LION Integrated Report2022

Contents

Our Purpose

Message from the Chairman...................................................................... 2
Creating Habits and Achieving Business Growth........................................ 4
Value Creation Process.............................................................................. 6
Lion at a Glance......................................................................................... 8
Financial and Non-Financial Highlights........................................................ 10

Vision & Strategy

Message from the President....................................................................... 12
Achieving Vision2030: Long-term Strategic Framework.............................. 18
Growth Points......................................................... 22
Financial Strategy....................................................................................... 28
New Medium-term Management Plan Vision2030 1st STAGE .................... 31
Consumer Products Business (Japan)........................................................... 32
Overseas Business.................................................................................... 34
Industrial Products Business...................................................................... 36
Research & Development........................................................................... 38
Supply Chain............................................................................................. 41
Human Resource Development.................................................................. 44
Sustainability.............................................................................................. 48

Corporate Governance

Messages from External Directors.............................................................. 56
Corporate Governance System.................................................................. 58
Compliance............................................................................................... 65
Risk Management...................................................................................... 66
Directors, Audit & Supervisory Board Members and Executive Officers....... 68

Performance/Data

Management's Discussion and Analysis of Fiscal 2021 Results................... 70
Ten-Year Financial Summary...................................................................... 74
External Evaluations and Participation in External Organizations.................. 76
Corporate Overview................................................................................... 77

Lion’s Disclosure
Financial Information

Non-Financial Information
Lion Integrated Report 2022

• S ecurities Report (Japanese only)

PrintedReports•C orporate Governance Report•L ion’s Sustainability: SDG-Related Initiatives(Japanese only)• S ummary of Consolidated Financial
Statements• C onvocation of the Annual General
Meeting of Shareholders• LION LETTER business report(Japanese only)

Investor Relations

Sustainability

Company
Websitehttps://www.lion.co.jp/en/ir/

https://www.lion.co.jp/en/sustainability/

LION Integrated Report 2022

1

Message from the Chairman

Itsuo Hama
Representative Director,
Chairman of the Board of Directors

Make a difference in everyday
2 LION Integrated Report 2022

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

In the 130 years since its founding, Lion has continued to look closely at consumers’
lifestyles and contributed to better lives by promoting better living habits. Tooth brushinghabits, which are essential to our everyday lives, are known to not only contribute to oral
health but also play a major part in maintaining the overall health of the body. In addition,with the spread of COVID-19 in recent years, the importance of hand washing has once
again come to the fore.
At Lion we have also been promoting environmentally friendly habits as a response toincreasingly serious social issues such as climate change and marine plastic pollution.
One-rinse laundry cycles, for example, which many people now use, help to save water andelectricity. The use of refill laundry detergents and other products are an important habitthat contributes to reduced plastic usage and promotes recycling. Going forward, we willcontinue working to establish these habits overseas, as well as in Japan.
In addition to promoting a healthy body and mind, we believe that habits such as the ones
above can play an important part in helping to achieve a sustainable society. Accordingly,
we have defined our purpose as “Make a difference in everyday lives by redesigning habits:
ReDesign.” We have also formulated a new set of beliefs to promote understanding of our
purpose among employees and to provide them with guidelines to act and make decisions
independently. These five beliefs describe the ideal path for Lion to follow.
At Lion, we will take full advantage of our unique approach to addressing society’s
issues through product development, services and the creation of new habits, while placing
the highest priority on customer satisfaction. To ensure that we become a highly trusted
company that exceeds the expectations of its stakeholders—be it our shareholders,customers, business partners, communities or employees—we will work to further enhance
our corporate value.
And, to ensure that we continue to exceed expectations and maintain this high level oftrust, with the Board of Directors leading the way, we will promote corporate governancethrough active, open dialogue with our external directors who come from wide-ranging
backgrounds.

lives by redesigning habits
LION Integrated Report 2022

3

Creating Habits and Achieving Business Growth
Lion’s origins lie in soap and toothpaste. The concept of “Fulfilling a Spirit of Love” has been fundamental to our management
since our founding, and we have sought to encourage consumers to enjoy healthy living through the provision of superior products
while engaging in communication and educational activities aimed at promoting better living habits. We recognized long ago that
global environmental protection is an issue that the whole world shares and have continuously worked to develop and propose
environmentally friendly products and habits. In addressing social and lifestyle issues through better living habits, we aim tocontribute to consumers’ everyday lives and in turn achieve sustainable business growth.

Net Sales
Lion’s founder
Tomijiro Kobayashi

Toothbrushing

Vegetable
washing

Laundry

1891

Dishwashing1950
Prevalence of cavities among children

Diversifying oral

Social andlifestyle issues

Establishing Tooth Brushing Habits
When Lion was founded in the late 1800s, tooth brushing was not yet widely practiced in Japan, and 96% ofchildren had cavities. Based on Lion’s founder Tomijiro Kobayashi’s feeling that the situation presented a realcrisis with regard to the nation’s future, Lion began developing and marketing oral care products and carrying out
educational activities.
In addition to providing products that address the nation’s increasingly diverse oral health problems, we haveengaged in activities to establish tooth brushing habits throughout society. In doing so, we have contributed tobetter oral health and the expansion and vitalization of the toothpaste market.
Social value:

Improved oral health

Establishing toothbrushing habits

Economic value:

Expansion and vitalization of the toothpaste market

Lion’s responseChildren being taught correct tooth brushingtechniques at the Oral Health Event of Tooth
Brushing for Children

Lion established the Lion Foundation
for Dental Health (Promoting oral
care through this organization)

Children being taught correct
flossing techniques at the Oral
Health Event of Tooth Brushing
for Children

Products for increasingly diverse
oral health problems
Cavityprevention

White Lion toothpaste

Dentor Systema Lion
series

CLINICA Advantage
series

Dentor Lion toothpaste

Lion F Cream

4 LION Integrated Report 2022

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Make a difference in everyday lives by redesigning habits
IFRS

Hand
washing

Accumulated
strengths andcapital1990

2000

health issues

2010

2021

From oral to overall health

Lion’s strengths

Prevention of infection

A sincere commitment
to manufacturing

Environmental problems

Promoting Hand Washing Habits
Following a series of large-scale outbreaks of E. coli in 1996, infections through food poisoning
came to be seen as a social problem in Japan. Fostering good hand washing habits to protect
children from viruses and bacteria thus took on new urgency, and Lion responded the following
year by launching KireiKirei. In addition to releasing products in line with the needs of the times,
including solutions to address global pandemics, Lion has focused on educational activities toteach the importance of hand washing at schools and in homes. In doing so, we have enhanced
awareness of the importance of hygiene, and expanded and vitalized the hand soap market.
Social value:

Establishing handwashing habits

Improved awareness of the importance of hygiene

Creation of better
living habits

Consumer research andtechnological development
capabilities

Economic value:

Expansion and vitalization of the hand soap market

Products that are widelyused by customers
Teaching correct
hand washingtechniques

KireiKirei medicated hand soaps

Trust of suppliers

Promoting Environmentally Friendly Habits
Lion has used cutting-edge technology to enhance its lineup of products with lower environmental
impact, be it products with lower CO2 emissions or reduced plastic and water use. We have also

Stable supply chainscontributed to a more sustainable global environment and achieved business growth by proposing moreenvironmentally friendly habits among consumers.
Social value:

Establishing environmentallyfriendly habits

Contribution to a sustainable global environment
Economic value:

Creation of new business opportunities

Diverse human resources

Stable financial baseOne-rinse laundry cycles tosave water and electricity

Product refills

LION Integrated Report 2022

5

Value Creation Process
Lion positions its purpose, “Make a difference in everyday lives by redesigning habits: ReDesign,” at the core of management.
To achieve the management vision, “Becoming an advanced daily healthcare company,” we will synergistically reinforce
initiatives to address the Sustainability Material Issues and advance growth strategies under the Vision2030 long-term strategic
framework. We will also accelerate growth, primarily in four fields of value creation. In doing so, we will create social andeconomic value as well as continue to increase our corporate value.

BUSINESSACTIVITIES

Growth Strategies

Strengths and capital

Vision 2030

Consumer
research and technologicaldevelopment capabilities
Page 38

Trust of suppliers

Lion’sstrengths

Products that are
widely used bycustomers

A sincerecommitment tomanufacturing

Diverse humanresources

Creating habits to solve
social and lifestyle issues

Enhancing our market,
economic and social presence

Reinforce initiatives
to address theSustainability MaterialIssuesCreation of better
living habits

Our three growth strategies

Stable supply chains

Page 44

Page 41

Accelerate growth in four fields ofvalue creation

Stable financial base

Page 25

Areas where we will further develop and evolve better
living habits as part of healthcare initiatives unique to Lion

Page 28

Transform our businessfoundations for growthPage 31

Create a business foundation that promotes growthby continuing to make and strengthen strategic
investments

Generate dynamism to realize
innovative change

Our Purpose

Page 31

Achieve sustainable growth by improving employee
engagement

Make a difference in everyday lives by redesigning habits

A higher level of corporate governance

Changes in society
Diversifying
valuesAging
population

6 LION Integrated Report 2022

Environmental
problems

Infectious
disease risk

Digitaltransformation

Contents

OUTPUT

Products andservices to create
new habits

Our Purpose

OUTCOME

Vision & Strategy

Performance/Data

Establishing better habits

Becoming an
advanced daily
healthcare company

Oral HealthSupporting physical and mental healthstarting with the mouth

Vision for 2030

Eat comfortably, talk,smile and be yourself

Sustainable
society

Infection Control

Supporting hygiene going forward
Protecting people’s
daily lives from thehidden risk of infection

Corporate GovernanceSocialvalue• Enhance consumer QOL• Contribute to therealization of adecarbonized, resourcecirculating society

Smart Housework

Creating housework habits suited toeach individual
Achieving a goodrhythm in life throughhousework optimized
to meet your needs

Well-Being

Supporting a cycle of health and happiness

Envisioned Financial
Performance in 2030
Net sales of approx.

Economic
value¥600 billion(Share of net sales from the Overseas
Business: Approx. 50%)

EBITDA*1

¥80 billion

Core operating income*2

Feeling happiness at
the little things that
happen in daily life

Page 56

Capital reinvestment
and distribution

Approx.

¥50 billion

ROIC*3

8–12%

ROE

10–14%

1.	Calculated as the sum of core operating
income and depreciation and amortization(excluding that of right-of-use assets)
2.	Calculated by subtracting selling, general andadministrative expenses from gross profit
3.	Calculated as net operating profit after tax(NOPAT) divided by the average invested
capital (total equity plus interest bearing
liabilities) during the period

LION Integrated Report 2022

7

Lion at a Glance
Net Sales and Core Operating Income by Segment
Industrial Products
Business

Other BusinessIndustrial Products
Business

0.9%

9.5%

7.2%

8.9%
Core
Operating
IncomeNet Sales¥366.2billion

Other Business

Overseas
Business

Consumer
Products
Business

Overseas
Business

27.0%

62.6%

20.1%

¥30.9
billionConsumer
Products
Business

63.8%

Note: Segment sales figures are external sales, net of intersegment sales and adjustments.

Consumer Products Business

In Japan, our Consumer Products Business offers a wide range of
products and services for total care, from prevention of issues tomaintenance and ease-of-use, including toothpastes, hand soaps,
laundry detergents and over-the-counter (OTC) pharmaceuticals.

Oral Care Products

Beauty Care Products

Toothpastes, toothbrushes, dental rinses, etc.

Hand soaps, body soaps, antiperspirants and deodorants, etc.

Fabric Care Products

Living Care Products

Laundry detergents, fabric softeners, laundry bleaches, etc.

Dishwashing detergents, household cleaners, foodpreparation products, etc.

Pharmaceutical Products

Other

Antipyretic analgesics, eye drops, dermatologic medicines, etc.

Foods with function claims, gifts, pet supplies, etc.

8 LION Integrated Report 2022

Contents

Our Purpose

Vision & Strategy

Overseas BusinessCorporate Governance

Performance/Data

Net
Net Sales
sales by
by Region
regionLion operates businesses in Southeast
Asia and Northeast Asia, providing
products useful for daily living regardlessof culture or language.

Northeast Asia

¥40.45 billion

Overseas
Net Sales¥109.2billionLion Corporation (Thailand) Ltd.

Location: Bangkok

Southeast Asia

¥68.79 billion

Southern Lion Sdn. Bhd.
Lion Corporation (Korea)

Location: Johor Bahru
Location: Seoul
Lion Corporation (Singapore) Pte Ltd.
Lion Daily Necessities Chemicals(Qingdao) Co., Ltd.

Location: Singapore

Location: Qingdao
PT. Lion Wings

Location: East Jakarta(Equity method subsidiary)

Lion Corporation(Hong Kong) Ltd.

Lion Home Products (Taiwan)Co., Ltd.

Location: Hong Kong

Location: New Taipei

Industrial Products Business

Other Business

Our Industrial Products Business comprises the Chemical Products Business, whichhandles surfactants, electro-conductive carbon and other chemicals; the Detergentsfor Institutional Use Business, which sells detergents and hand soaps for hotels andrestaurant kitchens; and Other Business.

Chemical Products
Mobility

Electronics

Eco Chemicals

Care Chemicals• R ubber processing agents• Rubber additive agents• Electro-conductive carbon• Pressure-sensitive adhesives• Concrete admixtures• S urfactants• C osmetics ingredients

In Japan, our subsidiaries aremainly engaged in operations
related to Group businesses.
The main products and servicesof this business include
construction contracting, realestate management, transport andstorage, and temporary staffing.

Detergents for Institutional Use
Dishwasher detergents

Alcohol sanitizers

Hand soaps

Vegetable-washingdetergents

LION Integrated Report 2022

9

Financial and Non-Financial Highlights
Financial Highlights
Core Operating Income,1 Ratio of Core Operating
Income to Net Sales and EBITDA2

Net Sales¥366.2billion Up 3.1% year on year

(Billions of yen)

¥30.9

billion Down 14.0% year on year

(Billions of yen)

(%)

60

500
400

342.7

349.4

347.5

355.3

366.2

45

8.4

8.6

8.1

47.6

300
30
200
15

100
0

12

10.1

40.5

36.5
28.8

37.0
28.3

30.0

2017

2018

2019

35.9

8.4

9

45.1

6

30.9

3

0

2017

2018

2019

2020

2021

0

2020

2021

Core operating income (left scale)
EBITDA (left scale)
Ratio of core operating income to net sales (right scale)

1. C ore operating income is an earnings indicator the Company uses to measure
regular business performance. It is calculated by subtracting selling, general andadministrative expenses from gross profit.
2. E
 BITDA is an indicator of profitability on a cash-flow basis. It is the sum of core
operating profit and depreciation and amortization (excluding right-of-use assets).

Capital Expenditures and Depreciation
and Amortization

ROIC* and ROE

ROIC
ROE

8.8%
9.8%

Down 1.9 percentage points
year on year

Capital expenditures:

Down 3.8 percentage points
year on year

Depreciation andamortization:(%)¥21.8 billion¥14.2 billion

Down 54.0%
year on year
Up 21.5%
year on year

(Billions of yen)

15

50

13.9

13.6

12.7
12

9

13.1
11.1

40

10.7
10.3

30

10.7

9.8
8.8

0

20
10

23.6
14.9
9.3

21.8

16.6
10.5

8.8

14.2

11.7

0

2017
ROE

47.5

2018

2019

2020

2017

2021

Capital expenditures

ROIC

2018

2019

2020

2021

Depreciation and amortization* Calculated as net operating profit after tax (NOPAT) divided by average invested
capital (total equity plus interest-bearing liabilities) during the period.

Cash Dividends per Share and Consolidated
Payout Ratio

Basic Earnings per Share (EPS)¥81.73¥24

Down 20.5% year on year

(Yen)

(Yen)

120

30

102.75

100
80

88.11
71.87

25

81.73

70.72

20

Sixth consecutive fiscal year of
dividend growth
(%)

29.7
23.7

22.7
20

17

21

29.4
24

22.4

30
25
20

23

60

15

15

40

10

10

20

5

5

0

0

2017

2018

2019

2020

2021

0

2017

2018

Cash dividends per share (left scale)

2019

2020

2021

Consolidated payout ratio (right scale)Note: Lion Group voluntarily adopted International Financial Reporting Standards (IFRS) as of 2018, but figures presented for 2017 also conform to IFRS.

10 LION Integrated Report 2022

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Non-Financial Highlights
2030
Sustainability
Material
Issues 1

Environment

2030
Sustainability
Material
Issues 1

Environment

Reduction of CO2 Emissions throughout
Business Activities*

Toothbrush Recycling Program
Number of Used Toothbrushes Collected*

7952,711%in 2021* Compared to 2017 levels; absolute quantity; all business locations* During the period 2015 through 2021

SDGs:

SDGs:

Lion implemented energy-saving activities and purchase ofelectricity from renewable energy sources throughout theCompany, including production, administration, sales andR&D divisions, in order to realize a decarbonized society,as set forth in the LION Eco Challenge 2050, a set of longterm environmental objectives.
2030
Sustainability
Material
Issues 2

HealthOral Healthcare Educational Activity:
Number of Participants in the Oral Health Event ofTooth Brushing for Children*

Approx.

2.21

millionTo achieve a resource-circulating society as stated in LION
Eco Challenge 2050, since 2015 Lion has been cooperatingwith TerraCycle LLC in the collection and recycling of used
toothbrushes for reuse in new plastic products.

2030
Sustainability
Material
Issues 2

HealthParticipants in Activities to Promote Correct
Hand Washing Habits*

Approx.

* Cumulative, from 1932 through 2021

36,700* Cumulative, from 2012 through 2021

SDGs:

SDGs:

With the aim of creating healthy living habits, Lion has held
this event to teach elementary school students correct
tooth brushing habits 78 times.

2030
Sustainability
Material
Issues 3

Human Resources
Ratio of Women in Management

20

To enhance consumers’ cleanliness and comfort ineveryday living, Lion carries out activities to promotecorrect hand washing habits with the KireiKirei brand.

Percentage of Employees Who Feel That Employeeswith Diverse Values Are Able to Succeed Professionally*56%

in 2021

SDGs:
With the aim of expanding creative business activities byutilizing diverse human resources, we are actively working
to create a corporate culture where women can participate
fully and advance professionally. Our Group target for theratio of women in management is at least 30% by 2030.

2030
Sustainability
Material
Issues 3

Human Resources%* Result of the Employee Awareness and Behavior Survey

SDGs:
Lion aims to enable employees with diverse values andideas to fully express their individuality and abilities andsucceed professionally.

LION Integrated Report 2022

11

Message from the President

Now more than everis the time for Lion toshine: Accelerating growthby redesigning habits
Masazumi Kikukawa
Representative Director,
President and Executive Officer
Chief Executive Officer

12 LION Integrated Report 2022

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

How We See the Business Environment
In recent years, the world has been dealing with two major

Good habits have the power to keep minds and bodies

threats: the novel coronavirus (COVID-19) pandemic, and thehealthy. Furthermore, the adoption of more environmentally

rapidly worsening global environment. These ongoing threatsfriendly habits will be very effective in preserving the global

mean that there is constant and unprecedented anxiety inenvironment. We feel that society is asking Lion to play apeople’s daily lives. Consequently, people are more aware

greater role: as a “daily habit design specialist” that helps

than ever of the need to maintain their own and their families’

resolve the great anxiety that is now sweeping the world.

health, and many believe that we must act quickly to halt the

Now more than ever is the time for Lion to shine.

deterioration of the environment.
Since its founding, Lion has been known for contributing
to society by encouraging people to develop good habits.
We have supported mental and physical health by providing
Our Purpose

products that are indispensable for daily life and by instilling
proper tooth brushing and laundry habits. We believe that
Lion’s strength lies in its ability to develop such good habits.
That is why we have set forth our purpose as “Make adifference in everyday lives by redesigning habits: ReDesign.”

Make a difference in everyday lives by redesigning habits

Assessing Our Performance in Recent Years
Under Vision2020, our management vision up to 2020, weOn the other hand, our sales growth rate in recent years

drastically reformed our business structure. In each step ofhas declined from around 4% to about 1%. This is due to thethe value chain, including R&D, production, marketing andslowing pace of increase in the number of customers who aresales, we have been creating products with more added

receptive to the products and information we offer—that is, tovalue and enhancing our ability to effectively communicate

the habits we propose. We realize that it is no longer enoughthat value to customers. As a result, the ratio of operating

to simply continue our current methods for developing good

income (core operating income) to net sales has increased

habits. As things stand, we cannot meet expectations tofrom approximately 2% in 2012 to around 10% in 2020. I

contribute to resolving the anxiety that I mentioned earlier.

believe this improvement is not temporary but structurally

We view this as our greatest challenge for the decade to 2030.

ingrained throughout the Company.

Progress of Results
Net sales(Billions of yen)Japanese GAAP

400

8.4

350
300
250

3.4

2.2

3.1

3.4

Ratio of core operating
income to net sales
(%)

IFRS

4.3

8.1

8.6

12

10.1
8.4

6.6

6.2

9
6
3
0

200

2011

2012

2013
V-1 Plan

Net sales (Left scale)

2014

2015

2016

2017
V-2 Plan

Ratio of core operating income to net sales* (Right scale)

2017

2018

2019

2020

2021

LIVE Plan*Ratio of operating income to net sales for Japanese GAAP

LION Integrated Report 2022

13

Message from the President

The Need to Break with Our Past to Accelerate Business GrowthBased on this view, in 2021 we established our long-term

our strategies are, they will not produce results unless thestrategic framework Vision2030. It sets forth three growth

people and organizations that implement them can act withstrategies for evolving how we redesign habits. The first

enthusiasm and agility. In this respect, the third strategy

strategy is aimed at evolving the habits we propose. We

is the most important of the three and should serve as thehave identified four fields of value creation—oral health,cornerstone of our corporate activities. Since becoming

infection control, smart housework and well-being—andpresident of the Company in 2019, I have made reforms

we will raise the quality of the value we provide by further

for professional fulfillment a core theme, and have been

evolving the habits we propose in each of these fields. In oralpromoting four parallel initiatives: establishing conditions forhealth, for example, we will expand from a stance of simply

self-directed employee growth and providing opportunities

maintaining oral health to positioning oral care as a means

for them to demonstrate the skills they have acquired (workfor maintaining overall health, with the aim of promoting

management); creating an environment where employees arean evolution in habits from conventional tooth brushing tofree to choose the place, time and other aspects of their work

preventive dentistry that effectively combines self-care ataccording to their individual circumstances, thus raising theirhome and professional care at a dental clinic. To that end, in

productivity (work styles); improving the skills of managers,

addition to the toothpaste, toothbrushes and other productswith an emphasis on long-term employee career development

we already provide, we intend to launch various newand team building (strengthen relationships); and healthbusinesses that strongly link self-care and professional care.

management to improve employee health (“GENKI” Action).

The second strategy is to enhance the business foundations

Corporate branding that originates from understanding andthat will support the evolution of the value we provide. Thissharing our purpose is another theme of the third growth

includes digital transformation measures such as upgrading

strategy. The objective of this theme is to foster a feeling that

our information infrastructure to accelerate decision-making

working at Lion is a valuable experience, thereby enhancing

and improving productivity by utilizing digital technology

employee engagement.

on production lines. It also includes measures to expand

Through these three growth strategies, we intend to breakproduction capacity. The third strategy involves employeewith our past by evolving the quality of the value we offer andand organizational dynamism. No matter how finely detailed

redesigning habits so that they meet contemporary demands.

Management
visionManagement
strategy

Becoming an advanced daily
healthcare company
Reinforce initiatives toaddress the Sustainability
Material Issues

Advance our three growth strategies

PurposeMake a difference in everyday lives by redesigning habits

Long-Term Strategic Framework Vision2030

14 LION Integrated Report 2022

Four Fields of Value Creation

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Redesigning Habits: Lion’s Unique Approach
Under Vision2030, we aim to tackle our Sustainability Material

providing a “CO2 emissions map” that quantitatively visualizes

Issues in synergy with the above growth strategies. As ourhousehold CO2 emissions to encourage consumers to

top priorities, we will focus on “creating healthy living habits”

change their behavior. As for recycling plastic, using refillable

and “promoting environmental initiatives for a sustainablecontainers has become a habit in Japan. Although this has

planet.” The former is essentially our purpose. The latter issignificantly reduced the amount of plastic used, current

an inescapable topic for all companies today, but that isrefill containers are difficult to recycle. Lion is collaborating

not the only reason we have made it a top priority. Manywith Kao Corporation and other competitors in developing

companies in the industrial sector are conducting initiatives

recycling technology and establishing a collection system forfor the global environment, but there is still a lack of initiatives

these containers. We intend to further evolve the refill habit

targeting households, which are a crucial factor in reducing

established in Japan to encompass collection and reuse, andCO2 emissions and recycling plastics. For example, in Japanthen spread it throughout Asia.

15% of total CO2 emissions are generated by housework.
Plastic recycling cannot be considered complete without thecollection and reuse of household plastics. Initiatives to makehousehold habits environmentally friendly will have a major
impact. I believe that a company such as Lion, which has
direct points of contact with households and whose purpose
is to redesign habits, can carry out such initiatives mosteffectively. We have made these initiatives our top priorities
because if we do not, who will?
Specifically, we will offer products that save water andelectricity and lifestyle proposals that will help reduce CO2
emissions. We know that the use of water and sewerage
generates most household CO2 emissions, so water-saving
measures are key. Our efforts to promote the creation ofenvironmentally friendly habits will include developing laundry
detergents that can reduce the number of rinse cycles andVision2030 Targets
The consolidated performance targets of Vision2030 are

enhancing consumer quality of life, and by helping to realize

net sales of ¥600 billion, EBITDA of ¥80 billion, and ROIC ofa decarbonized, resource-circulating society. Our approach

approximately 8-12% for 2030. Because we are targetingof redesigning habits will lead to an increase in our economic

CAGR of 5.6% for the period, we will work to expand thevalue as well as our social value. There is power in redesigningrange of our proposals for new habits at an unprecedented

habits. Believing in that power, we continue to evolve.

pace. At the same time, we aim to realize social value by

LION Integrated Report 2022

15

Message from the President

Updating Strategies for Realizing Vision2030
In 2021, we continued our discussions on deepening

the middle class is growing and we do not yet operate. In

strategies and enhancing measures to realize Vision2030. In

January 2022, I set up a new dedicated M&A team thatparticular, we are updating our strategies and frameworks

reports directly to me, and secured expert talent from outside

for the Overseas Business, which will be important for our

the Company to ramp up its activities. We intend to enter at

growth. In the Overseas Business, we are focusing on theleast two new countries or areas by 2024 and four by 2030.

