligations of funded plans
Plan assets$ 201,461

Unrecognized prior service cost
Total

(779)
¥ 21,145

483¥ 16,982(7,161)$ 194,300

2020

2019

7) Plan Assets¥ 133,158¥ 134,168$ 1,223,542(1) Major categories of plan assets as a percentage of total plan assets are as follows:(99,242)(106,963)(911,901)

33,91527,205

311,641
Bonds

39%

35%

Stocks15

22

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

39,90933,556

366,717

Alternatives

37

25

Retirement benefit liability

55,41053,830509,149

Cash and deposits

43Retirement benefit asset
Net amount of liability and asset recorded on the consolidatedbalance sheet(15,500)(20,274)

142,432

Others¥ 39,909¥ 33,556$ 366,717

Total

5

15

100%

100%

Corporate Information¥ 16,499

2020

55,0752020¥ 21,925

2019

6,350

2019

Unrecognized actuarial gains or losses

2020

5,993

Thousands of
U.S. dollars

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

3) Reconciliation of the ending balances of retirement benefit obligations and plan assets with the net defined
benefit liability and net defined benefit asset recorded on the consolidated balance sheet

2020

2019

Amortization of actuarial gains or losses

Financial and Non-Financial Section

Contributions from employer

2020

Our Activities for Sustainability

Thousands of
U.S. dollars

Millions of yen

Beginning balance of plan assets

Thousands of
U.S. dollars

Millions of yen(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 9% in the current consolidated accounting period and 11% in the previous consolidated accounting period.

98

Financial and Non-Financial Section

Meiji Holdings Co., Ltd.｜Integrated Report 202099

Contents

Notes to Consolidated Financial Statements

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

8) Actuarial assumptions

Thousands of
U.S. dollars

Millions of yen

2020

Actuarial assumptions are as follows:
4th Series of Unsecured Straight Bond

2019

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%

6th Series of Unsecured Straight Bond
Total

2020

2019
—

¥ 20,000

15,00015,000$137,829—¥ 15,000¥ 35,000$ 137,829

2) Notes receivable discounted and endorsed
Defined contribution plans

Thousands of U.S.
dollars

Millions of yen

The amount of required contribution to defined contribution plans for the consolidated subsidiaries is ¥1,226 million ($11,270
thousand) in the current consolidated accounting period and ¥1,230 million in the previous consolidated accounting period.

2020

13 Unconsolidated Subsidiaries and Affiliates

2020

2019
¥ 9
52

Notes receivable-trade discounted
Notes receivable-trade endorsed

¥23
34

$ 85
483

Thousands of
U.S. dollars

Millions of yen

2020
Investment securities (stock)

2020

2019

¥18,239

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 previous consolidated fiscal year.

¥18,238

Thousands of
U.S. dollars

Millions of yen$167,597

2020

2019

2020

Notes receivable-trade

—

¥ 277

—

Notes payable-trade

—

3,138

—

14 Contingent Liabilities
16 Commitment Line Agreements

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

2020

2020

Sendai Feed Co., Ltd.

64

76

590

Makiba Feed Co., Ltd.

1,158

—

10,642

Meiji India Pvt. Ltd

24

—

229

DM Bio Limited

874

—

8,032

47
¥ 2,168

68
¥ 200

432
$ 19,927

100 Financial and Non-Financial Section$—

Thousands of
U.S. dollars

Millions of yen

2020
Maximum loan amount
Used portion of the commitment line
Balance¥20,000—¥20,000

2019¥30,000—¥30,000

2020$183,772—$183,772

Corporate Information¥ 55

Employees
Total

¥

2019
—

PT MEIJI FOOD INDONESIAThe 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, 2020 and 2019, is as follows:

Financial and Non-Financial Section

As of March 31, 2020 and 2019, contingent liabilities are as follows:

Our Activities for Sustainability

15 Notes receivable/payable due on the consolidated balance sheet date

As of March 31, 2020 and 2019, investment securities of unconsolidated subsidiaries and aﬃliates is as follows:

Our Value Creation Story

2020

¥

Introduction(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.

Meiji Holdings Co., Ltd.｜Integrated Report 2020 101

Contents

Notes to Consolidated Financial Statements(2) Dividends with the cut-oﬀ date in the fiscal year ended March 31, 2020, and with the eﬀective date in the fiscal year ending
March 31, 2021

1) Matters related to types and total numbers of shares issued and treasury stock

2020
2020

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

Types of shares

Decrease(Thousands)

Number of shares
as of March 31, 2020
(Thousands)

152,683——

152,683

7,650

4

41

7,613

(Note 1) The treasury common stock increased by 4 thousand shares due to an increase in the purchase of shares that are less than one unit.
(Note 2) The treasury common stock decreased by 41 thousand shares due to the disposal of 40 thousand treasury stock used for restricted stock compensationand decreased by 0 thousand shares due to the sales of shares that were less than one unit.

