LION Integrated Report 2023

Habits have the power to change society. Lion is working for healthy minds and bodies byredesigning habits for more people in more regions and in more aspects of daily living.

Make a difference in everyday lives by redesigning habits

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Contents
Our Purpose

Accelerate Growth in Four Fields of Value Creation

Generating Dynamism to Realize Innovative Change

Performance/Data

Corporate Philosophy...............................................2

Business Development Aimed at the Evolution
and Expansion of Habit Redesign.....................20

Human Resource Development............................35

Results by Business Segment................................64

Message from the Director Responsible for Sustainability.....40

Oral Health...........................................................21

Consumer Products Business (Japan)..................65

Sustainability: Approach and Management.............41

Infection Control...................................................24

Overseas Business...............................................66

Initiatives to Address the Sustainability Material Issues.....42

Smart Housework.................................................25

Industrial Products Business.................................67

Disclosure Based on the TCFD Recommendations..... 49

Financial and Non-Financial Highlights....................68

Lion at a Glance.......................................................3
Creating Habits and Achieving Business Growth......4
Value Creation Process............................................5
Top-Priority Sustainability Material Issues.................6

Our Strategy
Message from the Chairman.....................................7
Message from the President...................................11
Message from the Director Responsible for Finance.....16
Medium-term Management Plan............................19

Expansion of the Overseas Business......................26
Transforming Our Business Foundations for Growth
Research and Development..................................29
Intellectual Property..............................................31
Digital Transformation (DX)....................................32
Supply Chain Management...................................33

Key Financial Data..................................................69

Corporate Governance

Key Non-Financial Data..........................................70

Messages from External Directors..........................51
Corporate Governance...........................................53

External Evaluations and Participation inExternal Organizations........................................71

Compliance............................................................59

Corporate Overview and Stock Information............72

Risk Management...................................................60
Leadership Team....................................................62

Editorial Policy

Lion’s Disclosure

Lion Integrated Report 2023 is intended to provide Lion’s shareholders, investors andother 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 “Make adifference in everyday lives by redesigning habits: ReDesign” and facilitating deeper
understanding of the Lion Group.
Reporting Period: From January 1 to December 31, 2022 (Some information covers activities in 2023.)
Scope of Report: Lion Corporation and all of its consolidated subsidiaries, in principle.

Financial Information

Non-Financial Information• Corporate Governance Report• Securities Report (Japanese only)• Summary of Consolidated Financial
Statements

Reports

Lion Integrated Report2023• Lion’s Sustainability: SDG-Related
Initiatives (Japanese only)• Convocation of the Annual General
Meeting of Shareholders• LION LETTER business report(Japanese only)

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)
Investor Relations• Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for

Sustainability

Collaborative Value Creation issued by the Ministry of Economy, Trade and Industry
Regarding Forward-Looking Statements
This report contains forward-looking statements on subjects that include matters related to future business plans,
corporate strategies and forecasts of performance. Such statements 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.

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

https://www.lion.co.jp/en/sustainability/1Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Corporate Philosophy

Our purpose reflects ourdesire to help people achieve
healthy minds and bodies and ourhopes for a sustainable society.
Our beliefs are the linchpin of ourbusiness activities, guiding our daily
thoughts, actions and decisions as we
strive to put our purpose into practice.
The basis of these beliefs is ourDNA, which has been handed
down since Lion’s founding.

2

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance3

Performance/Data

Lion at a Glance

Net Sales and Core Operating Income by Segment
Other BusinessIndustrial Products
Business

0.9%

9.7%

Industrial Products
Business

Overseas
Business(2022)

30.3%

5.7%

Net Sales by Region¥ 23.5billionLion Corporation (Hong Kong) Ltd.

Location: Bangkok

Location: Hong Kong

Overseas
Business

59.1%

24.5%

(2022)Southern Lion Sdn. Bhd.

Lion Corporation (Korea)

Location: Johor Bahru

Location: Seoul

Lion Kallol Limited

Lion Corporation (Singapore)
Pte Ltd.

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

Location: Dhaka

Location: Singapore

Location: Qingdao

Merap Lion Holding Corporation

PT. Lion Wings

Lion Home Products (Taiwan)Co., Ltd.

Location: Ho Chi Minh City
(Equity method subsidiary from March 2023)

Location: East Jakarta(Equity method subsidiary)

37.2%
Overseas
Net Sales

Consumer
Products
Business

54.8%

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

Consumer Products
Business

Lion Corporation (Thailand) Ltd.

Northeast
Asia

Core
Operating
IncomeConsumer
Products
Business

Lion operates businesses in Southeast and South Asia and Northeast Asia,
providing products useful for daily living regardless of culture or language.

Other Business

15.0%

Net Sales¥ 389.8billionOverseas Business

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

Oral Care Products

Beauty Care Products

Toothpastes, toothbrushes, dental rinses, etc.

Hand soaps, body soaps, antiperspirants anddeodorants, etc.

¥ 129.3
billionSoutheast
Asia(2022)

62.8%

Industrial Products Business
Fabric Care Products

Living Care Products

Laundry detergents, fabric softeners, laundrybleaches, etc.

Dishwashing detergents, household cleaners,
food preparation products, etc.

Other Business

Our Industrial Products Business comprises the Chemical Products Business,
which handles surfactants, electro-conductive carbon and other chemicals;
the Detergents for Institutional Use Business, which sells detergents and handsoaps for hotels and restaurant kitchens; and Other Business.

Chemical Products
Mobility• Rubber processing agents• Rubber additive agents

Pharmaceutical Products

Other

Antipyretic analgesics, eye drops, dermatologic
medicines, etc.

Gifts, pet supplies, etc.

Electronics

Eco Chemicals• Electro-conductive carbon • Concrete admixtures• Pressure-sensitive adhesives

Care Chemicals• Surfactants• Cosmetics ingredients

Detergents for Institutional Use
Dishwasher
detergents

Alcohol sanitizers

Hand soaps

Location: New Taipei

Vegetable-washingdetergents

In Japan, our subsidiaries
are mainly engaged inoperations related to Groupbusinesses. The main
products and services of thisbusiness include construction
contracting, real estate
management, transport andstorage, and temporary staffing.

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance4

Performance/Data

Creating Habits and Achieving Business Growth
Lion’s origins lie in soap and toothpaste. “Fulfilling a spirit of love” since our founding, we have sought to support mental and physical health by providing consumers with superior products while engaging incommunication and educational activities aimed at promoting better living habits. We recognized long ago that global environmental conservation is an issue that the whole world shares and have continuously
worked to develop and propose environmentally friendly products and habits. By addressing lifestyle and social issues through better living habit proposals, we aim to contribute to consumers’ everyday lives
while achieving sustainable business growth.

IFRS

Net Sales
Vegetable
washingHand
washing

Dishwashing

Laundry
Toothbrushing

Lion founder
Tomijiro Kobayashi

Make a difference in everyday lives by redesigning habits

1891

1950

1990

Prevalence of cavities among children

Lifestyle andSocial Issues

2000

Diversifying oral health issues

2010

2020

From oral to overall health

Laundry habits

Health hazards caused by E. coli

Global COVID-19 pandemic

Environmental problems

Establishing Tooth Brushing Habits
When Lion was founded in the late 1800s, tooth brushing was not yet widely practiced in Japan,
and around 96% of children had cavities. Based on Lion founder Tomijiro Kobayashi’s feeling thatthe situation presented a real crisis with regard to the nation’s future, Lion began developing andmarketing oral care products and carrying out educational activities.
Over the years, Lion has continued to conduct activities to firmly establish oral care habits insociety. These activities include the Oral Health Event of Tooth Brushing for Children, which has

Lion’s Initiatives
in the Field ofOral Care

Toothpaste Market Scale, Percentage of Consumers Who Brush At
Least Twice a Day and Percentage of Elementary School Children with
Cavities (Japan)

100

Lion Foundation for Dental Health, which spreads awareness of and educates people about oral

80

health; and sponsorship of TV programs that raise awareness of the importance of nighttime tooth60

brushing. As a result, approximately 80% of consumers brush their teeth at least twice a day, a40

fourfold increase over the past 50 years. Concurrently, the percentage of elementary school

20

children with cavities—previously an issue—has fallen to

0

80
60
40

25%

0
1981

2011

2016

Sources: Market size from a Lion Corporation survey; tooth brushing frequency and percentage ofchildren aged 10 to 14 years with cavities (treated and untreated) from “Survey of Dental
Diseases” by the Ministry of Health, Labour and Welfare.

oral health. Meanwhile, the size of the toothpaste market has
increased fourfold. In this way, creating habits that contributehas driven the growth of Lion’s businesses.

Approx.

20

1969

oral care habits has significantly helped to improve people’s

to better consumer health while revitalizing product markets

(%)
100

(Billions of yen)120

taught children correct tooth brushing methods for more than 80 years; the establishment of thearound 25%, thus indicating that the establishment of correct

Approx.
fourfoldincrease

Toothpaste market scale
Percentage of people brushing at least twice a day
Percentage of children aged 10 to 14 years with cavities

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

Establishing toothbrushing habits

Improved oral health
Economic value: Expansion and vitalization of the toothpaste market

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance5

Performance/Data

Value Creation Process
In fulfilling its purpose, Lion has built up a portfolio of management resources over many years of sincere dedication to manufacturing and redesigning habits for the better. To achieve our management vision
for 2030, “Becoming an advanced daily healthcare company,” we will create “Positive Habits” for even more people, regions and situations in daily life, with a focus on our four fields of value creation, whichemphasize such habits. Our aim is to increase corporate value by helping to make daily living and society better.

InputsManagement resources
cultivated over many yearsof creating habits

A sincerecommitment tomanufacturing

Redesigning habits for evenmore people, regions andsituations in daily life

Creation and proposal of“Positive Habits”

Outcomes

Improvement of dailyliving and society
Vision for 2030

Oral Health

Our three growth strategies

StablesupplychainsTrust ofsuppliers

Products and brands
that are widely loved
by customers

Diversehuman
resources

Creation of better
living habits

Outputs

Vision2030

Consumer researchand technologicaldevelopment
capabilities

Make a difference in everyday lives by redesigning habits

Business Activities

Enhance consumer QOL• Accelerate growth in four fields of value creation• Transform our business foundations for growth

Infection Control• Generate dynamism to realize innovative change

Reinforce initiatives toaddress the Sustainability
Material Issues

Net sales of approx.

Becoming an advanced daily
healthcare company

Capital reinvestment and distribution
Environmental
problems

Infectious
disease risk

EBITDA1Approx.

Economic
valueCore operating
Approx.
income2
ROIC3

¥80 billion¥50 billion
8–12%
10–14%

1. Calculated as the sum of core operating income
and depreciation and amortization (excluding that ofright-of-use assets)
2. C alculated by subtracting selling, general and administrative
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

A higher level of corporate governanceAging
population¥600 billion(Share of net sales from the Overseas Business: Approx. 50%)

ROE

Well-Being

Stablefinancial
base

Diversifying
valuesContribute to the realizationof a decarbonized, resourcecirculating society

Envisioned Financial
Performance in 2030

Priority Fields

Smart
Housework

Changes insocietySocialvalue

Digitaltransformation

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance6

Performance/Data

Top-Priority Sustainability Material Issues
The aim of Vision2030 is to sustainably enhance corporate value by creating both social and economic value through the synergistic promotion of growth strategies alongside initiatives to address our
Sustainability Material Issues.
These Sustainability Material Issues are relevant to both the Lion Group and society at large and, with the goal of helping to realize a healthy future for people and the planet, their selection was informed bybroad business, environmental and social sustainability perspectives. In 2020, we reexamined the Sustainability Material Issues that we need to address ahead of 2030 by backcasting from the vision we havefor society in 2030, taking into account factors such as the achievement of our management vision and our contribution to the Sustainable Development Goals (SDGs).*
In particular, we have positioned “creating healthy living habits” and “promoting environmental initiatives for a sustainable planet” as top-priority material issues in which we must invest management
resources to secure a competitive advantage. In 2021, we revised our objectives and other indicators due to the COVID-19 pandemic and drastic changes in the social environment.
In addressing the Sustainability Material Issues, we seek to contribute to everyday lives so that we can create a valuable future for all, while helping to achieve the SDGs.
* 17 global goals adopted by the 193 member states of the UN Summit held in September 2015, to be achieved between the years 2016 and 2030 as part of the 2030 Agenda for Sustainable Development

Objectives and Indicators
Creating Healthy Living Habits

Promoting Environmental Initiatives for a Sustainable Planet

Total number of persons provided with products, services andinformation aimed at creating healthy living habits: 1 billion
Provide opportunities for everyone to practice oral care whenevernecessary and foster oral care habits to promote health for all.

Oral care habits (500 million people)• Provide products and services• Communicate information• Educational and awareness activities(Inclusive Oral Care, etc.)

Page 44

Cleanliness and hygiene habits (500 million people)

Related SDGs

Realizing a Resource-Circulating Society

CO2

Plastic

Challenge

Challenge

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

Lion will optimize use of recirculated
plastic by 2050.

2030 objective:

Promote the establishment of cleanliness and hygiene habits that prevent
bacteria and viruses from entering the body across all aspects of dailyliving, so that everyone can stay healthy.

• Provide products and services• Communicate information• Educational and awareness activities(Promotion of hand washing habits)

Realizing a Decarbonized Society

Page 4555%

CO2 emission reduction in comparison with2017 levels in absolute quantity

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

30%

CO2 emission reduction in comparison
with 2017 levels in absolute quantity

Lion aims to become carbon negativeby 2050.
CO2 emission reduction
effect in excess of2030 objective:
Lion’s own emissions(Japan)Related SDGs

2030 objective: Promote the 3Rs (reduce,reuse and recycle) and the utilization ofrenewable resources (the 4th R)
Reduce petrochemicalderived plastic usage to

70%

or less

Water
Challenge

Lion will optimize water usage forsustainability by 2050.
2030 objective:

30%

water usage reduction per unit of net sales
across product lifecycles in comparison with2017 levels
Pages 46-48

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Message from the Chairman
purpose—in addition to being our way of contributing to society,
it is directly linked to the enhancement of the Company’s
economic value.
As populations decline, we can no longer expect conventional
approaches to expand our markets. That said, we believe thatdeveloping new habits is a highly effective way to achievesustainable market growth. This is the case not only for Japan,
where the population is already falling, but also for countries
in East Asia where populations will begin declining in the next
few years.
1. Source: Takeuchi, Oral Hygiene, Nagasue Shoten, Inc.
2. Source: 2022 Lion survey of oral care

Vision2030 Long-term Strategic Framework

We have started changing gears to accelerate growth andare entering a new stage of management in which we willfurther drive our growth strategies.

Based on this, in 2020 we formulated Vision2030, a long term
strategic framework covering the 10 years up to 2030. Our aims
through Vision2030 are to create social value by supporting
physical and mental healthcare and playing our part in global
environmental conservation by redesigning habits. In addition,
by further evolving and expanding the scope of how we redesign

Masazumi Kikukawa
Representative Director,
Chairman of the Board of Directors“ Developing new habits
is a highly effective way
to achieve sustainable
market growth.

”Thoughts on Our Purpose

habits, we aim to grow our business, achieving approximately

At Lion, our purpose is to “Make a difference in everyday lives by¥600 billion in net sales, about ¥50 billion in core operating

redesigning habits: ReDesign.” In the 131 years since ourincome and EBITDA of roughly ¥80 billion by 2030. Thesefounding, we have helped people to achieve healthy minds andtargets will enable us to maintain the ratio of core operating

bodies by proposing and establishing improvements to daily

income to net sales at current levels while increasing net sales

habits such as tooth brushing and laundry. We believe that weby approximately 60% compared with 2020. There are two

can best contribute to society through this unique approach.

reasons why we are prioritizing growth in net sales overMoreover, creating habits is very effective because it creates

increasing the ratio of core operating income to net sales.

new markets for our products and grows existing markets. For

One is that we believe that to achieve further profit growth, we

example, in the past 50 years in Japan the average number ofmust raise our market presence by restoring growth in net sales,

times an individual brushes their teeth each day has increased

which has slowed in recent years. In the 10 years leading up to

from once to twice, resulting in a fourfold increase in the2020, we mainly focused on developing high-added-value products

toothpaste market. Developing good habits is the basis of Lion’sand increasing business efficiency to improve our profitability.

1

2

7

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Message from the Chairman
As a result, we were able to improve business profit, which is the

direct control of the president to speed up efforts to expand into

ratio of operating profit (core operating income) to net sales fromnew countries.

around 2% to 10% in 2020. However, between 2018 and 2020 our* Organizations that provide cross-organizational support for in-house project
management.

average net sales growth rate remained at around 1%. To competeand survive in the growing Asian markets, we must establish a solid“ Net sales growth is anindicator of the growth in
the number of consumers
adopting and practicing
the habits we propose in
their daily lives.

”presence. As a first step, it is critical that we achieve net sales in the

Progress of Management Strategies

order of ¥600 billion by 2030.

(1) Formulation of a Three-year Medium-term Management Plan

The other reason for prioritizing sales growth relates to our

We formulated a three-year medium-term management plan for

purpose. Net sales growth is an indicator of the growth in thethe period from 2022 to 2024 as the 1st STAGE of our efforts tonumber of consumers adopting and practicing the habits weachieve the goals of Vision2030. The underlying theme for this

propose in their daily lives. Increasing the number of people whoplan is “gear change toward accelerated growth,” and our aim isadopt and practice these habits enables us to increase ourto accelerate growth in net sales, something that has slowed incontribution to society and expand the scale of our business.

recent years, by achieving CAGR of 4% within this period. At the

We believe that this will boost our presence in markets andsame time, we decided to transform our foundations in various

among consumers, ultimately improving our profitability.

ways to ensure ongoing business growth.