Qingdao Lion business in China, where we have set a sales

Another key to realizing Vision2030 is managementtarget of ¥100 billion for 2030 and a target for CAGR of 22%

control. We will implement the three growth strategies I

for the period for 2021 to 2030. CAGR for the previous ten

mentioned above with a focus on accelerating businessyears was approximately 16%, so achieving this target is

growth to 2030. Executing these growth strategies will

not impossible, but neither will it be easy. We will therefore

require up-front investment for reinforcing and expanding

accelerate growth of the oral care business in China throughthe business foundations as well as for investigating digital

measures including extending the sales area inland fromtransformation (DX) and new business models. I thought

our previous focus on major coastal cities, expanding into

our previous approach, which emphasized core operatingproducts for dental clinics, which have a strong affinity withincome and the ratio of core operating income to net sales,

our existing lineup, and branching out into oral care forwould cause hesitation in making this up-front investment,

pets. We have also newly established the China Businesstrapping us in a spiral of diminishing returns. Therefore, we

Promotion Office for efficient utilization of Group resources.

have changed our policy to emphasize EBITDA as a new

Another point for accelerating the growth of the Overseas

KPI that gauges the results of our strategies through its

Business is to expand into new countries or areas. We

growth. However, we have concurrently introduced ROIC

intend to use M&A, among other measures, for rapid entry

management, which will help us utilize capital efficiently andinto Vietnam, Bangladesh and other countries in Asia wheremanage each business field and optimize investments.

Preparations Are Under Way for Accelerating GrowthIn fiscal 2021, net sales were ¥366,234 million and EBITDA

for oral care products went on line in July 2021, and awas ¥45,175 million. Net sales increased 3.1% year-on-

new enterprise resource planning (ERP) system to support

year (or 1.9% at constant currency excluding exchange rate

expedited management decision-making began operating

fluctuations), and EBITDA decreased ¥2,494 million year-on-

in May 2022. We have also made significant advances

year. The decrease in EBITDA was mainly due to higher raw

in the third growth strategy of enhancing employee andmaterial prices and increased investment in competitivenessorganizational dynamism by revamping our corporate

for growth, so I do not see any major problems from a long-

philosophy. In addition to our purpose, which we alreadyterm perspective. Rather, the issue is that the sales growth

updated, we reorganized the corporate philosophy by setting

rate remains at the 1% level at constant currency. Clearly, we

forth the beliefs that underpin our judgment and behavior

cannot expect substantial growth by maintaining the samefor promptly and independently putting the purpose into

approach, thus evolution in redesigning habits is important.

practice in real-life situations, and by establishing a definition

On the other hand, we steadily moved forward withfor Lion’s DNA as “Fulfilling a Spirit of Love.” I am alreadythe three growth strategies set forth in Vision2030. We

sensing the effect of lively

are investigating new businesses to promote evolution in

discussions that haveredesigning habits. Some of these businesses will start on a

begun in response to thissmall scale or enter a trial stage in 2022, particularly in the

reorganization on how toarea of oral health. To reinforce our business foundations, ininterpret the philosophy in

Sakaide City, Kagawa Prefecture a state-of-the-art factory

our own unique way.

16 LION Integrated Report 2022

The Sakaide toothpaste factory that began
operating in July 2021

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Positioning of Vision2030 1st STAGE New Medium-Term Plan
In 2021, we made steady progress on the issues of evolution

EBITDA of ¥52 billion, which will mean CAGR of 4.7% andin redesigning habits, establishing the foundations for doingrecord-high EBITDA. As a result of the growth strategies

so, and transforming our employees and organization.

begun in 2021, we expect to start multiple new businesses,

Therefore, I believe that laying of the foundations for driving

and hope to enter the markets of at least two new countries

growth is well under way. Vision2030 1st STAGE is aor areas. In 2022, the initial year of the plan, we expect a

new medium-term management plan for the period fromdecrease in core operating income due to factors including

2022 through 2024. The theme of this plan is to utilize therising raw material prices and an increase in amortization

foundations we have laid so far to expedite growth. A key

expenses for investments made in previous fiscal years, but I

concept is “gear change towards accelerated growth.”

consider this to be for a necessary step in the evolution of the

Our targets for fiscal 2024 are net sales of ¥420 billion andvalue we provide that I have been talking about.

(Billions of yen)

Change2024 Targets

2021 Results

Net sales

420.0

366.2

53.7

14.7

Core operating income1(Ratio of core operating income to net sales (%))

32.0
(7.6)

30.9
(8.4)

1.0

3.5

Operating profit(Ratio of operating profit to net sales (%))

32.0
(7.6)

31.1
(8.5)

0.8

2.7

Profit for the period attributable to owners of the parent

23.0

23.7

-0.7

-3.2

Basic earnings per share (yen)

72.24

81.73

-9.49

-11.6

EBITDA2

52.0

45.1

6.8

15.1

ROIC (%)

Approx. 7.5

8.8—-1.3 PPROE (%)

Approx. 9.0

9.8—-0.8 PP

3

Amount(%)

1. Core operating income is an earnings
indicator the Company uses tomeasure regular business performance.
It is calculated by subtracting selling,
general and administrative expenses
from gross profit.
2. EBITDA is an indicator of profitability
on a cash-flow basis. It is the sum of
core operating profit and depreciation
and amortization (excluding right-ofuse assets). The calculation method forthis indicator has changed from 2022.
The amount after adjustment for 2021
is ¥43.9 billion.
3. ROIC is an indicator of the profitability
and efficiency of invested capital. It is
calculated as net operating profit aftertax (NOPAT) divided by average invested
capital (total equity plus interest-bearing
liabilities) during the period.

To Our Stakeholders
Lion is in the midst of a transformation. We aim to secure

Employees are also important stakeholders for Lion. As I

new models for successful evolution in redesigning habitssaid, nothing can be achieved without the enthusiasm of ourto complement our current models. Our activities are rooted

employees. My foremost objective is to continuously increasein our steadfast determination to contribute to society byemployee engagement, and I will work with our management

redesigning habits, and we are confident that this approachteam to devise measures to increase their productivity.

will lead to growth in our economic value. We intend to share

Lion will continue its transformation to reach new heights

our approach with the suppliers, wholesalers and retailers

with a commitment to redesigning habits. We look forward tothat make up our value chain and work with them to redesign

your continued support.

habits as we ramp up activities to enhance the sustainabilityof the value chain itself.
Dialogue with shareholders and investors is extremely
valuable. It provides me with an opportunity to confirm that
we have not become complacent or lacking in perspective in
our approach as I have described. I want to continue creating

Masazumi Kikukawa

opportunities for dialogue whenever I can in order to refine

Representative Director,
President and Executive Officer
Chief Executive Officer

our approach and incorporate diverse perspectives.

LION Integrated Report 2022

17

Achieving Vision2030:
Long-term Strategic Framework
Review of the Past Decade and Growth Initiatives Going Forward
Over the past decade, Lion has implemented a range of initiatives to increase profitability, a particularly challenging issue.
Those initiatives include implementing structural reforms such as developing high-value-added products and reinforcing therevenue base. Over the next 10 years, we will continually step up growth investments to accelerate business growth with the aimof expanding corporate value.

Progress of Results
Net sales(Billions of yen)Japanese GAAP

400

8.4

350
300

3.4

250

2.2

3.1

Ratio of core operating
income to net sales
(%)

IFRS

8.6

8.4

6.6

6.2

4.3

3.4

8.1

12

10.1

9
6
3
0

200

2011

2012

2013

2014

2015

2016

V-1 Plan
Net sales (Left scale)

2017

2017

2018

V-2 Plan

Ratio of core operating income to net sales* (Right scale)

2019

2020

2021

LIVE Plan*Ratio of operating income to net sales for Japanese GAAP

The Past 10 Years

The Next 10 Years

Increased profitability

Increase corporate value by expanding our presence

Shift toward higher-value-added products(unit price>volume)

Expand overseas and new businesses

Advanced structural reforms

Continually reinforce future-oriented
growth investment

Maximize up-front investment• Consolidated the chemicals business • Consolidated domestic logistics• Reorganized domestic production sites companies• Rationalized point-of-sale managementetc.

Key Management Theme for the Run-up to 2030:

Enhancing Lion’s market, economic and social presenceCashgeneration
Business
growthReinvestment/
ReturnsCashgeneration

Achieve business growth by putting our purpose—
Make a difference in everyday lives by redesigning
habits: ReDesign—into actionMore
contact

Moreconsumers

More
areas

Contacts with
consumers/day

Number of people(age groups)

Number of people(countries/areas)

Business
growthBusiness
growthUp-front
investment

Step up the process of accelerating growth through proactive
investments, generating cash, reinvesting that cash, andproviding returns
Realize a continuous upward corporate value expansion spiral

18 LION Integrated Report 2022

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Vision2030, a Long-term Strategic Framework for the Run-up to 2030
To achieve its management vision for 2030, “Becoming an advanced daily healthcare company,” the Lion Group will further
reinforce management driven by its purpose, “Make a difference in everyday lives by redesigning habits: ReDesign,” whilesynergistically addressing its Sustainability Material Issues and advancing growth strategies in order to contribute to therealization of a sustainable society and achieve business growth.

Management
visionManagement
strategy

Becoming an advanced daily
healthcare company
Reinforce initiatives toaddress the Sustainability
Material Issues

Advance our three growth strategies

PurposeMake a difference in everyday lives by redesigning habits

Lion will advance three strategies to drive business growth toward
the achievement of our management vision.

Three Growth Strategies

Accelerate growthin four fields ofvalue creation

Transform ourbusinessfoundations for
growthGenerate
dynamism torealize innovativechangeAccelerate growth in four fields of value creation
We have designated four fields in which we will strategicallyadvance innovation on a Company-wide, cross-divisional basis tocreate new consumer value as growth drivers for the Lion Groupin order to achieve the management vision. By evolving existing
businesses and creating new value, we will further accelerate
growth in Japan and overseas.

Transform our business foundations for growth
We will promote business foundation transformation that will spur
growth by continuing and reinforcing strategic investment.

Generate dynamism to realize innovative change
We will generate dynamism to transform into a company that cangrow sustainably by improving employee engagement throughprofessional fulfillment reforms and diversity and inclusion initiatives.

LION Integrated Report 2022

19

Achieving Vision2030: Medium-to-Long-term Strategic Framework

Growth in the Run-Up to 2030
Lion will implement three consecutive 3-year medium-term management plans—1st STAGE, 2nd STAGE and 3rd STAGE—toward
the realization of Vision2030. We will proceed on a rolling basis, adjusting strategy and policy according to changes in thebusiness environment to enhance precision as we go. In 1st STAGE, we will get on a growth track, create the foundations for
new growth, transform our business foundations and activate our human resources and organizations.

Up-front investment
Sales Growth (vs. 2021)• Sakaide toothpaste factory• Akashi Factory mouthwash line
• New core systems

New business
Expand in new countries or areas
Existing Overseas Business
Existing domestic businesses

2021

2024

1st STAGE

2027

2nd STAGE(2022-2024)(2025-2027)

Gear change toward future growth

Accelerate transformation and growth•G et on a growth track and create thefoundations for new growth• Strategy tuning to respond to signs ofchange in the business environment•T ransform business foundations (supply
chain management, DX, sustainability)• Accelerate transformation and growth•A ctivate human resources andorganizations(Billions of yen)
Net sales
420
EBITDA
52
Core operating income 32

20 LION Integrated Report 2022

ROIC
ROE

Approximately 7.5%
Approximately 9.0%

• Increase the average annual growth rate
(CAGR over 5%)

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Vision2030 Targets
Social value+¥240 billion
New business

Expand in new
countries or areas

Economic value

Contribute to a sustainable
society

Net sales• Enhance consumer quality of life

EBITDA• Contribute to the realization of adecarbonized, resource-circulating
societyCore operating Approx. ¥50 billion
incomeAdvancesustainability
strategy

Approx. ¥600 billion(Approx. 50% from theOverseas Business)

Approx. ¥80 billion

ROIC

8–12%

ROE

10–14%

Accelerate growth infour fields of value
creation

New business (+¥30 billion or more)
Secure profit opportunities from new business models

Existing overseas
business

Expand in new coutries or areas(+¥60 billion or more)

Focus on entering new markets in Asia
Existing domestic
businesses

2030

3rd STAGE(2028-2030)• Final touches to achieve thevision• Creating the foundations for
subsequent growth

Existing overseas business (CAGR around 10%)
*Around 5–6%, excluding Qingdao Lion

Realize growth centering on the Qingdao Lion business(¥100 billion)

Existing domestic businesses (CAGR of 2% or more)
Evolve existing businesses by shifting to higher-value-added
products and creating markets

LION Integrated Report 2022

21

Achieving Vision2030: Growth Points
Growth Point 1

Grow Overseas Business — Expanding Habit Redesign
As we aim for consolidated net sales of ¥600 billion in 2030, a key component will be growing our Overseas Business.
In addition to a CAGR of about 10% in our existing Overseas Business, our goal is to achieve an overseas sales ratio of
approximately 50%. We will accomplish this by expanding into new countries or areas in Asia.

(Billions of yen)
700
600
500
400

Overseas Sales
Ratio of
Approximately
27%

Overseas Sales
Ratio of
Approximately
50%

Growth Strategies for the Overseas Business1
Evolve glocalization strategy to maximize synergy

300

2

200

Expand Qingdao
Lion business100

3

Expand into new
countries or areas

0

2021

(Year)

2030

1. Evolve glocalization strategy* to maximize synergy
At Lion, glocalization is a key element of our global strategy.
Not only have we used glocalization to develop detailed
marketing strategies that meet the needs of the countries orareas we serve, we have also taken advantage of the appealof Japanese quality as a means to expand our business into
new countries.
However, given the environmental changes of recent
years, such as increasingly similar and common global
lifestyles and needs, it is essential that we evolve our

glocalization strategy. Rather than our conventional
approach, in which we addressed specific countries, we must
now define market types across borders based on consumer
features and trends. Ultimately, we seek to maximize synergy
and streamline management based on an optimal approachfor each market.
* A strategy that combines “globalization” and “localization” to create a uniquecompetitive advantage

Evolving the glocalization strategy
Glocalization Strategy
Until now

Going forward

Country/area focus

Regional focus/market classification

Balancing the provision of reliable quality andnew habit creation through global brands tailoredto the needs of each country

Define market types across borders based on the
consumer features and trends identified as part of
the glocalization strategy
Maximize synergy and promote efficient,effective operations through management andbusiness approaches tailored to each market

Adapting to environmental changes
Regions: Identify similar and common lifestyles
and needs

22 LION Integrated Report 2022

Evolve platform for strategy promotion(global operations)Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Glocalization Strategy: Market Type-Based Marketing
Evolve from the previous country/area focus to a regional focus by defining market types and promote more efficientand effective operations
With market type-based marketing, we have created threemajor cross-border market types and are developing astrategy for each. For each market type, we have taken GDP

growth rates and income levels into consideration, as wellas the local features and trends we have identified as part ofprevious glocalization strategies.

Market-type framework (types I–III)
Type I

Type II

Type III

Emerging countries
General-purpose
products
Volume-based growth
Product strategy
Channel strategy

Indonesia(Urban)

Malaysia
Thailand(Rural)(Urban)South Korea
Singapore
General-purpose, low-cost products

Value-added products (entry)

Value-added products (advanced healthcare)

Localization

Global brands

High-end products (Japanese brands)

Big-box stores (MT)/e-commerce

Drug stores/e-commerce

Regional supermarkets (TT)Value-added products
Quality-based growth

China(Rural)Reinforce promotion structure through global operations

Governance

Expand global business through market type-based marketing• Scale expansion by maximizing product and distribution synergy and through efficient, effective operations• Category expansion by gaining insights into each market type (product strategy, marketing strategy, channel strategy, etc.)
and entry into new countries, areas and fields based on past successes

Growth trends and outlook

The past 10 years

The next 10 years(Growth, with 2011 as 100)

(Net sales (IFRS))

2011

Consolidated Group(excluding Qingdao Lion)

2020

CAGR: 6.9%

200(Billions of yen)

100

140

92

50
0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
2011

2020

CAGR: 16.2%4002021 2022 2023 2024
(Billions of yen)

2021

2030

CAGR: 21.8%

120

2030

100

80
200
40
0

17

0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Growth areas

2030

100

0

Qingdao Lion

2021

CAGR: 5.3%1502021 2022 2023 2024

2030

Types I–II (mainly Southeast Asia)

Type III (mainly Northeast Asia and urban Southeast Asia)• Quality-based growth in laundry detergent
Promote shift to value-added products through optimal formula(market type) strategy (Secure the top market share in each country)• Leverage Japanese brands to shift to valueadded products• Expand into the personal care field
Move into personal care field (oral care, beauty care, etc.) based on
experience gained from success in home care

• Enhance lineup of mouthwashes to generatesynergy with toothpaste• Expand contact with consumers through moresophisticated e-commerce initiatives• Scale expansion based on strengthening e-commerce

LION Integrated Report 2022

23

2. Expand Qingdao Lion businessIn the Qingdao Lion business to date, we have achieved
growth through our global brands, such as SYSTEMA and
CLINICA, mainly in the oral care field. We have also enhanced
our brand image by taking advantage of the appeal of thehigh-quality of Japanese products. These efforts plus thesynergy we have created with local brands has enabled us
to maintain a CAGR of around 16% over the past ten years.
In addition to accelerating these initiatives, we will look to
expand our business fields with the oral care business at

the core. Specifically, we will expand into new areas, as well
as new segments such as dentistry products, which areclosely related to our oral care products, and products forpets and for institutional use. We will also look to expand ourbusinesses through D2C operations and other new channels.
To achieve these goals, we are allocating the necessary
management resources and strengthening our promotion
structure. Ultimately, we aim for around ¥100 billion in net
sales by 2030 (CAGR of approximately 22%).

Achievements to date

Global brands

Local brands(E.g. SYSTEMA, CLINICA)(E.g. Huayubai)

Increased sales 150% through oral care × e-commerce × targeted marketing(from sales in 2018, on a local currency basis)

Channels/areas• Regional cities• D2C business• Services• Reinforce retail stores(coastal areas)• Personal care
• Pet• For dental clinics• Commercial use,etc.

• Oral care ×
e-commerce

Gained recognition of Lion quality based on the idea of “made in Japan”

Existing

Category

New

Going forward

Key Points for Realizing Our Strategies• Further strengthen oral care, our toppriority category• Concentration and shift ofmanagement resources• Branch out from oral care and expand into
related fields(mid-career hiring, support local personnel in key roles)• Establish innovation generation bases(technologies, products, businesses)• Reinforce promotion structure(establish promotion office, global operations)

3. Expand into new countries or areas
The ratio of middle-class citizens, who we expect to become
the largest group of consumers, is expected to growsignificantly in Asia, and we are continuing to examine several
M&As on the continent. We aim to enter more than four new
countries or areas by 2030, and more than two during ourcurrent medium-term management plan. As such, we have
set up a dedicated organization under the direct control ofthe president, and are reinforcing our ability to, among otherthings, hire experts from outside the Company.

Population in 2020

Per-capita GDP

GDP growth rate

(millions of people)

(US$)

(%)

1,367.6

1,928

4.2

Pakistan

204.7

1,225

1.9

Bangladesh

166.6

1,962

8.2

Philippines

107.3

3,323

6.0

Vietnam

96.5

3,525

7.0

...

...

...

Country

India

...

Sources: IMF 2020 Report and Asian Development Bank December 2020 Report

24 LION Integrated Report 2022

Key Points for Realizing Our Strategies• Focus on expanding in Asia
(Aim to enter more than two countries or areas by 2024)• Enhance the system for M&As
(Create a dedicated organization under the directcontrol of the president, and strengthen organization byhiring mid-career experts)

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Growth Point 2

Evolve Businesses in the Four Fields ofValue Creation — Evolving Habit Redesign
As awareness and social needs related to healthand hygiene increase, these four fields of value
creation will drive growth as we seek to further
evolve and develop better living habits andhealthcare services unique to Lion.
The creation of new products and services in
the four fields of value creation will be essential tobusiness growth.
We have put an executive officer in charge ofeach field and will accelerate efforts to evolve ourbusinesses and create new value as we work toachieve our vision.

Oral Health
Lion aims to provide oral healthcare that supports overall health and QOL starting from the mouth. We will leverage our strengths
as Japan’s leading oral care product manufacturer to integrate innovative oral care products and services into the daily lives ofindividuals as a new form of healthcare. By doing so, we seek to realize business expansion beyond the bounds of our existing
businesses.
Infection Control
Lion aims to become a hygiene solution provider by addressing all kinds of risk related to infectious disease. As a company witha long history of supporting cleanliness, our mission is to continually transform our business. We will expand our business fromliving spaces to encompass public and industrial spaces in the fight against bacteria and viruses on all fronts–bodies, objects
and spaces–by providing hygiene solutions.
Smart Housework
Lion aims to create new housework habits for diverse lifestyles. As lifestyles and living situations diversify, one-size-fits-all ideas
for improving housework increasing fall short of meeting consumer needs. Building on the basic idea of smart housework that is
fun and efficient, we will establish a unique advantage by reframing the concept of housework in general to maximize authentic
comfort at the individual level and by cooperating closely with external partners across a wide range of categories.
Well-Being
Lion aims to provide total healthcare services for the mind and body. We will transform into a company that supports healthand happiness at each life stage by building connections with consumers through the promotion of healthcare habits that are
individually driven. We will also expand the range of solutions we offer and integrate our services through collaboration withexternal partners.

Evolving Our Business Model to Create New Value with the Four Fields of Value Creation as the Starting Point

Until now

Going forward

Value provided

Products(functional value)

Services(experience-based value)

Evolve the value we provide from products
to services

TargetHouseholds

Society(Schools, public
institutions, etc.)

Expand the scope of the value we provide
to solve social issues

Contact with
consumers

Sold-and-done

Recurring

Accumulate and utilize customer data

Business type

Manufacturer

Service provider

Change business type from manufacturer tototal service provider

Scope ofcoordination

Supply chain

Ecosystem

Collaborate with various partners in theindustrial, government, academic, medical
and public sectors

LION Integrated Report 2022

25

Oral Healthcare Business
While recognition that oral health plays a key role in overall

As the foundation of this business, we are building ahealth is rising, many consumers still see the two elements
as separate. As such, we are working to raise the profile oforal health in the context of overall healthcare, and moving
forward with a business that aims to establish preventive
dentistry as a habit.

personal oral health record (POHR) platform. As shown in the
diagram below, we are combining our existing businesses
with new business models to create a hub-like system thatlinks every element related to oral health.
With help from the industrial, public, academic andmedical sectors, we aim to create social trends and systems
related to preventive dentistry habits.

Specific corporate activities
Oral care product business

Existing businesses
New business models

Preventive dentistry
product businessPreventive habit solution
business

Households

Dental clinics

Companies

Oral healthbusiness

Professional care(preventive dentistry)
support business(targeting clinics andpatients)Newbusinesses
from 2022

Workplace dental checkups(public benefit services)

Well-being

Business foundation
POHR*(health and productivity
management)

support business

Promoting inclusive oral care
Help seniors enhance their
QOL through oral care

Collaboration
across regional
communities andprofessions

Local
governments
and educational
institutions

Newbusinesses
from 2022

Oral health promotion projects incollaboration with school dentists

Health literacy improvement
support business* Database containing information on basic health, living habits,
oral condition, tooth brushing habits, etc.

Newbusinesses
from 2022

Well-Being (Health and Productivity
Management) Support Business26 LION Integrated Report 2022

Health Literacy Improvement
Support BusinessWe began a social experiment involving the use of digitaltechnologies as part of a service to promote preventive
dentistry habits in collaboration with Koshi-shi in
Kumamoto Prefecture.

We launched an oral careinformation service forcorporations and local
governments in responseto the increasing
understanding of theimportance of oral healthworldwide.
Analyze the effect ofseminars in terms ofchanges in employee
awareness andbehaviors and reporton their impact on
health and productivity
managementNewbusinesses
from 2022

Through this experiment we hope to find new ways of contributing to regional
revitalization and promoting preventive dentistry habits in collaboration with local
governments, dental health organizations and corporations. We will use ourknowledge of preventive dentistry as well as apps to collect data on the oral healthof citizens in the area in an effort to accelerate the establishment of new habits.

Help establish oral care habits
Simple diagnosis
utilizing the Salivary
Multi Test

Assist in theformation of new
habits through theuse of our products

Goals of the Social
Experiment
1. Facilitate the formation of oral
health habits through the use ofdigital technologies
2. R aise the rate of individuals
who regularly undergo dental
checkups via interventions indaily life

Initiatives
1. H elp increase contact between
government agencies and citizens
to provide oral careinformation
2. O ffer a simple app
designed to predict theuser’s oral healthContents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Growth Point 3

Create Environmentally Friendly Habitswith Consumers — Evolving Habit Redesign
At Lion, we aim to become carbon negative in order tosociety. Furthermore, based on our purpose, we are working

play our part in the creation of a decarbonized society. We

to create environmentally friendly habits with consumers,

are also promoting the continuous recycling and reuse of

and in turn contribute to making lifestyles in Japan andplastic to contribute to the creation of a resource-circulating

elsewhere in Asia more planet-friendly.