Resolution

Board of Directors’ meeting
held on May 22, 2020

Commonstock

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

Source ofdividends¥11,605

Retainedearnings$106,639

Dividends per share
Yen

U.S. dollars

Cut-oﬀ dateEﬀective date

$0.73

March 31,2020

June 10,2020

Yen

Cut-oﬀ dateEﬀective date

¥75.00March 31,2019

June 6,2019¥80.002019
Total amount of dividends
Resolution

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

Commonstock

Dividends per share

Millions of yen

Source ofdividends¥10,877

Retainedearnings

2019
Number of shares
as of March 31, 2018
(Thousands)

Types of shares

Decrease(Thousands)

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

152,683——

152,683

7,680

5

36

7,650

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.

(Note 1) The increase in treasury common stock of 5 thousand shares was attributable to the purchase of 5 thousand 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 treasury stock used for restricted stock compensation
and a decrease in sales of 0 thousand shares that are less than one unit.

18 Supplemental Cash Flow Information
2) Matters related to dividends(1) The following table represents a reconciliation of cash and cash equivalents as of March 31, 2020 and 2019:(1) Cash dividends paid
2020

Types of shares

Commonstock
Commonstock

Dividends per share
U.S.
Yen
dollars¥10,877$99,949¥75.00$0.68

10,15593,311

75.00

0.64

2020
Cut-oﬀ dateEﬀective date

March 31,2019
September 30,
2019

June 6,2019
December 6,
2019

Commonstock
Commonstock

Total amount of dividends

Dividends per share

Millions of yen

Yen¥10,512¥72.50

9,427

65.00

Cut-oﬀ dateEﬀective date2020
$ 344,082(15,428)
12,341$ 340,995

March 31,2018
September 30,
2018

June 6,2018
December 6,
2018

The major elements of selling, general and administrative expenses during the fiscal years ended March 31, 2020 and 2019,are as follows:
Thousands of
U.S. dollars

Millions of yen

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

102 Financial and Non-Financial Section¥ 25,356(2,238)1,364¥ 24,481

2020

2019

2020

¥ 47,732
103,093
75,519
7,190
5,563
1,908

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

$ 438,596
947,293693,919
66,066
51,12017,539Meiji Holdings Co., Ltd.｜Integrated Report 2020 103

Corporate Information

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

Types of shares2019¥ 37,446(1,679)1,343¥ 37,110

19 Selling, General and Administrative Expenses

2019
Resolution

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

Financial and Non-Financial Section

Resolution

Board of Directors’ meeting
held on May 13, 2019
Board of Directors’ meeting
held on November 8, 2019

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

Thousands of
U.S. dollars

Millions of yen

Our Activities for Sustainability

Shares issued:
Common stock
Treasury stock:
Common stock (Notes 1, 2)

Increase(Thousands)

Our Value Creation Story

Shares issued:
Common stock
Treasury stock:
Common stock (Notes 1, 2)

Increase(Thousands)

Types ofsharesIntroduction

17 Consolidated Statement of Changes in Equity

Contents

Notes to Consolidated Financial Statements

The research and development costs that were included in general and administrative expenses and manufacturing expenses
during the fiscal years ended March 31, 2020 and 2019, are as follows:
Thousands of
U.S. dollars

Millions of yen

2020

2020

2019

¥31,446

Research and development costs$288,951¥29,182

Gain on sales of tangible and intangible assets for the fiscal years ended March 31, 2020 and 2019
Thousands of
U.S. dollars

Millions of yen

2020$ 9,802¥ 5,505

76

1,011

698

¥ 1,142¥ 6,516$ 10,501

Other non-current assets
Total

2020

2019

¥ 1,066

Land

Additionally, the recoverable amounts of assets in use withdecreased profitability have been measured based on value
in use. For assets in use in Kasai-gun, Hokkaido Prefecture, thevalue in use is calculated by discounting the future cash flow
at a rate of 5.00%.
The recoverable amounts for other assets in use and idle
assets have been measured based on the net selling values
when measurable, and the carrying values of these assets
have been reduced to memorandum values or expectedsales amounts, etc.

Our Value Creation Story

21 Gain on sales of tangible and intangible assets

We group our assets based on the business types for the
impairment test. In addition, assets leased to others and idle
assets are individually assessed for impairment.
In the fiscal year ended March 31, 2020, due to a decreasein the profitability of some assets, the carrying values of thoseassets were reduced to recoverable amounts, and impairment
losses of ¥2,390 million ($21,962 thousand) were recognized
as extraordinary losses.
Of this amount, for assets in use, ¥814 million ($7,486
thousand) was buildings and structures; ¥862 million ($7,927
thousand) was machinery, equipment and vehicles; ¥30
million ($277 thousand) was tools, furniture and fixtures; ¥6million ($57 thousand) was intangible assets.
In addition, for idle assets, ¥144 million ($1,331 thousand)was buildings and structures; ¥243 million ($2,233 thousand)was machinery, equipment and vehicles; ¥4 million ($45
thousand) was tools, furniture and fixtures; ¥283 million($2,602 thousand) was land.