The Path to Achieving the Goals of Vision2030(2) 2022 Financial Results

To achieve the goals of Vision2030, we will further reinforce andAs a result of the above, in 2022 we made a good start inexpand our existing businesses, create new businesses thatchanging gears by increasing net sales 6.5% year on year,

propose new habits, and accelerate growth of the Overseas

meeting the target set at the start of the year. We also madeBusiness to extend the scope of our habit proposals. By 2030,

progress toward our target of 50% for the overseas sales ratio

we aim to generate ¥30 billion in net sales from these new

by exceeding 30% for the first time. On the other hand, corebusinesses, while expanding the scale of sales from ouroperating income fell significantly, dropping 23.8% from theoverseas operations to ¥300 billion from the ¥110 billion we

previous year due to a rapid rise in raw material prices and theachieved in 2021. We have therefore allocated four priority fields

impact of fluctuating exchange rates. This outcome is a reminder

in which we will create value and formed project managementof the importance of shifting to a business structure that is more

offices* for each field to accelerate our plans. To accelerate

resistant to environmental changes.

growth of the Overseas Business, in addition to promoting ourunique glocalization strategy, we newly launched the China(3) Development of New Businesses to Evolve Habits

Business Department to function as a hub, bringing together

We are beginning to see steady progress in our initiatives forand leveraging Company-wide resources to accelerate growthbusiness growth. In the field of oral health, we have launchedin China, where we aim for particularly significant growth.

three new businesses aimed at an evolution in habits from tooth

Furthermore, in 2022 we set up a dedicated M&A team underbrushing at home to preventive dentistry combining regular visits8Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Message from the Chairman“ In 2023 we will work totransform our portfolios
in each business field
to reinforce our profit
structure.

”to the dentist with at-home oral care: Okuchi Plus You, apost-use disposal by making the use of refills and refillable

well-being support service for corporate customers, TANO-LT, anbottles and post-use container collection habits. We have set up

exercise game console for use by nursing care facilities to improve

the Sustainability Promotion Council, which will drive theoral and sleep functions, and ORAL FIT, an oral function fitness

promotion and implementation of Company-wide measures tosupport service. By targeting the employees of corporate

pursue these goals. In 2022, we promoted horizontal recycling

customers and senior citizens through various points of contact

by working with other companies and local governments to test

such as these, we aim to promote the habit of preventive dentistry.

a system for collecting empty refillable containers (pouches) from

We are also making progress with plans for other new businesses

customers’ homes and are focusing on development ofand expect to implement them gradually within the next few years.

container recycling technologies.

(4) Measures to Accelerate Growth of the Overseas Business(6) Transforming Our Foundations to Accelerate Growth

As part of our activities to accelerate growth of our Overseas

We have made steady progress with transformation aimed atBusiness, in June 2022 we established a joint venture in

further growth. To reinforce the dynamism of our employees andBangladesh with local company Kallol Limited, and we areorganizations, in addition to renewing our corporate philosophy,

currently preparing for the full-scale launch of business there.

we have changed our personnel system by incorporating

Further, in January 2023 we decided to invest in MERAP

job-focused employment options, which we began implementing

HOLDING CORPORATION, a Vietnam-based company, and to

gradually from January 2023. In terms of our businessget ready to launch pharmaceutical and personal care productfoundations, we have updated our core systems, which had long

businesses in Vietnam.

been a Company issue, and are using these new systems to
speed up management decision-making and enhance operational(5) Addressing Our Sustainability Material Issues

efficiency. Regarding domestic production facilities, our new

As part of Vision2030, we have set forth two top-priority

factory for oral care products went on line in 2021, and we have

Sustainability Material Issues: “creating healthy living habits” andalso decided to build a new factory for over-the-counter drugs“promoting environmental initiatives for a sustainable planet.”scheduled to go on line in 2025. This largely finalizes our initiatives

The former is the basis of our business activities. As for thefor improving domestic production facilities ahead of 2030. We

latter, we hope to make a major contribution to sustainability by

believe that in the 2021–2022 period, we made timely progress ininfluencing people’s living habits. In Japan, activities in households

fundamental transformation for further growth in personnel,

account for 16% of overall CO2 emissions, with the majority

organizations, information systems and production capacity.

originating from the use of water and sewage. As such,promoting the habit of saving water in laundry and cleaning, forIdentifying New Challenges

example, can make a notable contribution to reducing CO2

As stated above, in 2022 we were able to make significant

emissions. For plastics, we are working to reduce usage andprogress in transforming our foundations to accelerate growth.

9Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Message from the Chairman
Although we can only judge our progress based on the results

outstanding ability to drive projects forward and is the perfectfor a single year so far, we succeeded in increasing our growthindividual to lead our new stage of management. In addition torate and noticed a gear change. However, profits fell significantly

serving as the new Company president, Mr. Takemori will oversee

due to changes in our business environment, including soaring

overall business promotion as COO, while I steer corporate

costs, which are expected to continue over the medium term atmanagement as CEO.

the very least. Even if prices temporarily fall, similar spikes arehighly likely to recur repeatedly in the future. We will continue

To Our Stakeholders

with our basic policy of accelerating growth, but with a renewed

In summary, our activities are founded on our approach ofawareness of the importance of quickly shifting to a profit

enhancing social and economic value through the creation of

structure that is more resistant to downturns in the businesshabits. With the belief that habits have the power to change

environment. In light of this, in 2023 we will work to transformsociety, numerous transformations are under way and beginningour portfolios in each business field to reinforce our profit

to yield results. I will work to thoroughly explain our approach tostructure. By focusing management resources on the

our suppliers, wholesalers, retailers and other participants in ourdevelopment of highly profitable products and businesses morevalue chain, collaborating with them in various situations tothan ever, we will transform our overall business so it canredesign habits. For environmental conservation initiatives inwithstand soaring prices and other environmental changes.

particular, it is imperative that everyone in the value chain works
together toward common goals as this will lead to the greatest“ In addition to serving
as the new Company
president, Mr. Takemori
will oversee overallbusiness promotion
as COO, while I steer
corporate management
as CEO.

”Transitioning to New Corporate Management

benefit. I hope that by sharing ideas, Japan can initiate actions

Following approval at the Annual Meeting of Shareholders inthat make a real difference for the world.

March 2023 and resolution of the Board of Directors, Masayuki

Meanwhile, we will continue to create as many opportunities

Takemori assumed the role of representative director, president

for dialogue as possible with our shareholders and investors.

and executive officer, and I took on the role of representative

Through this dialogue we will strive to gain understanding anddirector, chairman of the Board of Directors.

support over the long term. Stakeholder dialogue is also an

To date we have made transformations in many areas tocreate social and economic value as part of Vision2030, whilesetting in motion strategies for accelerated growth. I believe our

excellent opportunity for discussing issues that we might
have overlooked.
Employees are among our most important stakeholders. The

management has now entered a new stage in which we canrenewal of our corporate philosophy, the revision of our

make the most of these transformations to further drive ourpersonnel system and the relocation of Lion's head office were

growth strategies. As senior executive officer, executive general

all aimed at boosting employee engagement and enhancing themanager of Health and Home Care Products Division, Mr.

Company’s human capital. We will continue to improve andTakemori oversaw the Consumer Products Business. In thisreview our measures in this regard.

position he led the revitalization of the LOOK brand, formulated
the recently announced new management strategy Positive
Habits and promoted specific strategic measures. He has an

Lion will continue to evolve as an expert in redesigning habits.
We look forward to your continued support.

10Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Message from the President
would naturally become part of consumers’ daily lives.
Rather than imitating rival manufacturers, I was strongly focusedon innovation.
When I assumed my role as brand manager of the householdcleaner brand LOOK, it was struggling. Profits were low andmarket share was dropping. I quickly created a new brandstrategy: “Only create products that lead to exciting new
cleaning habits.” We worked to propose new value, not imitate
our rivals. One new product that arose from these efforts was
LOOK Plus Bath Antimold Fogger. At that time, mold wassomething that had to be removed from bathroom surfaces after
it appeared, and consumers generally found this task
troublesome. Using a technology from a different businessdepartment, we were able to propose a completely new and

Accelerating the Combination of Products and Services to Cultivate
Positive Habits in the Daily Lives of People across Asia

easy cleaning habit using a product that prevents mold growthin the bathroom by simply adding water to the product andplacing it in the center of the bathroom. This new moldprevention habit was welcomed by consumers and the market
expanded. Since the product’s launch in September 2012, sales
have exceeded 600 million units.

Masayuki Takemori

Innovating to Redesign Habits for the Better

Representative Director,
President and Executive Officer“ I intend to work with
employees to grow Lion
into a company that stays
ahead of the competition.

my work. The first is constantly thinking how small can win

director, president and executive officer in March 2023. I feel aagainst big. The second is proactively seeking the expertise ofhuge sense of responsibility in taking over this management role

external parties and Group members, always with a completely

in the Company’s 132nd year. At the same time, I am excited

open mind, to come up with novel, winning ideas. The third isabout the future we can create together.

focusing management resources on promising areas to ensure

I joined Lion Corporation in 1993, making this my 30th yearwith the Company. I spent much of my career in domestic”

Furthermore, I place particular importance on three things in

My name is Masayuki Takemori, and I became representative

marketing. Recently I oversaw operations as executive generalvisible successes, which I believe can help make individuals andorganizations more aggressive.
By prioritizing these approaches, I believe we will be able tomanager of the Health and Home Care Products Division. Duringcontinuously generate innovative ideas that can lead to betterthat time, I was constantly working to propose new habits thatliving habits.

11

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Message from the President

The Company We Should Aim to Beof the competition. This will require more than mere

To help make the daily lives of customers and society happy

encouragement. I will strive to enhance the quality of our humanand achieve sustainable growth for the Company, we must be

resources and hone our strategies so that together we can takeaware of—and outshine—the competition in contributing to ourand maintain the lead.

customers and the general public. This is not limited to Lion

“ I will strive to enhance
the quality of our humanresources and hone ourstrategies so that together
we can take and maintainthe lead.

”

Regarding human resources, I feel that Lion’s workforce is full

employees around the world directly involved in the managementof individuals with great courage—the spirit of a wild lion.

and sale of consumer and industrial products. In research

However, given current circumstances few have been able todivisions (including development and basic research), there are

fully display this spirit due to a lack of opportunities. That said,

researchers at other companies competing with us in thein my work to date I have seen employees from various

development of new technologies. In production divisions anddepartments transform into lion-hearted individuals whenfactory operations, too, there are employees at other companies

opportunities to succeed arise. I have also seen how visible

competing with us in the pursuit of better production processes.

successes can build confidence and lead to growth in individuals

Similarly, in procurement and logistics, our competitors are intent

who go on to inspire a similar spirit in their colleagues. I believe

upon procuring and supplying the best materials at the lowest

that given the right opportunities, every employee has theprice. Nor is it different for corporate divisions. In the back-officepotential to embody the “Be Lion” spirit.

departments of other companies, employees are examining ways

As President, one of my roles is to cooperate with senior

to create better corporate foundations and environments that will

management and the leaders of each department in providing

enable them to fully leverage their capabilities.

these opportunities. However, haphazardly creating a flurry of

In every division, we face competitors, visible and unseen.

opportunities is not beneficial. Creating appropriate opportunities

Outshining them is what enables us to gain the trust and raise

calls for a strategic approach. In 2022, we announced Positive

the expectations of customers and society, and put our purpose

Habits as a new management strategy to help fulfill our purpose.

into practice. It is very easy to forget this point, so I want all Lion

It is important to note that this is not merely a rallying cry, but aemployees to share a common awareness of it. This shared

management strategy. It entails sparking change in customer

awareness will make it clear that we should aim to be a

behavior to create new demand—in other words, innovating.

company that stays ahead of its competitors. Throughout ourInnovation is extremely challenging and will require transforming

history, there have been numerous instances in which we haveoperational processes to generate added value, as well as

been overtaken by our rivals and unable to contribute to ourappropriate reallocation of the required management resources.

customers and society. For a long time, these instances

By freeing the potential of employees who have discovered theirhindered our growth. Rolling out outstanding solutions ahead of“inner lion,” focusing that power on the formation of positive

other companies accelerates the growth of your company. This

habits among customers, and allocating management resources

is one of the truths of business. As president, I intend to workas necessary, I intend to stay ahead of the competition andwith employees to grow Lion into a company that stays ahead

embody the “Be Lion” spirit Company-wide.

12

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Message from the President

My Goals as President

Positive Habits as a Strategic Concept

The former president, Masazumi Kikukawa, built the foundations

Although quality products and services are essential forfor corporate transformation over four years. I saw this processachieving sustainable growth, it is clear that they alone are not

up close, offering my support as an executive officer, mainly

enough. We are now in an era where continuous product-giving shape to the relevant marketing strategies.

centered actions alone do not necessarily result in greater

I want to use these foundations to the maximum and maintainthe lead in combining products and services to increase thematerial prices threatens to make sustainable growth using

speed at which the lives of people across Asia are filled withconventional business methods difficult to achieve. Our solution

positive habits.

is the new management strategy Positive Habits we announced

Our key performance indicator is average annual growth rate,social and economic value
by making our businessthe creation and evolutionof positive habits.

”

in November 2022. Rather than being a manufacturer thatwhich is evidence of increasing sales and sustainable growth. As

simply creates and sells products, through this strategy we aim

stated in Vision2030, we aim to achieve net sales and core

to enhance our social and economic value by making ouroperating income in the order of ¥600 billion and ¥50 billion,

business the creation and evolution of positive habits.

respectively, by 2030. We will therefore work to increase

I spent around three years with Mr. Kikukawa, otherfamiliarity and long-term use of our products and services

members of senior management and Company employees,

among as many consumers across Asia as possible, and in theexamining the ideal definition, strategic design and execution

case of our industrial products, among as many business clientsplan for Positive Habits.

as possible. At the same time, we will stay ahead of our“ We aim to enhance ourbusiness efficiency. Moreover, the recent rush of hikes in raw

In effect, the Positive Habits strategy is Lion’s purpose: tocompetitors by successively offering new solutions that they

”make a difference in everyday lives by redesigning habits.” Wecannot imitate. In this way, we will work to achieve our numericalbelieve that our role is to propose “positive habits” to customers

targets. As president, I will implement the necessary measuresand society. There are many things in daily life that people

to do so.

reluctantly must do, and some have become “reluctant habits,”

As I touched on above, management will move quickly tobothersome tasks that must be repeated daily. We havetransform and reinforce efforts in the following ways: (1)positioned these reluctant habits as our biggest challenge, and

Accelerate the combining of our products and services (toour aim is to transform them all into positive habits.

distinguish ourselves from companies that simply use their

The elements of the value essential for positive habits whencapital strength to manufacture and sell products); (2) Promoteevolved are what we call the three Es: Effective, Emotional andsustainability initiatives by redesigning habits for the better in

Ethical. “Effective” refers to the performance of the product orAsia (initiatives have mainly been implemented in Japan to date,service. That is, providing customers with solutions that exceed

with almost no expansion into other parts of Asia); and (3)their expectations, backed by reliable quality. “Emotional” is a

Assess and revise the business portfolio to accelerate growth

key element for ensuring that customers can tackle necessary(promote sustainable growth and increase opportunities foryet trifling tasks more positively. “Ethical” is the result of an

employee success).

individual’s growing collection of better habits. It is a viewpoint
essential for bettering society and the natural environment.

13

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

14

Performance/Data

Message from the President

Postive
HabitsEmotional
Effective
High-performanceand effective

Emotional
experience

EthicalSocially acceptableand environmentallysound

We believe that the three Es provide a solution for creating
positive habits. Company research has also shown that to create
positive habits these three elements must be simultaneously
incorporated into products and services, each with the samelevel of impact. None of the three can be missing, and they must
be in balance with each other. Building a solid foundation withthese three Es will enable Lion to achieve more positive habits
for all.

“ The elements of the value
essential for creating
positive habits whenevolved are what we callthe three Es: Effective,
Emotional and Ethical.

”

Not only will our Positive Habits strategy lead to better habits
among consumers, the expansion of the market will have apositive impact on the economy and also lead to social andEconomic Value ofLaundry Habits
2022

Total times fabric softeners and laundry
detergents used in JapanThe Three Elements Essential for Positive Habits¥480 billion

Negative Case¥463 billion+¥20 billion

1

Purchasing Habits(Increase in price per wash)+¥60 billion+¥60 billion

Price of laundry detergents and fabric softeners (¥)/per wash (times)
Negative Case: Number of washes and price per wash of laundry habit (laundry detergent and fabric softener) unchanged from 2022
Positive Case: Price of fabric softener per wash increases from current ¥12.9 to ¥24.9 and value of annual market share of approx.
10% = +¥21 billion
Value if use of fabric softener increases by 3% (79% to 82%) = +¥7 billion
Value if rate of use among people in their 20s to 40s (age bracket with highest frequency of use) increases
If the share of highly concentrated laundry detergents reaches 40% share of all laundry detergents in terms of value while number of
washes remains constantAdjustment for the impact of increasing the number of times a third item is used in addition to laundry detergent and fabric softener
Note: Rate of population decline estimated with reference to National Institute of Population and Social Security Research, Population
Projections for Japan, (January 2012). Market size from Lion survey (based on SRI data from INTAGE Inc.)