Social value
creation policy

Targets for
2050
KGIs

Create environmentally friendly habits with consumers to continuously
offer planet-friendly lifestyles that make more sustainable living easy

Decarbonized society:
Carbon negative•P romote water- and power-saving

habits by providing environmentallyfriendly productsR educe CO2 emission throughout the
product life cycle by 30% (Lion Group)•C reate environmentally friendly habits

Main Themes
Targets for
2030

Resource-circulating society:
Use recirculated plastic• Expand use of sustainable materials3 0% usage (Lion Group)• Promote refill habits in Asian markets

5 0% refill product sales (Lion Group)•E xpand advanced recycling initiatives

that can be practiced at home to reduce
society’s CO2 emissions through theuse of our products and services
Contribute to a CO2 emission reduction
effect in excess of Lion’s own emissions(Japan)to promote waste-free habitsB uild collaborative industry infrastructure(Japan)Promote one-rinse laundry cycles to encourage thehabit of not wasting water

Establishing the refill habit through refillable bottles
that can be used over and over again.

LION Integrated Report 2022

27

Financial Strategy

Financial strategies to increase market,
economic and social presence, andrealize an upward corporate value
expansion spiral
Kengo Fukuda
Director
Executive Officer

Assessment of Financial Strategies to Date
The biggest financial challenge for Lion between 2000 andplayed a major role in adding value to those markets.

2010 was increasing profitability. In V-1 Plan and V-2 Plan, theThe second factor is the cumulative effect of ongoing

two medium-term management plans we launched in 2012

cost-reduction measures, including streamlining productand 2015 respectively, we rolled out a range of measuresformulations and revising manufacturing processes.

to respond to this challenge. As a result, we substantially

The third factor was increasing the proportion of high-improved business profit, which is the ratio of operating profit

added-value products and our successful reduction(core operating income) to net sales and ROE.

and optimization of sales promotion expenses througheffective marketing.

There were three main factors that helped to increase

Development of high-added-value products has also

profitability during this period. The first factor was thedevelopment and sale of high-added-value products anddriven growth in our Overseas Business. Meeting growing

efforts to create new demand. Product unit price in theneeds for high-added-value products in Asia has enabledoral care and living care markets has increased between

the business to boost its sales to about ¥100 billion over

20–30% over the past 10 years, and we believe we havethe past 10 years.

Main Factors Increasing Profitability

Development of high-added-

Reduction and optimization

Cumulative effect ofvalue productsof sales promotion expenses

cost-reduction measures

Creation of new demandthrough effective marketing

Progress of Results
Net sales(Billions of yen)Japanese GAAP

400

IFRS

8.4

350
300
250

3.4

2.2

3.1

3.4

Ratio of core operating
income to net sales
(%)

4.3

8.1

8.6

12

10.1
8.4

6.6

6.2

9
6
3
0

200

2011

2012

2013
V-1 Plan

Net sales (Left scale)

2014

2015

2016

2017

2017

V-2 Plan

Ratio of core operating income to net sales* (Right scale)2019
LIVE Plan*Ratio of operating income to net sales for Japanese GAAP

Note: The Lion Group voluntarily adopted International Financial Reporting Standards (IFRS) as of 2018.

28 LION Integrated Report 2022

2018

2020

2021

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Vision2030—Approach to Financial Management and Key Financial Indicators
Our main challenge in long-term strategic framework

Growing net sales and expanding the scale of our

Vision2030 is to enhance our market, economic and social

businesses requires proportionate investment, so we havepresence. One of our performance indicators is position

been increasing up-front investment since 2020. We willin the Asian market. Currently our position is aroundutilize these investments to achieve business growth and13th,* but by 2030 we aim to be in the top 10 at the very

use the cash this growth generates for further investment,

least. Ultimately, our goal is to place in the top five. To

thus creating a cycle of business growth that increases

accomplish this, based on the increase in profitability

corporate value. In addition to using sales growth rate

to date, we must steadily achieve top-line growth.

as an indicator of our progress, we will use EBITDA toSpecifically, we are aiming for approximately ¥600 billion

measure the increase in cash and prioritize the use ofin net sales and an overseas sales ratio of 50% by 2030.

return on invested capital (ROIC) to gauge profitability andefficiency of the capital invested in each business.

* Market position by sales amount (in the main markets in which Lion operates)

Enhancing Lion’s Market, Economic and Social Presence
Corporate value
expansion spiral

Key indicators

EBITDA
Enhanceability togenerate cash
Increasepresence

Key indicators

Cashgeneration

Business
growthReinvestment/
ReturnsCashgeneration
Business
growthUp-front
investment

Growth/Presence (EBITDA)

ROIC
Prioritize
efficiency
Optimize
allocation of
resources

Earning power/Efficiency (ROIC)

While we will also monitor ROE as before, in Vision2030 ourand checking the trends and changes in individual ROIC

priority is to move forward with ROIC management. Overcomponents. This will lead to an even more robust

the five years from 2020 through 2024, going beyond thebusiness portfolio.

culmination of medium-term management plan Vision2030

Our weighted average cost of capital (WACC) is

1st STAGE, we plan to invest more than ¥140 billion. We

approximately 4%. We aim to keep ROIC above WACC andaim to monitor the returns from these investments inincrease it to 8–12% by 2030. In addition, we aim to boost

terms of both efficiency and profitability. We will reinforce

EBITDA, thus enhancing our ability to generate cash andmanagement control by looking at ROIC by business

improve our corporate value.

LION Integrated Report 2022

29

Financial Strategy

Approach to Cash Allocation in Vision2030 1st STAGE
1st STAGE Cash Allocation

Purpose-driven

Management
visionManagement
strategy

Becoming an advanced daily
healthcare company
Reinforce initiatives toaddress the Sustainability
Material Issues

Advance our three growth strategies

Reinvestment in growth

Cash flows
from operating
activities,
otherApprox.
¥120 billion

PurposeMake a difference in everyday lives by redesigning habits

Strategic
investment

 reation and acquisition ofCfoundations for future growth

Approx.
¥80 billion
or more anagement base transformationMand evolution supporting growth
acceleration(M&A, DX, environment, etc.)

Shareholder
returns

Continuous and stable returns
 iming to increase dividends everyAfiscal year

Approx. ¥30
billion or more

Get sales on a growth track
Highest-ever EBITDA

Flexible stock buy-backs

Basic financial operations policy/
ROIC management
In Vision2030 1st STAGE we aim to generate around ¥120

Capital Expenditures and Depreciation and Amortization

billion in cash from operating activities. We will allocate ¥80
billion of this to reinforce production facilities and to makeinvestments in labor-saving and streamlining measures.

Capitalexpenditures(Billions of yen)
50

Depreciation andamortization

47.5

This includes environmental and digital transformation
investments. Of the remainder, we will return just over ¥30
billion to our shareholders through dividends and stock buybacks. Our policy is continuous and stable increase of cash
dividends, aiming for a consolidated payout ratio of 30%.

40

23.6
20

In accordance with this policy, in Vision2030 1st STAGE,
we aim to increase dividends. Moreover, in February 2022,

14.9
10

we acquired and cancelled around ¥10 billion of Company
stock. Future decisions on such buy-backs will be madeflexibly based on comprehensive consideration of funds on
hand and our financial status.

Investing in Human Resources
Who Will Drive Growth

30.8

30

0

9.4
5.5

16.6

21.8
18.0

14.3

9.4

9.4
7.2

9.3

16.7

match the increasing scale of our operations. As I mentioned
before, we also believe we must acquire global personnel
who can help us enhance our presence overseas and boost
our overseas sales ratio. We are also proactively moving
forward with measures to develop our existing personnel.
For example, we will build systems that enable various
curriculums to be taught via remote learning in the Lion
Career Village and work with external training institutes.
In these and other ways, we will focus on measures thatbalance both corporate and personal growth. (See “Human
Resource Development” on page 44.)

30 LION Integrated Report 2022

12.4

10.5 11.7

9.3

8.8

4.1

4.5

5.5

6.2

5.2

4.3

4.9

5.5

14.2
7.9
6.2

2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022
(Forecast)January–June(Forecast)July–December

Investment in Human Resources in 2021

Investing in human resources will be essential for advancing
our growth strategies. First, we need to increase hiring to

29.0

Average hours of training
per FTE* employee
Average investment
in training per FTE
employee* Full-time equivalent

Lion Group(Consolidated)

Lion Corporation(including seconded
employees)

31.0

52.8

¥36,700¥67,100

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

New Medium-term Management Plan
Vision2030 1st STAGE (2022–2024)
Gear change towards accelerated growth
Implement growth strategies and transformthe management base to acceleratetransformation while growing
Reinvest returns from up-front investment for future growth to get on asales growth track and reach highest-ever EBITDA

2024 Targets¥420 billion¥52 billion
EBITDA¥32 billion
Core operating income
Approx. 7.5 %ROIC
ROEApprox. 9.0 %Net sales
12

3

Reinforce ROIC to enhance management
controlManage the business portfolio with an eye to business efficiency andappropriately allocate management resources

1. Earnings before interest, taxes, depreciation and amortization: Sum of core operating
profit and depreciation and amortization (excluding amortization of right-of-use assets)
2. Calculated by subtracting selling, general and administrative expenses from gross profit
3. Calculated as net operating profit after tax (NOPAT) divided by average invested capital(total equity plus interest-bearing liabilities) during the period.

Advance three growth strategies

Accelerate growthin four fields ofvalue creation

Lion will advance three strategies to drive business growth toward
Transform ourbusinessfoundations for
growththe achievement of our management vision.

Generate
dynamism torealize innovativechange

1st STAGE Initiatives

Accelerate growth in four fields of value creation
Focusing on four fields of value creation, the directions
for growth, we will evolve existing businesses andcreate new businesses to further accelerate growth inJapan and overseas.

Page 25

Secure profit opportunities by evolving existing
businesses and creating new businesses in four
fields of value creation

Page 24

Maintain rapid growth of Qingdao Lion’s business

Page 24

E xpand into new countries or areas

Page 27

E xpand social contribution by promoting
environmentally friendly habits

Page 41 ccelerate digital transformation (DX)A
(business foundations, operational
streamlining)

Page 41 einforce and make full use of systems
R
infrastructure

Page 29

Enhance management control

Page 48

 ccelerate the implementation of sustainabilityAstrategy

Page 46

 dvance the Lion Professional Fulfillment
A
Reforms

Page 47

Promote diversity and inclusion

Page 44 xpand investment in personnel development
Eand human capital(DX/Global/New businesses)

Transform our business foundations for growth
We will continue to engage in and reinforce strategic
investment (M&A, supply chain management,
production infrastructure, digitalization, sustainability,etc.) necessary for growth and transform our businessbase to one that promotes growth.

Generate dynamism to realize innovative change
We will generate dynamism to transform into a
company that can grow sustainably by improving
employee engagement through professional fulfillment
reforms and diversity and inclusion initiatives.

LION Integrated Report 202231Consumer Products Business (Japan)
Creating new markets by redesigning
habits through products tailored tochanging lifestyles

Masayuki Takemori
Senior Executive Officer,
Executive General Manager of Health and Home Care Products Division

External Sales

Net Sales by Product Category in 2021
LIVE Plan
2018–2020(Billions of yen)

Other Products

240

235.0
229.7

230
220

Oral Care
Products

14%27%

Pharmaceutical
Products

229.5

11%

219.3

210

Beauty Care
Products

Living Care
Products

0

2019

2020

2021

2022
(Target)(Year)

11%

11%

Fabric Care Products

26%

Market Position

Toothpastes

Toothbrushes

Hand soaps

Laundry
detergents

No. 1 shareNo. 1 shareNo. 1 shareNo. 3 share

Fabricsofteners

Dishwashingdetergents

Bathdetergents

Antipyretic
analgesics

No. 3 shareNo. 3 shareNo. 2 shareNo. 2 share

Note: Market position (market share) in 2021 according to Lion Corporation survey

Market Environment (Risks and Opportunities)
In Japan’s consumer products market, lifestyle changes caused by the prolonged COVID-19 pandemic have heightenedawareness of the importance of daily health and hygiene. Moreover, opportunities to reexamine lifestyles have increased,
and changes in environmental consciousness continue to accelerate. Meanwhile, changes in work styles have also led
to new consumer purchasing behavior, such as increased use of e-commerce. As Japan’s population declines, it will not
be enough to simply plan and develop good products. In order to achieve business growth, we must make new habit
proposals, including services tailored to changes in consumer awareness and behavior, and build new business models.

32 LION Integrated Report 2022

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Consumer Products Business Strategy in Vision2030 1st STAGE
To drive market creation and business growth, we aim to redesign habits by proposing products tailoredto changing consumer values and lifestyles. We will also contribute to the redesign of consumer habitsby seamlessly providing new value proposals that go beyond the boundaries of our established productcategories and businesses.

Oral Care Products

Page 26 Oral Health

Shift to high-added-value oral care products and build a new oral health business model
As Japan’s leading manufacturer of oral care products in terms of market share, we are driving market growth through acomprehensive strategy where we offer brands for various life stages and oral conditions. In addition, in 2022 we will launcha preventive habits solution business in collaboration with the industrial, public, academic and medical sectors, and nurture it
into a growth driver.

Beauty Care Products
Propose habits that promote mental and physical health through the beauty of cleanliness based on
hygiene awareness
The KireiKirei brand has helped to promote the habit of hand washing and is now the leading hand soap brand in Japan. Althoughconsumers recognize the importance of hand washing in preventing the spread of infection, we are aiming for further businessgrowth by proactively promoting and proposing an even higher level of hygiene-related habits that go beyond hand washing.

Fabric Care Products
Offer products tailored to changing lifestyles and propose new laundry habits
We aim to contribute to market growth by reinforcing our lineup of larger-size products—which we developed to addresschanging consumer purchasing behavior brought on by the pandemic—and offering highly concentrated liquid laundry
detergents that are compatible with increasingly popular washing machines that automatically dispense liquid laundry
detergent and fabric softener. At the same time, we will seek to create a new market by proposing new laundry styles that arecompatible with sustainability, and promote sustainable laundry as the de facto standard.

Living Care Products
Pursue more efficient, labor-saving housework and greater value in cleanliness and hygiene, andpropose new housework habits for the next generation
Through the promotion of CHARMY, LOOK, and REED—brands that offer simplicity, convenience, and cleanliness in thehousework routine, from dishwashing and bathroom/toilet cleaning to cooking—we will create new housework habits that aresuited to the various lifestyles that have evolved as a result of the pandemic.

Pharmaceutical Products
Propose self-care habits to ensure that individuals can choose the optimal solutions for their specificissuesWe offer self-care solutions centered on BUFFERIN and Smile to enable consumers to deal with specific ailments anddiscomforts independently. We are also contributing to market expansion by developing our Method and FERZEA branddermatologic solutions into the third pillar of the Pharmaceutical Products business.

Promote environmentally friendly habits alongside consumers by
expanding our lineup of refill products
At Lion, we have used our detergent and hand soap refill products to establish
the refill habit, which has reduced environmental impact. In the spring of 2022,
we launched refill products for NONIO Mouthwash, the first in the oral care
category. We will continue to propose new products to further establish the refill
habit among consumers.

LION Integrated Report 2022

33

Overseas BusinessAccelerating reforms to grow net sales
and increasing our presence in themarkets of Asia

Annette Ling
Executive Officer
Executive General Manager of International Division

External Sales

Net Sales in Southeast and Northeast Asia
LIVE Plan
2018–2020

LIVE Plan
2018–2020(Billions of yen)(Billions of yen)

105

70

69.5

102.0
100

Southeast Asia

66.4

Northeast Asia

68.7

60

98.7

95

50

91.7
90

91.2

40.4

40

0

31.5

0

2019

2020

2021

2022
(Target)2019(Year)

35.1
2020

2021

(Year)

Market Position
Lion Corporation(Thailand) Ltd.

Southern Lion
Sdn. Bhd.

Location: Bangkok

Location: Johor Bahru

Location: Seoul

Location: Qingdao

Categories in top 3

Categories in top 3

Categories in top 3

Categories in top 3• Liquid soaps No. 1 share• Laundry detergents No. 1 share

Lion Corporation(Korea)• Hand soaps

No. 1 share• Hand soaps No. 1 share• Laundry detergents• Toothpastes andtoothbrushes• Dishwashing detergents

Lion Daily Necessities
Chemicals (Qingdao) Co., Ltd.

• Regular toothbrushes
via e-commercechannels• Laundry detergents• Dishwashing detergents

Note: Market position (market share) in 2021 according to Lion Corporation survey

Market Environment (Risks and Opportunities)
In the markets of Asia in fiscal 2021, Northeast Asia recovered quickly from the effects of the COVID-19 pandemic, while
Southeast Asia suffered from prolonged lockdowns and restrictions on activity. As a result, consumption decreased andmarkets in each category were sluggish. With ongoing impacts from the pandemic, geopolitical issues, fluctuating exchange
rates, and soaring raw material prices, the risk of market stagnation remains.
Regarding consumer behavior in Asia, although needs are diverse due to differences in economic conditions, religions
and cultures, lifestyles and needs are becoming increasingly uniform, particularly in urban areas. Given changes in lifestyles
caused by aging populations and the increase in middle-income households, as well as needs for healthcare products that
help establish cleanliness and hygiene-related habits, there are opportunities for business growth through product proposals
that are optimized to address the specific trends and features of each country and region.

34 LION Integrated Report 2022

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Overseas Business Strategy in Vision2030 1st STAGE
To become an advanced daily healthcare company in Asia, we will accelerate reforms to restore high sales growth• Key Strategies

Page 22• Reinforce strategies for each region through our glocalization strategy*• Shift to a cross-regional management system by transitioning from our conventional country-centeredapproach to a business-centered approach*Unique strategy for creating competitive advantage through a combination of globalization and localization• Expand Qingdao Lion business

Page 24· We will extend sales inland to regional centers from our previous focus on coastal cities and e-commerce.
· While maintaining our priority focus on oral care, we aim to expand into closely related fields, such as oral
care for pets, a category we entered in 2021, and products for dental clinics.

Country/Area
Expansion• Expand into new countries or areas

Page 24

We aim to expand operations into two or more new countries or areas during Vision2030 1st STAGE. We will
also create an organization under the direct control of the president, hiring mid-career specialists from outside
the Company to reinforce the M&A process.

• Reinforce the oral care products businessIn each country and area, while considering different levels of knowledge and awareness of oral hygiene, as
well as various income levels, and providing products accordingly, we will promote the creation of healthyliving habits and firmly establish oral care habits through public awareness and informational activities. In
addition to toothpastes and toothbrushes, we will also strengthen our lineup of mouthwash products, use ofwhich has increased with rising health awareness.

• Expand the lineup of hygiene-related products

Category
Expansion

In tandem with rolling out KireiKirei brand hand soaps in each country
and area, we will expand our lineup of hygiene products to meet local
needs. We will also continue to proactively engage in public awarenessactivities aimed at establishing the habit of hand washing.

A public awareness activity to establish
the habit of hand washing• Enter new categories
Through product development driven by local insight, we aim to enter
new categories in which we are not active in Japan and develop theminto growth drivers. Looking ahead to post-pandemic markets in Asia,
in 2022 in Singapore, we launched SunoHada skincare products forsensitive skin, a category which is expected to see major growth in the

SunoHada products for sensitive skinlaunched in Singapore

market. We plan to launch these products in other countries or areas.

LION Integrated Report 2022

35

Industrial Products Business
External Sales
Note: Total for the Industrial Products Business

Detergents for
Institutional Use

LIVE Plan
2018–2020(Billions of yen)
36

Hand soaps

35.0

34.7
34

32.9
32

31.5

30

Dishwasher detergents
0

2019

2020

2021

2022
(Target)(Year)

Vegetable-washing systems

Detergents for Institutional Use
Providing Unique Cleanliness and Hygiene Solutions to Corporate Customers
and Contributing to the Resolution of Social Challenges
Market Environment (Risks and Opportunities)
Although the prolonged COVID-19 pandemic has had a negative impact on customers in the restaurant and hotel industry,causing a slowdown in operations and store closures, it has also had a positive impact in the home meal replacement industry,where customers are benefiting from an increase in demand from people spending more time at home, and has spurredhygiene-related needs at medical and nursing care facilities. Going forward, the Lion Group needs to reinforce user-oriented
product development and proposals by tailoring them to changes in its own and its customers’ business environments.

Institutional-use Detergents Strategy in Vision2030 1st STAGE
Using our ability to offer hygiene-related solutions that combine the washing technologies of the Lion Group and thespecialized hygiene management expertise of Lion Hygiene Co., Ltd., we aim to drive growth by focusing on promising growthbusinesses—the vegetable-washing business, the hygiene business and the medical and nursing care facility business. We will
also provide value in infection control from a B-to-B perspective.

•V egetable-Washing BusinessWe aim to further evolve and expand the range of applications for theozone sterilization technologies of our Yasai Kirei MiBO vegetablewashing and sterilization system, which is used by convenience store
vendors and vegetable processing plants. Through the developmentof these technologies and the supply of detergents, we aim to provide
a comprehensive range of solutions for food processing plants.

•H ygiene BusinessWe seek to acquire new customers by proposing comprehensive
solutions that cover everything from restaurant kitchens to dining halls
through the introduction of new hygiene diagnosis options (infection
prevention) tailored to current social conditions, and the use of ourHayaraku HACCP system.

• Medical and Nursing Care Facility Business
For nursing care and daycare facilities, where demand continues
to increase, we will step up our user-oriented initiatives based oncomprehensive proposals in facility hygiene, infection countermeasuresand laundry detergents.

36 LION Integrated Report 2022

Focus

Advantages of the Yasai Kirei MiBO
Vegetable-washing and Sterilization System
By using microbubble ozone technology, the Yasai
Kirei MiBO vegetable-washing and sterilization system
leaves no sterilization agent
residue and maintains
the natural flavor andappearance of vegetables.
Further, it contributes tothe reduction of food loss
by enhancing the freshnessof the vegetables.

WEB

Lion Hygiene Co., Ltd. (Japanese)
https://www.lionhygiene.co.jp/

Contents

Chemical
Products

Our Purpose

Vision & Strategy

Corporate Governance

Mobility

Performance/Data

Electronics•R ubber processing agents(Anti-sticking agents)•R ubber additive agents•M andrel release agent•F atty acid methyl esters•P lant-based electricalinsulating oils•C
 oncrete admixtures• Ground improvement agents•A sphalt recycling agents• Electro-conductive
carbon black• Pressure-sensitiveadhesives

Key products
in eachindustrial field• S urfactants• C osmetics ingredients

Eco Chemicals

Care Chemicals

Chemical Products
Becoming a Global Niche Company That Provides New Valuefor Industrial Customers’ Next-Generation Products
Market Environment (Risks and Opportunities)
In the Chemical Products Business, continuous growth is expected in the electric vehicle (EV) market as we move toward adecarbonized society due to changing consumer lifestyles and awareness; in the semiconductor market due to the spread of
5G communications; and in the hygiene-related market. On the other hand, to minimize the substantial negative impacts ofrisks of soaring material prices, stability issues in product and raw material supply and delays in distribution, we need to build astable business foundation.

Chemical Products Strategy in Vision2030 1st STAGE
Because of their high potential for future growth and as areas in which we have a thorough understanding of customer needs,
we have positioned CASE (connected, autonomous, shared, and electric) technologies and sanitary products as our key
categories, and will focus our management resources there. Further, leveraging the unique positioning of B-to-B, we will step
up initiatives for addressing our Sustainability Material Issues through our customers’ products and services, thus helping toenhance the value of the Lion Group’s business.

• CASE (Markets centered on connected, autonomous, sharedand electric technologies)• In the growing secondary battery market, which has been driven byrising demand for EVs, we will expand the business by increasing
production capacity for KETJENBLACK carbon black (KB), which
has competitive advantages.
• In the anti-sticking agent business, where we hold the top
domestic market share for general-use, powder-type anti-sticking
agents, we will enhance customer value through the rollout of liquid
polymer anti-sticking agents. We aim to capture top global market
share for both.

Focus

Competitive Advantages of KB
KB is an electro-conductive agent with a uniquestructure that can enhance range on a single charge.
Increased use of KB is
helping to popularize EVs,
thus contributing to reduced
CO2 emissions through ourcustomers.

• Sanitary Products (Healthcare market)
With regard to daily necessities and cosmetics raw material markets, we will develop products that meet the requirementsof markets during and after COVID-19, and utilize our top-class primary raw material processing plants to provide nitrogen
derivatives and functional polymers.
WEB

Lion Specialty Chemicals Co., Ltd.
https://www.lion-specialty-chem.co.jp/en/

LION Integrated Report 2022

37

Research & Development
With the aim of “Becoming an advanced
daily healthcare company,” we will foster
innovation as a growth engine.

Kosuke Tanaka
Executive Officer
Executive General Manager of Research and Development Headquarters

The Mission, Strengths and Next-Generation Policy of
Research & Development
The mission of the Lion Group's research and development
is to put the Lion Group’s purpose, “Make a differencein everyday lives by redesigning habits: ReDesign,” into
practice through numerous innovations that contribute tobusiness growth and the creation of a sustainable society.
Through these innovations, we redesign consumers’ living
habits to meet their diversifying needs and ensure healthy
minds and bodies for all. While focusing on the Lion Group’s
four fields of value creation,* which guide the growth of theGroup, we are taking on the challenge of cross-divisionalinnovation.
The foremost strengths of the Lion Group's researchand development are its connections with consumers
through the Lion products they use every day, and thewide-ranging expertise it has gained through consumer
research. In addition, our technological development
capabilities are backed by core technologies in oral care,life science, interface science, cleaning and formulation
cultivated through product development in various businessfields. Aiming for further innovation, we will combine thesestrengths to create new technologies in collaboration with
universities, research institutes, and corporations both
inside and outside Japan. We will also undertake digitaltransformation in our research activities to create new valuethat will enable us to contribute to redesigning habits fromthe consumer’s perspective.
Furthermore, given the rapid rise in importance ofsustainability in recent years, we are proactively working
to develop products that are even more environmentallyfriendly, as well as to collaborate with other companies,
universities and the government, among other initiatives.