Introduction

20 Research and Development Costs

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

Location

22 Loss on disposal of tangible and intangible assets

Other assets

Goodwill

Medreich Limited

Assets in use

Machinery, equipment and intangible assets, etc.

London, UK

Loss on disposal of tangible and intangible assets for the fiscal years ended March 31, 2020 and 2019

Idle assets

Land, etc.

Odawara-shi, Kanagawa Prefecture

Idle assets

Machinery and equipment

Madrid, Spain

Idle assets

Machinery and equipment

Guangzhou, China

Assets in use

Intangible assets

Chuo-ku, Tokyo Prefecture

Thousands of
U.S. dollars

Millions of yen

2020

2020

2019

¥ 177

¥ 268

$ 1,635

Machinery, equipment and vehicles

1,242

798

11,416

Others

1,129

953

10,378

Total¥ 2,549¥ 2,020$ 23,430

23 Impairment Loss
Impairment losses for the fiscal year ended March 31, 2020, are as follows:
Type

Location

Assets in use

Machinery, equipment and buildings, etc.

Kasai-gun, Hokkaido

Assets in use

Buildings and structures, etc.

Kamiyama-shi, Yamagata Prefecture

Idle assets

Land and buildings, etc.

Hiroshima-shi, Hiroshima Prefecture

Idle assets

Machinery, equipment and buildings, etc.

Nonoichi-shi, Ishikawa Prefecture

Idle assets

Buildings and structures

Fujieda-shi, Shizuoka Prefecture

Assets in use

Intangible assets

Madrid, Spain

Assets in use

Building, tools, furniture and fixtures

Sakai-shi, Osaka Prefecture

Assets in use

Building, tools, furniture and fixtures

Kyoto-shi, Kyoto Prefecture

104 Financial and Non-Financial Section

Note that an impairment loss of ¥9,379 million in goodwill
is the amortization of goodwill as required by paragraph 32 in
the “Practical Guidelines on Accounting Standards for Capital
Consolidation Procedures in Preparing 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 the carrying values of these assets have been reduced tomemorandum values or expected sales amounts, etc.

Corporate Information

Application

We group our assets based on the business types for the
impairment test. In addition, assets leased to others and idle
assets are individually assessed for impairment.
In the fiscal year ended March 31, 2019, due to a decreasein the profitability of some assets, the carrying values of thoseassets were reduced to recoverable amounts, and impairment
losses of ¥12,242 million were recognized as extraordinary
losses.
Of this amount, for assets in use, ¥405 million wasmachinery, equipment and vehicles; ¥26
million was tools, furniture and fixtures; ¥1,329 million was
intangible assets.
In addition, for idle assets, ¥7 million was buildings andstructures; ¥93 million was machinery, equipment andvehicles; ¥999 million was land. For other assets, ¥9,379 million
was goodwill.

Financial and Non-Financial Section

Buildings and structures

Our Activities for Sustainability

Application

Meiji Holdings Co., Ltd.｜Integrated Report 2020 105

Contents

Notes to Consolidated Financial Statements

25 Derivative Financial Instruments

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

Matters related to derivative transactions in the fiscal year ended March 31, 2020
Thousands of
U.S. dollars

Millions of yen

20201) Derivative transactions for which hedge accounting is not applied(1) Currency-related transactions

2020

2019

Millions of yen

Valuation diﬀerence on available-for-sale securities:
Amount incurred during the current year

¥ (7,616)

¥

272
(103)

(9,885)(8,692)

169(79,872)

Tax eﬀect

2,372

(102)

21,799Valuation diﬀerence on available-for-sale securities(6,320)66(58,072)

Amount incurred during the current year

73

85

676

Reclassification adjustments for gains and losses included in profit

—

—

—

Asset acquisition costs adjustments

—

—

—

Deferred gains or losses on hedges:

Amount before tax eﬀect

73

85

676

Tax eﬀect

(22)

(26)

(207)

Deferred gains or losses on hedges

51

58

469

(1,461)(1,615)(13,430)

Foreign currency translation adjustment:
Amount incurred during the current year——

(1,615)(13,430)

Amount incurred during the current year

(6,494)(3,370)(59,672)

Reclassification adjustments for gains and losses included in profit

2,331

3,482

21,421Remeasurements of defined benefit plans, net of tax:

(4,162)

112(38,251)(1,554)(196)(14,282)

Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted for using
equity method:(2,608)(84)(23,968)

(53)

(523)

(490)

¥ (10,392)¥ (2,097)$ (95,492)

Amount incurred during the current year
Total other comprehensive income

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

391
¥391

—
¥—

Fair value

Revaluation
gain (loss)

45
¥45

45
¥45

3,600
$3,600—$—Fair value

Revaluation
gain (loss)

418
$418

418
$418

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

(2) Interest rate-related transactions
None2) Derivative transactions for which hedge accounting is applied(1) Currency-related transactions
Millions of yen

Thousands of U.S. dollars

2020
Type of transactions

Primary hedged items

2020
Fair value

Portion with
Contract maturity over
one yearamount, etc.