By pushing forward with the combination of products andservices that embody our Positive Habits management strategy,
we will help to achieve a sustainable society.
Sustainability through Positive Habits—Effect of Change in One-rinse Cycle Implementation Rate
Yearly reduction in CO2 emissions
Postive
Habitshouseholds and a falling population in Japan over the eight years

In addition, evolving people’s laundry habits will increase our

Increase in numberof washes
New habit proposals(2030)

anticipated negative impact from the drop in the number ofaround ¥80 billion to the market sales.

on business2

positive habits could have a major positive impact. Despite theper wash and other new value creation is expected to add¥543 billion(2030)

environmental benefits. In the laundry market, for example,

between 2022 and 2030, higher detergent and softener prices+¥80 billion
impactPositive Case

130,000 tons

440,000 tons

30% implementation rate

100% implementation rate

Yearly amount of water saved

130 million m

430 million m

30% implementation rate

100% implementation rate

3

Emotional
Effective

Ethical3

Conditions of Lion survey:• Estimates assume 100% market growth compared with 2021
• Calculations based on reduction in amount of water used perrinse cycle

Our aim is to fully implement the strategy within Vision2030

contribution to the natural environment. For example, by

1st STAGE (2022–2024) and Vision2030 2nd STAGE (2025–

stepping up efforts to raise the one-rinse cycle implementation2027). Targeting Asia, we will work to develop and extend

rate, we can reduce CO2 emissions by 440,000 tons per year

positive habits from Japan to other parts of Asia, and vice-versa.

compared with the current reduction of 130,000 tons per year,
as well as cut water usage.

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Message from the President

Accelerating Growth of the Overseas Businesses

Furthermore, we separated Northeast Asia operations from

Another one of our measures is to accelerate growth of ourSoutheast and South Asia operations to ensure we canOverseas Business. We are targeting an overseas sales ratio of

implement even more detailed, specific measures.

approximately 50% by 2030 and intend to quickly commercialize
habit creation and redesign in various countries and regions.

Reinforcing Profitability

Demographic trends, levels of economic growth, cultures,

The Positive Habits management strategy entails sparking

customs and standards of living vary among the countries andchange in customer behavior with proposals that create new

regions of Northeast, Southeast and South Asia. Southeast anddemand—in other words, innovating. Innovation is extremely

South Asia in particular are expected to experience significant

challenging, and therefore will require transforming operational

economic growth, and we will seek to exceed the pace ofprocesses to generate added value, as well as appropriate

growth by expanding into new countries and regions and byreallocation of the required management resources.

moving forward with M&A. For example, we are moving forward

We will therefore conduct an objective assessment of ourwith our announced plan to enter the Vietnamese market. At thecurrent business portfolio during 2023 and reallocate the Lionsame time, in countries and regions where we already doGroup’s human capital and investments to areas where there arebusiness, we will reinforce our business collaboration with local

significant growth opportunities.

partner companies while rolling out our Positive Habits strategy“ We will create a virtuous
cycle linking the creationof growth drivers to thesuccessful creation andspread of positive habits,
and in turn to an increasein customers and the
expansion and continuationof production.

”in the healthcare domain in particular, with measures to extend

In Conclusion

healthy life expectancy.

At Lion, by working to increase familiarity and long-term use of

Meanwhile, in Northeast Asia we have positioned our China

our products and services among as many consumers acrossbusiness as the central pillar for our business activities. While

Asia as possible, and among as many business clients aspaying attention to geopolitical risks, we aim to increase sales topossible in the case of our industrial products, we will help to¥100 billion by 2030. To do so, we will create even more detailed

achieve a sustainable society. To do so, we will grow ourscenarios describing areas, consumer profiles, lifestyles andbusiness through innovations that our competitors cannot

other factors that we should prioritize in our customer proposals,

imitate, quickly gaining the lead and staying ahead. Repeating

reassess our various indicators and create optimal strategies forthis process will create a virtuous cycle linking the creation ofeach of our businesses. Specific measures will include thegrowth drivers to the successful creation and spread of positive

expansion of the oral healthcare field and entry into the growing

habits, and in turn to an increase in customers and thepet product market. We will use our assets to launch M&A andexpansion and continuation of production.

will examine new M&A possibilities, while moving forward withplans to set up an R&D subsidiary during fiscal 2023.
To achieve these initiatives, we have also appointed a vicepresident who will oversee the acceleration of overseas strategies.

Lion will continue working hard and taking on challenges to growso that it can contribute even more to its customers and society.

15Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance16

Performance/Data

Message from the Director Responsible for FinanceFiscal 2022 Performance Highlights

Outlook for Fiscal 2023

Net sales: ¥389.8 billion(Up 6.5% year on year; exceeded forecast by 4.0%)

Net sales: ¥410.0 billion(Up 5.2% year on year)

Kengo Fukuda

Sales increased in all segments except Other. Oral Care
Products and Beauty Care Products drove sales in theConsumer Products Business in Japan. In the Overseas
Business, Malaysia and South Korea experienced doubledigit sales growth. In the Industrial Products Business, sales
increased due to robust sales of carbon for secondary
batteries and hygiene-related products.

We aim to increase sales in all segments except Other by
expanding our markets with a focus on our four fields ofvalue creation through development and growth in sales of
products that propose better living habits, increasing salesof high-value-added products and growing the Overseas
Business with a focus on China and entering new countries.

Director,
Senior Executive Officer

Core operating income: ¥23.5 billion(Down 23.8% year on year; exceeded forecast by 2.4%)

Core operating income: ¥25.0 billion(Up 6.1% year on year)

While keeping capital efficiency in mind, we will build a financial basethat can power sustainable growth and adapt effectively to change.

Core operating income decreased due to the impact ofhigher raw material prices and an increase in depreciation
expenses. We achieved the forecast announced at
the beginning of the fiscal year by raising sales prices,
controlling sales promotion expenses and promoting
overall cost reductions Group-wide to address higher-thanexpected increases in raw material prices.

We aim to steadily restore profit growth by increasing the
proportion of high-value-added products in our sales mix
and by strengthening our presence in the personal care fieldin Southeast Asia.

Our objectives are to sustain and accelerate growth and enhance
profitability by structurally transforming our businesses.
Lion’s main focus under its Vision2030 long-term strategic framework is to enhance its presencefrom various perspectives—in the market, economically, and with respect to society—bystrengthening top-line growth while maintaining profitability. Vision2030 1st STAGE got off to agood start in fiscal 2022, the first year of the plan, with increased sales in the Consumer Products
Business in Japan, the Industrial Products Business, and the Overseas Business. As a result,consolidated net sales increased 6.5%, a higher sales growth rate than in the previous fiscal year.
At the same time, foreign exchange fluctuations and price increases for raw materials and

Key Financial Indicators

Net sales
Sales growth
rate
EBITDA
ROIC

2021

2022

2023 (Forecast)

2024 (Target*)¥366.2 billion¥389.8 billion¥410.0 billion¥420.0 billion

3.1%

6.5%

5.2%

14.7%
(vs. 2021)¥45.1 billon¥39.9 billion¥42.0 billion¥52.0 billion

8.8%

6.0%

5.5%

Approx. 7.5%2030 (Target)
Approx.

¥600.0 billion—
Approx.

¥80.0 billion
8%–12%* Targets of medium-term management plan Vision2030 1st STAGE

energy were significantly greater than our projections at the beginning of fiscal 2022. We
therefore increased sales of high-margin products in each of our businesses, raised someFinancial Strategy Driven by EBITDA and ROIC

shipping prices, optimized sales promotions and advertising and implemented Group-wide

Our top priority over the past decade has been to increase profitability, which we haveprograms to reduce overall costs. As a result, we achieved the earnings forecast announced ataccomplished. Consequently, we deferred systematic investment for the future to some extent.

the beginning of the fiscal year, but earnings were substantially lower compared with the

Recognizing this situation, in 2020 we initiated a phase of up-front investment for sustainableprevious fiscal year. We expect the business environment to remain uncertain, and therefore

growth. We are emphasizing EBITDA as an indicator for the cycle of increasing corporate value,

recognize that expanding our presence requires further transformation of our business structure

which involves investing to grow businesses and allocating the cash from this growth to newso that it is highly resilient to changes in the business environment.

investments that lead to further business growth. Enhancing our earning power on a cash basis

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Message from the Director Responsible for Financewhile appropriately managing the balance between investment for the future and near-term

Transforming the Business Structure to Make It Resilient to Changeearnings is vital.

As mentioned earlier, we urgently need to transform our business structure to withstandIn addition to our conventional use of return on equity (ROE), we have adopted return on
invested capital (ROIC) as a metric to promote management that emphasizes capital efficiency.
By monitoring ROIC and its components for each business, and allocating resources based on

fluctuations in raw material prices and energy costs. Improving our business portfolio from thisperspective is a pressing issue.
Our businesses in Japan are improving their product portfolios by developing andfactors such as business growth potential and efficient returns on invested capital, we willbuilding market share for high-value-added products in their respective markets, and theimprove our overall business portfolio and increase capital efficiency. We aim to increase ROIC

transition to products with higher prices and margins has already produced notable results,

to the 8%–12% range while consciously expanding the spread between ROIC and weighted

mainly in Oral Care Products. In 2023, we will also endeavor to add new value-added items toaverage cost of capital (WACC).

our Fabric Care Products lineup to increase profitability across the category and counter thehigh-cost environment.
Meanwhile, we are improving our business portfolio in the Overseas Business segment bystrengthening categories in the personal care field such as oral care, beauty care andpharmaceuticals mainly in Southeast Asia, where fabric care and living care account for a large

Enhancing Lion’s Market, Economic and Social Presence

proportion of our business. Personal care products currently account for about 30% of total
sales in Thailand and about 20% in Malaysia, so strengthening our presence in this category willKey
indicators

EBITDA
Enhanceability togenerate cash
Increasepresence

Key
indicators

Corporate value
expansion spiral

Cashgeneration

Business
growthROIC

transform our business structure, making it less susceptible to the impact of raw material prices
and more resilient to changes in the competitive landscape.

Aggressively Investing for Growth while Monitoring ROIC
During Vision2030 1st STAGE, we expect to generate approximately ¥120 billion in cash flows

Reinvestment/
Returns

Prioritize
efficiency

Cashgeneration
Business
growthUp-front
investment

from operating activities and plan to invest ¥80 billion of that in the creation and acquisition of
future growth opportunities, as well as in production and other facility upgrades, labor saving,
rationalization, environmental preservation and digital transformation.

Optimize
allocation of
resources

In Japan, we have been investing to enhance production capacity as well as to upgrade andincrease the efficiency of our IT infrastructure. Investments include a toothpaste factory in
Sakaide City, Kagawa Prefecture and the construction of a factory for over-the-counter

Growth/Presence(EBITDA)

Earning power/
Efficiency (ROIC)

pharmaceuticals at our Odawara Plant in Odawara City, Kanagawa Prefecture. Large scale
investments will likely taper off when the OTC factory starts operations as scheduled in 2025.
Going forward, we intend to improve capacity utilization, maximize the benefits of new coresystems introduced in 2022 and enhance investment in human capital, among other projects.

17Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance18

Performance/Data

Message from the Director Responsible for Finance

We will also invest to acquire more business opportunities, based on careful consideration

Shareholder Returnsof investment efficiency and risk diversification. In Japan, we have broadened scenarios and

The Lion Group’s management prioritizes a sustainable increase in corporate value and continuous

methodologies in our search for business opportunities and are launching a variety of newreflection of that increase in shareholder returns. Our basic policy is to return profits tobusinesses centered on the field of oral health.

shareholders on a continuous and stable basis with a target consolidated dividend payout ratio

Furthermore, we aim to create opportunities for growth in more countries and regions. Weof 30%, and we aim to continue increasing dividends in Vision2030 1st STAGE. In February

have already achieved the 1st STAGE goal of expanding into two new countries or regions by2022, we also acquired and cancelled treasury stock totaling ¥10 billion. We will continue toestablishing operations in Bangladesh and Vietnam. We will explore all opportunities to expand

consider measures such as flexibly conducting stock buybacks based on comprehensive

our presence in Japan and overseas and will use M&A and other means to enter new countries

consideration of return on capital, share price, capital availability and financial condition.
The Lion Group is committed to maintaining a sound financial base while accelerating its

or regions and to develop new businesses.

growth strategies, speeding up the transformation of its earnings structure by improving its
Financial Strategy (Cash Allocation) in
Vision2030 1st STAGE

Investment for GrowthCreation and acquisition of opportunities for growthbusiness portfolio, and conducting appropriate cash allocation.
We look forward to your continued support.

 ransformation of management base to helpT
accelerate growth (M&A, digital transformation,
environmental measures, etc.)• Investment to create and acquire opportunities for
growthCash flows
from operating
activities
Other
Approx.
¥120.0 billion

Strategic
investments
Approx.
¥80.0 billion

Shareholder
returns
Approx.
¥30.0 billion

Basic financial operations policy
ROIC management

 xpanded into Bangladesh and Vietnam. ContinueEto enter new countries or regions and to develop
new businesses.
• Large-scale investment to increase production
capacity in Japan lanned capital investment is almost complete withP
the construction of a toothpaste factory in Sakaide
City and the construction of a factory for OTC
pharmaceuticals in Odawara City.

Per-share Dividends
(Yen)
40

25

Aim to increase dividends every fiscal year

15

Flexible stock buybacks

10• Stock buybacks will continue based oncomprehensive consideration of capital availability
and financial condition.

42.3 40
35

29.7

30

Continuous and Stable Returns• In 2023, we plan to increase the annual per-share
dividend by ¥1.00 over the previous fiscal year.

(%)

IFRS

35

20

• In 2022, we increased the annual per-share dividendby ¥1.00 over the previous fiscal year and acquiredand cancelled treasury stock totaling ¥10 billion.

Japanese
GAAP

5
0

23.6

24.9
17

13

23.7

20 21

17

10

10

5

7

7

2016

2017

2017

8

22.7

Interim dividend (left scale) /

11

10

22.4
23
12

29.4

30

24

32.4
26
25
13

13

20

12

25
15
10

10

10

11

12

12

2018

2019

2020

2021

2022

13

5
0

Year-end dividend (left scale)

Consolidated dividend payout ratio (right scale)2023 (FY)(Forecast)Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance19

Performance/Data

Medium-term Management Plan

Lion is reinforcing its management based on its purpose, “Make a difference in everyday

We will implement Vision2030 in three consecutive 3-year medium-term management

lives by redesigning habits: ReDesign” to achieve its management vision for 2030 ofplans—1st STAGE, 2nd STAGE and 3rd STAGE—adjusting strategy and policy“Becoming an advanced daily healthcare company.” By promoting synergy between ouraccording to changes in the business environment to enhance precision as we go. In 1st

Sustainability Material Issues and three growth strategies, we aim to contribute to the

STAGE, we will get on a growth track, create the foundations for new growth, transform

realization of a sustainable society and achieve business growth.

our business foundations and activate our human resources and organizations.

3rd STAGE (2028–2030)
Management
visionManagement
strategy

Becoming an advanced daily
healthcare company
Reinforce initiatives toaddress the Sustainability
Material Issues• Rolling strategy to respond to signs ofchange in the business environment• Accelerate transformation and growth• Increase the average annual growthrate (CAGR over 5%)

Make a difference in everyday lives by redesigning habits

Accelerate growthin four fields ofvalue creation

Transform ourbusinessfoundations for
growth

2nd STAGE (2025-2027)

Advance our three growth strategies

PurposeThree Growth Strategies• Final touches to achieve the vision• Creating the foundations for
subsequent growth

Generate
dynamism torealize innovativechange

1st STAGE (2022-2024)

Vision2030
Becoming an advanced
daily healthcare company• Get on a growth track and create
the foundations for new growth• Transform business foundations(supply chain management, DX,sustainability)• Activate human resources andorganizations

2022
Results

Launched new businesses in the oral health field

Page 23

Expanded into two new countries

Page 28

Launched new core systems

Page 32

 egan full-scale operations at the toothpaste factory in
B
Sakaide City, Kagawa Prefecture

Page 34

Formulated our purpose and beliefs

Page 36Introduced new personnel system for managers tomaximize use of human capital

Page 35

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance20

Performance/Data

Accelerate Growth in Four Fields of Value Creation
Business Development Aimed at the Evolution and Expansion of Habit Redesign
Given increasing awareness of the importance of healthy minds and bodies and growth in related social demand, we have established four fields of value creation to drive growth as we seek to further evolve
better living habits and healthcare services unique to Lion. The creation of new habits and the evolution of existing habits in these four fields of value creation will be essential to future business growth. We havetherefore created executive officer-led project management offices* for each field and are accelerating efforts to evolve our businesses and create new value beyond existing organizational boundaries throughcross-organizational investigation and promotion.
* Organizations that provide cross-organizational support for in-house project management.

Three Elements Essential for Positive Habits

Four Fields of Value Creation
Postive
HabitsEmotional
Effective

Emotional
experience

High-performanceand effective

Evolving a Business Model for Creating New Value Starting from the Four Fieldsof Value Creation
Until now
Value provided

Products(functional value)

EthicalSocially acceptableand environmentallysound

We are advancing projects in the four
fields of value creation that feature
the 3Es (Effective, Emotional, Ethical)
essential for positive habits

Going forward+

Services(experiential value)

Adapt the value we provide throughproducts to services

TargetHouseholds+

Society(schools and public
facilities)

Consumer contact

One-time sales+

Recurring

Accumulate and use customer data

Expand the scope of the social issues wetarget for solution

Business type

Manufacturer+

Service provider

Evolve business from manufacturing to total
service provision

Scope ofcollaboration

Supply chain+

Ecosystem

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

Creation of new habits—Creating entirely new habits

Evolution of existing habits—Making existing habits better

Products

Products/
servicecombinations

Services

Products

Products/
servicecombinations

ServicesLion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance21

Performance/Data

Accelerate Growth in Four Fields of Value Creation

Oral Health
Oral Health
Lion aims to provide oral healthcare that supports overall health and improved quality of life starting from the mouth. We will leverage ourstrengths 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 expand beyond the bounds of our existing businesses.