Management
visionManagement
strategy

Becoming an advanced daily
healthcare company
Reinforce initiatives toaddress the Sustainability
Material Issues

Advance our three growth strategies

PurposeMake a difference in everyday lives by redesigning habits

Generating innovation

Developing informationand communicating

Building research infrastructure
Next-Generation Policy Aimed at Realizing Vision2030* Oral health, infection control, smart housework and well-being

R&D strengths
WEB

Research & Development
https://www.lion.co.jp/en/company/rd/

38 LION Integrated Report 2022

WEB

Next-Generation Policy
https://www.lion.co.jp/en/company/rd/structure/next-generation/

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Key R&D Themes Aligned with Long-Term Strategies(1) R &D That Supports the Focus on the Four Fields of Value Creation and the Expansion of Businesses
That Combine Products and Services
We are currently engaged in cross-divisional efforts to evolvethe smart app HAGUKI CHECKER, as

our existing businesses and create new business models in thewell as health checkup data, to visualize

four fields of value creation that guide the growth for the Lion

participants’ level of oral health. We will

Group. In the field of oral health, in addition to proposing better

use the numerous technologies we haveoral healthcare habits for all ages through various products anddeveloped in our research laboratories

informational activities, we are working on projects that use datato continue proposing new value in ways

on the oral condition of each individual to support the development

such as this.

of even more personalized oral health habits. Specifically, we havesigned a comprehensive partnership agreement with Koshi City in

HAGUKI CHECKER

Kumamoto Prefecture to provide citizens with opportunities to think

An app to check gum conditions

about their own oral health by answering a simple questionnaire,
either at home or on the go. We plan to use technologies thatleverage machine learning to process data on gum conditions fromWEB

HAGUKI CHECKER
https://haguki-check.lion-apps.jp/pc.html (Japanese only)(2) R&D Initiatives Aligned with Glocalization Strategy
To expand the Overseas Business, the Lion Group is moving forward

in Singapore and other countries or areas in Asia have led to anwith glocalization* to increase its presence in Asia’s markets. In R&D,

increasing number of people with sensitive skin concerns, andwe are posting researchers overseas as necessary to investigate

corresponding growth of the market for products to address them.

local lifestyles. This is helping us to discover promising needs that do

We responded by collaborating with a dermatologist to develop

not exist in Japan and to engage in new product development.

skincare products that moisturize dry skin and suppress itchiness.

In Indonesia, the beauty care market for color cosmetics is

As a result of these efforts, we launched the new SunoHada brand

beginning to expand owing to economic growth in recent years. In

in October 2021. Aiming for further business growth, we will expand

fact, we have positioned Indonesia as a key country in Southeast

rollouts of SunoHada products to neighboring countries.

Asia in this category, and are working on product developmentwith our local affiliate PT. Lion Wings. For a full-scale entry into thecolor cosmetics market, we carried out observational research on
local cosmetics trends to clarify the desired qualities for Luminous
Cushion, Two Way Cake, Loose Powder, Compact Powder, Matte
Lipcream, and Long Lasting Lipstick. We also created a systemfor collaboration with external parties, including technical experts
and raw materials producers, to implement an efficient formulationand production framework while complementing our range oftechnologies and expertise. As a result of these efforts, in September
2021 we simultaneously launched the above six products under the
new AZZURA brand.
Among other issues, changes in physical environments, diets,
lifestyles, hygiene awareness and other factors due to urbanization

The new AZZURA (left) and SunoHada (right) brands for the cosmetics businessin Southeast Asia
* A strategy for establishing unique competitive edges by combining
globalization and localization(3) Development of Environmentally Friendly Products
Based on the LION Eco Challenge 2050, a set of long-term

our highly concentrated liquid laundry detergent TOP SUPER NANOX,

environmental objectives, the Lion Group aims to achieve a high level

which we renewed and relaunched in 2020, not only did we reduceof plastic recycling. We have been working to reduce plastic use

plastic use by 20%, but we also made the bottle entirely from recycled

since the 1990s, and as of 2020 we had achieved a 43% reduction1

PET, excluding components such as the nozzle and cap.

in plastic used (per amount of product shipped) compared with
1995 in eight major product categories.2 We are also proactively
using recycled materials in our containers. In 2000, we began using
recycled polyethylene terephthalate (PET) from beverage bottles in our
dishwashing detergent containers. Furthermore, for the clear bottle of

1. Converted to align with the standards of the Japan Soap and Detergent
Association’s reduction target for plastic usage for packaging (unit: plastic used
per amount of product shipped)
2. Liquid laundry detergents, fabric softeners, bleaches, shampoos andconditioners, hand soaps, dishwashing detergents and household cleaners

LION Integrated Report 2022

39

Research & Development

Initiatives to Promote the Key R&D Themes
Enhancing Work Process Efficiency through Digital Transformation (DX)We are proactively advancing digital transformation (DX) in order

For example, in the case of bristle firmness, without having toto enhance our operational efficiency. One application of DX iscreate an actual sample, we can use AI to predict actual outcomes—

the use of AI in toothbrush development. Previously, toothbrush

whether the bristles will be hard, medium, or soft—and therefore

development was a time-consuming process. Based on theirdetermine whether the specifications are in line with the productexperience, expertise and ideas, researchers would examine shape,

concept and Japan Industrial Standards. We still need to create andthickness, length and various other factors according to the productevaluate an actual sample, but by using AI we have been able toconcept. Having AI learn from large volumes of past research has

shorten a process that previously took several days to about an hourenabled highly accurate prediction in certain qualities of the product.

or so, greatly enhancing development efficiency.

Creating Mechanisms That Generate Innovation
To further drive transformation in the Lion Group’s research anddate, this scheme has helped give rise to research themes that candevelopment, in 2018 we established the Innovation Lab. Currently

create new value, broaden researchers’ perspectives and foster anfunctioning as an innovation hub for the entire Company, the lab

innovation mindset.

contributes to the creation of a range of amazing new businesses
that go beyond conventional systems. It provides services ranging
from support for the ideation process, including workshop
planning, visualization of past and current ideas and prototyping,
to collaboration with the Business Development Center, andindependent open innovation to provide new idea creation, productdemonstrations and feasibility studies for commercialization.
We have implemented an initiative under which all of ourresearchers are allowed to use 15% of their working hours toinvestigate a theme of their own choosing. These themes do notnecessarily have to be connected to researchers’ main lines of work;
our intention is to bring together researchers with common interestsand concerns to work toward targets they themselves have set. To

Focus

A Research Theme for New Value Creation

Taking advantage of this scheme, our researchers devised amethod for detecting COVID-19 neutralizing antibodies. In avery short timeframe, they developed a new testing methodthat is more convenient and qualitatively superior to theimmunochromatographic methods currently most commonly used.
Less than two months from the start of their investigation, ourresearchers filed two patent applications. During implementation
trials, they issued a request for a divisional, accelerated patentexamination, and 11 months from the application filing, a patent
was registered (Patent no. 7036979) with the Japanese Patent Office.

Intellectual Property Initiatives
Lion’s basic policy regarding intellectual property is set forth in its

managing patents, trademarks and copyrights, the Intellectual

Behavioral Guidelines. These stipulate that we will strive to create,

Property Department protects and utilizes a wide range of otherproperly protect and actively utilize intellectual property, and that

intellectual property and intangible assets, such as manufacturing

we will respect the intellectual property of others and not seek toand assessment methods (proprietary information) and healthcare

improperly acquire or use it.

data. An intellectual property committee, chaired by the director

To promote and manage intellectual property initiatives, we have

responsible for intellectual property, meets twice yearly to formulate

established a dedicated Intellectual Property Department underintellectual property strategies and report and discuss progress on

the direct control of management. The department coordinates

key measures.

investments in intellectual property with management strategies,

The Intellectual Property Department at our Headquarters inensures that intellectual property rights are used appropriately

Japan is in charge of managing and utilizing main overseas intellectualand conducts accurate information disclosure. In addition toproperty rights, and works to eliminate counterfeit goods.

Unique Intellectual Property Initiatives
Initiatives

Details

Creating inventions that
contribute to putting Lion’s
purpose into practice

Focusing on technological developments that contribute to redesigning habits has led to the creation of inventions thatprovide new value. Our patented children’s safety toothbrush, which promotes enjoyable tooth brushing for children
and peace of mind for parents, was recognized as an outstanding invention with an invention promotion award in the2020 Kanto Commendation for Invention organized by the Japan Institute of Invention and Innovation.

Registering sound trademarks

As of May 2022, we hold 10 registered sound trademarks, the most of any company in Japan. Since our founding,our marketing activities have emphasized sounds that are memorable to consumers, and our large number of soundtrademarks demonstrates our outstanding ability to create and utilize recognizable sounds.

Employee awards program
for wide-ranging intellectual
property initiatives

We offer in-house Intellectual Property Contribution Awards to recognize employees’ wide-ranging intellectual property
initiatives. In fiscal 2021, nine individuals from various organizations inside and outside Japan were recognized for
implementing counterfeit product countermeasures, educational video copyright administration and other activities.

40 LION Integrated Report 2022

CLINICA Kid’s
Toothbrush
For children
0–2 years old©DisneyContents

Supply Chain

Our Purpose

Vision & Strategy

Raw Material Procurement

Corporate Governance

Production

Performance/Data

Distribution

We will deliver products to address
the daily needs of consumers bybuilding a sustainable supply chain
management platform.
Kei Minamikawa
Executive Officer
Executive General Manager of Supply Chain Planning Headquarters,
Director of Administrative Department

Improving Flexibility and Resilience across the Supply Chain
In 2022, we have reorganized the functions of supply chain
management (SCM) departments and newly launched
the Supply Chain Planning Headquarters. The reason forthis is to quickly resolve SCM issues through focused,comprehensive response, data- and technology-based
design and collaboration, both within chains of commandand between SCM departments.
To ensure that Lion can continue to deliver products forthe daily needs of consumers, we have been working todevelop highly competitive SCM by boosting the resilienceof our logistics system and framework for sustainable andstable raw material procurement and product supply. For
example, to counter the increase in scale and severity ofnatural disasters in recent years, we have created alternate

Building a Sustainable SCM Platform

How We Achieve Operational Streamlining

Increase the flexibility and resilienceof the entire supply chain
 oordinate production, distribution and sales data (via aCshift to universal numbering) to optimize inventories andminimize the occurrence of product shortages
Upgrade BCPs (by securing multiple raw material
suppliers and multiple transport and distribution routes)

Lion

Expected effects
1. Improvement in the labor environment fordrivers and warehouse workers engaged inloading and unloading
2. Increased labor productivity
3. Reduced environmental impact (reduced CO2
emissions and use of paper)

Receive order

Place order

Wholesaler

Inventory
allocation

Shipment
content
confirmation

Continuously step up responsible
supply chain initiatives
 romote a logistics EDI concept (collaborativeP
distribution involving industry peers) to achieve
operational streamlining, reinforce our logistics crisis
response capabilities, and curb CO2 emissions and otherenvironmental footprints

delivery routes and backup hubs to ensure continuous
product supply. We are also reinforcing efforts to adopt
universal numbering to coordinate ongoing sales dataprocessing. This will enable precise sales and operations
planning, which will improve our production, sales andinventory management processes.
Going forward, procurement, production and distribution
methods could change drastically as product personalization
increases, resulting in demands for greater speed andflexibility throughout the supply chain. Therefore, in
addition to our own efforts, we intend to lead the industry inpromoting supply chain platform reforms to address issues
across the supply chain.

Scheduledshipment data
(ASN)

Logistics
EDI

Scheduledshipment data
(ASN)

Manifest-free

Advance confirmation
Scheduled arrival
confirmation

Inspection-free
Transport

Shipment

ArrivalReceipt confirmation
Arrivalinspection data
(upon receipt)

Logistics
EDI

Receipt
Arrivalinspection data
(upon receipt)

LION Integrated Report 2022

41

Supply Chain
Raw Material Procurement

Production

Distribution

Sustainable Raw Material Procurement
Promoting Sustainability with Materials
Manufacturers and Production Contractors
The palm oil, paper, pulp and other raw materials that Lion
uses must be harvested, processed and sold to suppliers
before they reach the Group. If issues related to theenvironment, human rights or labor occur at any of thesestages, even if they are not directly related to Lion, we could
be held responsible.
In order to ensure sustainable procurement, Lion isreinforcing coordination with materials manufacturers andproduction contractors to realize more effective SCM. Lion’s
Procurement Principles clearly state its stance of considering
legal compliance, environmental conservation and respectfor human rights when selecting business partners. To help
our suppliers understand the importance of sustainability
initiatives, we require them to conduct self-checks basedon the Lion Group Supplier CSR Guidelines. We only
do business with suppliers that meet the standards set
according to our key sustainability criteria.
We will continue to coordinate with our suppliers inbuilding and operating a sustainable procurement system.

Procuring Sustainable Raw Materials
Lion uses palm oil and palm kernel oil derivatives—renewable,
carbon-neutral plant-based raw materials—in its body soaps,
laundry detergents and dishwashing detergents. We also use
paper and pulp in product packaging, booklets, pamphlets,
copy paper and other office supplies. However, procurementof these materials often involves environmental problems suchas deforestation, as well as human rights and labor issues, allof which can negatively impact sustainable development.
In response, based on our Sustainable Material
Procurement Policy, we are using the frameworks of various
certifications to promote sustainable procurement.
Item

Main Initiative
Procurement of RSPO1-certified oil

Palm and palm kernel oil
derivatives

derivatives

Paper and pulp

Procurement of FSC2-certified paper

1. Roundtable on Sustainable Palm Oil
2. Forest Stewardship Council

WEB

WEB

Raw Material Procurement

Lion Group Supplier CSR Guidelines
https://www.lion.co.jp/ja/sustainability/businesscustom/valuechain/pdf/eng.pdf
Sustainable Material Procurement Policy
https://www.lion.co.jp/en/company/governance/policies/
material-procurement.php

Production

Distribution

Increasing Production Capacity in Focus Areas to Grow Sales
At Lion, we are working to build a highly flexible, resilientand sustainable production and supply system to enable thetimely provision of the products our customers need.
In the market for oral care products, one of Lion’s
mainstay business categories, demand continues to growin line with diversifying tastes (needs) and increasing healthawareness among consumers in Japan, and support
from overseas customers for high-quality products madein Japan. Responding to this demand, in July 2021 webegan operation of a new plant at the Lion Chemical Co.,
Ltd. Oleochemical Production Site (“LCCOC,” located in
Sakaide, Kagawa Prefecture), thereby boosting our supply
capabilities by 70%. Nearby, Dai Nippon Printing Co.,
Ltd. has built a plant that produces laminated toothpaste
tubes, enabling greater procurement efficiency and fasterproduction through integrated production from toothpaste
tubes to toothpaste.
In Japan, to respond to increasing demand for largersize refill products for liquid laundry detergents and fabricsofteners, we have installed new filling and packaging
equipment at the Chiba Plant and the Osaka Plant, our main
production sites, boosting their supply capacity by 60%.

Overseas, in line with growth in the powder laundry
detergent market, Lion Corporation (Thailand) Ltd. (“LCT”)
has built a new spray-drying tower, which is one of the main
pieces of production equipment, thereby doubling its supply
capacity. Featuring solar panels and a heat recovery systemfor collecting and reusing heat from waste gas, this new
spray-drying tower is more environmentally friendly than thetwo existing towers.
From another sustainability standpoint, in addition to
updating plant equipment to energy-saving models andinstalling solar panels on production sites (see page 55),
we hope to eventually be able to visualize the energy
consumption of all of our factories, which will give us theinsight we need to achieve even further energy savings.

The new spray-drying tower building at LCT

42 LION Integrated Report 2022

Contents

Our Purpose

Vision & Strategy

Raw Material Procurement

Corporate Governance

Production

Performance/Data

Distribution

Ongoing Reinforcement of Initiatives to Build a Responsible Supply Chain
One issue affecting the logistics industry in recent years has
been the long working hours for truck drivers—in particular,
the time they must wait for their cargo to be unloaded. To
address this issue, in 2021 we introduced a berth reservation
system at 10 of our logistics hubs for daily sundries. This has
greatly reduced waiting time.
For cargo to be loaded and unloaded, trucks must be
parked in a berth. Previously, when transporting goods fromproduction sites to logistics hubs, trucks were unloaded in theorder of their arrival. When the number of trucks exceeded
the number of berths, there would invariably be an average
waiting time of one hour or more per truck from arrival tounloading. The new system has helped to optimize truck
dispatch, transportation and delivery by cutting annual waitingtimes for these 10 hubs by a total of about 66,700 hours.
Furthermore, the reduction in engine idling time is expected
to lower annual CO2 emissions by around 68,900 tons.

digitalization of logistics data platforms to solve logistics
issues throughout the daily sundries industry. Using thelogistics electronic data interchange (EDI) platform of
PLANET, INC., which operates such systems for thelogistics industry, we conducted demonstration testing
using advanced shipping notices (ASNs) to digitalize delivery
receipts and simplify inspections, and have commenced
gradual expansion of ASN use for individual trucks in thewholesale industry.
In tandem with this, we are working to streamline andstandardize frontline logistics operations as part of the Study
Group for Logistics Productivity in the Supply Chain, which
is hosted by the Distribution Economics Institute of Japan(“DEIJ”). The DEIJ comprises industry manufacturers andthe logistics companies tasked with delivering their goods.
In collaboration with other manufacturers and logistics
companies, we are leading efforts to build a standardized

Aside from this initiative, we continue to promoteshared use of vehicles and a joint two-way transportation
program with companies from different industries, among
other measures, as we promote initiatives to improve labor
environments in logistics and reduce CO2 emissions.

supply chain model for the whole industry.
Through these initiatives, we aim to improve labor
environments, boost labor productivity, and reduce
environmental burden while building a sustainable, resilient
supply chain platform for the entire industry.

Meanwhile, we are taking the initiative in promoting the

1

2

3

4

Reserve

Check inReceive callComplete

Unloading

Sorting during inspection

Storage

Currently
Departure

Trucking
company

Driver

Select and reserve
time via online or
smartphone app

Check in upon Proceed to designatedarrivalberth after receiving
SMS text

Unloadingcomplete

No need to bepresent during
inspection

Receiving
manager
UnloadingInspection

Driver
Departure

Logistics
centerEnvisioned
process
Confirm
reservation andcheck-inDesignate berth and send SMS
text to truck driver to proceed
to berth when it opens

Outline of Berth Reservation System Service

Focus

Registercompletion of
unloading

Unloading

Sorting

Storage

Receiving
manager

Sorting and storage

Process completion
DriverReceiving
manager

Envisioned Process for Using ASN for Inspection-free Shipment and Delivery

Efforts to Streamline and Standardize Frontline Logistics Operations

Faced with an imminent logistics crisis and calls to achieve the SDGs, the Ministry of Economy, Trade and Industry
and the Ministry of Land, Infrastructure, Transport and Tourism are using the Physical Internet* Symposium andother platforms to seriously discuss roadmaps to digitalize and standardize logistics operations based on industry,
government, and academia collaboration. Efforts such as these can boost momentum across society, and while
we can expect advances in infrastructure development, actual operation of new mechanisms will depend on eachcorporation involved. At the DEIJ where I was seconded from Lion in 2022, we will drive industry-wide efforts andpromote specific actions to enhance logistics efficiency. My role involves promoting these efforts on a day-to-day basis.
* Taking its name from digital internet networks, the Physical Internet is an approach to logistics systems aimed at enhancing theefficiency of cargo transportation by having multiple corporations share their warehouses and trucks.

Atsushi Kono
Project Researcher
The Distribution
Economics Instituteof Japan

LION Integrated Report 2022

43

Human Resource Development

We will generate dynamism in our
personnel and organization by putting
our purpose into practice and promoting
professional fulfillment reforms.
Yoko Koike
Executive Officer
Director of Human Resources Development Center

Human Resource Development Strategy to Realize Our Management Vision
One of the growth strategies of Lion’s Vision2030 is“Generate dynamism to realize innovative change.” Under
this strategy, we aim to have all employees spurring oneach other in their respective growth processes andoperating as autonomous individuals in order to generate
waves of innovative change; that is, dynamism, acrossthe organization as a whole. To do so, we are promoting
corporate branding based on understanding of andresonance with our purpose,“Make a difference in everyday
lives by redesigning habits: ReDesign,” to help employees
feel real value in working for Lion, thus improving employee
engagement. Furthermore, in addition to our efforts tocreate employee-friendly workplaces from the perspectiveof human resource development—in everything from hiring
to training, compensation and the fostering of healthy
habits—we also aim to increase productivity and create newvalue by instilling a sense of professional fulfillment in every
employee.
Through further advancement of corporate brandingand LION Professional Fulfillment Reforms, we are helping
employees fully display their diverse capabilities to form acollective of human resources that will embody our purpose.
In this way, we will continue to transform for sustainablegrowth.

Corporate Branding

Transition to a corporate culture
capable of practicing our purposeand empowering employees to “Makea difference in everyday lives byredesigning habits: ReDesign”
Continuously promote LION Professional
Fulfillment Reforms

Create a collective of humanresources who work vibrantly witha sense of professional fulfillment
as they pursue the realization of the
management vision in line with theirown aspirations and actions

WEB

Together with Employees
https://www.lion.co.jp/en/sustainability/employee/

44 LION Integrated Report 2022

Creating acollective ofhuman resources
to fulfill our
purposeA companythat grows
sustainably

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Transition to a corporate culture capable of practicing our purpose andempowering employees
Reorganizing Our Corporate Philosophy
Lion has reorganized its corporate philosophy to include a
set of beliefs to guide employee decisions and actions as
they seek to promptly and independently put the purpose
into practice at the frontline, as well as the Group’s DNA(“Fulfilling a Spirit of Love”), which has remained unchanged
since its founding.
We will encourage employees to more strongly feel
personal relevance in our purpose and transition to a
corporate culture embodying our purpose by providing themwith opportunities to practice.
Corporate Philosophy (page 1)

Measures to Promote the Spread of Our Purpose
and Beliefs
Active discussions are already underway to help employeesinterpret Lion’s corporate philosophy in their own way. It is
important that each department and individual within theGroup considers their mission based on our purpose, andthat they examine whether the actions they take to help
achieve their mission are in line with Lion’s beliefs. We will
make time for employees to take a good look at the purposeand beliefs. Rather than simply issuing top-down directives,
we will provide opportunities to share information andideas, mainly through dialogue. Furthermore, to inculcate
the purpose and beliefs, we will spread the word about
purpose-driven activities, both internally and externally.

Employee Awareness and Behavior Survey
We are administering the Employee Awareness and Behavior
Survey to all domestic Group employees to verify whether
each employee feels a sense of value in working for theGroup and therefore highly engaged in their work. This year’s
survey gauged factors that influence levels of employee

Focus

Each work group’s interpretations of the beliefs displayed along the corridor
next to the cafeteria at the Odawara Plant

engagement—such as “ability to express individuality,” “jobsatisfaction,” and “ability to put the purpose into practice in
one’s work”—thus giving us a clearer picture of Group-wide
progress in understanding and practice of the purpose.
Going forward, we will continue to make use of thesurvey and other measures that lead to further improvement
in employee engagement to ensure that employees canachieve professional and personal fulfillment throughenthusiasm for the purpose.

Establishment of the Culture Lab

To achieve Vision2030, we must review and improve internal activities that have up until
now been conducted as a matter of course. We established the Culture Lab to carry out
activities to unify and enhance the efforts and policies of each department from a Groupwide perspective. Specifically, discussions among employees brought together fromvarious departments, ranks and roles will accelerate corporate culture reforms. The Culture
Lab will address various questions, including “How can we ensure active communication
among different-ranking employees?”, “How can we speed up the dissemination andacquisition of information?”, and “How can we encourage employees to establish lofty
goals on their own initiative?”

Shohei Fujimura
Director-Corporate Culture

LION Integrated Report 2022

45

Human Resource Development

Continuously Promoting Diverse Work Styles for the New Normal
Overview and Goals of the LION Professional
Fulfillment Reforms
Lion aims to ensure that individual employees are able totake total ownership of their roles and exercise their abilities
to the fullest. To this end, in 2019, we launched a new
initiative, the LION Professional Fulfillment Reforms, focusedon health, work styles and enabling diverse personnel
to participate more fully and advance professionally. The
reforms comprise four initiatives: Work management,
Work styles, Strengthen relationships and, as thefoundation supporting the first three, Lion-style healthsupport, “GENKI” Action.
The COVID-19 pandemic has led to changes in work styles
and values for many employees. Amid such changes in theexternal environment, the Human Resources Development
Center is striving to ensure that employees can maintain theirsense of professional fulfillment and find the work styles thatare best for them by upgrading environments and systems
under the framework of the Reforms and implementing avariety of measures to address the new normal created by
the conditions of the pandemic.

LION Professional Fulfillment Reform Framework• Opportunities not bound by official
qualifications or roles• New promotion system• Career design support• Lion Career Village• Multifaceted evaluations of ability• Making employee information moreaccessible• New health management system:
GENKI Navi
• V isualization of health checkup results
and future health risk data
• A rchiving of exercise, diet, bloodpressure and weight data
• Preventive dentistry• Countermeasures to three common
types of cancer• Reinforcing nonsmoking initiatives

Fulfilling work
Able to grow as a professional and private individual and lead a fulfilling lifeWork
management

Work styles
Change ways of working, withemphasis on independence

Make maximum use ofdiverse talent

Strengthen
relationships

Mutual understanding and respect•P ermitting discretion in work styles(attire, time, place)•N ew work systems(full-flex, telecommuting, use of time off
in hourly increments)• Moving the headquarters• Side job system• Relationship enhancement program• 1-on-1 meetings• Employee award system• Address mutual biases throughattention, understanding and positive
actionLion-style health support“GENKI” Action

Work styles“GENKI” Action

Creation of Diverse, Flexible Work Environments(telecommuting, side businesses, side jobs, etc.)

Health and Productivity Management to Improve
Employee Health

In January 2021, we introduced telecommuting and fullflex systems (eliminating core time). Due in part to thepandemic, around 50% of employees continue to work
remotely. Moreover, approximately 100 employees currently
have side jobs, suggesting that independent, diverse work
styles have begun to take root.