Fair value¥ 3,567¥—¥ 78$ 32,777

$—

$ 724

Accounts receivable-trade

—

—

—

—

—

—

Accounts payable-trade
Accounts payable-trade
Accounts payable-trade
Accounts payable-trade

826
—
237
30

—
—
—
—

(Notes)

7,591
—
2,179
279

—
—
—
—

(Notes)Accounts receivable-trade
Accounts receivable-trade——¥ 4,660——¥—(Notes)——$ 42,828——$—(Notes)Accounts payable-trade(Notes)(Notes)(Notes)(Notes)¥ 78(Notes)(Notes)(Notes)(Notes)$ 724(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 payabletrade and accounts receivable-trade, their fair values are included in the fair value information of the respective accounts payable-trade and accounts
receivable-trade.

106 Financial and Non-Financial Section

Meiji Holdings Co., Ltd.｜Integrated Report 2020 107

Corporate Information

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

Portion with
Contract maturity over
one yearamount, etc.

Financial and Non-Financial Section

Amount before tax eﬀect
Tax eﬀect

Type of transactions

2020
Portion withmaturityoverContract
amount, etc. one year

Our Activities for Sustainability—(1,461)

Reclassification adjustments for gains and losses included in profit
Foreign currency translation adjustment

Portion withmaturityoverContract
amount, etc. one year

Our Value Creation Story(1,075)

Thousands of U.S. dollars

2020$ (69,986)

Amount before tax eﬀect

Reclassification adjustments for gains and losses included in profit

Introduction

24 Consolidated Statement of Comprehensive Income

Contents

Notes to Consolidated Financial Statements

Introduction2) Derivative transactions for which hedge accounting is applied(2) Interest rate-related transactions(1) Currency-related transactions

Type of transactions

Primary hedged items

Thousands of U.S. dollars

2020

2020

Portion with
Contract maturity over
one yearamount, etc.

Fair value

Portion with
Contract maturity over
one yearamount, etc.

Millions of yen

2019
Fair value
Type of transactions

Long-term
borrowings¥15,702¥14,655(Note)$144,287$134,668(Note)(Note) Method for determining fair value: Since the items above are handled together with long-term borrowings that are subject to hedging, the estimated fairvalue of these items is included in the fair value of the long-term borrowings.

Matters related to derivative transactions in the fiscal year ended March 31, 20191) Derivative transactions for which hedge accounting is not applied

Millions of yen

2019Type of transactions

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

Portion with
Contract maturity over
one yearamount, etc.

1,209
¥1,209

399
¥399

136
¥136

136
¥136

Accounts payable-trade

Fair value¥ 1,582¥—¥5

Accounts receivable-trade

—

—

—

Accounts payable-trade
Accounts payable-trade
Accounts payable-trade
Accounts payable-trade

217
—
123
101

—
—
—
—

(Notes)——¥ 2,025——¥—(Notes)Accounts receivable-trade
Accounts receivable-trade(Notes)(Notes)(Notes)(Notes)¥5(Note 1) Fair value is based on the statements received from the counterparty financial institutions.
(Note 2) For forward foreign exchange contracts, etc., subject to the allocation method, because they are treated together
with the hedged accounts payable-trade and accounts receivable-trade, their fair values are included in the fairvalue information of the respective accounts payable-trade and accounts receivable-trade.

(2) Interest rate-related transactions
Millions of yen

2019(2) Interest rate-related transactions
None

Type of transactions

Primary hedged items

Long-term borrowings¥16,749¥15,702

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

108 Financial and Non-Financial Section

Meiji Holdings Co., Ltd.｜Integrated Report 2020 109

Corporate Information

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

Portion with
Contract maturity over
one yearamount, etc.

Financial and Non-Financial Section(Note) Fair value is based on the statements received from the counterparty financial institutions.

Fair value

Revaluation
gain (loss)

Primary hedged items

Our Activities for Sustainability(1) Currency-related transactions

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

Portion with
Contract maturity over
one yearamount, etc.

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

Millions of yen

Contents

Notes to Consolidated Financial Statements

Millions of yen

2019
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

Pharmaceutical¥ 1,048,963
596
1,049,559
87,340¥ 705,346

Total¥ 203,742
611
204,354
15,982271,809¥ 1,252,706
1,207
1,253,914
103,322
977,155
45,9722,390
48
12,382¥

37,469
2,076
15
7,199

8,502
313
32
5,182

¥

55,729¥ 10,067¥

65,797¥¥—(1,207)(1,207)(614)
21,481¥ 1,252,706—
1,252,706
102,708
998,637

213———

46,1852,390
48
12,382

156¥

65,953

Net sales(1) Sales to third parties(2) Intersegment sales and transfers
Total
Segment income (loss)
Segment assets
Other items
Depreciation
Impairment Loss
Amortization of goodwill (Note 3)
Equity in income of affiliates
Increase in property, plant andequipment/intangible assets