The Society We Aim for through Oral Health Activities
The provision of oral care opportunities to people across Asia will help to reduce the risk of
tooth loss and create a society in which everyone can comfortably eat, speak, laugh and bethemselves throughout their lives.

Activity Indicator

Products and services that help
keep teeth healthy and beautiful,control plaque and support thedevelopment and maintenance of
healthy oral functions

OutputEducation on oral care methods toensure that everyone has equal
opportunities to access the oral carethey need

Mechanisms for using accumulated
data on individuals’ oral health topromote oral care habits as thestarting point for overall health

Extended healthy
life expectancy

Impact on society

Curb medical
expenses

Improved access to
medical care

2030 target:

500 million

500
400
300
200
100
0

500
300

150
2021

2022

2030

Pages 42-43: Initiatives to Address the Sustainability
Material Issues
500
500
400
300
200
120
120
Oral Care and Healthy Life100
Expectancy
0
2021
2022
2030
(Millions of people)

Oral care is seen as a key factor in extending people’s healthy life expectancy.
For example, the 74th World Health Assembly has adopted a resolution on oral
people) on Economic and Fiscal
health and the Government of Japan’s(Millions
BasicofPolicy
500
5Management and Reform outlines plans to enhance oral healthcare and build and4strengthen a system for the provision of dental healthcare. 300
3
2
100
1
Correlation between Regular Dental0 Checkups and Medical Expenses
2018
2019
2020

Results of a study show that medical
expenses for people who regularly receive
dental care are less overall (for all illnesses,
including dental conditions) comparedwith those for people who do not. Thisshows the impact that oral health has on
the body.

Comparison of Total Annual
Medical Expenses(Thousands of yen)
400

¥150,000
difference at
the age of 65!

350

Annual medical expenses

Persons provided with oral care products,
services and information aimed at creating
healthy living habits(Millions of people)

300

Average for all people

250

48

200

years old

150
100

Average for people
who receive regulardental care

50

Source: Created based on Dentalism 2011,
No. 9, page 24

0
35

45

55

65

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Accelerate Growth in Four Fields of Value Creation

Oral HealthDirection of Activities

The Lion Oral Health Initiative is an umbrella term for all of Lion’s activities in the oral

linking all points of contact related to oral health, including households, dental clinics,

health field ahead of 2030. Through this initiative, we aim to promote healthy minds andcompanies, local governments and local communities. We will work to build the initiative

bodies by promoting positive preventive dentistry habits suited to people’s lifestyles andinto a state-of-the-art project through the creation of a Personal Oral Health Record

physical and mental condition. Our basic idea is to make preventive dentistry a habit by(POHR) database in collaboration with external partners.

Lion Oral Health Initiative1

Households
Exercises to improve oral
fitness and sleep function

High-added-value products

Living with dementia
Verification of products andservices at nursing care facilities

Lion Oral Health Fund

Dentalclinics

Companies
Contributing to better
health through creationof positive preventive
dentistry habits

Well-being support service
for corporate customers

New services forhouseholds

New services fordental clinics

Oral frailty
prevention program

Local
governments
and educational
institutions

Local
communities

Oral health database(POHR2)

Collaboration with external partners

1. Corporate activities based on our basic approach to oral health (preventive dentistry)
2. Personal Oral Health Record: A database containing information on basic health, living habits, oral condition, tooth brushing habits, etc.

Health literacy improvement
support business

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Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Accelerate Growth in Four Fields of Value Creation

Oral Health

New Businesses

In addition to further growth in our existing businesses, through the Lion Oral Health Initiative we aim to roll out new businesses that go beyond the scope of offerings of a manufacturer to include both
functional and experiential value to consumers while working to develop positive preventive dentistry habits.

Oral Fitness Service
ORAL FIT

Well-being Support Service for Corporate Customers
Okuchi Plus You

In November 2022, weAs exemplified by thelaunched ORAL FIT, aservice that proposes thegovernment of Japan’s

new habit of oral fitness.

specific consideration of
mandatory dental checkups,

The aim is to maintain andthe focus on the importance

improve oral fitness toprevent the loss of muscle
strength around the mouth,
which can lead to choking,difficulty speaking, difficulty chewing, and other problems. This app-based
service proposes a two-month program with ten minutes of oral exercise aday to prevent deterioration of and improve oral functions.

Lion Oral Health Initiative
Households

Dentalclinics

Children’s Development Support Service
Okuchi-iku
In April 2023, we launched
the Okuchi-iku oral careprogram via a dedicatede-commerce site. The aim of
the program is to support
the development of proper
tooth brushing habits andthe creation of a strong
foundation for straight teeth
in line with children’s varying
stages of growth. As the first step, we are offering Okuchi-iku Kamotto! forchildren whose baby teeth are in the process of being replaced by adultteeth, an important period for establishing a foundation for straight teeth. This
three-item set includes gummies for daily consumption to develop chewing
strength, chewing gum for monthly use to check chewing strength, and an AI
app to check teeth alignment via the Okuchi-iku members website.

Companies
Contributing to better
health through creationof positive preventive
dentistry habits

Local
communities

Oral health database(POHR)

Local
governments
and educational
institutions

Collaboration with external partnersof oral health and the role ofcompanies and local
governments in promoting
oral health is increasing.
Given these circumstances, in July 2022 we launched Okuchi Plus You, aservice to support companies’ well-being (health and productivity
management) activities. The service combines various offerings tailored to the
management issues and workstyles of each corporate customer, including
easy-to-understand seminars by dental hygienists, saliva tests, e-learning
videos and Lion products. This service is helping to promote positive behavior
and the creation of new habits in the workplace.

Nursing Care Gaming Console for Improving Oral Health
TANO-LT
Senior citizens begin to face various
challenges in their day to day lives as
they develop difficulties speaking, eating,sleeping and walking, for example. To
address these issues, we jointly
developed a motion-based training
system with Professor Ko Matsudaira*and others to simultaneously improveoral fitness, sleep and motor functions.
Subsequently, we worked with Tanotech
Corporation to develop TANO-LT, agaming console that incorporates thistraining system to enable senior citizens to have fun while continuously
improving their oral fitness, sleep and motor functions. We began supplying
this console to nursing care facilities in September 2022.
* Affiliation at time of development: 22nd Century Medical and Research Center,
The University of Tokyo Hospital

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Our Purpose

Our Strategy

Corporate Governance24

Performance/Data

Accelerate Growth in Four Fields of Value Creation

Infection Control(Millions of people)

500
500
400
300
300
150
200
Lion aims to become a hygiene solution provider that addresses risk related to infectious disease in every setting. As a company with a long
history of supporting cleanliness and hygiene, we will transform our businesses with a sense of duty,100
extending the scope of our operations from
02021people’s lives
2022from bacteria
2030 andliving spaces to include public and industrial spaces. In doing so, we will provide hygiene solutions that protect

Infection Control

viruses on all fronts (through contact with other people, objects and spaces).

The Society We Aim for through Infection Control Activities
The propagation of good hygienic behavior as a habit among all people will help to create asociety in which there are fewer concerns about infectious diseases, and in which people
care for and trust one another, and live with peace of mind.

Activity Indicator
Persons provided with hygiene-related
products, services and information aimed atcreating healthy living habits

2030 target:

500 million

Promotion of hygiene habits through hygienic design infrequently used public facilities and spaces

Support and solutions for environments with poor hygiene,
such as regions with underdeveloped infrastructure anddisaster-affected areas

500
400
300
200
100
0

500

120

120

2021

2022

2030

Pages 42–43: Initiatives to Address the Sustainability
Material Issues(Millions of people)
5
4
3
2
1
0

Provision of mechanisms to increase the ranks of teachers andpromoters of good habits, including consumers themselves

Output(Millions of people)

500

300
100
2018

2019

2020

Spread of hygiene literacy and education

Impact on society

Reduced infection incidence and mortality rates

Extended healthy life expectancy
Reduced burden from medical expenses

Promoting and Establishing Cleanliness and Hygiene Habits through Educational Institutions (Japan and Overseas)

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Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Accelerate Growth in Four Fields of Value Creation

Smart Housework
Smart Housework
Lion aims to create new housework habits for diverse lifestyles. As lifestyles and living spaces become increasingly diverse, one-size-fits-all
housework proposals are no longer sufficient for meeting consumer needs. Building on the basic idea of smart housework that is enjoyable andefficient, we will establish a unique advantage by reframing the general concept of housework to maximize personal comfort and by cooperatingclosely with external partners to come up with innovative ideas across a wide range of categories.

The Society We Aim for through Smart Housework Activities
By reducing the burden of housework and creating more personal and enjoyable housework habits, we will help to increase people’s free timeand peace of mind. In turn, this will improve relationships between people, among family members, and with the local community, thus ensuring
more comfortable living.

Proposing New Habits in Smart Housework

SOFLAN Airisby me—Experience a fresh, positive and airy fragrance even during the wash cycle—Proposing a new habit of applying custom fragrances to household goods

In April 2023, Lion launched SOFLAN Airis, a new genre of clear
fabric softener/laundry water. Today around 80%* of homes use
fabric softener, but the market has become commoditized withproducts providing two main functions: odor prevention andsustained fragrance. To provide a new option for the fabric softenermarket and create even better laundry habits, we used a consumer
behavior survey to uncover hidden needs and develop a new productthat releases an airy fresh and positive fragrance not just when thelaundry is done, but during the wash cycle.

In January 2023, Lion began direct-to-consumer sales of by me, a new brand that
proposes a new habit: applying custom fragrances to household goods such as fabricsoftener and clothing mist.
These products are sold via a dedicated e-commerce site. By quickly reflecting
customer feedback from our e-commerce site and social media in our products andservices, we will share the creation of better customer experiences with them.

Customer Experience Unique to SOFLAN Airis
New aroma: Transforming the air during and after the wash cycle with a sustained fragrance
New feel: Smooth to the touch and air-like comfort
New look: Refined, transparent container design

SOFLAN Airis transforms your laundry process, leaving you in an airy, positive mood andyour laundry with an airy fresh fragrance and feel.
* Lion laundry survey (September 2022; n=2,000)

Customer Experience Unique to Direct-to-Consumer Sales- Search for fragrance recipes and select fragrances throughAI diagnostics- Regular deliveries that allow you to choose your desired
fragrance each time
- Connect with brand through social media
The aim of by me is to build relationships with customers through use of digital tools
and create a fragrance brand that goes beyond fabric care to cover daily living as a whole.

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Our Strategy

Corporate Governance26

Performance/Data

Expansion of the Overseas BusinessOne key theme of Vision2030 is the expansion of our Overseas Business. In addition to reinforcing our businesses in countries or regions where we already operate, we aim to raise the share of consolidated net
sales from the Overseas Business sales to 50% by 2030 through expansion into new countries or regions. We will work to boost our presence in Asia by promoting better living habits among as many people
and in as many regions and aspects of life as possible.

Until now

• Strengthen personal care category* mainly inSoutheast Asia
Diversify business portfolio, strengthen profitability* Oral care, beauty care and OTC pharmaceuticals• Expand into new countries or regions
Diversify regional portfolio

Evolving the Glocalization Strategy
Glocalization is a key element of Lion’s Overseas Business strategy, bringing together globalizationand localization strategies to create a unique competitive advantage. Not only have we usedglocalization to develop detailed marketing strategies that meet the needs of the countries andregions we serve, we have also taken advantage of the appeal of Japanese quality as a means
to expand our business into new countries.
However, given the changes in our business environment in recent years, such as increasingly
similar and common lifestyles and needs globally, it is essential that we evolve our approach tobusiness. Rather than our conventional approach, in which we addressed specific countries, wemust 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
approach for each market.

Going forward

Country/Region focused

Evolving the Glocalization Strategy• Expand Qingdao Lion business
Expand scale of Overseas Business

Key Measures

Glocalization Strategy

Regional focus/Market classification
Define market types across borders based on the
consumer features and trends identified as part of theglocalization strategy

Balancing the provision of reliable quality and new
habit creation through global brands tailored to theneeds of each country

Adapting to changes in the business environment
Regions: Identify similar and common lifestyles andneeds

Maximize synergy and promote efficient, effective
operations through management and businessapproaches tailored to each market
Evolve platform for strategy promotion (global
operations)Glocalization Strategy—Pattern-based Marketing
We have divided our sales regions into three major cross-border market types based on sharedcharacteristics (patterns) and are developing a strategy for each. To classify market types, wehave used characteristics such as GDP growth rates and income levels, as well as the local
features and trends we have identified as part of previous glocalization strategies.
Framework of Market Types (I–III)
Type I

Type II

Type III

VietnamBangladesh

Product strategy
Channel strategy(Rural)China
Indonesia(Rural)(Urban)
Malaysia

Thailand(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)

Regional supermarkets (Traditional Trade)Big-box stores (Modern Trade)/E-commerce

Drug stores/E-commerce

Value-added products
Quality-based growth

Overseas Business Strategy

Evolving the Glocalization Strategy

General-purpose products
Volume-based growth2030 Targets

Consolidated net sales: Approx. ¥600 billion
Share of the Overseas Business: Approx. ¥300 billion(50% of total)

Lion Integrated Report 2023

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Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Expansion of the Overseas Business

Expanding the Qingdao Lion Business—Expanding the Scale of the Overseas Business

Strengthening the Personal Care Category Mainly in Southeast Asia
—Diversifying the Business Portfolio and Strengthening Profitability

In the Qingdao Lion business to date, using our global brands mainly in the oral care field, suchas SYSTEMA and CLINICA, we have enhanced our brand image by taking advantage of theappeal of the high quality of Japanese products and created synergy with local brands todevelop a business in brick-and-mortar stores mainly in large cities and through online sales.
To expand business further, for online sales we will extend business into beauty care andbegin full-scale sales of pet products in addition to working to reinforce our social customer
relationship management (SCRM) based on customer online purchasing data andcharacteristics. For offline sales, at brick-and-mortar stores we will enhance our local sales
structure to reach as many people and regions in China as possible, while accelerating
development and boosting sales of locally manufactured products to meet the needs of local
consumers. In this way, we aim to achieve net sales in the order of ¥100 billion by 2030 (CAGR
of approximately 22%) in the Qingdao Lion business.

In addition to Northeast Asia, certain countries in Southeast Asia (Thailand, Singapore, etc.) areexperiencing decreasing birthrates and aging populations. Like in Japan, as average life
expectancy grows, increasing awareness of the importance of health is expected to lead to
growth of the personal care* market.
The Group’s businesses in regions like these, however, are centered on laundry detergentsand other home care product categories, which are easily impacted by fluctuations in raw
material prices. Going forward, we will transition to a more robust business structure by
stepping up efforts in the personal care product category—which is centered on oral care, oneof the strengths of the Lion Group.
On the other hand, in Indonesia, Vietnam, Bangladesh and other countries or regions inSoutheast and South Asia where populations and income are rising, we aim to boost sales oflaundry detergents and other home care products, as well as low-end products such as
toothpastes and toothbrushes. At the same time, we will also make preparations in the personalcare category to address changing needs stemming from economic development anddemographic changes. By implementing these strategies, we aim to grow the scale of theOverseas Business while establishing a robust profit structure.

Measures for Expansion and Implementation in the Qingdao Lion Business
Main sales regions

TargetMainly large cities

Until now+
Measures for
expansion

Measures for
implementation

Inland cities

Sales channel

Products

Middle- to highincome earners
Fans of Japanese
products
Quality-oriented
consumers

Mainly online(e-commerce)

Mid- to high-pricerange
Made in Japan/
Japanese quality+
Wider income
range

Business categories
Mainly oral care
+ KireiKirei, etc.

Brand image

Measures for
expansion
Beauty care, pet

+

+

+

Expand offline
sales(brick-and-mortar
stores)Mid-price range
Emphasis on local
preferences
Made in China/
Japanese quality

Gradually expand
product range
from oral care

Online (e-commerce) sales:
Use customer data Establish through social
customer relationship management (SCRM)
Offline sales (brick-and-mortar stores):
Enhance sales structure

products

Thoroughly investigate andidentify local needs andestablish R&D subsidiary inShanghai to improve productdevelopment speed* Oral care, beauty care and OTC pharmaceuticals

Stepping Up Efforts in the Personal Care Category—Entering New Markets through Product Development Inspired by Local Insights

In Singapore, the number of consumers with sensitive skin concerns is rising due toincreasing urbanization and the ensuing changes in physical environments, diets andlifestyles. As a result, the market for sensitive skincare is growing. Combining this local
insight with our expertise in dermatology research, we are working with dermatologists
to develop body soaps, lotions and mists, and selling them through Singapore Lion
under the SunoHada sensitive skincare brand.
We aim to expand sales of these products toother regions and will continue to enter markets
such as this, in which we are not currently
participating in Japan, and develop them into
SunoHada sensitive skincare brandgrowth engines.

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Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Expansion of the Overseas Business

Expanding into New Countries or Regions—Diversifying Our Regional Portfolio
Aiming to enter more than two new countries or regions as part of Medium-term Management Plan Vision2030 1st STAGE (2022–2024), we have strengthened our M&A system by setting up a dedicated organization
under the direct control of the president and hiring mid-career experts. As a result, in 2022 and 2023 we entered Bangladesh and Vietnam, respectively—two countries in which we expect market growth.