Despite the ongoing pandemic, following strict infection
prevention countermeasures, we held dental checkups
at 121 of our business sites, for approximately 56%2 ofStrengthen relationships
Management Skill Improvement Program to Enhance
Employee Relationships
We are currently implementing a program for the 600
members of management in the Lion Group to help
them redefine their relationships with their subordinates.
The program will run for a total of three years, with 100
members of management taking part every six months.
To achieve true professional fulfillment, it is essential to
improve relationships among employees. As such, thisprogram brings together management and all other Group
employees to strengthen workplace relationships under the
key concept of psychological safety.

46 LION Integrated Report 2022

employees. Elsewhere, we have introduced the new healthmanagement system GENKI Navi to help visualize healthconditions, and are raising employees’ awareness of theimportance of health. We are also working to improve ourhealth guidance and consultation services by enabling
employees to use a mobile device or PC to check theresults of their health checkups and log lifestyle data suchas diet and exercise. As part of our countermeasures tothree common types of cancer, around 200 employees
underwent detailed examinations for stomach, colon andlung cancer. Through these initiatives, we are reinforcing
health and productivity management while improving
employee health.
1. Checkups were cancelled at three business sites (Headquarters, Sapporo
office, and Fukuoka office) due to states of emergency.
2. Percentage of employees at each business site.

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Continuous Acquisition and Development of Human Resources
Who Can Drive Company GrowthDiversity and Inclusion to Promote Innovation
For us to continue speedily generating new value throughsolutions to lifestyle and social challenges, we must makefull use of the diverse insight of diverse personnel to create
new concepts and innovations.
We are developing an environment and culture in which
employees can respect each other’s diverse values andideas and fully demonstrate their individuality and abilities,
regardless of nationality, gender or any other personal traits.
In addition, we are proactively hiring and promoting adiverse range of personnel, including women, non-Japanesenationals and mid-career individuals with a wide variety ofwork experience.
With regard to the number of women promoted to
management, an area in which Japan is lagging behind othercountries, we will continue to develop female employees
for leadership roles. Our targets for the ratio of women in
management* are 30% or more for the Lion Group and at
least 35% for Lion Corporation by 2030.

Stepping Up Development of Global and Digital
Human Resources
In the Overseas Business, which is key to Lion’s growth,developing global personnel is an urgent matter. To
accelerate the growth of our Asia business, we are also
moving forward with the development of leaders for our
glocalization strategies. In 2021, we launched a global
personnel development program for younger and midlevel employees to gain first-hand experience in our Asia
business. Through efforts such as these, we will support thedevelopment of employees with outstanding expertise who
can be successful in all of Asia, including Japan.
It will also be important to make up-front investments todrive digital transformation and create new business models.
We will work to further improve our overall productivity
through the development of personnel who can lead digitaltransformation that streamlines our business foundation andwork processes.

* Personnel holding managerial positions at the level of manager or higher

Diverse Human
Resources

InitiativeMid-career
hires

Hiring mid-career individuals with the knowledge andexperience to be an immediate asset

Side job
applicants

Bringing in new ideas by hiring individuals withspecialized expertise from outside the Group to workside jobs

Global humanresources

Developing and utilizing global human resources,
including foreign nationals, as part of efforts to advancebusiness globalization

People withdisabilities

Proactively hiring people with disabilities

Focus

Employees taking part in the global personnel
development program

About Human Resource Strategy—Diversity and Inclusion

As we aim for sustainable corporate growth on a global scale, we will work to eliminate gender gaps incareer development, housework and childcare.
In Japan, which ranks low on the Global Gender Gap Index,* many people have biases on the rolesof men and women. We aim to throw out conventional ideas and preconceptions about what men
and women can or cannot do, as well as regarding their suitability for various roles, and create anenvironment in which employees can take on any challenge regardless of their gender. In doing so, wewill support diverse work styles and careers.
Specifically, we will
• Foster a corporate culture of acceptance for diversity, in which unconscious bias in workplaces
and the overall organization is addressed through attention, understanding and positive action• Provide female employees with more opportunities, a mentoring program to support theirdevelopment, and empowerment seminars• Encourage male employees to take childcare leave and participate in housework
We believe that broadening roles both at work and at home can improve personal motivation andhelp employees develop better habits. We will continue to promote the generation of these and otherpositive outcomes.

Azusa Yamauchi
Director-Special Diversity& Inclusion* 120th out of 156 countries (Global Gender Gap Report 2021)
WEB

Promoting Diversity & Inclusion
https://www.lion.co.jp/en/sustainability/employee/various/

LION Integrated Report 202247

Sustainability
Addressing the Sustainability Material Issues to Achieve Our Management Vision

Approach to Sustainability
Upholding its founding spirit of “benefiting society throughits business activities,” Lion, in addition to pursuingeconomic development, has long considered its impact
on the environment and society and worked to address
related issues.
At present, we are tackling key management issues toreduce risks and achieve our management vision for 2030
of “Becoming an advanced daily healthcare company.” At
the same time, we are practicing management driven by our
purpose, “Make a difference in everyday lives by redesigning
habits: ReDesign.” The Lion Group will synergisticallyaddress its Sustainability Material Issues and advance three
growth strategies in order to contribute to the realization of asustainable society and achieve business growth.

Identifying Material Issues

Management
visionManagement
strategy

Becoming an advanced daily
healthcare company
Reinforce initiatives toaddress the Sustainability
Material Issues

Advance our three growth strategies

PurposeMake a difference in everyday lives by redesigning habits

WEB

Lion’s Sustainability
https://www.lion.co.jp/en/csr/management/

Steps for Identifying Sustainability Material Issues

The Lion Group’s goals for 2030 include realization of the
management vision and contributing to the realization of the
SDGs. In order to achieve these goals, in 2020 we applied
the steps shown on the right to revise the Sustainability
Material Issues to address over the coming decade. These
Sustainability Material Issues are relevant to both the LionGroup and society at large and, with the goal of helping
to realize a healthy future for people and the planet, theirselection was informed by broad business, environmental
and social sustainability perspectives. In identifying theseissues, we comprehensively considered the entire value
chain and interests of Lion’s stakeholders in order tounderstand the risks and opportunities each represents.
In particular, we have positioned “Creating Healthy
Living Habits” and “Promoting Environmental Initiatives
for a Sustainable Planet” as top priority material issues
that we must invest management resources in to secure acompetitive advantage. In addition, we revised our objectives
and other indicators in 2021 due to the COVID-19 pandemic
and drastic changes in the social environment.

Step

1

Identify social issues
Based on ISO 26000, the SDGs, the GRI
Standards and the ten principles of the UN
Global Compact, 39 social issues were identified.

Consider each issue’s impact onsociety and businesses
Step

2

Step

3

The issues identified in Step 1 were evaluated interms of their impact on society and businesses
and reviewed by related departments and theSustainability Promotion Meeting (currently the
Sustainability Promotion Council).

Investigate the soundness of thematerial issues
The soundness of each item was investigated inlight of the viewpoints of third-party institutions
and the issues were revised as necessary.

Our Approach to Identifying Sustainability Material Issues

Degree of impact
on society

Extremelyhigh

The Lion Group’s
Sustainability MaterialIssuesDegree of impact
on businesses

48 LION Integrated Report 2022

Step

4

Extremely
highObtain approval from the
Executive Committee and Boardof Directors
The Sustainability Material Issues identified
were approved by the Executive Committee and
Board of Directors.

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Risks and Opportunities Related to Sustainability Material Issues in the Value Chain
Lion has classified its Sustainability Material Issues as presenting either risks or opportunities based on considerations of theentire value chain and its stakeholders.
Value ChainStage

Raw Material
Procurement

Use by Consumers

Lion’s Activities
Business partners

Keystakeholders

Disposal by Consumers

Consumers

Employees
Shareholders and investors
Local communities

Sustainability Material Issues• Creating Healthy Living Habits

Opportunities• Promoting Diversity & Inclusion• Promoting Work-Life Enrichment• Developing Human Resources• Improving Employee Health• Pursuing Customer Satisfaction and Trust• Promoting Environmental Initiatives for a Sustainable Planet• Enhancing the Occupational Safety Management System• Respecting Human Rights

Risks• Building Responsible Supply Chain Management• Promoting Risk Management• Reinforcing Compliance• Enhancing Governance

Sustainability Management
Sustainability Promotion Council
In order to promote sustainable management, until 2020
we held the Sustainability Promotion Meeting, comprising
all executive directors, including the president, andrelated departments. In 2021, we revised this system andestablished the Sustainability Promotion Council, whichmeets twice a year.
We have established three subcommittees under the

Senior Executive Committee

Present items fordiscussion

ReportSustainability Promotion Council
Chairperson: T he director responsible for the Sustainability Promotion Department
Members: The President, executive officers and representatives of related divisions

E Subcommittee

S Subcommittee(Global Environment)
Run by: Executive officers(Social Environment)
Run by: Executive officers

council, each headed by an executive officer, positioning
top management at the forefront of promoting Sustainability
Material Issues more than ever before. Decisions made by
the council are reported to the Senior Executive Committee
and, as necessary, presented to and discussed by the
Executive Committee and the Board of Directors, before
being reflected in the business activities of the businessexecution departments.

Focus

Executive Committee/Board of Directors

G Subcommittee(Action Management)
Run by: Executive officers

Strategy

Plan

Act

Business execution departments

Expectations for Evolving Sustainability Management

The Audit & Supervisory Board makes sustainability a priority theme each fiscal year. I have been working in the fieldof sustainability for many years. As such, I look at how issues related to the environment (E) as well as people andsociety (S) are decided upon in the Lion Group (i.e., governance (G)), including decisions by the Board of Directors.
The Sustainability Promotion Council is an extremely important body as it gives specific instructions with regard
to sustainability issues and demonstrates leadership in dealing with investments, risk and progress management,
among other issues. The president, the director in charge of sustainability, directors responsible for other areas andexecutive officers in charge of operations are all driven by the same purpose. As they are serious about their work,
conflict can sometimes arise. However, I am encouraged by the fact that the more often we meet, the more often
we are able to come up with various innovative ideas. Going forward, there is urgent need to disclose non-financial
information more effectively. This is due to the growing realization that addressing ESG-related issues is directly
connected to corporate value over the medium to long term. Our challenge will be to convey to society and themarket what it is that Lion does and the ways in which it contributes to a sustainable society by redesigning habits.

Atsuko Suzuki
External Audit & Supervisory
Board Member

LION Integrated Report 2022

49

Sustainability Material Issues, 2030 Objectives and Indicators, 2021 Results and Measures to 2030
Material Issues

Promoting
Environmental
Initiatives for a
Sustainable Planet

WEB

Top-Priority Material Issues

E

Objectives

Indicators (2030)

Reduce CO2 emissions throughout business activities.

• CO2 emissions throughout business activities
Down 55% compared with 2017 levels (Absolute quantity)

Reduce CO2 emissions throughout product life cycles.

• CO2 emissions throughout product life cycles
Down 30% compared with 2017 levels (Absolute quantity)

Achieve a CO2 emissions reduction effect in excess of Lion’s own
emissions to help society become carbon negative.

• Contribute to a CO2 emission reduction effect in excess of Lion’s own
emissions (Japan)

Promote actively the 3Rs (reduce, reuse, recycle) and renewable activities.

• Petrochemical-derived plastic use rate
70% or less

Reduce water usage throughout product life cycles.

• Water usage throughout product life cycles
Down 30% compared with 2017 levels (Per unit of net sales)

Provide opportunities for everyone to practice oral care whenevernecessary and foster oral care habits to promote health for all.

Creating Healthy
Living Habits• Persons provided with products, services and information aimed at creating
healthy living habits
1 billion<Oral care: 500 million, Cleanliness and hygiene: 500 million>

WEB

Promote the establishment of hygienic habits that prevent bacteria andviruses from entering the body across all aspects of daily living.

• Ratio of women in management 30% or more
• Employees who feel that employees with diverse values are able to succeed
professionally 80% or more

Promoting Diversity &Inclusion

WEB

Enable human resources with diverse values and ideas fully express theirindividuality and abilities and succeed professionally.

Promoting Work-Life
Enrichment

WEB

Create an environment that helps employees fulfill their ambitions through • Employees who feel that life outside of work (role at home and external
synergy between work and private life.
activities) has a positive impact on work 75% or more

Developing Human
Resources

WEB

Foster human resources who generate dynamism to realize innovativechange by creating environments that allow all employees to exercise
their diverse abilities to the fullest and embrace challenges.

• Employees who are using diverse educational programs (Lion Career Village)
for individualized skill acquisition and ability development 100%

Improving Employee HealthWEB

Support mental and physical healthcare for employees to reinforce
Group human resources and achieve sustainable corporate growth.

• Employees getting dental checkups 100%
• A bsenteeism Improve from the 2021 level

Enhancing the Occupational
Safety Management System

WEB

Enhance systems to ensure compliance with occupational safety andhealth laws and regulations and to enforce safety awareness thoroughly
for the safety and peace of mind of employees and outside partners
working on site.

• Participation in safety education and training
Implement as planned (100%) at work sites• Compliance with occupational safety and health laws and regulations
Serious accidents and incidents Zero

Respecting Human Rights

WEB

Ensure respect for the human rights of all stakeholders affected by Groupbusiness activities, in line with the LION Human Rights Policy.

• Human rights due diligence implementation for material human rights issues
100%

Building Responsible
Supply Chain Management

WEB

Implement sustainable procurement with zero tolerance for humanrights and labor problems (including child labor and forced labor) or
environmental destruction in line with the Sustainable Material
Procurement Policy and Lion Group Supplier CSR Guidelines.

• Procurement of third-party certified paper and pulp (FSC, PEFC, etc.) and palmoil, palm kernel oil and their derivatives (RSPO, etc.) 100%
• Procurement of third-party certified paper and pulp (FSC, PEFC, etc.) and palmoil, palm kernel oil and their derivatives (RSPO, etc.) from suppliers that support
efforts aimed at zero deforestation 100%

Pursuing Customer
Satisfaction and TrustWEB

Promote and reinforce customer-oriented business activities by improving
customer support quality and the value of products and services.

• Customer opinions are reflected in all products and services so that customers
will continue to choose themPromoting Risk
Management

WEB

Build a comprehensive and exhaustive risk management system for
identifying and quickly and appropriately dealing with risks to achievesustainable corporate growth.

• Disclosure of the results of monitoring significant business risks and progressin implementing reduction measures At least once a year

Reinforcing ComplianceWEB

Reinforce effective initiatives to instill compliance awareness and thus
earn and maintain the trust of society.

• Participation in compliance education and training(100%) at work sites• Serious compliance violations Zero

Enhancing GovernanceWEB

Build a sound, fair, transparent and highly effective governance system toenable sustainable corporate value enhancement.

• Disclosure of the results of the establishment and operation of the internal
control system
At least once a year
• Improvement in evaluations from external organizations
Continuously improve from the 2020 onward

S

G* The Sustainability Material Issues and objectives published in 2021 have been partially revised.

50 LION Integrated Report 2022

Implement as planned

Contents
Progress (2021 results)•D own 7% compared with 2017•U
 p 10% compared with 2017•P
 lan to formulate actions and KPIs and verify their effectiveness•9 5% (Japan)•D own 2% compared with 2017
Oral care: 150 million• L aunched CLINICA and SYSTEMA Gel Toothpaste for use with electric
toothbrushes• L aunched Lightee Toothpaste for whitening• Spread the habit of after-lunch tooth brushing at the workplace• Conduct initiatives under the Okuchikarada Project for children Inclusive Oral Care
• Released an animated video showing how to brush teeth with mouth closed.
• Released “Ee, Ha,” a tooth brushing song to promote the formation of proper
tooth brushing habits among children
Cleanliness and hygiene: 120 million• L aunched KireiKirei Blue series to combat viruses in daily life
• L aunched Pocket Size KireiKirei Medicated Foaming Hand Soap for use whenever,wherever• L aunched KireiKirei Medicated Foaming Hand Soap Auto Dispenser for touchlessdispensing• Began the KireiKirei Relay Project to help create a clean and hygienic environment•B egan “Let’s Join Together to Promote Habits for Cleanliness! Produced byKireiKirei” for educational institutions•R eleased “If I Wash My Hands Together With You”, a song to help encouragechildren to join the hand-washing crowd

Our Purpose

Vision & Strategy

Corporate Governance

Globally Common Measures to 2030

•R
 educe water usage by consumers through the provision of water-saving products.

• Increase range of products and services that promote the creation of better oral
care habits.
• Reinforce educational and awareness activities aimed at establishing preventive
dentistry and better oral care habits.
• Promote activities to address personal and social challenges through Inclusive Oral
Care.

•P
 rovide products and services that support the establishment of hand cleanlinessand hygienic habits in daily living.
•P rovide new customer experiences in all aspects of daily living through the provisionof products and services that protect customers from bacteria and viruses.
• Implement educational and awareness-raising activities to establish cleanliness andhygienic habits in all aspects of daily living.

• Provide opportunities for employees to deepen their understanding of diverse values.
•C reate systems and mechanisms for diverse human resources to succeed
professionally.

•5 4% (Japan)•C reate an environment that enables employees to fulfill their life ambitions andachieve their ideal lifestyles.

•E mployees getting dental checkups: 56% (Japan; stopped during state of
emergency)
Note: Support for dental checkups is provided (Overseas)•A bsenteeism: 0.7% (Japan)
Note: Calculation method under consideration (Overseas)•P articipation in training: 100% as planned• Serious accidents and incidents: Zero•C
 urrently studying methods for assessing risk of human rights violations

Related SDGs

•R
 educe energy usage through energy-saving activities.
•P urchase electricity generated by renewable energy sources.
• Reduce household CO2 emissions from product use through the provision ofenvironmentally friendly products and services and the promotion of environmentallyfriendly habits.
•R educe CO2 emissions at the stage of procurement through supplier engagement
and the purchase of raw materials that generate low CO2 emissions.
•R educe society’s overall CO2 emissions through collaboration with other industry
actors and companies.
• Reduce household CO2 emissions through provision of environmentally friendly
products and services.
•R educe usage of petrochemical-derived materials through the increased use ofrecycled plastic and biomass materials in products, containers and other packaging.
•C ontinuously promote reduced use and reuse of plastic in products, containers andother packaging.

•R atio of women in management: 20%•E mployees who feel so: 56% (Japan)•5 6% (Japan)
Note: Programs are being introduced in stages (Overseas)

Performance/Data• Introduce e-learning system and curriculum that meet the needs of overseas Group
companies.
•C reate mechanisms that will be used to provide contents for learning opportunities
on an ongoing basis.
•U se a self-administered daily oral care program and regular dental checkups tocreate an environment that allows all employees to implement a PDCA cycle and toprovide information and learning opportunities regarding oral self-care.
•P rovide opportunities for management to learn about checking the mental health ofsubordinates and for all employees to learn about caring for their own mental health.
• Improve health literacy by providing information that helps employees understandtheir own health conditions and future risks, as well as what preventative actions totake in their daily lives.
•P rovide opportunities to learn about safety and disaster prevention, and implement
activities to promote understanding of basic safety activities.
•B uild mechanisms for exchanging safety information, and proactively disclose
information on levels of workplace safety based on the management of records ofoccupational accident frequency.
•B uild a mechanism for addressing human rights issues.
• Identify material human rights risks and verify how those affected are negatively
impacted.
•E xecute and monitor measures for addressing human rights risks that have been
identified.
•P roactively disclose status of response to human rights due diligence.

• Ratio of certified raw materials procurement
Japan:
Certified paper and pulp: 65% (item ratio)
Certified palm oil and palm kernel oil derivatives: 93% (based on key raw materials)
Overseas:•C reate and promote a sustainable procurement system in cooperation with suppliers.
Certified paper and pulp: Procurement to begin in stages
Certified palm oil and palm kernel oil derivatives: Procurement to be considered•R atio of suppliers supporting zero deforestation: 50% (Japan)
Note: Surveys to begin in stages (Overseas)•E volve the activities of customer response departments by steadily promoting threesteps: Understand the current situation Formulate plans Promote activities• In addition to a monthly newsletter aimed at quickly discovering issues and trends•C reate an environment for improving customer relationships and expanding thethrough the voice of the customer, in February 2022 we launched a new weekly
range of problem resolution methods.
VOC newsletter (Japan)•C reate and implement a system for reflecting customer feedback in products andservices.
•B uild and raise awareness of a management system that includes overseas Group
companies.
•D isclosed once•U se a consistent format for investigating risks and implement countermeasures.
•S hare information on progress of response through reports to the Board of Directors
once a year.
•B uild and enhance a compliance system that includes overseas Group companies.
•F urther inculcate through ongoing implementation of management and employee•P articipation in training: 100% as planned
training and questionnaires, etc.
•S erious compliance violations: Zero
• Improve Group-wide risk perception and accelerate risk response by designatingcompliance managers at overseas Group companies and building a global hotline.
• Disclosed once•A
 s in 2020, continued activities to improve evaluation results•E valuate and disclose results of the operation of the current internal control system.
•C larify status of establishment of internal control systems at overseas Group
companies and evaluate their operation.
•C ontinuously and proactively disclose governance-related non-financial information.

LION Integrated Report 2022

51

Sustainability

Creating Healthy Living Habits

Top Priority Material Issues

At the Lion Group, we believe that enhancing basic living habits, like tooth brushing and hand washing, is at the core of our value
creation. As awareness of and social demands related to health and hygiene continue to grow, we will contribute to the creation ofhealthy living habits for 1 billion people in our business areas by further promoting and advancing our purpose, “Make a differencein everyday lives by redesigning habits: ReDesign.”

Lion Group Initiatives for 2030
Indicator

Persons provided with products, services and information aimed
at creating healthy living habits: 1 billion
Oral care habits(500 million people)

Activities and KPIs

Cleanliness and hygiene habits(500 million people)• Provide products andservices• Communicate information• Educational activities(Inclusive Oral Care, etc.)• Provide products and services• Communicate information• Educational activities(promotion of hand washinghabits)Approach to Establishing Oral Care Habits —From tooth brushing habits to preventive dentistry habits
To date, the Lion Group has worked to establish toothbrushing habits to maintain and improve overall oral
health, including the prevention of cavities and gum
disease. With the theme of “realizing healthy minds andbodies,” we will strive to evolve the idea of preventive
dental habits through self-care that can be done athome as well as professional care through the guidanceof dentists and dentistry experts. We will make use of
AI and IoT to promote enjoyable preventive dentistry
habits, while also broadening our solutions in other ways
to benefit the lives of people. Furthermore, we will workwith local governments to promote preventive dentistry
habits with people whom we previously have not beenable to focus on. By providing people with opportunities

to engage in proper oral care, we will realize “Creating
healthy living habits.”

Approach
Evolve the idea of preventive dentistry habits

Contribute to society by providing a variety of products that utilize
IoT, AI and other technologies

Contribute to reducing health disparities by eliminating inequalities
in oral care while also expanding business opportunities

Inclusive Oral Care —A project to support oral and physical health among people in various situations
To ensure that anyone can develop effective oral care habits,
we are increasing opportunities for people to learn about
oral care through the Inclusive Oral Care project as a way totackle social issues. In Japan, the relative poverty rate amongchildren (13.5%1) is becoming a public concern. Childrenof economically disadvantaged families have inferior healthhabits and fewer beneficial experiences2 than the childrenof more affluent households. There is also a correlation
between poverty and cavities, with children of economicallydisadvantaged families more likely to have many cavities.
Based on the “Dental and Oral Health” concept, wedeveloped an experience-based program called the
Okuchikarada Project. With employees acting as volunteers,
we are working with NPOs and local governments atchildren’s cafeterias to promote preventive dentistry habits
and boost children’s self-esteem.

Dental and Oral Health Program

1. Percentage of children under 18 who live in relative poverty (FY2019 Comprehensive Survey of
Living Conditions, Ministry of Health, Labour and Welfare)
2. Receiving praise from others, communicating with adults, acquiring life skills, etc.

52 LION Integrated Report 2022

Key aspects of the program

Enjoyable
learning

WEB

Opportunities
to be praised

Communication
with adults

Inclusive Oral Care
https://www.lion.co.jp/ja/sustainability/inclusiveoralcare/(Japanese only)

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Related SDGs

Approach to Establishing Hygienic Habits —Extending hygienic habits to public spaces
In addition to ensuring stable supplies of the hand soaps andsanitizers that are used in a variety of settings, the Lion Groupalso conducts educational activities in Japan and across Asia
that predominantly promote the prevention of infection in thehome and among family members.
With the recovery of economic activity and the reopeningof schools, person-to-person contact is set to increase. We
believe that hygienic habits will become increasingly important
as we live in a world with COVID-19. Society’s expectationsof the Lion Group have risen in line with the pandemic, so wewill expand our scope of activities to include the prevention of
infection in public spaces and the supply of hygienic products
and services. As one aspect of our educational activities, wewill work with local governments and other organizations topromote and establish hygienic behavior that protects loved
ones from infection, and incorporate enjoyable, practicalelements unique to the Lion Group.

First developed in Japan, our KireiKirei hand soaps arenow sold in Asia. While there are limits on promotional
activities due to the pandemic, we will work together as aGroup and, based on shared goals and themes, promotecleanliness and hygienic habits.

Qingdao Lion employees at an event for Global Handwashing Day

Promoting and Establishing Hygienic Habits in
Elementary Schools through Our Employees(Japan)As part of junior employee training, since 2014 we havebeen carrying out activities to promote proper hand washinghabits at kindergartens and preschools near where the LionGroup’s facilities are located. Although we had to cancel theclasses in 2020 due to the pandemic, we restarted these
activities and extended them to elementary schools in 2021.
With difficulties related to face-to-face learning, we limited
the number of employees visiting the schools and provided
hybrid classes, fusing on-site and online methods and using
videos of experiments to make them easier to understand.
We believe this initiative has helped to promote hand washingamong the students.

Hybrid class fusing on-site and online methods

Initiatives to Promote Cleanliness and Hygienic
Habits in Asia
(Overseas)
Lion Home Products (Taiwan) Co., Ltd.
Although employees previously had visited local elementary
schools to teach children the importance of hand washing,
to prevent the spread of COVID-19 the classes wereredesigned as workshops to enable students to learn about
hand washing themselves. Students were sent videos andblacklights (to visualize dirt before the classes), allowing themto learn about hand washing habits in an enjoyable way.