Pharmaceutical

Total

Adjustments(Note 1)

¥ 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

¥

¥

¥

¥

¥

34,517
1,024
3
6,493
60,127

8,212
11,218
1,637
6,175
10,86542,73012,242
1,641
12,66870,993

302
—
—
—
175

43,033
12,242
1,641
12,66871,169(Note 1) The adjustments are as follows.
The adjustments in the segment income (negative ¥624 million) includes the elimination of expenses for intersegment transactions (¥14 million) andthe corporate expenses not allocated to each reporting segment (negative ¥638 million). The corporate expenses are expenses related to the Company’s(holding company) operations, etc.
The adjustments in the segment assets (¥30,373 million) includes the elimination of intersegmental assets (negative ¥85,387 million) and the corporate
assets not allocated to each reporting segment (¥115,760 million).
The main corporate assets include the Company’s (holding company) surplus management funds (cash and deposits), long-term investment funds(investment securities) and other assets held by the Company (holding company).
(Note 2) The segment income is adjusted based on operating income in the consolidated statement of income.
(Note 3) The total balance of goodwill as of the end of the current fiscal year was ¥73 million, comprising ¥73 million for the Food segment and zero for the
Pharmaceutical segment, and there were no adjustments.

Thousands of U.S. dollars

2020
Reporting segments
Food$ 9,638,547
5,476
9,644,024
802,539
6,481,176$ 1,872,120
5,623
1,877,743
146,856
2,497,560$ 11,510,668
11,09911,521,767
949,395
8,978,736

344,296
19,08078,1252,882

141
66,151

301
47,623$ 512,082$

92,504$

Adjustments(Note 1)$—
(11,099)(11,099)(5,643)
197,382$ 11,510,668—
11,510,668
943,752
9,176,119

422,421
21,962

1,960—

424,382
21,962

442
113,775——

442
113,775

604,587$ 1,434$

606,021

Corporate Information

Amortization of goodwill (Note 3)
Equity in income of affiliates
Increase in property, plant andequipment/intangible assets

Total

Financial and Non-Financial Section

Net sales(1) Sales to third parties(2) Intersegment sales and transfers
Total
Segment income (loss)
Segment assets
Other items
Depreciation
Impairment Loss

PharmaceuticalAmount presented
in consolidated
statement of income(Note 2)

(Note 1) The adjustments are as follows.
The adjustments in the segment income (negative ¥614 million or negative $5,643 thousand) includes the elimination of expenses for intersegment
transactions (¥13 million or $122 thousand) and the corporate expenses not allocated to each reporting segment (negative ¥627 million or negative$5,766 thousand). The corporate expenses are expenses related to the Company’s (holding company) operations, etc.
The adjustments in the segment assets (¥21,481 million or $197,382 thousand) includes the elimination of intersegmental assets (negative ¥87,399
million or negative $803,084 thousand) and the corporate assets not allocated to each reporting segment (¥108,880 million or $1,000,467 thousand).
The main corporate assets include the Company’s (holding company) surplus management funds (cash and deposits), long-term investment funds(investment securities) and other assets held by the Company (holding company).
(Note 2) The segment income is adjusted based on operating income in the consolidated statement of income.
(Note 3) The balance of goodwill as of the end of the current fiscal year was ¥680 million ($6,257 thousand), comprising ¥57 million ($530 thousand) for the Foodsegment and ¥623 million ($5,726 thousand) for the Pharmaceutical segment, and there were no adjustments.

110 Financial and Non-Financial Section

Our Activities for Sustainability

Net sales(1) Sales to third parties(2) Intersegment sales and transfers
Total
Segment income (loss)
Segment assets
Other items
Depreciation
Impairment Loss
Amortization of goodwill (Note 3)
Equity in income of affiliates
Increase in property, plant andequipment/intangible assets

Adjustments(Note 1)

Amount presented
in consolidated
statement of income(Note 2)

Food

Amount presented
in consolidated
statement of income(Note 2)

Our Value Creation Story

2020
Reporting segments

Reporting segments

Introduction

26 Segment Information

Meiji Holdings Co., Ltd.｜Integrated Report 2020 111

Contents

Notes to Consolidated Financial Statements

Transactions between the company submitting the consolidated financial statements and the related parties in the fiscal year ended
March 31, 2020
Oﬃcers and principal shareholders (only for individual parties) for the company submitting the consolidated financial statements
and related items

Category

Director

CommonsharesMasahikoMatsuoKazuo
Kawamura

Director of
Katsunarisignificant
Matsudasubsidiary

—

—

—

Chairman and
Representative
Director

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

0.0%

0.0%

0.0%

0.0%

—

—

—

—

Amount of transaction
Balance at theMillions Thousands
end of theof U.S.
offiscal year
dollarsyen
Account being reported