Bangladesh

Vietnam

Population of 170 million; untapped market

Population of over 100 million; a market expected tosurpass that of Thailand in size
- Roll out OTC pharmaceuticals and other healthcare products tolay a foundation- Aim for quantitative growth- Roll out mass-produced products—mainly laundry detergentsand other home care products—in line with income growth- Make use of Vietnam’s unique business model; have doctors
recommend Lion products to patients to develop trust in thecompany/brand

In June 2022, we established Lion Kallol Limited, a joint venture with Bangladesh-based
Kallol Limited. The joint venture commenced operations in October of the same year.
Aiming for quantitative growth, in March 2023 we increased our investment to acquire
new land for local production.
Kallol owns major fabric care and beauty care brands through its group companies
and has a distribution network and sales capabilities covering all of Bangladesh. By
combining our strengths in product development and production technology with
Kallol’s business foundation to generate synergy, we will work to enhance our businessin the Bangladesh market.

WEB

Lion to Establish a Joint Venture Company in Bangladesh
https://doc.lion.co.jp/uploads/tmg_block_page_image/file/8136/20220531.pdf

In January 2023, we decided to acquire a 36% stake in MERAP HOLDING CORPORATION(“MERAP”), a company operating in Vietnam.
In Vietnam, not only do doctors provide prescriptions, they also recommend OTC
pharmaceuticals and highly functional non-pharmaceuticals to patients depending on theirconditions, and most patients will purchase the recommended products at a pharmacy.
MERAP is well-versed in this unique business model and possesses major brands inthe healthcare field, mainly in over-the-counter pharmaceuticals, as well as a distribution
network and sales capabilities covering hospitals, clinics and pharmacies throughout
Vietnam. Making use of this unique business model, we will lay a foundation in Vietnam
with our healthcare products to launch our oral care products and the skincare products
and other highly functional products we offer elsewhere in Southeast Asia.

WEB

Notice Concerning the Acquisition of Shares of Vietnam-Based MERAP HOLDING CORPORATION
https://lion-corp.s3.amazonaws.com/uploads/tmg_block_page_image/file/8492/20230116.pdf

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Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Transforming Our Business Foundations for Growth
R&D That Leads Value Creation
R&D Centered on Consumer Research
Through R&D, Lion generates innovation to redesign the living habits of consumers, meeting theirdiversifying needs and promoting mental and physical health. Our cross-divisional research
activities focus on the Lion Group’s four fields of value creation,* which drive business growth.
The greatest strength of our Research & Development Headquarters is its expertise in consumer
research. Our current research activities are supported by the wide-ranging knowledge we havebuilt up over many years through contact with consumers who use our products in various aspectsof their lives. We also engage in open innovation projects with universities, research institutes andcorporations to further develop the functional value derived from our core technologies in oral
science, interface science, life science and analytical chemistry while simultaneously evolving
emotional value that can lead to better living habits and a sustainable perspective that addresses
environmental issues, social conditions and cooperation with local communities.

Research Fields in Which We Create New Value

Basic Technology
Research

New Research
Activities

R&D• Oral science• Dental and oral care

• Interface science• Body care

• Digital transformation
promotion• Life science• Medical care

• Open innovation activities• Aroma technology• Home and fabric care

• Analysis technology• Packaging and containers• Safety science

Consumer Research* The four fields in which we provide value: oral health, infection control, smart housework and well-being

Cross-divisional Product Development

Open Innovation Activities

SOFLAN Airis is the result of a cross-divisional
project involving Lion’s R&D, planning andproduction divisions to redesign laundry habits
by tackling everything from concept creation to
product design. The project team used an
unconventional strategy to come up with theconcept and created the new technology tobring the concept to fruition for this new genreof clear fabric softener/“laundry water,” which perfumes the air with a pure fragrance likea gentle breeze. SOFLAN Airis delivers not only a high-quality finish, but also a relaxing,
positive atmosphere encompassing both the user’s mood and the air itself.
Specifically, the technology that the team developed instantly releases a fresh
fragrance that leaves the user in a light-hearted mood, not just when the laundry is dry,but before that—when the washing machine is opened to remove the laundry and when
the laundry is hung up to dry. And, to ensure a smooth, light and airy feel when theclothes are worn, the team developed a new formulation containing proprietary
ingredients. Furthermore, to contribute to a sustainable environment, the productcontainer (excluding parts such as the nozzle and cap) is made from biomass PET resin.

We are promoting open innovation projects with universities, research institutes,
corporations and other entities to acquire technologies and information that help create
new value. For example, in the field of oral health, we joined with Kuroishi City in Aomori
Prefecture and Hirosaki University to investigate dental occlusion in elementary school
students and its relationship to living habits. Together with Hitachi Health Care Center,
we used data on a subject group of around 10,000 people to confirm the effectivenessof dental checkups in the workplace for improving the general health of employees. Bycollecting, communicating and linking such data to the development of products andservices, we are creating value that leads to better living habits.

WEB

Possible Relationships between Dental Occlusion and Living Habits Identified through Joint
Study by Lion, Kuroishi City and Hirosaki University
https://doc.lion.co.jp/uploads/tmg_block_page_image/file/8460/20221214.pdf

WEB

Making Dental Checkups More Accessible to More People
Hitachi and Lion Confirm That Workplace Dental Checkups Contribute to Oral and General Healthhttps://doc.lion.co.jp/uploads/tmg_block_page_image/file/8696/20230209.pdf

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Our Purpose

Our Strategy

Corporate Governance30

Performance/Data

Transforming Our Business Foundations for Growth

R&D That Leads Value Creation
Product Development That Supports
Our Glocalization Strategy
To expand the scale of the Overseas
Business, the Lion Group is evolving its
glocalization strategy to increase its presencein Asia. We are posting researchers overseas
to investigate the conditions and needs of
local consumers in order to develop newtechnologies and products.

Lion Corporation (Korea)
Lion Daily Necessities
Chemicals (Qingdao)
Co., Ltd.
Lion Innovation Center(Shanghai) Co., Ltd.

Focus: Initiatives to Accelerate Innovation
Japan/Kanto Region
Domestic researchlaboratories

An Organization That Functions as an Innovation Hub

Lion Corporation(Thailand) Ltd.

OdawaraResearch Center

Hirai
Research Center

Southern Lion
Sdn. Bhd.
PT. Lion Wings

Example of Product Development Following Investigation of Local Needs
In Asia, markets for laundry detergent capsules are growing. In South
Korea in particular, demand for highly convenient products is on therise due to the increase in number of high-income earners and theconcentration of people in urban areas. As a result, we expect
significant growth of these markets. Although Lion's researchlaboratories in Japan had limited experience in developing capsuledetergents, we built a collaborative system with Lion Korea, a film
manufacturer and an equipment manufacturer and used our proprietary cleansing
ingredient concentration technology to design a formulation with triple functionality (miteremoval, PM2.5 particle removal and color care). Together, we successfully developed a
new formulation and began production in a short time. The new brand—7.Lab—waslaunched in April 2022.

In 2018, we established the Innovation Lab to further drive transformation of ourresearch activities. Currently functioning as an innovation hub for the entire Company,
the Innovation Lab contributes to the creation of a range of amazing new businesses
that go beyond the conventional. It provides services ranging from support for theideation process, such as workshop planning, visualization of past and current ideas
and prototyping assistance, to collaboration with the Business Development Center,
new idea creation, product demonstrations and feasibility studies for commercialization.

Research for New Value Creation
We have also introduced an initiative under which all of our researchers are allowed touse a maximum of 15% of their working hours to do research on a topic of their own
choosing. One theme developed under this initiative is easy-rinse toothpaste. Through a
project by the Japan Aerospace Exploration Agency (JAXA) to find solutions to common
issues facing life in space and on Earth, an easy-rinse toothpaste developed by Lionwas selected for use by astronauts in their daily life on board the International Space
Station in 2022. We are currently pursuing further uses for this technology on Earth, inenvironments that experience water shortages or in similar situations.

Message from a Researcher in Global Product Development
PT. Lion Wings in Indonesia develops and produces a wide range of
products centered on beauty care. One of the strengths of its research
institute is designing products that accurately grasp consumer
preferences. To improve product quality, we are using the extensive
formulation and instrumental analysis technologies of our R&D facilities inJapan to develop products in collaboration with PT. Lion Wings. In
addition to regularly exchanging information, we also visit PT. Lion Wings
to discuss matters directly with local researchers, deepening mutual
understanding and speeding up the product development process.

Photo courtesy of JAXA/NASA
Ms. MatsumotoResearcher,
Research and Development
Headquarters

WEB

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

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Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Transforming Our Business Foundations for Growth

Strategic Investment in Intellectual Property and Intangible Assets for Redesigning Habits
Basic Policy and Promotional Framework for Intellectual Property Strategy
Lion’s basic policy regarding intellectual property is set forth in its Behavioral Guidelines. The guidelines stipulatethat we will strive to create, properly protect and actively utilize intellectual property, and that we will respect the
intellectual property of others and not seek to improperly acquire or use it.
To promote intellectual property initiatives, we have established a dedicated Intellectual Property Department
under the supervision of the Board of Directors and the direct control of management. The department executes
investments in intellectual property in line with Group-wide management strategies, ensures that intellectual
property rights are used appropriately and conducts accurate information disclosure. The Intellectual Property
and Licensing Committee chaired by the director responsible for the Intellectual Property Department meets
twice yearly to formulate strategies, and to report and discuss progress on key measures. The results of these
discussions are reported and deliberated at meetings of the Board of Directors and the Executive Committee.
In addition to patents, trademarks and copyrights, our core strengths in intellectual property include
intangible assets such as manufacturing and evaluation methods (proprietary information) and healthcare data.
We are using these key management resources to increase corporate value. The Intellectual Property Department
also provides specialized intellectual property functions for affiliates in Japan and overseas, managing and utilizing
main intellectual property rights and working to eliminate counterfeit goods.

Promotional Framework

Approach to Intellectual Property Strategies

Board of Directors/Executive Committee

Key points for transformation to achieve the targets
of Vision2030 1st STAGE

Management strategies

1. Contribute to business results from intellectual
property creation
In addition to protecting and using newly createdintellectual property, we aim to contribute tobusiness results from the creation of intellectual
property at the research/planning stage.

Business strategies

R&D strategies

Intellectual property strategies

2. Create and protect intangible assets
We will clarify our strengths in intellectual property
and other intangible assets and work to create,
protect and utilize assets that contribute tocorporate growth.

Intellectual Property andLicensing Committee• Formulation of intellectual property
policies• Confirmation of progress toward fiscal
year targets

3. Cross-border Group-wide intellectual property
activities
To support the creation and use of intellectual
property outside of Japan, we will create andutilize strengths across the Group that are
effective globally.

• Discussion of Group-wide challenges• Reports to management
etc.

Intellectual Property Activities That Support Diverse Capital Creation
Patent Protection of a Technology for PreventingIntellectual Capital
Cavities That Increase with Age

Protection of Highly Distinctive Brands

Lion owns the largest number of patents in thefield of toothpaste products in Japan* and uses
many patented inventions for cavity prevention inits products.
Root surface caries, also known as root
cavities, develop due to receding gum tissue
linked to old age or gum disease. This exposes
dentin at the root of the tooth, which is more
vulnerable to tooth decay than tooth enamel. Lion has developed atoothpaste that protects against cavities by coating the dentin on theroot surface with pyrrolidone carboxylic acid in addition to fluoride toprevent demineralization and collagen degradation.
We initially applied this technology to the Check-Up toothpaste
sold at dental clinics and are currently extending its application tocommercial toothpastes. The invention of this technology, which issuited to the oral health issues of Japan’s aging society, received “TheEncouragement Prize for Invention” (Patent no. 6474375) at Local
Commendation for Invention of Kanto 2022.

Since our founding, our marketing activities have focused on highly
distinctive sounds to help consumers create better living habits. As aresult of our promotional and advertising activities, we have developed
brand names and key phrases that are highly recognizable andidentifiable to the ear. We have the highest number of registered soundtrademarks of any company in Japan, showing our strength in linking
sounds with the consumer’s memory in our marketing activities.
The children’s website of the Japan Patent Office includes theKireiKirei sound (trademark registration no. in Japan: 5842092) as an
example of a registered sound trademark.
Furthermore, we haveregistered the KireiKirei Family
Character Logo as a trademark
in various countries to widely
promote enjoyable handwashing habits among children
in countries across Asia.
Trademarks registered in such
Trademark registration no. in China:
42631419
countries are also helping toTrademark registration no. in South Korea:
eliminate counterfeit products.
40-1692459*N umber of patents owned as pending applications or valid patents (as of April 2023);
search for F-term 4C083CC41 on the Japan Platform for Patent Information.
https://www.j-platpat.inpit.go.jp/p1101

Social and Relationship CapitalAwarding Employees for Wide-ranging Intellectual
Human Capital
Property Activities
In line with our wide-ranging intellectual
property activities and patent incentive
program, we have established theContribution Awards for Intellectual
Property to commend employees who
contribute to diverse intellectual
property activities.
At the 16th annual Contribution Awards for Intellectual Property
held in fiscal 2022, nine employees from eight different divisions werecommended for a diverse range of activities, including collaboration
with overseas affiliates on new inventions and enhancement ofintellectual property information disclosure.
To increase employee motivation for self-development and help
develop personnel who can use intellectual property and related
information in creating innovative business models, we also support
employees from outside the Intellectual Property Department who wish
to take IP Analyst Certification Courses offered by the Association ofIntellectual Property Education.

WEB

Intellectual Property
https://www.lion.co.jp/en/company/governance/ip/31

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance32

Performance/Data

Transforming Our Business Foundations for Growth

The Science of Habits—Digital Transformation at Lion
The Science of Habits

Digital Strategy and Promotional Framework
To put our purpose into practice and achieve continuous businessgrowth in a highly volatile business environment, we are adopting a
digital strategy that is directly linked to Group-wide transformation.
For internal and external communications, we have adopted the slogan “The Science ofHabits” for this strategy of using digital technology and data science in order to develop
products and services that help create better living habits. Aiming to achieve greater speed,
efficiency, sophistication and new value creation by 2030, during Vision2030 1st STAGE(2022–2024) we have installed new core systems and are working to inculcate the use of dataon a Company-wide basis—both key components of our transformation to digital-driven
management—and are focusing on the development of personnel adept in information
technology (IT) and digital technology.
To carry out these initiatives, the Digital Strategy Promotion Council, comprising thepresident, executive officers and heads of related departments, actively discusses andpromotes Group-wide digital strategies and implements various measures based on thosestrategies. In January 2023, we established the Digital Strategy Department, bringing together
strategic planning for information and digital technology, implementation functions such as IT
maintenance and data analysis, and business process re-engineering functions that had been
split among multiple departments. This has helped to accelerate the implementation ofCompany-wide digital transformation measures.

Progress of Digital Transformation Measures
Theme

Progress in 2022

Sophisticationof Business
Management
Capabilities- May 2022: Began operation of new core systems to ensure speedy, data-driven
decision-making- Launched new businesses in the field of oral healthby utilizing Lion’s expertise and oral health data

Expansion and
Evolution of
Habit ReDesign- Promoted digital technology utilization to double
research productivity
Began using AI in toothbrush and fragrance
development

Page 23WEB- Promoted electronic data interchange (EDI) initiatives
to standardize and streamline logistics systems
Development ofOrganizational
CultureR&D Digitization
https://www.lion.co.jp/en/
rd/new-activity/digital/

Page 33- Developing and educating IT/digital personnel and hybrid personnel- Providing learning opportunities for all employees through the Lion Digital Summit,
e-learning, etc.

Vision2030

Greater speed, efficiency, sophistication and new value creation
Transformation to data-driven management
Sophistication of business management capabilities
Visualization ofmanagement data

Acceleration ofdecision-making

Monitoring of KPIs/KGIs

Expansion and evolution of habit redesign
Streamlining of existing businesses
Streamlining of purchasing,production, logistics and sales

Maximization oflabor productivity

New value creation
Four fields of value
creation (POHR, etc.)

CRM
communication

ESG
Traceability

Development of organizational culture
Creation of data
management foundation

Data governance

Development of IT/
digital personnel

Development and Acquisition of IT and Digital Personnel
To achieve Lion’s vision of digital transformation for 2030, it is important to develop IT
and digital personnel who can independently promote digital transformation in every
situation and to create an organization that can flexibly adapt to technological trends andchanges in the business environment. In addition to developing IT and digital personnel
with a high level of technological expertise, we are focusing on the enhancement anddevelopment of hybrid personnel who can link our businesses with digital technology byplanning and executing optimal solutions to various technical issues.
For the acquisition of IT and digital personnel, while we have established a new
graduate hiring quota for IT strategy/data scientists, we are also actively hiring midcareer professionals throughout the year. Moreover, we have adopted a system forrecruiting people to work side jobs with us to help utilize diverse capabilities and skills
from outside the Company.
To promote Company-wide digital transformation, we hosted digital literacy courses
for all employees through e-learning platforms (96.5% of eligible Company employees
attended in 2022) and hold the Lion Digital Summit to share and discuss various
initiatives from inside the Company and advanced case studies from elsewhere. In theseand other ways, we are working to improve employees’ digital awareness and skills.