WEB

Students who took part in a hand washing workshop

Establishing Cleanliness and Hygiene Habits
https://www.lion.co.jp/en/sustainability/community/cleanliness/#area01

LION Integrated Report 2022

53

Sustainability

Promoting Environmental Initiatives for a
Sustainable Planet

Top Priority Material Issues

In 2019, the Lion Group established the LION Eco Challenge 2050, a set of long-term environmental objectives, with the goalof promoting business activities that help to address global problems, such as those identified in the Paris Agreement andthe Sustainable Development Goals (SDGs). In 2022, many countries, including Japan, began raising their environment- andsustainability-related targets. We have also revised our objectives as we work to achieve carbon neutrality by 2050. Aiming to realize
a decarbonized, resource-circulating society, we will promote environmentally friendly habits with consumers to continuously
provide planet-friendly lifestyles that make more sustainable living easy.

LION Eco Challenge 2050 and Objectives for 2030
Realizing a Decarbonized Society

CO

2
Challenge

Realizing a Resource-Circulating Society

Lion will reduce CO2 emissions to zerothroughout its business activities by 2050.
2030
objective:

55%

Plastic

Lion will optimize use of recirculated
plastic by 2050.

Challenge

CO2 emission reduction
in comparison with 2017
levels in absolute quantity

2030 objective:
Promote the 3Rs (reduce, reuse and recycle) and theutilization of renewable resources (the 4th R)

Reduce petrochemical-derived
plastic usage to

Lion will reduce CO2 emissions by half throughout
the lifecycle of its products by 2050.
2030
objective:

30%

CO2 emission reduction
in comparison with 2017
levels in absolute quantity

or less

Lion will optimize water usage forsustainability by 2050.

Water
Challenge

Lion aims to become carbon negative by 2050.

2030
objective:

2030
CO2 emission reduction effect in excess
objective: of Lion’s own emissions (Japan)

WEB

70%

30%

water usage reduction per unitof net sales across productlifecycles in comparison with2017 levels

Together with the Environment
https://www.lion.co.jp/en/sustainability/env/

Approach to Achieving a Decarbonized, Resource-Circulating Society—Creating environmentally friendly habits
As part of its responsibility as a producer, the Lion Groupis working to achieve a decarbonized society and to solve
plastic and water resource issues in every stage of the
product lifecycle, from the procurement of raw materials to
disposal by consumers. As laundry and other housework
requires electricity and water, CO2 emissions and water

usage are at their highest at the stage when people use
our products.
Going forward, we will work to reduce the environmental
impact of our products at this stage through the provisionof environmentally friendly products and services and thecreation of environmentally friendly habits for consumers.

The Ratio of Environmental Burden (CO2 Emission and Water Usage) and Activities to Reduce Emissions/Usage/
in the Lifecycle of the Lion Group’s Business (2021)• Reducing CO2 emissions together with suppliers• Using recycled materials

CO2:
Water:• Promoting the use of refill pouches andreplacement products• Downsizing containers and packaging• Reducing plastic use• Reducing CO2 emissions through use ofplant-derived materials

25%
20%

Environmentally friendly
initiatives from raw material
procurement to disposal• Promote transition to lifestyles thatuse less water, electricity and plastic

Production
CO2:• Saving energy (reduce energy loss andintroduce high-efficiency equipment, etc.)• Using renewable energy• Saving water in plants

Distribution

Use by Consumers

54 LION Integrated Report 2022

Water:

Procurement of
raw materials

10%
4%

Disposal by
consumers

CO2:

57%
Water: 76%

CO2:• Improving loading efficiency bydownsizing products• Reducing CO2 emissions throughmodal shifts and logistics EDI

CO2:
Water:

4%
0%

Water:

4%
0%

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Related SDGs

Achieving a Decarbonized Society
In 2021, in line with the worldwide goal of keeping global
warming below 1.5˚C compared with pre-industrial levels,
we raised our CO2 emissions reduction objectives for 2030
from 30% to 55% (in comparison with 2017). In addition topromoting energy-saving activities at each of our businesssites (aiming for an annual 1% reduction in emissions intensity
per unit of production), we will contribute to the creation ofa decarbonized society by installing solar power generationequipment for in-house consumption and promoting the shift
to purchasing renewable energy.

Introducing an Internal Carbon Pricing (ICP)
SystemIn Japan, we have introduced an ICP system through which
we calculate the hypothetical costs of our CO2 emissions
and use the results to make decisions on environmental
investments. Looking forward, by using the ICP system tomake decisions on capital and technological development
investments, we will improve environmental awareness within
the Group and accelerate investments that help to reduce
CO2 emissions.

WEB

Installing Solar Power Generation Equipment for
In-house Consumption
In addition to the equipment already installed at our Hirai
Office, in 2021 we installed and began operation of solar
power generation equipment for in-house consumption at theLion Chemical Co., Ltd. Oleochemical Production Site and
LCT, using the equipment as a source of renewable energy.

Purchasing Renewable Energy
LCT acquired renewable energy certificates (I-REC*)equivalent to the amount of energy purchased in 2021,
ensuring that the electricity used at the business sites iscarbon neutral. We will continue to promote the gradualswitch to renewable energy at our business sites in andoutside Japan, aiming to ensure that all energy purchased isrenewable by 2030.
* International Renewable Energy Certificate

Realizing a Decarbonized Society
https://www.lion.co.jp/en/sustainability/env/climate/
Solar power generation equipment at
LCCOC

Ceremony to celebrate receiving I-REC
Standard certificates

Achieving a Resource-Circulating Society
In May 2022 we formulated the Lion Group Plastics
Environmental Declaration. In line with this declaration,
we aim to reduce usage of petrochemical-derived plastic
by increasing the use of recycled plastics and biomass
materials in the development process. We will also engage
in Group-wide efforts to promote the reduction andrecycling of plastics, such as by fostering refill habits in Asia.

WEB

WEB

Realizing a Resource-Circulating Society
https://www.lion.co.jp/en/sustainability/env/resources/
Lion Group Plastics Environmental Declaration
https://www.lion.co.jp/en/company/governance/policies/
plastics-environment.php

Promoting the 4Rs (Reinforcing recycling
initiatives)
The Lion Group is actively promoting the 3Rs (reduce, reuse
and recycle) and the utilization of renewable resources(the 4th R) to reduce the use of plastics in our products,
containers and packaging.
There are several challenges to overcome in
implementing horizontal recycling. We must first build aplastics collection system for shops and other facilities thatis easy for customers to use. We then need to develop a
low-cost plastic recycling method. We must also choose
methods and materials that make it easy to recycle from theinitial development stage. We are working with household
goods manufacturers, recycling companies, retailers andlocal governments (Tokyo, Kobe, and others) to solve thesechallenges, and are currently testing a system to sort andcollect used toothbrushes and plastic containers (bottles
and refill pouches).

LION Integrated Report 2022

55

Corporate Governance
Messages from External Directors
Discussions and effectiveness of the Board of Directors

Kazunari Uchida
External Director

As can be seen in the informal way we address one another, the open atmosphere at Boardof Directors meetings ensures we can discuss matters freely, regardless of rank or role
within the Company. Further, the corporate culture is such that consideration is given to all
opinions, whether from inside or outside the Company, and good ideas are adopted. As
external directors, therefore, we can speak openly about topics that are uncomfortable for
the Company and receive the understanding of other board members. I therefore believe thatexternal director-driven governance is functioning very effectively.
On the other hand, strong assertions and passionate discourse are rare in board meetings.
It concerns me that meetings tend to simply proceed in a predictable fashion. Every once in awhile, we could do with a heated discussion among internal directors or between internal andexternal directors.

Expectations and challenges for Lion as it works to sustainably enhance
its corporate value
As the domestic market matures, there is a limit to how far Lion can develop on its own
through organic growth, an approach it has excelled in thus far. To develop further, Lion must
transition from product-based to service-based businesses in its existing operations, enter
new markets through M&A and other means, and reinforce its Overseas Business.
However, Lion’s track record and speed in such areas is somewhat lacking. It will bedifficult to succeed following the same approach as in the past. The Company must develop
its outstanding younger employees, acquire excellent personnel from outside the Company,
and take risks without fear of failure. But simply having management call on employees
to take risks will not be enough. I expect the Company to take bold steps, such as
demonstrating its support for risk-takers by promoting them and placing them in importantroles, even if the risks they took were not successful.

Discussions and effectiveness of the Board of Directors

Takashi Shiraishi

The atmosphere is exceptionally good. Internal directors respond honestly to all questions
and clarify their position and their reasoning when there are any differences in opinion.
Further, they report on matters under their jurisdiction in a timely manner, so it is easy tounderstand not only current circumstances but also the basic approach they will take inaddressing matters. Further, in addition to myself, the external directors on the board havewide-ranging backgrounds. There is a lawyer, a company CEO and an expert in business
management. This ensures relevant comments and questions from diverse perspectives on
any issue, and there are many things to learn from diverse viewpoints. Rather than being aformality, board meetings are venues of substantive discussion.

External Director

Expectations and challenges for Lion as it works to sustainably enhance
its corporate value
As set out in Vision2030, Lion has positioned Asia, particularly China, Southeast Asia
and South Asia, as its main growth driver. Considering the potential for growth and wage
increases in Asia’s developing and emerging countries, this strategy makes sense. At thesame time, however, income gaps between formal and informal sectors have grown in manyof these countries and regions as they emerge from the pandemic. Moreover, althoughsignificant growth can be expected in China, increasing political risk cannot be ignored. It istherefore important to ensure that information on Asia’s markets, politics and economies isshared across the Company, and that its domestic and overseas operations are integrated.

56 LION Integrated Report 2022

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Discussions and effectiveness of the Board of Directors

Takako Sugaya

Board meetings are open. Opportunities are provided for advance explanations, andthe meeting format enables directors to discuss matters freely. Regarding the board’s
effectiveness, accurate information is provided and there is honest exchange of opinions
and ideas. These are important factors. Moreover, any issues identified for improvement in
the annual assessment of Board of Director effectiveness are quickly acted on. For example
in addition to providing detailed materials for advance explanations, the board addressed
the issue of how information is disclosed. More recently, directors have also been convening
informal meetings to ensure thorough discussion of medium- to long-term strategies andother matters. Overall, I think the effectiveness of the board is increasing.

External Director

Expectations and challenges for Lion as it works to sustainably enhance
its corporate value
By putting its purpose—Make a difference in everyday lives by redesigning habits:
ReDesign—into practice, Lion can help make people healthy and happy in this era of 100year lifespans. I look forward to Lion’s continuing enhancement of its corporate value
as a company that is both needed and admired by society. To continue making soundcontributions to consumers’ lives, it is important that Lion improve its ability to communicate
and enhance recognition of the reliable products and services, as well as the initiatives, thatit has developed over many years. It must also enhance its sensitivity to dizzying changes
in the management environment, environmental issues that require quick countermeasuresand likely geopolitical risks, and it must respond with speed and flexibility. In the Overseas
Businesses, Lion must utilize the trust it has fostered and its strong presence to boldly takeon the challenge of tuning its approach to address the characteristics and needs of eachcountry and region where it does business.

Discussions and effectiveness of the Board of Directors
As meeting agendas are clearly explained to external directors in advance, I believe the board
engages in substantive, effective discussions. There are also opportunities for us to deliberate
on a wide range of other themes. There are four external directors in total, and as we all
have diverse backgrounds, we can actively offer our opinions utilizing our fields of expertise.
Overall, the board is highly conscious of the importance of discussions that incorporate
diverse viewpoints.

Reiko Yasue
External Director

Expectations and challenges for Lion as it works to sustainably enhance
its corporate valueOver more than 130 years, Lion has established the habit of tooth brushing among people inJapan and elsewhere in Asia, and has helped create a culture that goes beyond the goal of
keeping teeth healthy to include the goal of making teeth more beautiful. While the Company
continues to provide social value in that sense, my hope is that it continues to support
people’s lifestyles through environmentally friendly manufacturing. If consumers intuitively
recognize Lion as a company whose products are all environmentally friendly—not just its
toothbrushes and toothpastes—its corporate value will increase even further.

LION Integrated Report 2022

57

Corporate Governance
Basic Approach
The Lion Group’s top priorities for corporate governance are to increase management transparency, strengthen supervisory
functions, accelerate decision-making and ensure compliance. By strengthening and enhancing its corporate governancesystem, Lion aims to increase its corporate value.
WEB

Basic Approach to Corporate Governancehttps://www.lion.co.jp/en/company/governance/approach.php

Corporate Governance System
Organizational Structure Overview• Has adopted the company with an Audit & Supervisory Board system
To ensure that the Board of Directors can fulfill its management supervisory function, and to enable independent
Audit & Supervisory Board members to appropriately fulfill their auditing function• Has adopted an executive officer system
To reinforce the Board of Directors’ management supervisory function and accelerate decision-making• Has established a voluntary advisory body
To enhance management transparency and further improve corporate governance• Has established an Advisory Committee consisting of external experts
To reflect the opinions and advice of third parties with regard to legal compliance and management policies

Annual Meeting of Shareholders

Nomination Advisory
Committee

Response

Consultation
Response

Board of Directors

Audit & Supervisory Board
Members

Auditing

Supervision of management• Decisions on execution of importantmanagement matters• Supervision of directors’ executive
performance• Supervision of executive officers

Monitoring

Legality audits

Auditing

Operational audits

Opinions andadvice on legal
compliance

Reporting

Auditing
Reporting

Delegation

Advisory Committee
AdviceInternal control of financial
reportingExecutive Committee
Execution of operations

Senior Executive Committee
Basic policies for medium-to longterm management plans and othermajor corporate strategies

Reporting

Legality, fairness andefficiency audits; complianceprogress audits

Departments
Execution of operations

Business divisions, Production and Logistics
Headquarters, R&D Headquarters andoperating divisions

ReportingStrengthening of legal compliance and ethics

Corporate Ethics Committee
Lion Group Charter for Corporate Behavior; Behavioral Guidelines

58 LION Integrated Report 2022

Auditing Office

Reporting
Proposals

Accounting Auditors

Compensation Advisory
Committee

Consultation

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Initiatives to Enhance Management Auditing and Supervision
Formulated the Lion Group Charter for Corporate Behavior and Behavioral Guidelines
Established the Management Evaluation Committee (now the Advisory Committee)
Formulated the Basic Internal Control System Policy
Established the Compensation Advisory Committee and the External Director System (two directors)
Introduced a performance-linked compensation system
Appointed independent officers and notified the Tokyo Stock Exchange of the appointments
Established the Basic Corporate Governance Policy
Established the Nomination Advisory Committee
Began evaluations of the Board of Directors
Increased the number of external directors from three
to four
Increased the number of external Audit & Supervisory
Board members from two to three
2003

2004

2006

2007

2010

2012

2016

2017

2021

Increased the number of external directors from two to three
Separated roles of Chief Executive Officer and Chief Operating Officer
Built a system for the internal control of financial reporting
Implemented the Executive Officer System

Measures to Enhance Business Execution and Supervisory Functions
Establishment of the Compensation Advisory Committee (2006)
Lion has established a Compensation Advisory Committee comprising external directors and external Audit & Supervisory Board members.
Because of their independence, they enhance objectivity and transparency in matters related to director compensation. The Board of Directors
consults the Compensation Advisory Committee regarding such matters as the compensation system, compensation levels and methods forcalculating director and Audit & Supervisory Board member bonuses. The committee considers the matters in question and provides a responseto the Board of Directors (or, for matters regarding Audit & Supervisory Board members, to the Audit & Supervisory Board). (Chairperson: External
Director Kazunari Uchida)

Establishment of the Nomination Advisory Committee (2016)
Lion has established a Nomination Advisory Committee comprising external directors and a representative director designated in advance by
the chairman of the Board of Directors. The committee enhances objectivity and transparency in the process for nominating Company directors,
Audit & Supervisory Board members and executive officers. The Board of Directors consults the Nomination Advisory Committee regarding thenecessary qualities of directors and other officers, reasons for their selection or dismissal, and related processes, and the committee considers
the matters in question and provides a response to the Board of Directors (or, for matters regarding Audit & Supervisory Board members, tothe Audit & Supervisory Board). The committee also exchanges opinions on the development of future Group presidents. (Chairperson: External
Director Takashi Shiraishi)

Establishment of the Advisory Committee (2003)
The Advisory Committee comprises outside experts other than the external directors
and external Audit & Supervisory Board members who possess extensive knowledge
and insight. The committee considers the appropriateness and other aspects of Lion’s
management policies and measures and serves to reflect objective opinions from awide range of perspectives in management. In principle, the committee meets twicea year. The chairman of the Board of Directors reports a summary of the committee’s

Main Themes• Direction of medium- to long-term
management strategies• Vision for the corporate governance system• Direction of sustainability strategies• Direction of human resource strategies• Other matters related to management

advice to the Board of Directors.

LION Integrated Report 2022

59

Corporate Governance

Skills and Expertise and Meeting Attendance of Directors andAudit & Supervisory Board Members
To increase corporate value, the Lion Group has selected directors and Audit & Supervisory Board members with diverse
knowledge, experience and capabilities to provide oversight of decision-making and management from the viewpoints ofvarious stakeholders.
Principal Skills and Areas of Expertise
Name

Current Position

External/Independent

Itsuo Hama

Representative Director,
Chairman of the Board of Directors

Masazumi Kikukawa

Representative Director,
President and Executive Officer

Kenjiro Kobayashi

Director, Senior Executive Officer

Yugo Kume

Director, Senior Executive Officer

Fumitomo Noritake

Director, Executive Officer

Hitoshi Suzuki

Director, Executive Officer

Kengo Fukuda

Director, Executive Officer

Kazunari Uchida

External Director

External

Independent

Takashi Shiraishi

External Director

External

Independent

Takako Sugaya

External Director

External

Independent

Reiko Yasue

External Director

External

Independent

Corporate
management

Globalbusiness

Finance/
Accounting

Principal Skills and Areas of Expertise
Name

Current Position

External/IndependentToshiyuki Nikkawa

Audit & Supervisory Board Member

Yoshiaki Kamao

Audit & Supervisory Board Member

Takao Yamaguchi

External Audit & Supervisory Board
MemberExternal

Independent

Setsuko Takemoto

External Audit & Supervisory Board
MemberExternal

Independent

Atsuko Suzuki

External Audit & Supervisory Board
MemberExternal

Independent

Corporate
management

Globalbusiness

Finance/
Accounting

Note: 1. For Mr. Suzuki, Ms. Yasue and Ms. Suzuki, attendance shown is the number of times they attended following their appointment at the 160th Annual Meeting of
Shareholders held on March 30, 2021.
2. Attendance for Mr. Fukuda is not shown as he was appointed at the 161st Annual Meeting of Shareholders held on March 30, 2022.

Ratio of External Directors and External Audit & Supervisory Board Members
Board of Directors
Internal

Audit & Supervisory Board
External

Nomination Advisory Committee
Internal

60 LION Integrated Report 2022

External

Internal

External

Compensation Advisory Committee
External

Contents

Our Purpose

Vision & Strategy

Principal Skills and Areas of Expertise
Legal/Riskmanagement

Human
resource/HR
development

Sustainability

IT/DX

Sales/
Marketing

R&D/
Production

Corporate Governance

FY2021 Boardof Directors
Attendance

Performance/Data

Nomination
Advisory
Committee

Compensation
Advisory
Committee

Nomination
Advisory
Committee

Compensation
Advisory
Committee

17/17 meetings(100%)
17/17 meetings(100%)
17/17 meetings(100%)
17/17 meetings(100%)
17/17 meetings(100%)
13/13 meetings(100%)—
17/17 meetings(100%)
17/17 meetings(100%)
17/17 meetings(100%)
13/13 meetings(100%)
Principal Skills and Areas of Expertise
Legal/Riskmanagement

Human
resource/HR
development

Sustainability

IT/DX

Sales/
Marketing

R&D/
Production

FY2021 Boardof Directors
Attendance
15/15 meetings(100%)
15/15 meetings(100%)
15/15 meetings(100%)
15/15 meetings(100%)
11/11 meetings(100%)

Director/Audit & Supervisory Board Member Candidate Selection Standards
1. C andidates must understand Lion’s management philosophy and always comply with the Lion Group Charter for Corporate Behavior andBehavioral Guidelines.
2. Candidates must demonstrate excellent leadership as the heads of management.
3. Candidates for director must possess expertise and a strong track record in such fields as research and development, manufacturing,marketing, sales and corporate management as well as the necessary qualities to carry out their duties and provide management oversight.
4. Candidates for Audit & Supervisory Board member must possess considerable knowledge and insight in such areas as finance andaccounting, corporate governance and risk management as well as the necessary qualities to contribute to fair and transparent decisionmaking in the Company.
5. C andidates for director must possess the qualities necessary to appropriately fulfill their duty of care as good managers and duty ofloyalty. Candidates for Audit & Supervisory Board member must possess the qualities necessary to appropriately carry out their duty ofcare as good managers.
6. C andidates must not be hindered from performing their duties by health-related or other factors not specified in the Companies Act asreasons for disqualification as director or Audit & Supervisory Board member.
LION Integrated Report 2022

61

Corporate Governance

Board of Directors
The Board of Directors is composed of 11 directors. The Board of Directors regularly meets once a month and holds
extraordinary meetings, as necessary. In addition to matters stipulated by laws and regulations or the Articles ofIncorporation, the Board of Directors determines important matters related to the business execution of the Company andsupervises the business execution of directors and executive officers. Resolutions of the Board of Directors may be madeat the regular Board of Directors meetings, as well as in writing in accordance with laws and regulations.. For important
corporate strategies such as the basic policies of medium- to long-term management plans, a system is established thatenables the Board of Directors to make appropriate decisions upon deliberation by the Senior Executive Committee.
Additionally, the Executive Committee has a system in place to discuss and examine, from various angles, measures related
to job execution that directly impact businesses.

Evaluation of Board of Directors EffectivenessTo ensure the effectiveness of the Board of Directors, every year the directors evaluate the board’s operating methods andthe content and status of the proposals it considers, among other factors. This evaluation includes examinations of eachdirector. A summary of the results of the evaluation is disclosed in the Corporate Governance Report.
Evaluation Process
Completion of selfassessment surveys by
all directors and Audit &Supervisory Board members

Report and discussion
at Board of Directors
meetings of compiled andanalyzed results

Identification of issues
based on evaluation of
results

Promotion of initiatives toaddress issues

2021 Evaluation Results and Future Initiatives
2021 Evaluation Results Summary•T he number of persons on Lion’s Board of Directors,
including the number and proportion of external directors,
is sufficient for deliberations. Board members havethe knowledge, experience, capabilities and diversity
necessary to enhance corporate value.
•T he meeting frequency as well as the number of agenda
items considered and amount of time allowed fordeliberation by the Board of Directors are appropriate. The
deliberations comprise open, constructive debate that
does not hinder risk taking.

Accordingly, the effectiveness of Lion’s Board of Directors
was deemed sufficient.

To date, evaluations of the board’s effectiveness have uncovered
certain issues. While Lion has achieved a measure of successwith initiatives aimed at addressing each of these issues, as
described below, the Company recognizes that there is stillroom for improvement. Looking ahead, Lion will continue to
implement necessary measures and make efforts to further
enhance the effectiveness of the Board of Directors.
Issues Identified and Initiatives to Address Them

Issues• E xternal directors and Audit & Supervisory Board members should be
provided with more extensive information regarding the background andcontext of important agenda items.
• D iscussions of management strategy should be enhanced to further
increase corporate value.

Initiatives• We are taking steps to enhance the information provided and facilitate
understanding regarding such matters as the background, objective
and content of agenda items. These steps include having officers fromthe divisions that propose such items participate, as needed, in premeeting briefings for external directors and Audit & Supervisory Board
members conducted by the secretariat of the Board of Directors.
• In 2021 we set up informal meetings for directors to exchange opinions
on and discuss resolutions in advance of Board of Directors meetings.
As a result, we have secured the time necessary for deliberating onimportant matters related to the corporate philosophy and medium- tolong-term strategies.

Audit & Supervisory Board
The Audit & Supervisory Board comprises five Audit & Supervisory Board members. It holds regular meetings once
every two months and extraordinary meetings and liaison meetings, as necessary. In accordance with the Audit &Supervisory Board’s standards, audit policy, audit plans and other stipulations of the Audit & Supervisory Board, each
Audit & Supervisory Board member audits the reasonableness of Board of Director resolutions, as well as the lawfulness,
appropriateness and efficiency of directors’ execution of duties. Specifically, Audit & Supervisory Board members attend
meetings of the Board of Directors and other important meetings, conduct interviews with directors regarding the statusof the execution of their duties (regular meetings three times a year with representative directors to exchange information,
opinions and views, and including the status of the execution of directors’ duties pertaining to the development andoperation of internal control of financial reporting), perform site visits to Lion’s headquarters and major offices and plants,
and conduct audits of subsidiaries. Further, the Audit & Supervisory Board, the internal auditing division (the Auditing Office)and the accounting auditors regularly hold audit liaison meetings, as well as comprehensive themed audits of response toimportant management issues, with the aim of improving audit effectiveness.

62 LION Integrated Report 2022

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Corporate Officer Compensation
Overview and Details of Basic Policy Regarding Compensation for Directors and Audit & Supervisory
Board Members
Overview of Basic Policy
Lion has designed a corporate officer compensation system
to provide sound and appropriate incentives necessary forretaining outstanding management talent that will achieve theCompany’s management policies and continuously increase
its corporate value over the medium to long term. Director and
Audit & Supervisory Board member compensation is decided
by the Board of Directors and the Audit & Supervisory Board,
respectively, based on consultations with the Compensation
Advisory Committee. Compensation is set within the limits
decided by resolution of the General Meeting of Shareholders.