Contributions
in kind formonetary
compensation
claims¥11

Contributions
in kind formonetary
compensation
claims18

Contributions
in kind formonetary
compensation
claims14

Contributions
in kind formonetary
compensation
claims

$103

172

—

—

Category

Director

MasahikoMatsuoDirector

Kazuo
Kawamura

—

105

—

—

President andRepresentative
Director—

The Member ofthe Board andPresident andRepresentative
Director of Meiji—

The Member ofthe Board andPresident andRepresentative
Director of Meiji
Seika Pharma——
Director of
Daikichirosignificant
Kobayashi
subsidiary

11—

Chairman and
Representative
Director

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

0.0%

—

0.0%

0.0%

0.0%

Amount of transaction
Millions ofyen

Balance at theend of the
fiscal year
Account being reported—

Contributions
in kind formonetary
compensation
claims

¥11

—

—

—

Contributions
in kind formonetary
compensation
claims

18

—

—

—

Contributions
in kind formonetary
compensation
claims

14

—

—

—

Contributions
in kind formonetary
compensation
claims

11

—

—

—

Director of
Katsunarisignificant
Matsudasubsidiary132

CommonsharesDescription ofbusinessor occupation(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.

(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.

28 Significant Subsequent Events

On April 15, 2020, Meiji Co. Ltd. (hereafter referred to as“Meiji”) consolidated subsidiary of the Company concluded
a stock transfer agreement with Japfa LTD., a shareholder of
AustAsia Investment Holdings Pte LTD. (hereafter referred to as“AustAsia”), which operates dairy farms business in China, toacquire a 25.0% stake in AustAsia. After the stock acquisition,
AustAsia is expected to become an aﬃliate and accounted forusing equity method.

Japfa LTD.

3) Name and business domain of company being
acquired(1) Name: AustAsia Investment Holdings Pte LTD.
(2) Primary business domain: Dairy production, etc. in China(3) Other: Following the business reorganization announced in
April 2020, AustAsia will become the core company for raw
milk production in China.

1) Purpose of stock acquisition

4) Timing of stock acquisition

Boasting superior milk yields, AustAsia is one of the leading
producers of premium raw milk in China, and is currently amajor supplier of raw milk to Meiji’s drinking milk and yogurt
business in China.
The stable procurement of high-quality raw milk is essential
for Meiji to achieve continuous growth in China’s chilled milk
and yogurt market.
The purpose of this stock acquisition is to strengthen
Meiji’s value chain, from raw milk procurement through to
production, and to establish a platform for sustainable growthin China business.

July 2020 (planned)5) Number of shares to be acquired, acquisition
value, and equity ratio after acquisition(1) Number of shares to be acquired: 84,027,991 shares(2) Acquisition value: $254.4 million (approximately ¥28.0
billion)(3) Equity ratio after acquisition: 25.0%

Meiji Holdings Co., Ltd.｜Integrated Report 2020 113

Corporate Information

112 Financial and Non-Financial Section2) Name of partner company in stock acquisition

Financial and Non-Financial Section(Application of equity method due to stockacquisition)

Our Activities for Sustainability

Director of
Daikichirosignificant
Kobayashi
subsidiary—

Description ofbusinessor occupation

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

Name ofperson,company,etc.

Our Value Creation Story

Director

Name ofperson,company,etc.

Transactions between the company submitting the consolidated financial statements and the related parties in the fiscal year ended
March 31, 2019
Oﬃcers and principal shareholders (only for individual parties) for the company submitting the consolidated financial statements
and related items

Introduction

27 Information About Related Parties

Notes to Consolidated Financial Statements

Payment for acquisition will be made in cash, based on funds
on hand within the Group and external procurement.

Contents

Introduction

6) Procurement of paid capital and method of
payment

Independent Auditor’s Report(5) Redemption term
10 years or less

(6) Redemption method
Lump-sum redemption upon maturity(7) Purpose of funds

At the Board of Directors meeting held on May 13, 2020, we
passed a comprehensive resolution as follows regarding theissuance of domestic unsecured straight bonds.

Operating funds, funds for equipment, investment andlending funds, loan repayment capital, commercial paper
redemption capital(1) Total issue amount(8) Special conditions¥100 billion ($918,864 thousand) or lessHowever, multiple issuances within this range shall bepermitted.

These bonds shall include a negative pledge clause.

(2) Planned issue period
From June 2020 to March 2021
If a bond subscription is oﬀered during this period, it shall be
included even if the payment date is after this period.

Our Value Creation Story(Comprehensive resolution concerning the issuanceof bonds)(9) OtherDecisions concerning the matters set forth in the items of
Article 676 of the Companies Act of Japan and all othermatters required for the issuance of corporate bonds shall beleft to the discretion of the President & Representative Director
up to the abovementioned limits, and shall be reported at thefirst Board of Directors’ meeting held after the issuance.