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Transforming Our Business Foundations for Growth

Supply Chain Management
Improving Flexibility and Resilience across the Supply Chain

Industry Collaboration to Digitalize the Logistics Industry

To ensure that Lion can continue to deliver quality products for the daily needs of consumers, we have beenworking to develop highly competitive supply chain management by boosting the resilience of our logistics systemand framework for sustainable and stable raw material procurement and product supply. For example, to counterthe increase in scale and severity of natural disasters in recent years, we have mapped out a system of alternatedelivery routes and backup hubs to ensure continuous product supply. We are also reinforcing efforts to establish
a universal numbering system* for sales and operations planning based on sales forecasts as part of our ongoing
efforts to upgrade our production, sales and inventory management processes.
Going forward, procurement, production and distribution methods could change drastically as productpersonalization increases, resulting in demands for greater speed and flexibility throughout the supply chain. Therefore,
in addition to our own efforts, we intend to lead the industry in promoting supply chain platform reforms to address
issues across the supply chain.
* Improved coordination through universal numbering of production, distribution and sales data

Building a Sustainable Supply Chain Management Platform
How We Achieve Operational Streamlining

Increase the flexibility andresilience of the entire
supply chain
 oordinate production, distribution andCsales data via a shift to universal numbering
to optimize inventories and minimize
product shortages
Upgrade Lion’s business continuity plan by
securing multiple raw material suppliers andmultiple transport and distribution routes

Continuously step up
responsible supply chain
initiatives
 romote logistics using electronicPdata interchange (EDI) for collaborative
distribution involving industry peers toachieve operational streamlining, reinforce
logistics crisis response capabilities andreduce environmental footprint throughmeasures such as curbing CO2 emissions

Expected effects
1. Improvement in the labor environment
for drivers and warehouse workers
engaged in loading and unloading
2. Increased labor productivity
3. Reduced environmental burden(reduced CO2 emissions and useof paper)Receive order

Place order

Lion

Aim

Inventory
allocation

Scheduledshipment
data using
advancedshipping
notices (ASNs)

Manifestfree

Logistics
EDI

Scheduledshipment
data using
advancedshipping
notices (ASNs)

Advanceconfirmation
Scheduledarrivalconfirmation

Inspectionfree

Transport

ArrivalShipment

Receipt
confirmation

Background
Given the various problems that have come to the fore in recent years in
the logistics industry, including driver shortages and long waiting times
for shipment receipt, solutions are required for sustainability in logistics.
For manufacturers who make shipments, in addition to lowering logistics
costs, ensuring continued stability in logistics is an importantmanagement issue.

Wholesaler

Inventory
allocation

Shipment
content
confirmation

We are taking the initiative in promoting the digitalization of logistics data
platforms to solve logistics issues throughout the daily sundries industry.
Using the logistics EDI platform of PLANET, INC., which operates such
systems for the logistics industry, we conducted demonstration testingby making use of advanced shipping notices (ASNs) to digitalize delivery
receipts and simplify inspections, and have commenced gradualexpansion of ASN use for individual trucks in the wholesale industry. In
mid-2023 we expected to begin full-scale use of ASNs.

Arrivalinspection data
(upon receipt)

Logistics
EDI

Arrivalinspection data
(upon receipt)

Receipt

To digitalize and mutually share logistics information, such as shipment
volumes and delivery vehicle details, and to achieve smart logistics, wewill send wholesalers ASNs for each truck, simplify delivery inspections
and shift from paper to digital manifests. In doing so, we aim to increase
labor productivity and optimize logistics resources.
In tandem with this, we are working to streamline and standardize
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 manufacturersof daily sundries and the logistics companies tasked with delivering theirgoods. In collaboration with other manufacturers and logistics
companies, we are leading efforts to build a standardized 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.

33

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Transforming Our Business Foundations for Growth

Supply Chain Management
Promoting Sustainability with Materials Manufacturers andProduction Contractors
The palm oil, paper, pulp and other raw materials that Lion uses must be harvested, processedand sold to suppliers before they reach the Group. If issues related to the environment, humanrights or labor occur at any of these stages, even if they are not directly related to Lion, we
could be held responsible.
In order to ensure sustainable procurement, Lion is reinforcing coordination with materials
manufacturers and production contractors to realize more effective supply chain management.
Lion’s Procurement Principles clearly state its stance of considering regulatory compliance,
environmental protection and respect for human rights when selecting business partners. To help
our suppliers understand the importance of sustainability initiatives, we require them to conduct
self-checks based on 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 in building 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 officesupplies. However, procurement of these materials often involves environmental problems suchas deforestation, as well as human rights and labor issues, all of which can negatively impact
sustainable development. As such, based on our Sustainable Material Procurement Policy, we
are utilizing the frameworks of various certifications to promote sustainable procurement.
Material
Palm and palm
kernel oil derivatives
Paper and pulp

Main InitiativeWEB

Procurement of RSPO1certified oil derivatives
Procurement of FSC2-

WEB

certified paper

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

WEB

Building a Sustainable Production and Supply System
Lion is working to build a highly flexible, resilient and sustainable production and supply system
to enable the timely provision of the products customers need.
The new toothpaste factory that commenced operations at the Lion Chemical Oleochemical
Production Site in Sakaide City, Kagawa Prefecture in 2021 is now under full-scale operation as
one of our main toothpaste production facilities. Dai Nippon Printing has built a laminatedtoothpaste tube factory on adjoining land, and together we are using state-of-the-art
manufacturing equipment to achieve integrated production of tubes and toothpaste with just asmall number of workers. This has increased the efficiency of the procurement and production
process and enabled us to meet the diversifying needs of our customers.
Furthermore, in 2025 we plan to launch a new OTC pharmaceuticals factory on the premisesof our Odawara Plant in Odawara City, Kanagawa Prefecture. The aim is to establish a stableproduction and supply system for the future in line with the growth of the antipyretic analgesics
market, which has been boosted by growing health consciousness and the COVID-19
pandemic. The new factory will feature state-of-the-art equipment to save labor, as well as anenvironmentally friendly design that will reduce CO2 emissions. Going forward, we will also
strengthen our production and supply systems in the fabric care category, in which we haverecently released SOFLAN Airis, as well as in other core categories.
For sustainability, in 2022 we introduced an internal carbon pricing system, which we will use
to accelerate investment in energy-saving measures. We will also apply our expertise in highly
efficient production at the new factory to other production facilities, with the ultimate aim ofcreating smart factories that combine digital technologies and human labor.

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

Tube factory
Toothpaste factory

LION Human Rights Policy
https://www.lion.co.jp/en/company/governance/
policies/human-rights.php
The new Sakaide toothpaste factory carries out integrated
production of toothpaste products (Sakaide City, Kagawa
Prefecture)

Conceptual drawing of the OTC pharmaceuticals factory(Odawara City, Kanagawa Prefecture)34

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance35

Performance/Data

Generating Dynamism to Realize Innovative Change
Human Resource Development

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 haveall employees spurring on each other in their respective growth processes and operating as autonomous individuals in order to generate
waves of innovative change; that is, dynamism, across the organization as a whole. To do so, we are promoting corporate branding basedon understanding of and resonance 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 to create
employee-friendly workplaces from the perspective of human resource development—in everything from hiring diverse personnel with a richand varied array of skills, to training, compensation, and the fostering of healthy habits—we also aim to increase productivity and create
new value by instilling a sense of professional fulfillment in every employee.
Through further advancement of corporate branding and LION Professional Fulfillment Reforms, we will help employees fully develop
their diverse capabilities to form a collective of human resources that will put our purpose into practice. In this way, we will continue totransform for sustainable growth.

We will generate dynamism in our personnel
and organization by putting our purpose into
practice and promoting professionalfulfillment reforms.

Yoko Koike
Executive Officer,
General Manager of Human Resources Development Center

Corporate Branding
Transition to a corporate culture capable of putting our purpose into practiceand empowering employees to “Make a difference in everyday lives byredesigning habits: ReDesign”

Continuously promote LION Professional Fulfillment Reforms
Create a collective of human resources who work vibrantly with a sense of
professional fulfillment as they pursue the realization of the management
vision in line with their own aspirations and actions

Creating acollective ofhuman resourcesthat puts our
purpose into
practice

Objectives and Features of the New Human Resource Management System(New Personnel System and New Human Resource Development System)
Create a company that empowers employees to choose their own path andgrow toward their vision of what they want to be
Visualization of duties
and roles

Matching
Transfer• Definition of duties and roles• Job maps

Grade

Compensation

Human resource
development system• Relationship enhancement
program• Career design support• Provision of self-directed
learning opportunities• 360-degree competency
assessment

Link one’s
career to
management
Draw up a
career map
Developcapabilities

Appointment

Increase professionalfulfillment• Competencies• Experience

Promote selfunderstanding

Improve organizational
strength through growth
Amass theof each individual• Expertise• Career aspirations

various strengths
of individuals

Individual

Evaluation
Improvemanagement skills

Visualization of humanresources

Career autonomy support

Supervisor

We launched our new human resource management
system in January 2023. Specifically, we revised thepersonnel system for managers, and also renewed thehuman resource development system.
We want to create a company that empowers
employees to choose their own path and grow toward
their vision of what they want to be. To do this, we will
structure the system to(1)make it easier for employees to set goals for personal
growth and self-actualization,(2)create a culture of taking on challenges and personal
initiative, and(3)enable diverse people to succeed professionally.
In this way, we will empower employees to experience
professional fulfillment through personal growth, which
will improve organizational strength.

A companythat grows
sustainably

Overview of the New
Personnel System
Managerial positions are categorized
into management (M) and expert (E)grades in order to evaluate thecontributions of both management
and expertise.
In addition, management grades
are determined by the duties of eachposition. Expert grades are determinedby role. Presented with these definitions,employees throughout the Lion Groupcan more easily map their careers.
In conjunction with this, we will
also revise the evaluation system toencourage employees to take onchallenges, and to achieve (1) to (3)at left.

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Generating Dynamism to Realize Innovative Change

Putting Our Purpose—“Make a Difference in Everyday Lives by Redesigning Habits: ReDesign”—into Practice
Promoting the Practice of Our Purpose through the New Human
Resource Management System
The aim of the new human resource management system is to strengthen therelationship of support and contribution between the Company and employees. To
achieve our vision and expand the practice of our purpose, we must increase theLion Group’s economic and social value in unison to increase employee engagement.
Our new human resource management system must therefore increase the numberof employees who achieve their personal goals and realize a life that is rewarding,fulfilling and allows personal growth through work.
In addition, under the new personnel system, we have transitioned to a
performance evaluation system that more clearly incorporates goals that are linked toa high-level vision. This helps to ensure that actions putting our purpose into practice
are consistently evaluated under the new system.
Linking Employees and Purpose

Approaches to, Measure for and Results of Efforts to Inculcate
the Purpose
We have set down our purpose, “Make a difference in everyday lives by redesigning
habits: ReDesign,” and our beliefs to guide employee thoughts, actions and decisions
in putting the Lion Group’s purpose into practice. We have also shared senior
executives’ discussions of the purpose and beliefs with employees as an opportunity
for all employees to reflect and deepen their understanding. In addition, we holdworkshops for all employees in Japan, including those of Group companies, to shareideas through dialogue. More than 90% of post-workshop survey respondents gave
positive responses regarding their understanding of the purpose and beliefs. We will
expand efforts to inculcate our purpose and beliefs at overseas Group companies.
In addition, we conduct a yearly Employee Awareness and Behavior Survey of all
Group employees in Japan to verify their level of engagement and gather data for
utilization in relevant measures. Currently, we are analyzing the relationship between
the degree of inculcation of purpose and beliefs and employee engagement.

WEB

Employee Awareness and Behavior Survey
https://www.lion.co.jp/en/sustainability/employee/work_life/

Workshops on Lion's purpose
We hold workshops on Lion’s purpose and beliefs for each division. Using a dialogue format,
these workshops are aimed at deepening employee understanding of the connection between
the purpose and their work, and the relationship between the purpose and beliefs.

36

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Generating Dynamism to Realize Innovative Change

Recruiting, Developing and Supporting the Growth of the Personnel Who Will Drive the Lion Group’s Growth
Recruiting Personnel and Supporting Their Growth

Promoting Diversity and Inclusion

Investing in human resources will be essential for advancing our growth strategies.
We must bring on global personnel who can help us enhance our presence overseas
and boost our overseas sales ratio. At the same time, we are proactively moving
forward with measures to develop our existing personnel. For example, using the Lion
Career Village (LCV) we will build systems with external training institutes for teachingvarious curriculums via remote learning. We will focus on measures that balance both
corporate and personal growth.

We believe that leveraging the diverse knowledge
and experience of our employees will lead to new
ideas and innovation aimed at creating better habits.
Therefore, we are enhancing the diversity of ourdecision makers and creating an organizational
culture in which employees with diverse values andideas can demonstrate their individuality and abilities
and succeed professionally, regardless of nationality,
gender or other attributes.
As a new initiative in 2022, we held a study
session for senior management and department
heads. Participants improved their understanding ofdiversity and inclusion, learned about commonly held
biases and discussed the impacts and challenges
caused by these biases. Going forward, we will
extend this learning opportunity to all managers andemployees to promote the creation of anorganization that embraces mutual acceptance andenables diverse personnel to succeed professionally.

Investment in Human
Resources in 2022

Lion Group(Consolidated)

Lion Corporation(including seconded employees)

Average hours of training per
FTE* employee

34.9 hours

58.1 hours

Average investment in training
per FTE employee¥51,400¥94,800* Full-time equivalent

Stepping Up Development of Global and Digital Personnel
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 posting younger andmid-level employees overseas to gain first-hand experience in our Asia business.
Through efforts such as these, we will support the development of employees withoutstanding expertise who can be successful in Asia, including Japan.
We will also be required to make up-front investments to drive digital transformationand create new business models. We will work to further improve our overall productivity
through the development of personnel who can lead digital transformation thatstreamlines our business foundation and work processes.

Training in Singapore

Training in Bangladesh

Study session about unconscious bias for department heads

Initiatives for Recruiting and Developing Diverse Human Resources
Mid-career hires

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

Side job applicants

Bringing in new ideas by hiring individuals with specialized expertise from outside
the Group to work side jobs

Global human resources

Developing and utilizing global human resources, including foreign nationals, aspart of efforts to advance business globalization

People with disabilities

Proactively hiring people with disabilities

37

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Generating Dynamism to Realize Innovative Change

Diversifying Work Styles for the New Normal through the LION Professional Fulfillment Reforms
Overview and Goals of the LION Professional Fulfillment Reforms
Lion aims to ensure that individual employees are able to take total ownership of
their roles and exercise their abilities to the fullest. To this end, in 2019, welaunched the LION Professional Fulfillment Reforms, four health and productivity
management initiatives: Work management, Work styles, Strengthen relationships,
and as the foundation supporting the first three initiatives, Lion-style health support,“GENKI” Action.
The COVID-19 pandemic has led to changes in work styles and values for many
employees. Amid such changes in the external environment, the Human Resources
Development Center is striving to ensure that employees can maintain their sense of
professional fulfillment and find the work styles that are best for them by upgrading
environments and systems under the framework of the LION Professional Fulfillment
Reforms and implementing a variety of measures to address the new normal createdby the conditions of the pandemic.

LION Professional Fulfillment Reform Framework• New human resource management
system• Career design support• Provision of self-directed learning
opportunities (Lion Career Village)• Multifaceted evaluations of ability• Making employee information moreaccessible• Side job system• New health management system:
GENKI Navi
Visualization of health checkup
results and future health risk data
Archiving 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 life

(1) Work
management(2) WorkstylesMake maximum useof diverse talent

Change ways ofworking, with emphasis
on independence(3) Strengthen relationships
Mutual understanding and respect

Lion-style health support(4) “GENKI” Action• Permitting discretion in work styles(attire, time, place)• New work systems (full-flex,
telecommuting, use of time off inhourly increments)• Head office relocation• Relationship enhancement program• 1-on-1 meetings• Employee award system• Learning about, recognizing andaddressing mutual biases• Making employee information moreaccessible• Side job system

Ongoing Promotion of LION Professional Fulfillment Reforms—Aiming to Improve Productivity and Achieve a High Level of Employee Satisfaction
We see the work and private lives of employees holistically and believe that creating goodsynergy between the two supports professional fulfillment. We are therefore establishingan environment in which all employees can realize their life plans and individual lifestyles.
In addition to the support we provide for various life stages such as childcare and nursing
care, we set the stage for more flexible work styles by introducing telecommuting andfull-flex systems in 2021. Our goal is an environment in which employees can work
vibrantly, be themselves and realize their ambitions in life.

Work Styles—Head Office Relocation
Lion’s head office has transitioned from the traditional work style in which employees
commute to the office and sit at assigned desks to a style that allows employees tofreely choose the time and place they work—at home or the office—according to thework content and their frame of mind. In addition, to encourage innovation we havecreated a co-creation floor to strengthen external communication and haveestablished a collaboration area on each floor to enhance internal communication.

Co-creation floor

Collaboration area38

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Generating Dynamism to Realize Innovative Change

Diversifying Work Styles for the New Normal through the LION Professional Fulfillment Reforms
Strengthen Relationships—Relationship Enhancement Program
A Leadership Skill Enhancement Program That Strengthens Relationships
among Employees
We are currently implementing a program for the Lion Group’s 600 members ofmanagement 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 tostrengthen relationships among employees. The program brings together
management and all members of the Group to achieve this objective under the key
concept of psychological safety.

Focus: Health & Productivity Stock Selection and Award Received
Lion Chosen for the Health & Productivity Stock Selection
Lion was chosen from among listed companies that implement health and productivity
management for inclusion in the 2023 Health & Productivity Stock Selection in recognitionof its particularly outstanding initiatives. Inclusion in the Health & Productivity Stock
Selection, a program that was inaugurated in 2015, is determined jointly by the Ministryof Economy, Trade and Industry and the Tokyo Stock Exchange.