Policy Details
Compensation for directors (excluding external directors)
consists of fixed monthly compensation and performancelinked compensation (bonuses and stock-based
compensation). It is made up of approximately 50% fixedcompensation and 50% performance-linked compensation(30% of which is bonus and 20% stock-based compensation),
according to the director’s rank. The proportion of
performance-linked compensation increases according torank and is revised as needed. Fixed monthly compensation
is raised or lowered once per year following an appraisal of
how well the director has executed duties and supervised
management. Performance-linked compensation is calculated
based on the degree to which performance targets have been
met in each year and is paid individually at a designated timeafter the end of the relevant year.

Approximate Composition of Compensation of Executive Corporate Officers(Excluding External Directors and Audit & Supervisory Board Members)
Performance-linked compensation 50%
Fixed monthly compensation 50%
Bonus 30%

Stock-based compensation 20%
Fixed portion Performance-linked portion

Performance-Linked Compensation System
Type

Performance-Linked Bonus

Performance-Linked Stock-Based Compensation

Indicators

Core operating income
An earnings indicator used to measure regular business performance, calculated by subtracting selling, general and administrative expenses fromgross profit (one of the most emphasized indicators under the medium-term management plan)
Profit for the period attributable to owners of the parent
An earnings indicator that expresses final business results and is directly linked to increases and decreases in shareholder value

Total payment
amountTotal payment amount: Sum of (1) and (2) below(1) 50% of 0.5% of core operating income for the relevant year(2) 5
 0% of 0.75% of profit for the period attributable to owners of theparentNote: Rounded down to the nearest ¥10,000. If the result of either
calculation is negative, its value is set at 0.

Total number of points (number of shares) assigned
The upper limit per year is 120,000 points(one share of Company stock per point)
The upper limit per year is ¥200 million

Individual payment
amount(1) Calculation of payment per point
Total payment amount ÷ (Points assigned according to rank ×
Number of officers)(2) Individual payment amountPayment per point × Points assigned according to rank
(3) Points assigned according to rank
From 3,000 points for Chairman and President and Executive
Officer to 0.900 points for Executive Officer(1) Calculation of number of points(Fixed base amount +Performance-linked base amount ×
Performance-linked coefficient) ÷ Per-share acquisition cost
• Fixed base amount and performance-linked base amount: ¥4 million
each (multiplied by 1.0–3.625, depending on rank)• Performance-linked coefficient: 0–2.0, depending on achievement
rate for each indicator• Per-share acquisition cost: ¥2,078

Time of payment

End of March of each year

In principle, shares are issued to directors upon retirement in a number
equivalent to the total number of points they have been assigned

Upper limit¥250 million per year¥800 million (per four years)
Total number of shares: 480,000 (per four years)

Clawback clause

No

Yes*

* In the event of a serious violation of internal rules or professional duties, forfeiture of points already granted or return of the amount equivalent to the shares already received

Fixed Monthly Compensation
Determining Policy
Overview• Flat-rate system• Compensation levels are set taking into consideration similar levels
at other companies, and once per year fixed monthly compensation
is raised or lowered following an appraisal of how well execution ofduties and supervision of management have been performed.

Upper Limit¥300 million (per year)

LION Integrated Report 2022

63

Corporate GovernanceAchievement of Performance-Linked Compensation Indicators (2021)
Achievement of targets for core operating income and profit for the period attributable to owners of the parent are as below.
Indicator

TargetAchievement

Achievement rate

Core operating income¥30,000 million¥30,923 million

103%

Profit for the period attributable toowners of the parent¥21,000 million¥23,759 million

113%

Compensation System for External Directors and Audit & Supervisory Board Members
Compensation for external directors and Audit & Supervisory Board members consists solely of fixed monthly compensation.
Compensation levels are set taking into consideration similar levels at other companies and are based on individual roles andresponsibilities.

Total Compensation for Directors and Audit & Supervisory Board Members (2021)
Performance-Linked Compensation
Number of Corporate Fixed Compensation
Officers(Millions of yen)

Bonuses(Millions of yen)

Stock-Based
Compensation(Millions of yen)

Total
(Millions of yen)

Directors(External Directors)

11 (4)

299 (45)166 (–)

113 (–)

580 (45)

Audit & Supervisory Board Members(External Audit & Supervisory Board
Members)

5 (3)

93 (33)

– (–)

– (–)

93 (33)

Total(External Officers)

16 (7)

392 (78)

166 (–)

113 (–)

673 (78)

1. T here are no individuals serving concurrently as employees and corporate officers.
2. A n upper limit on directors’ fixed compensation of ¥300 million per year was set by resolution of the 156th Annual Meeting of Shareholders held on March 30, 2017.
There were nine directors at the closing of this meeting.
3. A n upper limit on Audit & Supervisory Board members’ fixed compensation of ¥110 million per year was set by resolution of the 156th Annual Meeting of
Shareholders held on March 30, 2017. There were four Audit & Supervisory Board members at the closing of this meeting.
4. W ithin performance-linked compensation, bonus amounts are calculated and determined based on the core operating income and the profit attributable to theowners of the parent for each year, in accordance with the methods described above. An upper limit for bonuses of ¥250 million per year was set by resolution of the156th Annual Meeting of Shareholders held on March 30, 2017. There were six directors (excluding external directors) at the closing of this meeting.
5. Within performance-linked compensation, stock-based compensation is the amount obtained by using the share acquisition price to convert the number of points (shares)
granted to eligible individuals under the system, depending on the degree of achievement of the Group’s business targets for the year. An upper limit of ¥200 million on
the contribution amount of stock-based compensation per year and an upper limit of 120,000 shares on the total number of shares granted per were set by resolution of
the 160th Annual Meeting of Shareholders held on March 30, 2021. There were seven directors (excluding external directors) at the closing of this meeting.
6. T he amounts shown are rounded down to the nearest million yen.

Total Consolidated Compensation by Corporate Officer (2021)
Total Amount by Type of Compensation (Millions of yen)
Name

Corporate Officer
Classification

Basic
Compensation

Bonuses

PerformanceLinked StockBased
Compensation

Retirement
Benefits

Total
Compensation(Millions of yen)Itsuo Hama

Director

68

46

31

–

146

Masazumi Kikukawa

Director

68

46

31

–

146

Note: Only individuals receiving total consolidated compensation of more that ¥100 million are listed here.

64 LION Integrated Report 2022

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Compliance
The Lion Group’s strong reputation for trustworthiness has

To enhance awareness of compliance among corporate

been built through decades of hard work by its employees.
The trust the Group enjoys has been a key driver of its
growth and development.
Ethics guide individuals along the correct path. We regard
ethics as meaning, broadly, doing what is right. In concreteterms, we see this as rooted in being honest, observingsocial mores, not antagonizing others, and thinking of others
as we think of ourselves.
Based on this understanding, we formulated the LionGroup Charter for Corporate Behavior as a code of conduct,and updated it to more clearly define our stance with regard
to providing safe, secure products and services, addressing
environmental issues and other topics through a set of
Behavioral Guidelines. In addition to strict compliance with
the Lion Group Charter for Corporate Behavior, the LionGroup is committed to being useful and valuable to society.

officers and employees, the Group promotes measures led
by the Corporate Ethics Committee, which is chaired by the
director responsible for corporate ethics.
Every year in March, the Group conducts a Compliance
Awareness Survey for all domestic Group employees(including part-time employees). In 2021, approximately 88%
of all employees responded.
The Group also holds regular annual compliance training
sessions using e-learning platforms. Compliance content isalso available on the Lion Career Village (LCV) on-demand
media platform as a mandatory part of the curriculum,
allowing employees to study in their own time.
There were eight items in the 2021 curriculum. Amongthem were “compliance (including harassment issues),”“Lion’s approach to quality” and “social media-related risks.”

WEB

Internal Control System
https://www.lion.co.jp/en/company/governance/system.php

Internal and External Whistle-Blowing System:
All Lion (AL) Heart Hotline
The Lion Group has set up an internal and external whistleblowing system, the AL (All Lion) Heart Hotline, as a setof contacts for consultations for use when an employee
learns of a compliance violation within the workplace thatis impossible to report or cannot be handled appropriately
through normal workplace channels. The system features
an internal and an external reporting hotline, and users areencouraged to use the supplied reporting form to reporttheir findings in writing or via email to ensure accurate
understanding of the nature of the report or consultation.
Once the details of said report and the response desired by
the reporter are confirmed, the Director of Corporate Ethics
promptly investigates and confirms the relevant facts.
In 2021, the hotlines received 19 consultations andreports. However, none of the cases were judged
to constitute serious misconduct, and each is being
appropriately addressed.

The AL Heart Hotline System

AL Heart Hotline Consultations and Reports

In-House Recognition of the AL Heart Hotline

2019

2020

Seeking Solutions/Resolving Problems

Subject of consultations
and reports received

Consulter/Reporter
Employees of the Lion Group, temporary staff orexternal business partners

11

8

12

Personnel and labor
management issues

11

7

5

Other

3

58

2

Feedback

Internal contact
Director of Corporate Ethics

ReportingInstruction

Corporate Ethics
Committee Chair

Report details of Consultations
and reports
consultations/
reports

Feedback

External contact
LawyerReportinvestigation
results andcountermeasures

Board of Directors

Report asneededCorporate Ethics
Committee
Set up as needed

Ethics Evaluation Committee
External experts

2021

Harassment

Consultations
and reports

WEB

2019

2020

2021

98.6%

99.5%

99.0%

Compliancehttps://www.lion.co.jp/en/company/governance/compliance/

LION Integrated Report 2022

65

Corporate GovernanceRisk Management
Lion’s business activities entail a wide range of risks. To avoid and minimize losses caused by the actualization ofrisks, we have appointed a Director Responsible for Risk Management (the director responsible for the Corporate
Planning Department) who comprehensively controls and supervises risk for the whole Lion Group.

Basic Policy for Risk Management(1) M anagement and employees strive to prevent theactualization of risks that could harm Group business
operations as part of their normal duties based on Lion’s
Basic Internal Control System Policy.
(2) In the event that a risk actualizes, we strive to minimize
losses and harm to employees, shareholders, customers,
local communities and other stakeholders.
(3) We report actualized risks to top management
immediately and promptly take steps to understand thesituation, elucidate the events and factors that led to it,
develop measures for improvement and strive to prevent
recurrences.

Rules and Other Structures Relating to theManagement of Risk
Response under Normal Conditions(1) T he director responsible for the Corporate Planning
Department has overall responsibility for the risk
management of the Group. The Corporate Planning
Department comprehensively manages the Group’s risk.
(2) T he Auditing Office audits the status of risk management
for each department within the Group and reports its
findings to the Executive Committee and the Board of
Directors.
(3) Each department periodically identifies its own risks andimplements appropriate risk management measures(encompassing avoidance, transfer, reduction andacceptance). For management risks with the potential
to significantly impact business activities, the director
responsible for the relevant department considers
appropriate risk management measures, which are thendeliberated on by the Senior Executive Committee andExecutive Committee for implementation.
(4) For the management of risk related to the environment,
quality assurance, and accidents and disasters, theadministrative offices for the deliberative bodies withresponsibility for the respective areas (the Sustainability
Promotion Council, CS/PL Committee,* Safety, Hygieneand Disaster Prevention Meeting, etc.) are designatedas the departments with responsibility for risk. These
departments consider preventive countermeasures, withdeliberation by the Executive Committee when necessary,and implement risk management. Furthermore, theGroup Risk Officer (Director of the Corporate Planning
Department for Special Mission) participates in themeetings of the deliberative bodies to confirm froman objective, overarching perspective that they areadvancing appropriate, timely measures.
* C S/PL Committee
A cross-departmental committee focused on customer satisfaction (CS)and product liability (PL) to promote quality assurance activities

66 LION Integrated Report 2022

Response in the Event of Emergency
In the case of a physical emergency, such as a natural
disaster or accident, in accordance with the Emergency
Response System (a system of manuals outlining
countermeasures against earthquakes or influenza andother infectious diseases), the relevant facts are reported tothe president and Audit & Supervisory Board members. At
the same time, the heads of relevant departments collect all
pertinent information, formulate response measures, clarify
causes, determine countermeasures and submit reports onthese actions to the Executive Committee and the Board of
Directors.

Business Continuity Plan (BCP)
Lion works to build and maintain systems to minimize
damage and to ensure the continuation of business
operations so that it can provide products to customers evenin the event of a major earthquake, storm or flood damage,an epidemic, an outbreak of infectious disease (pandemic)
or other such contingency. In the event of an emergency, we
will discuss how to set in motion business continuity plans
based on the Emergency Response System.
Basic Policy(1) S ecure the safety of employees and their families(2) C ontinue priority businesses and key operations tominimize business damage(3) Carry out corporate social responsibilities andcontribute to local communities
Key Points of Plan(1) P riority business: Consumer Products Business(2) P riority operations: Operations necessary forcontinuation of product supply(3) Target timeframes for restoring operations andorganizational chains of command

Implementing Risk Management
The Lion Group has positioned the 13 risks outlined on
the next page as shared risks to be managed Group-wide
because they have the potential to significantly impact theGroup’s management performance and financial status.
Other risks have been defined as departmental risks to
be dealt with by each department, mainly by officers. The
status of risk response is assessed twice yearly by eachdepartment. The Corporate Planning Department compiles
the results and reports them to the Board of Directors andExecutive Committee. The status of each department’s risk
management is further assessed by the Auditing Office via
business operations audits.

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Business Risks
The Lion Group has identified 13 risks that may seriously impact Group management in terms of its ability to carry out its
corporate social responsibilities, including achieving sustainable growth and supplying products to customers. We are focusing
particular efforts on managing these risks.
Risk

Description(1) R isks related
Risks of being unable to supply superior products
to market andand services useful for everyday living due to delays
consumer change in responding to changes in markets, wholesalers,
retailers or consumers

Main Initiatives
We analyze changes in markets and consumer lifestyles on an
ongoing basis and develop products that offer new living habits.

(2) Product quality
risks

Risks of problems with products, such as unforeseen We ensure compliance with related laws and regulations and implement
product-related accidents, due to unforeseen product product development and other processes in line with our Productdefects or mistaken use by customers
Management System based on the JIS Q 9000 family of standards. We
have also acquired ISO 9001 certification and are working to reinforce
our organizational management system for quality.

(3) R aw material
procurement
risks

Risks of purchase price increases and supply-chain
delays or breaks due to intensifying competition in
procurement

We ensure stable raw material procurement through the use ofinterchangeable materials, purchasing from multiple sources andpracticing global procurement, and furthermore implement responsible
procurement activities based on our Procurement Principles.

(4) O verseas
business risks

Risks of incurring costs associated with response
measures or limitations on business activities arisingfrom political and economic developments or changes
in or the tightening of laws and regulations in the
countries and regions where we do businessWe closely monitor developments related to political and economic
conditions as well as laws and regulations in the counties andregions where we do business, continually gathering information andpreparing for changes.

(5) H uman resource
risks

Risks of stagnation in corporate growth due to
We practice year-round hiring and are expanding our ranks
difficulty in securing and developing necessary human of specialized human resources while implementing the Lion
resources according to plans as a result of such
Professional Fulfillment Reforms.
factors as the shrinking labor force and changes inthe employment environment(6) Information
management
risks

Risks of information leaks, system paralysis or otherincidents due to such unforeseen events as computervirus infections or improper system access(7) C ompliance risks Risks of serious legal or regulatory violations due tothe unforeseen establishment or abolition of relevantlaws or significant regulatory changes or tightening

We have designated countermeasures to system problems in the
Information Security Regulations, which are updated as needed,
and implement thorough information management, including thatof business secrets, based on the Basic Policy on Information
Management.
We have established the Lion Group Charter for Corporate Behavior
and Behavioral Guidelines, which serve as a code of conduct,
regarding which we implement periodic education for all employees.

(8) R eputation risks

We have established the Lion Group Social Media Policy, implement
Risks of inappropriate comments or messages onsocial media or other platforms quickly spreading and education for all employees and strive to quickly detect inappropriate
generating controversy or backlash
information through the ongoing monitoring of social media andother platforms.

(9) E xchange rate
risks

Risks of yen conversions upon the preparation of
consolidated financial statements affecting Groupmanagement performance and financial status

We carefully monitor the exchange rates of key currencies and strive
to reduce risks presented by exchange rate fluctuations throughhedging and other means. We are also compiling a Social Media Risk
Response Manual.

(10) M ajor lawsuit
risks

Risks of major lawsuits resulting in unfavorable
decisions for the GroupWe ensure thorough legal compliance, clearly explain and discuss
contract terms before forming agreements, appropriately manage
intellectual property and take other steps to prevent lawsuits.

(11) N ovel influenza
and other
infectious
disease risks

Risks of the emergence and prolongation of novel
strains of influenza or other infectious diseases
resulting in restrictions on the movement of people
and things

We implement thorough infection prevention measures under normal
conditions and have designated response measures in the “Manualon Countermeasures against Novel Influenza and Other Infectious
Diseases” in addition to creating a system to enable quick andappropriate action in the event of an outbreak.

(12) M ajor
earthquake andother natural
disaster risks

Risks of death or injury of employees or others, as well
as physical damage, such as damage to manufacturing
facilities or warehouses, caused by a major earthquake,major typhoon or other natural disasterWe have prepared a system for implementing organizational
responses (including remotely) based on the “Manual on
Countermeasures for Earthquake Disasters,” conduct periodic drills,
and have established a Business Continuity Plan (BCP) Framework
to ensure business continuity and rapid recovery in the event of adisaster in order to fulfill our product supply responsibilities.

(13) C limate change
and otherenvironmental
change risks

Risks related to responding to tightening regulations,rising raw material costs, other cost increases andreputational damage due to delays in responding
arising from global temperature increases caused byclimate change

Working to realize a sustainable society, we have establishedthe LION Eco Challenge 2050, a set of long-term environmental
objectives for 2050, and are ambitiously working to realize adecarbonized, resource-circulating society.

* More information on the 13 risks and Lion’s main initiatives to address them can be found in Lion’s Securities Report for 2021 (Japanese only).

WEB

Securities Report (Japanese)
https://www.lion.co.jp/ja/ir/library/yuhou/

LION Integrated Report 2022

67

Corporate GovernanceDirectors, Audit & Supervisory Board Members and Executive Officers (As of April 1, 2022)
Representative Director,
Chairman of theBoard of Directors

Representative Director,
President and Executive Officer

MASAZUMI KIKUKAWA

ITSUO HAMA

April 1977	Joined Lion Fat & Oil Co., Ltd. (now Lion
Corporation)
January 2008	Executive Officer
March 2008	Director
January 2012	Representative Director, President, Executive
Officer, Chief Operating Officer
January 2014	Representative Director, President and CEO,
Executive Officer
March 2016	Representative Director, President and CEO,
Chairman of the Board of Directors, Executive
OfficerMarch 2017	Representative Director, President and Executive
Officer, Chairman of the Board of Directors, Chief
Executive Officer
January 2019	Representative Director, Chairman of the Board of
Directors, Chief Executive Officer
March 2022	Representative Director, Chairman of the Board of
Directors (current position)

April 1984	Joined Lion Corporation
January 2010	Executive Officer
March 2012	Director
March 2018	Representative Director, Senior Managing Executive
OfficerJanuary 2019	Representative Director, President and Executive
Officer, Chief Operating Officer
March 2022	Representative Director, President and Executive
Officer, Chief Executive Officer (current position)

Director
Senior Executive Officer

Director
Senior Executive Officer

KENJIRO KOBAYASHIYUGO KUME

April 1987	Joined Lion Corporation
January 2009	Executive Officer
January 2010	Senior Executive Officer
March 2012	Director
March 2017	Director, Senior Executive Officer
Responsible for Corporate Ethics, Human Resources Development
Center, General Affairs Department, Management Support
Department, Sustainability Promotion Department, System
Department and Business Process Re-engineering Department(current position)

April 1988
January 2016
March 2019

Chief Executive Officer

April 1984	Joined Lion Corporation
January 2016	Executive Officer
March 2018	Director
January 2021	Director, Senior Executive Officer
Responsible for Business Development Center, Health & Home Care
Products Division, Gift and Channel-Specific Products Division,
Direct Marketing Division and Corporate Communication Center(current position)

Director
Executive Officer

Director
Executive Officer

Director
Executive Officer

FUMITOMO NORITAKEHITOSHI SUZUKIKENGO FUKUDA

Joined Lion Corporation
Executive Officer
Director, Executive Officer

Responsible for Supply Chain Management Headquarters,
Manufacturing Innovation Headquarters, Purchasing Headquarters,
Research and Development Headquarters, Production and Logistics
Headquarters, Overall Chemicals Businesses, DX Promotion
Department, Intellectual Property Department and Safety and Disaster
Prevention Promotion Department (current position)

April 1985
January 2016
March 2019
March 2021

Joined Lion Corporation
Executive Officer
Senior Executive Officer
Director, Executive Officer

April 1987
January 2017
January 2022
April 2022

Joined Lion Corporation
Executive Officer
Senior Executive Officer
Director, Executive Officer

Responsible for International Division (current position)

Responsible for Risk Management, Corporate Planning Department,
Finance Department, Consumer Service Center, Reliability Assurance
Department and Legal Department (current position)

Senior Executive Officer

Senior Executive Officer

Executive Officer

Masaharu Mikuni

Masayuki Takemori

Tomomichi Okano

Executive General Manager of Health and Home Care
Products Sales Division;
Responsible for Distribution Policy Department

Executive General Manager of Health and Home Care
Products Division

President of Lion Chemical Corporation

Executive Officer

Executive Officer

Executive Officer

Jiro Nagasawa

Yasutsugu Shimizu

Yoko Koike

Executive General Manager of Gift and Channel-Specific
Products Division

Executive General Manager of Production and Logistics
Headquarters

Director of Human Resources Development Center

68 LION Integrated Report 2022

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

External Director

External Director

External Director

KAZUNARI UCHIDATAKASHI SHIRAISHI

TAKAKO SUGAYAJanuary 1985	Joined Boston Consulting Group
June 2000	Representative for Japan, Boston Consulting Group
March 2006	External Auditor, Suntory Limited (now Suntory
Holdings Limited)
April 2006	Professor, Faculty of Commerce, Waseda University
February 2012	External Auditor, Kewpie Corporation
June 2012	External Director, Lifenet Insurance Company
External Director, Mitsui-Soko Holdings Co., Ltd.
August 2012	External Director, Japan ERI Co., Ltd. (now ERI
Holdings Co., Ltd.)
February 2015	External Director, Kewpie Corporation
March 2016	External Director, Lion Corporation (current position)

June 1979	Assistant Professor, International Relations,
Department of Humanities and Social Science,
College of Arts and Sciences, University of Tokyo
January 1996	Professor, Department of Asian Studies andDepartment of History, College of Arts andSciences, Cornell University
July 1996	Professor, Center for Southeast Asian Studies,
Kyoto University
April 2005	Professor and Vice President, National Graduate
Institute for Policy Studies
May 2007	President, Institute of Developing Economies, Japan
External Trade Organization
January 2009	Councilor, Council for Science, Technology andInnovation, Cabinet Office
April 2011	President, National Graduate Institute for Policy
StudiesJanuary 2013	Member, Management Evaluation Committee (nowthe Advisory Committee), Lion Corporation
March 2017	External Director, Lion Corporation (current position)
April 2017	Special Visiting Professor, Ritsumeikan University
May 2017	Professor Emeritus, National Graduate Institute for
Policy Studies (current position)
April 2018	Chancellor, Prefectural University of Kumamoto(current position)

October 2002	Registered as an attorney at law (Daini Tokyo Bar
Association)
	Joined Yamada Hideo Law Office (now the Yamada
Ozaki Law Office) (current position)
April 2010	Associate Professor, Toin University of Yokohama
Graduate School of Laws
June 2018	External Director, Haruyama Holdings, Inc.
March 2019	External Director, Lion Corporation (current position)

External Director

Audit & Supervisory
Board Member

Audit & Supervisory
Board Member

REIKO YASUETOSHIYUKI NIKKAWA

YOSHIAKI KAMAO

April 1991	Joined Nagoya Research Institute, PanasonicInformation Systems Co., Ltd. (now Panasonic
Advanced Technology Development Co., Ltd.)
December 1999	Joined Motorola, Inc.
June 2004
Joined SEVEN Networks, Inc.
September 2005 Joined Qualcomm, Inc.
July 2009
Joined FUJISOFT Inc.
April 2015	Managing Executive Officer, FUJISOFT Inc.
January 2018	Joined Cybernet Systems Co., Ltd., Executive Vice
President
March 2018	Representative Director, Executive Vice President,
Cybernet Systems Co., Ltd.
March 2019	Representative Director, President & CEO, Cybernet
Systems Co., Ltd.
January 2020	Representative Director, President and Executive
Officer, Cybernet Systems Co., Ltd. (current
position)
March 2021	External Director, Lion Corporation (current position)

April 1984
Joined Lion Corporation
March 2019	Audit & Supervisory Board Member(current position)

April 1985
Joined Lion Corporation
March 2019	Audit & Supervisory Board Member(current position)

External Audit &Supervisory Board Member

External Audit &Supervisory Board Member

External Audit &Supervisory Board Member

TAKAO YAMAGUCHISETSUKO TAKEMOTOATSUKO SUZUKI

October 1981	Joined Chuo Accounting Office Auditing Corporation
February 1985	Acquired Japanese CPA certification
September 1987	Entered Yamaguchi Accounting Office
December 1987 Acquired Japanese tax accountant certification
January 1996	Director, Yamaguchi Accounting Office(current position)
March 2015	Alternate External Audit & Supervisory Board
Member, Lion Corporation
March 2019	External Audit & Supervisory Board Member, Lion
Corporation (current position)

April 1969	Joined the Ministry of FinanceJuly 2009	Director, Ogikubo Tax Agency
July 2011	Retired from the National Tax Agency
August 2011	Acquired Japanese tax accountant certification
September 2011	Established Takemoto Setsuko Tax Accounting
Office (now the Kuchitani General Accounting Office)as partner (current position)
March 2019	External Audit & Supervisory Board Member, Lion
Corporation (current position)

April 1986	Joined Matsushita Electric Industrial Co., Ltd. (nowPanasonic Corporation)
April 2008	Director and Manager of the CSR Office, Matsushita
Electric Industrial Co., Ltd. (resigned in December
2014)
April 2010	External Director and Auditor, Nara Women’s
University (resigned in December 2012)
January 2015	Joined Asahi Breweries, Ltd.
April 2015	Manager of the Social Environment Department,
Asahi Breweries, Ltd.
October 2015	Manager of the Sustainability Promotion Section,
Olympic/Paralympic Promotion Headquarters(concurrently held), Asahi Breweries, Ltd.
April 2017	Director and General Manager of the CSR Divisionof Asahi Group Holdings, Ltd.
March 2021	External Audit & Supervisory Board Member, Lion
Corporation (current position)

Note: N otification of the appointment of Mr. Uchida, Mr. Shiraishi, Ms. Sugaya and Ms. Yasue as independent directors, and Mr. Yamaguchi, Ms. Takemoto and Ms. Suzuki
as Audit & Supervisory Board members has been sent to the Tokyo Stock Exchange.
Executive Officer

Executive Officer

Executive Officer

Kosuke Tanaka

Annette Ling

Kei Minamikawa

Executive General Manager of Research and Development
Headquarters

Executive General Manager of International Division

Executive General Manager of Supply Chain Planning
Headquarters, Director of Administration Department

LION Integrated Report 2022

69

Management’s Discussion and Analysis of Fiscal 2021 Results
Market Environment
In fiscal 2021 (January 1, 2021–December 31, 2021), as

In domestic consumer products, the Lion Group’s

the effects of the novel coronavirus (COVID-19)

main business, while unit prices continued to rise, thepandemic stretched on, despite signs of recovery inoverall market shrank, due partly to recoil from ancorporate profits, conditions in the Japanese economy

expansion in sales of hygiene-related products andremained harsh overall, with continued stagnation incertain other products in the previous year.

employment and personal consumption.