Our Activities for Sustainability(3) Amount of payment¥100 ($0.91) or more per bond amount of ¥100 ($0.91)(4) Interest rate
Swap rate with same term as bond plus no more than 1.0%

Financial and Non-Financial Section
Corporate Information

114 Financial and Non-Financial Section

Meiji Holdings Co., Ltd.｜Integrated Report 2020 115

Independent Auditor’s Report

Contents

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

116 Financial and Non-Financial Section

Meiji Holdings Co., Ltd.｜Integrated Report 2020 117

Independent Auditor’s Report

Contents

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

118 Financial and Non-Financial Section

Meiji Holdings Co., Ltd.｜Integrated Report 2020 119

Contents

Operating Bases and Group Companies (As of June 30, 2020)
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
Asahikawa Plant

Meiji Co., Ltd.

Nishi Shunbetsu Plant

Research Laboratory

Head Oﬃce

Group Company

Pharmaceuticals
Hokkaido Branch
Sapporo Plant

5Group Company 25

Research Laboratory
Plant

Plant

BranchHonbetsu Plant▼ Pharmaceuticals Segment

Meiji Co., Ltd.

Meiji Seika Pharma Co., Ltd.

Head Oﬃce

Group Company

2Group Company 12

OfficeTokachi Plant
Nihon Kanzume, Co., Ltd.

Head Oﬃce

Group Company

2Group Company 18

OfficeDonan Shokuhin Co., Ltd.

▼ Pharmaceuticals Segment

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

Meiji Seika Pharma Co., Ltd.
Head Oﬃce

Research Laboratory

Research Laboratory

Plant

Group Company

16Group Company
4

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

BranchKM Biologics Co., Ltd.
Head Oﬃce

Research Center

1
Production Center 4
Research CenterOﬃce

Production Center

1

OfficeThree S and L Co., Ltd.

Kurashiki Plant
Okayamaken
Shokuhin Co., Ltd.

KCS Co., Ltd.
Osaka Plant

Meiji Sangyo
Co., Ltd.
Karuizawa Plant
Gifu Plant
Meiji Chewing Gum
Co., Ltd.
Tokai Meiji
Co., Ltd.

Pharmaceuticals
Chugoku Branch

Aichi Plant

Pharmaceuticals
Shikoku Meiji Co., Ltd. Shikoku Branch
Kyushu Plant

Kansai Plant
Kansai Ice Cream Plant
Kansai Nutritionals Plant

120 Corporate Information

Chubu Branch
Pharmaceuticals
Nagoya Branch

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

Saitama Plant
Moriya Plant
Toda Plant
Tokai Nuts Co., Ltd.

Pharmaceuticals Tokyo Branch
Meiji Ad Agency
Pharmaceuticals
Co., Ltd.
Yokohama Branch
Kanagawa Plant
Pharmaceutical Research Center
CMC* Research Laboratories (Yokohama)
Agricultural & Veterinary
Research Laboratories
Head Oﬃce
Meiji Business Support Co., Ltd.
Fresh Logistic Co., Ltd.
Meiji Food Materia Co., Ltd.
Me Pharma Co., Ltd.
Romeck Pharma, LLC
Tokyo Oﬃce

DM Bio Limited

Meiji Pharma(Shandong) Co., Ltd.

★

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

Sakado Plant

Beijing Oﬃce

Hanoi Oﬃce

Bioscience Laboratories
CMC* Research Laboratories(Ashigara)
Odawara Plant

Co-Creation Center
Meiji Innovation Center

Okinawa Meiji Milk
Products Co., Ltd.

US Oﬃce
Laguna Cookie Co., Inc.

Meiji Pharma Spain, S.A.

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

PT. Meiji Indonesian
Pharmaceutical Industries

Ibaraki Plant

Meiji Techno-Service Inc.
Chiba Meiji Milk Products
Co., Ltd.
Kitasato PharmaceuticalIndustry Co., Ltd.
Kanto Branch
Meiji Feed Co., Ltd.
Meiji Logitech Co., Ltd.
Meiji Fresh Network Co., Ltd.
Meiji Nice Day Co., Ltd.

Corporate Information

Kansai Branch
Pharmaceuticals Osaka Branch
Agricultural Chemicals West Branch
Veterinary Drugs West Branch
Head oﬃce
Kumamoto
Production Center
Kikuchi Research Center
Kikuchi Production Center
Koshi Production Center
Aso Production Center

Kitanihon Branch
Pharmaceuticals Sendai Branch
Zao Shokuhin Kaisha, Ltd.
Agricultural Chemicals East Branch
Kantou Seiraku Co., Ltd.
Gunma Milk Joint Business Cooperatives
Gunma Plant/Gunma Nutritionals Plant
Gunma Pharmaceuticals Plant
Tochigi Meiji Milk Products Co., Ltd.

Tokai Plant

Meiji Dairies(Tianjin) Co., Ltd.

Meiji Seika Europe B.V.