Lion-style Health Support—“GENKI” Action
Foster Healthy Habits among Employees
We held dental checkups at 15 work sites to promote preventive dentistry, following
strict measures against COVID-19. We also encouraged regular visits to dental
clinics, with 88% of employees in Japan receiving dental checkups. Moreover, wehave cancer countermeasures in place and have been recognized as an “Excellent
Company Promoting Cancer Control”* for our system of detailed examinations forstomach, colon and lung cancer. Another initiative to foster healthy habits in daily life
involves use of the new GENKI Navi health system, which awards points to each
employee based on daily physical data (weight and blood pressure) and lifestyle
habits (diet and exercise). More than 1,000 employees have begun using this systemsince its launch. We will continue working through these initiatives to establish habitsthat promote health.
Lion was chosen for inclusion in the 2023 Health & Productivity Stock Selection inrecognition of initiatives such as these.
* Under the Project for Promotion of Cancer Control, commissioned by the Ministry of Health, Labourand WelfareWEB

Lion-Style Health Support—“GENKI” Action
https://www.lion.co.jp/en/sustainability/employee/health/#sec05

WEB

Lion Chosen for the Health & Productivity Stock Selection
https://www.lion.co.jp/ja/news/2023/4233 (Japanese only)

Received Women’s Health and Productivity Management Promotion Award®
Our Research and Development
Headquarters received the Women’s
Health and Productivity Management
Promotion Award® from the Women’s
Healthcare Awareness & Menopause
Network Society, which recognizes theachievements of corporations andorganizations that are actively involved inhealth support, education and health andproductivity management for women.
WEB

Lion’s Research and Development Headquarters Receives the Women’s Health and Productivity
Management Promotion Award ®
https://doc.lion.co.jp/uploads/tmg_block_page_image/file/8597/20230317_01.pdf (Japanese only)

39

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Message from the Director Responsible for Sustainability
Another top-priority material issue, promoting environmental initiatives for a sustainable
planet, involves using environmentally friendly products to further the creation of environmentallyfriendly habits with consumers, such as saving water and power, using refills and reducing
waste. In other words, we will contribute to a decarbonized and resource-circulating society byproviding planet-friendly lifestyles and making daily life more sustainable. In cooperation withlocal governments and competitors, we are developing recycling technologies and structuring

Kenjiro Kobayashi
Director,
Senior Executive Officer

We aim to contribute to a sustainable society and generate further
business growth with an approach that integrates sustainability into
management strategy.

collection systems for refill containers. We will continue to enhance these partnerships.
A key feature of the Group is its many contact points with the daily lives of households, so
we believe that our approach to resolving social issues should involve providing experiencesthat redesign everyday routines to become more natural, easy and enjoyable. In addition, we will
create further business opportunities by using digital technology and data science under theslogan “The Science of Habits”, for example, to visualize behavioral changes brought about by
activities to promote habit formation.

Integrating Sustainability into Management Strategy
To remain socially relevant into the future amid the rapid change in its external operating
environment, the Lion Group must respond boldly and swiftly to help resolve various social
issues. We also recognize that maintaining sustainable growth requires us to meet theCreation of Social and Economic Value
Healthy minds and bodies

Preservation of the global environment

expectations of our stakeholders by backcasting—mapping out a route for achieving our goals.
The Group used this approach to consider the entire value chain and stakeholders, and to

Promote better health through habits

in management and connect them to the actions of each business. The Sustainability Promotion
Council, which I chair, formulates sustainability strategies related to the environment, society, andPlanet-friendly lifestyles

Creation of living habits

identify the Sustainability Material Issues to be addressed by 2030.
Identifying material issues is merely the first step. The key is how we use these material issues

Resolution of social issues

Popularize the habits that Lion proposes

Customer retention

Directly connected to businesses

Market expansion

The Science of Habits (DX)

Create business opportunities

governance, makes decisions on specific action plans, and monitors progress toward medium- tolong-term goals. Leveraging the strengths of the Group, I will guide sustainability management toconcentrate management resources on measures that only we can take.

Furthermore, we also need to nurture employees who embody our purpose, “Make adifference in everyday lives by redesigning habits: ReDesign.” In January 2023, we introduced
a new personnel system for managers that incorporates a job-focused perspective andEvolving and Expanding the Redesign of Living Habits to Grow Our
Businesses and Help Resolve Social Issues

eliminated the previous seniority-based system for determining job titles. Our goal is for eachCreating healthy living habits is a top-priority material issue for the Group. We provide products,

aspirations, thus increasing their motivation and expertise and maximizing the value they

services and information that promote living habits that are directly linked to health, such as

create. We will implement various measures that promote long-term job satisfaction andtooth brushing and hand washing. As we aim to provide 1 billion people around the world withincrease employee engagement. Pages 35-39

products, services and information that help to create healthy living habits, a key issue going
forward will be collaboration with overseas Group companies.

leader to map out a clear picture of how they should develop themselves to achieve their

Going forward, we will continue to promote sustainability management while enhancing
social and economic value to improve corporate value.

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Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Sustainability: Approach and Management

Approach to Sustainability

Sustainability Management

Upholding its founding spirit of “benefiting society through its business activities,” Lion, in
addition to pursuing economic development, has long considered its impact on the environmentand society and worked to address environmental and social issues through its businesses.
At present, we are tackling key management issues to reduce risks and achieve ourmanagement vision for 2030 of “Becoming an advanced daily healthcare company.” At thesame time, we are practicing management driven by our purpose, “Make a difference ineveryday lives by redesigning habits: ReDesign.” Based on comprehensive consideration of theentire value chain and stakeholders, we have identified 13 Sustainability Material Issues withregard to both risks and opportunities.
The Lion Group will synergistically address its Sustainability Material Issues and advancethree growth strategies in order to contribute to the realization of a sustainable society andachieve business growth.

Sustainability Promotion Council
In order to promote sustainable management, until 2020 we held the Sustainability Promotion
Meeting, comprising all executive directors, including the president, and related departments.
In 2021, we revised this system and established the Sustainability Promotion Council, whichmeets twice a year.
We have established three subcommittees under the council, each headed by an executive
officer, more than ever before positioning senior management at the forefront of promoting
Sustainability Material issues. Decisions made by the council are reported to the Senior Executive
Committee and, as necessary, presented to and discussed by the Executive Committee andthe Board of Directors, before being reflected in the business activities of the businessexecution departments.

Implementation Framework
Senior Executive Committee

Vision2030 Long-term Strategic Framework

Executive Committee/Board of Directors

ReportPresent items for discussion

Sustainability Promotion Council

Management
visionManagement
strategy

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

Advance our three growth strategies

Chairperson: The 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

G Subcommittee(Action Management)
Run by: Executive officers

PurposeStrategyPlan
Act

Make a difference in everyday lives by redesigning habits

Business execution departments
WEB

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

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Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Initiatives to Address the Sustainability Material Issues
Steps for Identifying Sustainability Material Issues
Step 1

Step 2

Step 3

Step 4

Identify social issues

Consider each issue’s impact on society
and businesses

Investigate the pertinence of thematerial issues

Obtain approval from the Executive
Committee and Board of Directors

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

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

The pertinence of each item was investigated in lightof the viewpoints of third-party institutions, and theissues were revised as necessary.

The Sustainability Material Issues identified wereapproved by the Executive Committee and Boardof Directors.

Sustainability Material Issues, 2030 Objectives and Indicators, 2022 Results and Measures to 2030
We conducted activities toward achieving the 2030 objectives for each Sustainability Material Issue. In particular, under Globally Common Measures each overseas Group company made progress in its activities. We will continue
to introduce further initiatives.
Material Issues

Promoting
Environmental
Initiatives for a
Sustainable Planet

Link

Top-Priority Material Issues

E

S

Objectives

Indicators (2030)

Reduce CO2 emissions throughout businessactivities.

• CO2 emissions throughout business activities
Down 55% compared with 2017 levels(Absolute quantity)• Down 13% compared with 2017
(Figure after deducting purchases of carbon credits. 4% reduction if not deducted.)• Reduce energy usage through energy-saving activities.
• Purchase electricity generated by renewable energy sources.

Reduce CO2 emissions throughout productlifecycles.

• CO2 emissions throughout product lifecycles
Down 30% compared with 2017 levels(Absolute quantity)• Up 12% compared with 2017• Reduce household CO2 emissions from product use through the provision ofenvironmentally friendly products and services and the promotion of environmentallyfriendly habits.
• Reduce CO2 emissions at the stage of procurement through supplier engagement
and the purchase of raw materials that generate low CO2 emissions.

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

• Contribute to a CO2 emission reduction effectin excess of Lion’s own emissions (Japan)• Plan
to formulate actions and KPIs and verify their effectiveness• Reduce 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.

Actively promote the 3Rs (reduce, reuse,recycle) and renewable resource activities.

• Petrochemical-derived plastic use rate
70% or less• 97% (Japan)
Rate of containers and other packaging using sustainable materials: 3.2%

• Reduce usage of petrochemical-derived materials through the increased use ofrecycled plastic and biomass materials in products, containers and packaging.
• Continuously promote reduced use and reuse of plastic in products, containers andpackaging.

Reduce water usage throughout productlifecycles.

• Water usage throughout product lifecycles
Down 30% compared with 2017 levels(Per unit of net sales)• Down 7% compared with 2017

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

Oral care habits: 300 million*
Spreading Awareness of Preventive Dentistry Habits(Japan)• Began
services supporting the oral care habits of corporate customers and senior citizens (Okuchi Plus You and
ORAL FIT)(Overseas)• Conducted
educational and awareness activities to promote the formation of good tooth brushing habits among
kindergarten and elementary school children• Participatedin oral care improvement support program sponsored by the Ministry of Economy, Trade and Industry• Conducted
educational and awareness activities to promote oral care during pregnancy
Putting Preventive Dentistry Habits into Practice(Japan)• Promoted

greater frequency of tooth brushing
35% of population brushed teeth after lunch (target for 2030: 50%)
• Promoted greater use of products other than toothpastes and toothbrushes
31% of population used dental floss products (target for 2030: 50%)
* Source: Lion survey• 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 oral care.
(Inclusive Oral Care)

Cleanliness and hygiene habits: 120 million*
Promoting and Establishing Cleanliness and Hygiene Habits through Educational Institutions(Lion Group)• Conducted
educational and awareness activities at preschools, kindergartens and elementary schools to promote
hand washing habits• Received 24,250 entries in the My Bottle Sticker Drawing Contest from 8 countries and regions where we do businessBroadening Coverage of Activities to Support the Establishment of Cleanliness and Hygiene Habits(Japan)• Conducted the Relay Project for Cleanliness in collaboration with shopping districts, local governments andelementary schools• Conducted a project to promote “HAND WASH & HYGIENE before meals” at hotels and restaurants* Source: Lion survey• Provide
products and services that support the establishment of hand cleanlinessand hygiene habits in daily living.
• Provide
new customer experiences in all aspects of daily living through the provisionof products and services that protect customers from bacteria and viruses.
• Implement
educational and awareness activities to establish cleanliness and hygiene
habits in all aspects of daily living.

Provide opportunities for everyone to practiceoral care whenever necessary and foster oral
care habits to promote health for all.

Creating
Healthy Living
Habits• Total number of persons provided withproducts, services and information aimed atcreating healthy living habits
1 billion(Oral care habits: 500 million people,
Cleanliness and hygiene habits: 500 million
people)Link

Promote the establishment of cleanlinessand hygiene habits that prevent bacteria andviruses from entering the body across all
aspects of daily living, so that everyone canstay healthy.

Progress (2022 Results)

Globally Common Measures to 2030

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Lion Integrated Report 2023

Material Issues

Objectives

Our Purpose

Indicators (2030)

Our Strategy

Corporate Governance

Progress (2022 Results)

Performance/Data

Globally Common Measures to 2030

PromotingDiversity andInclusion

Link

Enable human resources with diverse values
and ideas to fully express their individuality
and abilities and succeed professionally.

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

PromotingWork-Life
Enrichment

Link

Create an environment that helps employees
fulfill their ambitions through synergy between
work and private life.

• Employees who feel that life outside of work(role at home and activities outside the office)has a positive impact on work 75% ormore• 53% (Japan)• Create an environment that enables employees to fulfill their life ambitions andachieve their ideal lifestyles.

Developing
Human Resources

Link

Foster human resources who generate
dynamism to realize innovative change 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%

• 57%• Introduce e-learning system and curriculum that meet the needs of overseas Group
companies.
• Create mechanisms that will be used to provide contents for learning opportunities
on an ongoing basis.
• Use 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.
• Provide opportunities for management to learn about checking the mental health ofsubordinates and for all employees to learn about caring for their own mental health.
• Improve 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.
• Provide
opportunities to learn about safety and disaster prevention, and implement
activities to promote understanding of basic safety activities.
• Buildmechanisms for exchanging safety information, and proactively disclose
information on levels of workplace safety based on the management of records ofoccupational accident frequency.

• Ratio of women in management: 20%• Employees who feel so: 54% (Japan)• Provide opportunities for employees to deepen their understanding of diverse values.
• Create systems and mechanisms for diverse human resources to succeed professionally.

Link

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

• Employees getting dental checkups 100%
• Absenteeism Improve from the 2021 level• Employeesgetting dental checkups: 88% (Japan)
Note: Support for dental checkups is provided (Overseas)• Absenteeism: 0.8% (Lion Corporation in Japan; unchanged from 2021)
Note: Calculation method under consideration (Overseas)

Enhancing the
Occupational
SafetyManagement
SystemLink

Enhance systems to ensure compliance withoccupational safety and health laws andregulations and to enforce safety awarenessthoroughly for the safety and peace of mindof employees and outside partners working
on site.

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

• Participationin training: 100% as planned• Serious
accidents and incidents: Zero

Respecting
Human Rights

Link

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

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

Link

Implement sustainable procurement withzero tolerance for human rights and labor
problems (including child labor and forcedlabor) or environmental destruction in linewith the Sustainable Material Procurement
Policy and Lion Group Supplier CSR Guidelines.

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

• Ratioof certified raw materials procurement
Japan:
Certified paper and pulp: 65% (item ratio)
Certified palm oil and palm kernel oil derivatives: 99% (based on key raw materials)
Lion Group:
Certified paper and pulp: 17% (item ratio)
Certified palm oil and palm kernel oil derivatives: 48% (based on key raw materials)• Ratioof suppliers supporting zero deforestation
Japan: 48%, Lion Group: 39%• Create and promote a sustainable procurement system in cooperation with suppliers.

Pursuing
Customer
Satisfaction and
Trust

Link

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

• Reflection of customer opinions in all products
and services so that customers will continue
to choose them• To promptly respond to customer comments on social media, we launched a social media risk management manualin January 2022 and conducted training to deal with online flaming in May 2022 (Japan)• We improved the accessibility of the corporate website through a site renewal in June 2022 (Japan)• Evolve the activities of customer response departments by steadily promoting threesteps: Understand the current situation, formulate plans, and promote activities• Create an environment for improving customer relationships and expanding therange of problem resolution methods.
• Create and implement a system for reflecting customer feedback in products andservices.

Promoting Risk
Management

Link

Build a comprehensive and exhaustive risk
management system for identifying andquickly and appropriately dealing with risks
to achieve sustainable corporate growth.

• Disclosure of the results of monitoringsignificant business risks and progress in
implementing reduction measures At least
once a year

• Disclosed once

• Build and raise awareness of a management system that includes overseas Group
companies.
• Use a consistent format for investigating risks and implement countermeasures.
• Share information on progress of response through reports to the Board of Directors
once a year.

Link

Reinforce effective initiatives to instill complianceawareness and thus earn and maintain thetrust of society.

• Participation in compliance education andtraining Implement as planned (100%) atwork sites• Serious compliance violations Zero

• Participationin training: 100% as planned• Seriouscompliance violations: Zero

• Build and enhance a compliance system that includes overseas Group companies.
• Further inculcate compliance through ongoing implementation of management andemployee training and questionnaires, etc.
• Improve Group-wide risk perception and accelerate risk response by designatingcompliance managers at overseas Group companies and building a global hotline.

Link

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

• Disclosure of the results of the establishment
and operation of the internal control system
At least once a year
• Improvement in evaluations from externalorganizations
Continuously improve from 2020 onward• Disclosed once
• As in 2021, we continued activities to improve evaluation results• Evaluate and disclose results of the operation of the current internal control system.
• Clarify status of establishment of internal control systems at overseas Group
companies and evaluate their operation.
• Continuously and proactively disclose governance-related non-financial information.

Improving
Employee HealthS

Contents

Building
Responsible
Supply Chain
Management

Reinforcing
G Compliance

Enhancing
GovernanceNote: The Sustainability Material Issues and objectives published in 2022 have been partially revised.

• Human rights due diligence implementation
Lion Group: 100%
Suppliers: 68%• Build a mechanism for addressing human rights issues.
• Identify material human rights risks and verify how those affected are negatively impacted.
• Execute and monitor measures for addressing human rights risks that have been
identified.
• Proactively disclose status of response to human rights due diligence implementation.

43

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance44

Performance/Data

Initiatives for Addressing Sustainability Material Issues

Creating Healthy Living Habits
Since its founding, the Lion Group has contributed to society through the promotion and establishment of healthy living habits such as tooth brushing and hand washing. Our purpose is “Make a difference in everyday
lives by redesigning habits: ReDesign.” Based on this purpose, by providing healthy living habits to the 1 billion people in our business areas, we will seek to contribute to better everyday lives and expand our businesses.

Lion Group Initiatives for 2030
Total number of persons provided with products, services and information aimed at creating healthy living habits: 1 billion(Oral care habits: 500 million people; cleanliness and hygiene habits: 500 million people.)
Oral care habits(500 million people)• Provide products andservices• Communicate information• Educational and awarenessactivities (Inclusive Oral Care,etc.)