Consolidated Results
Under Vision2030, its long-term strategic framework,

bolster its competitiveness and profitability in the home

the Lion Group advanced initiatives to address its

care field, which includes such products as laundry

Sustainability Material Issues as well as measures based

detergents.

on three growth strategies – “Accelerate growth in

Reflecting these efforts, consolidated results for fiscal

four fields of value creation,” “Transform our business

2021 were as follows. Net sales amounted to ¥366,234

foundations for growth” and “Generate dynamism tomillion, a year-on-year increase of 3.1% (or a 1.9% increase

realize innovative change.” At the same time, with noat constant currency excluding exchange rate fluctuations).

end to the COVID-19 pandemic in sight, the Lion Group

Core operating income* came to ¥30,923 million, down

made every effort to prevent the spread of the virus and14.0%, and operating profit was ¥31,178 million, down

ensure the safety of its employees while focusing efforts

29.3%. Profit for the period attributable to owners of theon promoting the establishment of good hygienic habits.
In domestic operations, Lion introduced new products

parent totaled ¥23,759 million, down 20.5%.

including toothpastes, dental rinses, hygiene-related* C ore operating income is an earnings indicator the Company uses to measure
regular business performance. It is calculated by subtracting selling, generaland administrative expenses from gross profit.

products, fabric softeners, dishwashing detergents,

Consolidated Results(Millions of yen)

2021

2020

focus on high-value-added products, and worked to

Net sales

366,234

355,352

cultivate markets for these products through efficientCore operating income

30,92335,937

marketing.

Ratio of core operating income to net sales

household cleaners and antipyretic analgesics, with a

In overseas operations, in addition to efforts to expand

Operating profit

8.4%

10.1%

31,17844,074its business in the personal care field, which includes

Ratio of operating profit to net sales

8.5%

12.4%

oral care and beauty care products, the Group sought to

ROE

9.8%

13.6%

Changes in Core Operating Income

Selling, General and Administrative Expenses(Billions of yen)

2021
Amount35.9

2020 core operating income(Millions of yen)
Increase in sales, productmix changes and others+0.5

Total cost reduction(raw materials, logistics)

+1.2

-3.7

Increase in raw material prices
Increase incompetition-related expenses-2.0

Increase in other expenses-1.0

2021 core operating income

30.9

70 LION Integrated Report 2022

Selling, general andadministrative expenses

2020% of net sales

Amount(Millions of yen)

% of net sales

143,934

40.5

2.7

9,426

2.7

7.8

26,9097.6

24,908

6.8

24,9437.0

Transportation andwarehousing expenses

20,1695.5

18,851

5.3

Salaries and allowances

16,663

4.5

15,7394.4

R&D expenses

11,1803.1

10,906

3.1

Other expenses

36,928

10.1

37,156

10.5

148,18140.5

Sales commissions

9,864

Promotion expenses

28,466Advertising expenses

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Results by Reportable SegmentGums) Plus Premium Dental Rinse, featuring a unique

The Group comprises three reportable segments

helps prevent gum disease (gum and periodontal

differentiated by product and service type and by region,
which are in turn based on business divisions andcompanies. These reportable segments are Consumer
Products Business, Industrial Products Business andOverseas Business.

premium formula with eight effects. It revitalizes gums andinflammation).
In Beauty Care Products, overall sales of hand soaps
decreased as sales of KireiKirei Medicated Foaming Hand
Soap decreased, reflecting recoil from a demand boom inthe previous year.
In body washes, overall sales increased as hadakara

Consumer Products BusinessBody Soap were firm.

The Consumer Products Business segment comprises the

In antiperspirants and deodorants, overall sales fell as

Oral Care Products, Beauty Care Products, Fabric Caresales of the Ban Sweat-Blocking Roll-On series decreased.

Products, Living Care Products, Pharmaceutical Products

In Fabric Care Products, overall sales of fabric softeners

and Other Products businesses. Segment net sales

increased as sales of SOFLAN Aroma Rich and SOFLAN

increased 0.6% compared with the previous fiscal year.

Premium Deodorizer were firm.

Segment profit decreased 22.8%, reflecting increases in

In laundry detergents, overall sales decreased slightly.

raw material prices and competition-related expenses.

Sales of highly concentrated liquid laundry detergent TOP

Net Sales and Segment Profit

SUPER NANOX For Odors were strong, but sales of liquid(Millions of yen)2021
% of net sales2020% of net sales

Net sales

247,068

Segment profit

19,0397.7%

ChangeChange(%)

245,493

1,574

0.6%

24,647 10.0%(5,607)(22.8%)

Note: Net sales include internal sales within and among segments, whichamounted to ¥17,473 million in fiscal 2021 and ¥15,746 million in fiscal 2020.

laundry detergent TOP Clear Liquid fell.
In Living Care Products, overall sales of dishwashingdetergents increased as sales of CHARMY Magica weresteady, and sales of CHARMY Crysta for dishwashers werestrong.
In household cleaners, overall sales increased

Net Sales by Product Category(Millions of yen)significantly. Sales of bath detergent LOOK Plus Bath

2021

2020

ChangeChange(%)

Oral Care Products

69,41866,407

3,010

4.5%

Antimold Fogger were strong, and LOOK Plus Awa-Pita

Beauty Care Products

24,72931,489(6,760)(21.5%)

Toilet Cleaning Spray, a new type of product that easily

Fabric Care Products

60,66059,119

1,540

2.6%

cleans even the hard-to-clean space under the toilet bowl

Living Care Products

25,15824,063

1,094

4.5%

rim, received favorable consumer reviews.

Pharmaceutical Products

25,381

23,897

1,484

6.2%

Other Products

41,72040,515

1,204

3.0%

In Oral Care Products, overall sales of toothpastes
increased. Although sales of the SYSTEMA EX Toothpaste
decreased, sales of the CLINICA Advantage Toothpaste
were favorable, and the new Lightee Toothpaste, awhitening toothpaste that thoroughly removes grime fromeven micro-level imperfections in the dental surface,received favorable customer reviews.
In toothbrushes, overall sales increased as sales of
CLINICA ADVANTAGE Toothbrush were strong, and sales
of SYSTEMA Toothbrush were firm.
In dental rinses, overall sales increased. Sales of NONIO
Plus Whitening Dental Rinse were strong, and the productlineup saw the addition of new SYSTEMA Haguki (theCleansing and bathroom fungicide LOOK Plus BathIn food preparation products, overall sales decreased as
sales of REED Healthy-Cooking Paper decreased.
In Pharmaceutical Products, overall sales of antipyretic
analgesics increased significantly as sales of the BUFFERIN
series, which saw the launch of BUFFERIN PREMIUM DX,
a new product for severe headaches that is formulated for
maximum effect and speed, increased substantially.
In eye drops, overall sales increased due to strong salesof Smile 40 Mediclear DX, although sales of the Smile 40EX
series decreased.
In Other Products, overall sales of direct-to-consumer
products decreased as sales of Nice rim essence
Lactoferrin decreased.
In pet supplies, overall sales increased as sales of Nioi
wo Toru Suna (Deodorizing Cat Litter) were firm, and thoseof oral care products were favorable.

LION Integrated Report 2022

71Industrial Products Business

Net Sales and Segment Profit

The Industrial Products Business segment includes the
Mobility, Electronics and Detergents for Institutional Use
fields. These businesses handle products that include antisticking agents for tires, electro-conductive carbon forsecondary batteries, and detergents for institutional andkitchen use, respectively. Segment net sales increased
11.3% compared with the previous
fiscal year. Segment profit increased 22.0%.
Net Sales and Segment Profit
2021% of net sales
Net sales

61,271

Segment profit

2,650(Millions of yen)2020
% of net sales
55,069

4.3%

2,171

ChangeChange
(%)

6,201

11.3%

478

22.0%

3.9%

Note: N et sales include internal sales within and among segments, which amounted
to ¥26,491 million in fiscal 2021 and ¥23,505 million in fiscal 2020.

In the Mobility field, sales of anti-sticking agents for tires andmold releasing agents for rubber were strong, and overallsales increased significantly.
In the Electronics field, sales of conductive carbon forvehicle batteries were strong, and overall sales increased
substantially.
In the Detergents for Institutional Use field, sales of handsoaps were favorable, and overall sales increased.

Overseas Business
The Overseas Business segment comprises business
operations located in Southeast Asia, including Thailand andMalaysia, and Northeast Asia, including South Korea andChina. Segment net sales increased 7.5% year on year (a3.1% increase at constant currency excluding exchange rate
fluctuations). Segment profit decreased 15.9%, reflecting
increased raw material prices.

Net sales
Segment profit(Millions of yen)2021
% of net sales2020% of net sales

109,253

101,651

6,005

5.5%

7,144

7.0%

ChangeChange
(%)

7,602

7.5%

(1,138)(15.9%)

Note: N et sales include internal sales within and among segments, which amounted
to ¥10,525 million in fiscal 2021 and ¥10,440 million in fiscal 2020.

In Southeast Asia, overall sales were up 3.5%.
In Thailand, sales of dishwashing detergents decreased,
but sales of laundry detergents were steady. Overall sales
after yen conversions increased.
In Malaysia, sales of TOP laundry detergent were firm.
Overall sales after yen conversions increased.
In Northeast Asia, overall sales were up 15.1%.
In South Korea, sales of hand soaps decreased, but
due to exchange rate fluctuations, overall sales after yen
conversions increased.
In China, sales of SYSTEMA toothbrushes and products
imported from Japan increased significantly. Overall sales
after yen conversions were up substantially.

Other
Net Sales and Segment Profit
2021% of net sales
Net sales

27,881

Segment profit

2,145(Millions of yen)2020
% of net sales
34,820

7.7%

2,315

6.6%

ChangeChange(%)(6,938)(19.9%)(169)(7.3%)

Note: N et sales include internal sales within and among segments, which amounted
to ¥24,687 million in fiscal 2021 and ¥31,992 million in fiscal 2020.

Financial Status
Consolidated Financial Status
2021

2020

ChangeTotal assets (millions of yen)

428,025

435,501(7,475)

Total equity (millions of yen)

265,014244,856

20,158

Ratio of equity attributable to ownersof the parent to total assets1 (%)

58.8

53.2

5.6

Equity attributable to owners of theparent to total assets per share2 (yen)865.31797.0868.23

1. R atio of equity attributable to owners of the parent to total assets = (Total equity –Non-controlling interests) / Total assets
2. N on-controlling interests are excluded from the calculation of equity attributableto owners of the parent to total assets per share.

72 LION Integrated Report 2022

Total assets fell ¥7,475 million compared with the previous
consolidated fiscal year-end to ¥428,025 million. Thiswas primarily attributable to a decrease in cash and cash
equivalents. Total equity increased ¥20,158 million to¥265,014 million. The ratio of equity attributable to owners of
the parent to total assets stood at 58.8%.

Contents

Consolidated Cash Flows

Our Purpose(Millions of yen)

2021

2020

ChangeCash flows from operating activities

19,296

40,729(21,433)

Cash flows from investing activities(34,177)(19,868)(14,308)

Cash flows from financing activities(10,225)(9,140)(1,085)

Effect of exchange rate change on
cash and cash equivalents

822

(593)

1,415

Net increase (decrease) in cash
and cash equivalents(24,283)

11,127(35,411)

Cash and cash equivalents at endof period

97,250121,534(24,283)

Vision & Strategy

Corporate Governance

Performance/Data

Net cash provided by operating activities totaled ¥19,296
million, due mainly to profit before tax.
Net cash used in investing activities totaled ¥34,177 million,
due in part to the purchase of property, plant and equipment.
Net cash used in financing activities totaled ¥10,225
million. Major components of this outflow included cash
dividends paid.
As a result of the above, cash and cash equivalents as ofDecember 31, 2021 decreased ¥24,283 million comparedwith December 31, 2020, to ¥97,250 million.

Outlook for 2022
Outlook for 2022

(Millions of yen)

Fiscal 2022
forecast

2021

ChangeChange(%)

Net sales

375,000

366,234

8,765

2.4%

Core operating
income*23,00030,923(7,923)(25.6%)

Operating profit

27,50031,178(3,678)(11.8%)

Profit for the period
attributable to ownersof the parent

20,00023,759(3,759)(15.8%)

Basic earnings per
share (yen)

68.79

81.73

(12.94)(15.8%)* C ore operating income is an earnings indicator the Company uses to measure
regular business performance. It is calculated by subtracting selling, general andadministrative expenses from gross profit.

During fiscal 2022 (the year ending December 31, 2022),
despite anticipated recovery from the harsh conditions
created by the COVID-19 pandemic, the outlook remains
unclear.
In domestic consumer products, the Lion Group’s main
business, although steady demand is expected, intensecompetition is forecast to continue.
Amid these circumstances, the Lion Group will launch
its new medium-term management plan, Vision2030
1st STAGE, based on its Vision2030 long-term strategic
framework, aiming to contribute to the realization of asustainable society and to accelerate business growth.
In the Consumer Products Business segment, theLion Group will introduce and cultivate new, high-addedvalue and environmentally friendly products in its mainstay
businesses, working to accelerate new value creation
initiatives in its four fields of value creation.
In the Industrial Products Business segment, the LionGroup will steadily promote its priority measures in such key
areas as the Mobility and Electronics fields to reinforce its
business foundation and strive to contribute to sustainability
through the sale of its products. Furthermore, Lion will stepup marketing efforts to reach out to key customer groups
in the Detergents for Institutional Use field while striving to
expand sales of hygiene-related products.

With regard to the Overseas Business segment, the LionGroup will work to increase profitability in the home carefield. The Group will also implement marketing activities
focused mainly on expanding the scale of its business in the
personal care field, which includes oral care and beauty careproducts, with particular emphasis on the Chinese market,
which continues to grow. At the same time, the Group willproactively advance deliberations related to entry into new
countries or areas.
As a result of the above, net sales in fiscal 2022 are
expected to increase, but profit is expected to decrease,reflecting rising raw material costs and increased
depreciation and amortization due to investments for
growth.
Consolidated results forecasts for fiscal 2022 are as
follows: net sales of ¥375,000 million (up 2.4% year on year),core operating income of ¥23,000 million (down 25.6%),
operating profit of ¥27,500 million (down 11.8%) and profit forthe period attributable to owners of the parent of ¥20,000
million (down 15.8%).
Assumptions Underlying the Forecast of Consolidated
Financial Results for Fiscal 2022
Lion utilized the following foreign exchange rates in thecalculation of the aforementioned forecasts.
¥110= US$1.00¥3.4 = 1.00 baht
Forecast of Fiscal 2022 Consolidated Cash Flows
In cash flows from operating activities, Lion projects profit
before tax of approximately ¥28,000 million. Depreciation
and amortization is estimated to total about ¥18,000 million.
In cash flows from investment activities, Lion plans toundertake capital expenditures of around ¥29,000 million.
Cash flows from financing activities are expected to yieldan outflow of about ¥10,000 million mainly due to cash
dividends paid.
Based on these projections, Lion estimates that cash
and cash equivalents as of December 31, 2022 will be up
approximately ¥7,000 million year on year.

LION Integrated Report 202273

Ten-Year Financial Summary

V-2 Plan
2015–2017

V-1 Plan
2012–2014

Japanese GAAP(Millions of yen)

2012

2013

2014

2015

2016

2017

Net sales

335,171352,005367,396378,659

395,606

410,484

Cost of sales

145,385

153,336

160,677

162,435

161,992

171,209

Gross profit

189,785

198,668

206,718

216,223

233,613239,275

Selling, general and administrative expenses

182,572

187,849

194,312

199,848

209,110

212,068

Operating income

7,213

10,81912,406

16,37424,502

27,206

Income before income taxes

8,594

10,925

13,085

19,38724,03530,560

Profit attributable to owners of parent

4,235

6,097

7,368

10,68015,951

19,827

Total assets

257,595

282,098

283,352

282,434

298,510331,751

Property, plant and equipment, net

61,95568,98979,27575,06074,40280,981

Total noncurrent liabilities

47,28826,20840,38018,455

17,19017,511

Total liabilities

143,431

157,865

155,918

139,703

140,630

144,736

Total net assets

114,163

124,232

127,434

142,730

157,879

187,015

10,82013,70913,555

8,801

9,407

14,892

Consolidated Statements of Income

Consolidated Balance Sheets

Other selected data
Capital expenditures*
R&D expenses

8,989

9,618

9,439

9,808

10,084

10,474

Depreciation and amortization*

11,834

11,227

10,301

11,166

10,244

9,386

Number of employees

6,006

6,162

6,343

6,816

6,895

7,075

Earnings per share – basic

15.77

22.72

27.47

39.35

55.13

68.23

Earnings per share – diluted

15.75

22.68

26.16

36.84

55.04

68.15

Dividends per share

10.00

10.00

10.00

10.00

13.00

17.00

Net assets per share

407.08441.59449.94469.05513.76607.61

299,115,346

299,115,346

299,115,346

299,115,346

299,115,346

299,115,346

Gross profit to net sales

56.6

56.4

56.3

57.1

59.1

58.3

Selling, general and administrative
expenses to net sales

54.5

53.4

52.9

52.8

52.9

51.7

Operating income to net sales

2.2

3.1

3.4

4.3

6.2

6.6

Income before income taxes to net sales

2.6

3.1

3.6

5.1

6.1

7.4

Profit attributable to owners of parent to net sales

1.3

1.7

2.0

2.8

4.0

4.8

Return on equity (ROE)

4.0

5.4

6.2

8.5

11.2

12.2

Per share data (yen)Common stock(number of shares outstanding)
Ratios (%)* Includes intangible assets.

74 LION Integrated Report 2022

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

LIVE Plan
2018–2020

IFRS(Millions of yen)

2018

2019

2020

2021

Net sales

349,403347,519355,352

366,234

Cost of sales

177,673

175,588

175,479

187,129

Gross profit

171,729

171,931

179,872

179,104

Selling, general and administrative expenses

143,353

141,882

143,934

148,181Core operating income

28,37530,04835,93730,923Operating profit

34,196

29,83244,074

31,178

Profit before tax

35,65831,40244,49434,089Profit for the period attributable to owners of the parent

25,606

20,55929,87023,759Total assets

355,365

380,701

435,501

428,025

Property, plant and equipment

81,54690,903

118,379

120,673

Total non-current liabilities

21,35023,781

24,016

23,792

Total liabilities

151,093

159,499

190,644

163,011

Total equity

204,271

221,201

244,856

265,014

Capital expenditures*

16,67823,64447,57021,890R&D expenses

10,96910,944

10,906

11,180Depreciation and amortization*

8,707

10,504

11,732

14,252

Number of employees

6,941

7,151

7,452

7,584

Basic earnings per share

88.11

70.72

102.75

81.73

Diluted earnings per share

87.99

70.63

102.61

81.59

Cash dividends paid per share

20.00

21.00

23.00

24.00

Equity attributable to owners of the parent to total assets per share

657.50716.94797.08865.31

299,115,346

299,115,346

299,115,346

299,115,346

Gross profit to net sales

49.1

49.5

50.6

48.9

Selling, general and administrative expenses to net sales

41.0

40.8

40.5

40.5

Operating profit to net sales

9.8

8.6

12.4

8.5

Profit before tax to net sales

10.2

9.0

12.5

9.3

Profit for the period attributable to owners of the parent to net sales

7.3

5.9

8.4

6.5

Profit for the period to equity attributable to owners of the parent (ROE)

13.9

10.3

13.6

9.8

Consolidated Statement of Income

Consolidated Statement of Financial Position

Other selected data

Per share data (yen)Number of outstanding shares (common stock)

Ratios (%)

LION Integrated Report 2022

75

External Evaluations and Participation in External Organizations(As of May 2022)

In addition to financial considerations, the Lion Group works to address environmental, social and governance issues. We havebeen selected for inclusion in leading socially responsible investing (SRI) indices.
Our environmental, logistics and human resources initiatives have been highly evaluated by governmental and otherexternal institutions.

Inclusion in SRI Indices

THE INCLUSION OF LION CORPORATION IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS,SERVICE MARKS OR INDEX NAMES HEREIN DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT ORPROMOTION OF LION CORPORATION BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE
EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS ORSERVICE MARKS OF MSCI OR ITS AFFILIATES.

Participation in External Organizations

RSPO

Evaluations, Certifications and Awards
Overall CSR

Sustainability Site
Awards 2022
Gold Award
Human Resources

Supply Chain

Environment

76 LION Integrated Report 2022

Contents

Our Purpose

Vision & Strategy

Corporate Governance

Performance/Data

Corporate Overview (As of December 31, 2021)
Corporate Overview

Stock Information

Corporate Name Lion Corporation

Stock ListingFirst Section of Tokyo Stock Exchange

Foundation

October 30, 1891

Securities Code

4912

Establishment

September 1918

Transfer Agent

Capital¥34,433,720,000

Mitsubishi UFJ Trust and Banking
Corporation

Address

3-7, Honjo 1-chome, Sumida-ku,
Tokyo 130-8644, Japan

Number of Shares 299,115,346
of Common Stock (Issued and outstanding)

Employees

3,165 (Consolidated: 7,584)

Number of
Shareholders

Shareholders by Category
Foreign institutions
and individuals

Principal Shareholders

24.43%
Other Japanese
corporations

Japanese financial
institutions

14.61%

34.93%

Financial instrument firms

3.31%

TOPIX

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

11.61

Custody Bank of Japan, Ltd. (Trust Account)

9.12

Custody Bank of Japan, Ltd. As trustee for Mizuho Bank, Ltd. Retirement
Benefit Trust Account re-entrusted by Mizuho Trust and Banking Co., Ltd.

3.52

STATE STREET BANK AND TRUST COMPANY 505223

2.75

MUFG Bank, Ltd.

2.42

STATE STREET BANK WEST CLIENT -TREATY 505234

1.60

SMBC Nikko Securities Inc.

1.58

Tokio Marine & Nichido Fire Insurance Co., Ltd.

1.52

Meiji Yasuda Life Insurance Company

1.40

TOYOTA TSUSHO CORPORATION

1.20

Note: Shareholding ratios are calculated based on a total of 291,501,619 shares, whichis the number of shares issued and outstanding less the number of shares oftreasury stock, and are rounded down to the second decimal place.

Share Price and Trading Volume
Lion shares
(Yen)
3,000

Shareholding
ratio (%)

Shareholder

Individual investors
and others(including treasury
stock)

22.72%

164,059

Trading volume(Millions of shares)
60

2,500

50

2,000

40

1,500

30

1,000

20

500

10

0

0

1

2

3

4

5

6 7
2019

8

9 10 11 12 1

2

3

4

5

6 7
2020

8

9 10 11 12 1

2

3

4

5

6 7
2021

8

9 10 11 12

Editorial Policy
Lion Integrated Report 2022 is intended to provide Lion’s shareholders, investors and other stakeholders with key information
about the Company’s initiatives for increasing its corporate value over the medium to long term by fulfilling its purpose of “Makea difference in everyday lives by redesigning habits: ReDesign” and facilitating deeper understanding of the Lion Group.
Period Covered: From January 1, 2021 to December 31, 2021 (Some information covers activities in 2022.)
Scope of Coverage: Lion Corporation and all of its consolidated subsidiaries, in principle.
Note: Where the scope of coverage of reported activities or data differ from the above, a description is provided.

Accounting Standards Applied: International Financial Reporting Standards (IFRS)
Referenced Guidelines:• International Integrated Reporting Framework issued by the Value Reporting Foundation (VRF)• Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for Collaborative Value Creation issued by the Ministryof Economy, Trade and Industry• GRI Sustainability Reporting Standards issued by the Global Reporting Initiative• ISO 26000: 2010 Guidance on social responsibility issued by the Japanese Standards Association
Regarding Forward-Looking Statements
This integrated report contains forward-looking statements on subjects that include matters related to future business plans, corporate strategies and forecasts of performance. Suchstatements were formulated based on information that was available at the time of the preparation of this integrated report and contain uncertainties regarding such factors as economic
conditions, market trends and foreign currency risks. Actual results may differ from the information presented in these forward-looking statements.

LION Integrated Report 2022

77

Inquiries

Published by

Lion Corporation
Published June 2022

Lion Corporation
3-7, Honjo 1-chome,
Sumida-ku, Tokyo 130-8644, Japan
Website (English): https://www.lion.co.jp/en/
Tel: +81-3-3621-6211