Financial and Non-Financial Section

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

Nishinihon
BranchPharmaceuticals
Fukuoka Branch

Tohoku Plant

Pharmaceuticals Kanto Branch

Our Activities for Sustainability

Plant

4
2

BranchOur Value Creation Story

1
26

Branch▼ Food Segment★ The nine subsidiaries of Medreich Limited are not shown.

Unmarked bases are companies and facilities that do not belong to the segment.

* CMC: Chemistry, Manufacturing & Control

Meiji Holdings Co., Ltd.｜Integrated Report 2020 121

Contents

Corporate Data / Stock Information (As of March 31, 2020)
Stock Information

Company Name

Major Shareholders

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

Percentage of
total sharesissued (%)

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

15,070

10.39

April 1, 2009

Japan Trustee Services Bank, Ltd. (Trust Account)

8,832

6.09

Share Capital

Nippon Life Insurance Company

3,348

2.31

JPY 30.0 billion

Mizuho Bank, Ltd.

3,117

2.15

Number of Group Employees

The Norinchukin Bank

2,892

1.99

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

2,705

1.87

Stock Listing

Meiji Holdings Trading-Partner
Shareholding Association

2,613

1.80

Tokyo

Meiji Holdings Employee Shareholding Association

2,523

1.74

Fiscal Year-End

JP MORGAN CHASE BANK 385151

2,349

1.62

Resona Bank, Limited

2,347

1.62

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

17,571
Common Stock Issued

152,683,400

March 31
Ordinary General Meeting of Shareholders

Late in June

Our Value Creation Story

Number ofshares held(Thousands)

Name

In order to improve the reliability of the data, Meiji Holdings Co., Ltd. obtained the independent practitioner’s assurance forthe domestic CO2 emission volume (Scope 1, Scope 2 and Scope 3 category 1) and domestic water consumption volume for
FY2019 indicated on p.44 and 45 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.

Introduction

Corporate Data

Independent Practitioner’s Assurance of
CO2 Emission Volume & Water Consumption Volume(Notes) 1. The Company holds 7,613,416 shares of treasury stock as of March 31, 2020.
2. The shareholding ratio is calculated by subtracting the treasury stock fromthe total shares of common stock issued.

Transfer Agent of Common Stock
Public Notices

Our Activities for Sustainability

Mitsubishi UFJ Trust and Banking Corporation

Shareholding by Type of Shareholder

Public notices given by the Company
are issued electronically.
URL: https://www.meiji.com/■ Financial Institution

41.34%
24.98%■ Foreign Companies, etc.
22.33%■ Other Companies
9.93%■ Financial Instruments Dealers
1.42%■ Government and Public Bodies
0.00%■ Individuals and Others

However, in the event that public notices cannot be issued electronically
due to an accident or some other unavoidable circumstances, public
notices given by the Company shall be carried in the Nihon Keizai
Shimbun. It should be noted that pursuant to Article 440, Paragraph 4 of
the Companies Act, public notices of financial statements are not given.

* Individuals and Others includes treasury stock.

Stock Price and Trading Volume
Meiji Group(ThousandTrading volume shares)
30,000TOPIX

125

25,000100

20,00075

15,00050

10,00025

5,000March 2016

March 2017

March 2018

March 20190March 2020

(Notes) 1. The closing price as of March 31, 2015 is 100.
2. A 2-for-1 common stock split was issued on October 1, 2015. This value was retro-actively applied.

External Evaluation of ESG
Meiji Holdings Co., Ltd. is working to achieve sustainable growth through sustainability management.
These efforts have been received positively by external bodies and the Company is included in ESG indices in Japan and overseas.

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.
Note that CO2 emission volume for Meiji Logitech Co., Ltd. only include the fuel used in company owned delivery vehicles/trucks.

Scope of domestic CO2 emission volume (Scope 3, category 1)
This scope includes the main raw materials and packaging materials (paper, plastic, cardboard, steel, aluminum and glass bottles) that will be introduced into the domestic
production locations for Meiji Co., Ltd. and the group companies (Shikoku Meiji Co., Ltd., Tokai Meiji Co., Ltd., Gunma Milk Joint Business Cooperatives, Tochigi Meiji Milk
Products Co., Ltd., Meiji Oils and Fats Co., Ltd., Chiba Meiji Milk Products Co., Ltd., Donan Shokuhin Co., Ltd., Zao Shokuhin Kaisha, Ltd., Meiji Sangyo Co., Ltd., Meiji Chewing
Gum Co., Ltd., Tokai Nuts Co., Ltd., Okayamaken Shokuhin Co., Ltd., Nihon Kanzume, Co., Ltd., Okinawa Meiji Milk Products Co., Ltd.), Meiji Seika Pharma Co., Ltd. and the groupcompanies (OHKURA Pharmaceutical Co., Ltd.), as well as KM Biologics Co., Ltd.

122 Corporate Information

Meiji Holdings Co., Ltd.｜Integrated Report 2020 123

Corporate Information

0
March 2015

Financial and Non-Financial Section(index)150

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

https://www.meiji.com/global