Approach
Evolve the idea of preventive dentistry habits

Provide products andservices that utilize IoT,
AI and other technologies+

Contribute to reducing healthdisparities and expand business
opportunities by eliminating
inequalities in oral care

The Lion Group has worked to establish tooth brushing habits toprevent cavities and gum disease.
In 2022, we used various contacts in our existing businesses tolaunch two new businesses aimed at encouraging the formation of
preventive dentistry habits. One is Okuchi Plus You, a corporate
well-being support service, and the other is ORAL FIT, an oral
function fitness support service for senior citizens.
WEB

https://oral-kenkou.lion.co.jp/ (Japanese only)
https://oralfit.lion.co.jp/ (Japanese only)

Educational and Awareness Activities to Address Social and Environmental Issues through Inclusive Oral Care
Lion is engaged in activities to address social and environmental issues through inclusive
oral care. To ensure that everybody can make preventive dentistry a habit—regardless ofliving environment, physical limitations, economic circumstances, education, access to
information or other factors—we are working with external partners to roll out various
initiatives. One example is the Okuchikarada Project, which looks at the correlation
between children’s cavities and their family’s financial circumstances. Children of
economically disadvantaged families are about two times more likely to have more than
five cavities than children of more affluent families.1 They also have fewer beneficial
experiences2, such as healthy habit experiences. To address these disparities, wedeveloped a proprietary experiential program about dental and oral health and are working
with NPOs to provide this program mainly through “children’s cafeterias.” We are also
creating opportunities for Lion employees to participate in these activities to experience
these social issues directly, thus promoting understanding of the importance of thedirection the Group is aiming for and of contributing to putting our purpose into practice.
Furthermore, in 2022, we verified the effectiveness of the experiential program conductedin collaboration with partners in industry, government and academia in Okinawa Prefecture,
which has the highest percentages of child poverty and children with cavities3 in Japan.
Results showed signs that the experiences helped children to form oral care habits andboost self-esteem. We will use the knowledge we gained from this verification to provide
even more effective experiential programs.
1. Source: Department of Social Medicine, National Center for Child Health and Development, Adachi City and Adachi City Board of
Education (2016)
2. Receiving praise from others, communicating with adults, acquiring life skills, etc.
3. Source: Ministry of Education, Culture, Sports, Science and Technology, 2020 School Health Survey Statistics

Okuchikarada Project
Total no. of experience kits provided

Total no. of employees participating

1,112 organizations in total(for approx. 60,000 children)

129 in total (at 39 children’s cafeterias
in total)

Employee Feedback
Approx. 80% said they would like to participate again.
BeforeI’m not sure

18%
After

Dental plaque buildup before andafter the experiential program(The dyed areas indicate plaque buildup.)

I won’t beparticipating
again
2%

I would like to participate again
80%
It was a great opportunity
to fulfill our purpose!

Being in contact with
consumers helped to boost
my motivation at work.
Note: Survey period from June through December 2022

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Initiatives for Addressing Sustainability Material Issues

Creating Healthy Living Habits

Lion Group Initiatives for 2030
Total number of persons provided with products, services and information aimed at creating healthy living habits: 1 billion(Oral care habits: 500 million people; cleanliness and hygiene habits: 500 million people.)
Cleanliness and hygiene habits(500 million people)• Provide products and services• Communicate information• Educational and awarenessactivities (Promoting handwashing habits)

Educational and Awareness Activities to Promote the Habit of Hand Washing
The Lion Group has been providing hand soaps and sanitizers that are used in a variety of settings and conducting educational and awareness activities
at preschools, kindergartens and elementary schools in Japan and across Asia to promote the prevention of infection in the home.
Going forward, we will expand the scope of our activities to include the prevention of infection outside the home and supply hygiene products andservices. In our educational and awareness activities as well, we will work with other companies, local governments and other organizations to establish
cleanliness and hygienic behavior that protects loved ones from infection.

Educational and Awareness Activities: Promoting Hand Washing Habits
Promoting and Establishing Cleanliness and Hygiene Habits through Educational
Institutions (Japan and Overseas)
At the Lion Group, as one part of our activities to create cleanliness and hygiene habits in countries andregions in Asia where we have newly started business, such as Taiwan and Malaysia, we are working topromote and establish hand washing habits through preschools, kindergartens and elementary schools.
In Bangladesh, another market we have recently entered, we are working through the Japan International
Cooperation Agency (JICA) to provide teaching materials to support children’s health education, and in turncontribute to the creation of cleanliness and hygiene habits.

Expanding Areas of Activity to Establish Cleanliness and Hygiene Habits
To prevent infection outside the home, the Lion Group collaborated with shopping districts and local
governments to promote the habits of cleanliness and hygiene through the Relay Project for Cleanliness, andconducted a project to promote “HAND WASH & HYGIENE before meals at hotels and restaurants.”
Moreover, in support of Global Handwashing Day on October 15, we hosted the Global My Bottle Sticker
Drawing Contest, with the aim of establishing fun hand washing habits for the whole family. For the contest,
children created their one-and-only KireiKirei bottles with their own drawings. We received more than 24,000
entries from children in Japan and seven other countries and regions in Asia.

Hand washing classes by employees and others at educational institutions

Japan

Malaysia

Installation of automatic soap dispensers in toilets at
Kakogawa City Hall in 2021
(Relay Project for Cleanliness)

Entries for the Global My Bottle Sticker Drawing Contest

45

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

46

Initiatives for Addressing Sustainability Material Issues

Promoting Environmental Initiatives for a Sustainable Planet
In 2019, the Lion Group established the LION Eco Challenge 2050, a set of long-term environmental objectives, with the goal of promoting business activities that help to address global problems, such as those
identified in the Paris Agreement and the Sustainable Development Goals (SDGs). We have been working to find solutions for issues related to decarbonization, plastic and water resources. In 2022, we updated
our objectives in order to contribute to the achievement of carbon neutrality by 2050, an aim of countries around the world. To realize a decarbonized, resource-circulating society, we will promote environmentallyfriendly habits with consumers to continuously provide planet-friendly lifestyles that make sustainable living easy.

LION Eco Challenge 2050 and Vision for 2050
CO

2
Challenge

Lion will reduce CO2 emissions tozero throughout its businessactivities.
Lion will reduce CO2
emissions by halfthroughout the lifecycle ofits products.
Lion aims to become carbon
negative.

Making Planet-friendly Lifestyles a Reality

Plastic
Challenge

Lion will optimize use ofrecirculated plastic.

Zero-carbon throughout business activities (Scope 1 and 2)
Energy saving

Water Lion will optimize water

Challenge

usage for sustainability.

Initiatives for Achieving Objectives by 2030
To promote environmentally friendly habits with consumers, the Group is reducing theenvironmental burden throughout its product lifecycles and working to help reduce society’s
environmental burden overall.
The diagram on the right gives an overall picture of our initiatives. Those in bold font are theinitiatives through which we hope to contribute highly to realizing our aim of promoting
environmentally friendly habits.
1. Zero-carbon throughout business activities (Scope 1 and 2) / Shift to smart energy- Increasing investment inenvironmentally friendly equipment
through internal carbon pricing

Carbon-neutral
product lifecycles(Scope 3)

Renewable energy

Procurement

2. Carbon neutral product lifecycles (Scope 3) / Decarbonize the value chain
Reduce absolute quantity of Scope 1, 2, and 3 CO2 emissions by 30% in comparison with 2017 by 2030
Lower petrochemical-derived plastic use rate to 70% or less by 2030
 evelop and supply environmentally friendly products and services through environmentally friendlyD
designIncrease the sophistication of recycling initiatives and transform to a circular business modelPromote water- and power-saving habits, and refill and waste-free habits

3. Help achieve a carbon negative society by reducing its environmental burden(Scope 4) / Create green innovations
Contribute to reducing CO2 emissions in society by using our products (Japan)
 ropose environmentally friendly, fulfilling lifestyles and create new markets (sustainable fashion, smart
Phomes and decarbonized transportation fields) through collaboration with lifestyle-related companies(By 2024 in Japan; by 2030 overseas)

Ethical products- Environmentally friendly design- Creating water- andpower-saving habits

Logistics- Collaborative smart logistics- Logistics EDI- Supplier engagement- Increasing lineup of certified
products- Carbon recycling

Reduce absolute quantity of Scope 1 and 2 CO2 emissions by 55% in comparison with 2017 by 2030
KPI: Conversion of all electricity used in-house to renewable energy by 2030 (by 2024 in Japan)- 100% renewable energy in all Group plants
and offices

CreateEnvironmentally
Friendly Habits with
Consumers

Digital transformation

Resource recycling- Promoting 3Rs + renewables (the 4th R)- Contributing to the creation of a recycling
society- Creating refill habits- Creating waste-free habits

Using recirculated
plastic- Enhancing lifecycle
assessment and Scope 3
activities- Usability

Help achieve a carbon
negative society
by reducing its
environmental burden(Scope 4)

Proposing environmentally friendly, fulfilling lifestyles- Sustainable fashion (Long-lasting clothing)- Smart homes (Spending comfortable, relaxing time at home)- Decarbonized transportation(Popularization of environmentally friendly vehicles)

Co-creation with society- Changing consumer behavior/Cultivating habits(Ecosystem comprising industry, government and private sectors)- CO2 absorption by forests/Afforestation

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance47

Performance/Data

Initiatives for Addressing Sustainability Material Issues

Promoting Environmental Initiatives for a Sustainable Planet
As part of its responsibility as a producer, the Lion Group is working to achieve a decarbonized society and to solve plastic and water resource issues in every stage of the product lifecycle, from theprocurement of raw materials to use by consumers, disposal and recycling. As laundry and other housework requires electricity and water, CO2 emissions and water usage are at their highest at the stage when
consumers use our products. Going forward, we will work to reduce the environmental burden of our products at this stage through the provision of environmentally friendly products and services and thecreation of environmentally friendly habits for consumers.

R&D Initiatives to Reduce Environmental Burden- Developing new products that promote environmentally friendly habits for consumers- Developing concentration technologies that enable reduction of product sizes(product contents)- Developing technologies for using biomass and recycled materials(product contents, packaging and containers)- Developing refill products and replaceable components with excellent usability(product packaging and containers)- Developing products that save water and power during use- Developing technologies for using raw materials that have been made throughenvironmentally friendly processes (product contents, packaging and containers)- Developing technologies for reducing plastic use (product packaging and containers)- Developing products and product containers that are easy to recycle(appliances/product packaging and containers)

The Ratio of Environmental Burden (CO2 Emissions and Water Usage) and Activities to Reduce
Environmental Burden in the Product Lifecycles of the Lion Group’s Businesses (2022)

11%
4%

CO2 :
Water :Procurement of raw materials

Disposal/Recycling• Promoting a toothbrush recycling program• Promoting a recycling program for plastic
container/packaging resources• Developing technologies aimed at improving thequality of recycled materials• Examining how to reduce collection costs

25%
20%

CO2 :
Water :Environmentally friendly initiatives from raw
material procurement to disposal/recycling

CO2 :
Water :Production/Offices• Promoting energy saving• Shifting to renewable energy• Recycling wastewater frommanufacturing processes• Reducing water usage byusing rainwater• Transitioning to raw materials made through environmentally friendly processes• Transitioning to biomass and recycled materials• Using recycled paper (certified paper)

Use by Consumers• Enhancing environmental awarenessthrough products (products that meetin-house environmental standards,
featuring the “eco Lion” mark with the“Every Day. For the Earth” slogan)• Enhancing recognition of watersaving products and communicating
information on their appropriate use

57%
Water : 76%
CO2 :

3%0%

Logistics• Improving transport efficiency by
reducing product size and creatingload-efficient designs• Promoting modal shifts• Conducting joint logistics

CO2 :
Water :4%0%

• Promoting zero emissions• Promoting green purchasing• Conducting biodiversity
conservation activities
in collaboration with
communities near our facilities

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Our Strategy

Corporate Governance48

Performance/Data

Initiatives for Addressing Sustainability Material Issues

Promoting Environmental Initiatives for a Sustainable Planet
Activities for Reducing Environmental Burden (2022)
Greenhouse Gas Reduction Targets Validated by the SBT
Initiative for Being in Line with the 1.5°C Target

Operations Begin at New Head Office Building Featuring
CASBEE Smart Wellness Office Certification

In July 2020, the Lion Group obtained SBT validation for being in

We moved to our new head office building in Kuramae, Taito-ku, Tokyo inline with the “well-below 2°C target,” and has continued to

January 2023. In 2021, the building received the “Superior” or “S” rank

promote the reduction of greenhouse gas emissions. In 2022, weunder the CASBEE Smart Wellness Office certification, which recognizes

raised our 2030 CO2 emissions reduction objective in the LION

the building’s overall performance with respect to the environment and

Eco Challenge 2050 from 30% to 55% in comparison with 2017.

occupants’ health and comfort.

As a result, in March 2023 we obtained updated SBT validation

Development of Zero-rinse Laundry Detergent
Acron Smart Carefor being in line with the 1.5°C target.

Utilization of Internal Carbon Pricing (ICP)

Lion’s Acron Smart Care zero-rinse

Results compared with laundry
detergents that require two rinse cycles

laundry detergent has made clean,quick, and environmentally friendly

In 2022, we introduced an ICP system on a trial basis. We referlaundry a reality. It contains ourto this system in capital investment planning to judge environmental

proprietary anti-redeposition agent

investments after CO2 emissions have been converted intoof the same name, made with aexpenses virtually according to our standards.

new formulation that boosts

Bottle440mL

Refill
820mL

131 L

45 L

65%

18 Wh

10 Wh

44%

124 g

44 g

64%

We began full-scale use of this ICP system in 2023 at oursurfactant performance, thus drastically reducing the

Two-rinse cycle detergents

domestic Group companies, enabling us to move forward withamount of surfactant required. The product effectively

efforts to decarbonize our manufacturing operations by choosing

removes soil even with low amounts of surfactant, while

Note: Typical top-loading washingmachines from 4 major washingmachine manufacturers in Japan
1 kg of clothing
Average values for a gentle wash
cycle (In-house empirical data)

equipment with low CO2 emission levels.

Conceptual illustration of the completed
new over-the-counter pharmaceuticals
factory (Odawara City, Kanagawa
Prefecture)

preventing it from reattaching to the clothing. On top of
that, the product has eliminated the need for rinse
cycles, which account for approximately 70% of the

In September 2020, we announced that we would be collaborating with Kao
Corporation to help realize plastic packaging resource recirculation in society.
Together, we have been collecting used refill packs at some stores in Japan.

(Using Acron Smart Care)

Approx. 50% decrease* in water andpower usage and CO2 emissions

laundry process.

Film-to-Film Recycling of Used Refill Packs

Zero-rinse cycle setting* Zero-rinse cycle setting vs. two-rinse cycle

Acron Smart Care is contributing to substantial
reductions in water and power use and CO2 emissions.

Using Recycled Materials from Toothbrush Recycling Programto Make Cat Litter Boxes

We have used recycled materials collected in this initiative to make a limited

Domestic Group company Lion Pet Co., Ltd. is currently rolling out the

production run of the refill packs for TOP SUPER NANOX for Odors XXL, a highly

Love Cats Love Earth Sakura Project, through which it donates cat litterconcentrated laundry detergent launched in May 2023.

boxes and cat litter sets to support people fostering rescue cats. The catlitter boxes are made from 10% recycled plastic from toothbrush recycling.
Conceptual illustration

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Disclosure Based on the TCFD Recommendations
The Lion Group’s Initiatives to Address Climate Change

The Lion Group’s Response to the TCFD

Climate change has become a pressing social issue in recent years and presents serious risks
to corporate management as well as new opportunities that could be created for corporate
activities. Under the Vision2030 long-term strategic framework, the Lion Group has madereinforcing initiatives to address the Sustainability Material Issues one of its management
strategies and designated “creating healthy living habits” and “promoting environmental
initiatives for a sustainable planet” as top-priority material issues. Accordingly, we are working to
mitigate risk by reducing CO2 emissions and through other means while advancing a variety of

In May 2019, Lion endorsed the recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD), an organization established by the Financial Stability Board (FSB).
From October 2019 to January 2020, Lion took part in the Ministry of the Environment’s Projectto Analyze Scenarios of Climate Risks and Opportunities in Accordance with TCFD, evaluating
the financial impact on its operations of climate-related risks and opportunities. In 2022, Lion
expanded the scope of its analyses to encompass businesses, communities, product categories
and supply chains, developing them into full-scenario analyses. Our disclosures of climaterelated information resulting from these analyses are based on the TCFD framework.

initiatives to address the risks and opportunities presented by climate change, such as
promoting the formation of environmentally friendly habits together with consumers.

Initiatives and Policy to Address the TCFD Recommendations

Overview of Scenario Analyses
We conducted scenario analyses using scenarios in which the average global temperature
increases 1.5°C or 4°C from the pre-industrial average by 2100. These analyses, focused on
effects in 2030 and 2050, were carried out for the Consumer Products Business (for the oralcare, beauty care, fabric care, living care and pharmaceutical product fields) and the Overseas
Business (for businesses in China and Thailand).
•	Principal scenarios used for analysis of transition risks and opportunities:
	The International Energy Agency (IEA)’s Net Zero Emissions (NZA) scenario and Stated
Policies Scenario (STEPS)• Principal scenarios used for analysis of physical risks and opportunities:
The IPCC’s Representative Concentration Pathways (RCP) 1.9 and 8.5 scenarios
The analyses consisted of identifying climate-related risks and opportunities in each scenario,
considering their qualitative impacts on businesses and then quantitatively estimating these
impacts in financial terms in order to rate them as large, medium or small. As a result, theintroduction of a carbon tax and increased raw material costs were identified as risks that havea large impact on our businesses. The expansion of markets for sustainable products was
identified as an opportunity that has a large impact on our businesses. In addition, we are
studying the latest literature, including the Intergovernmental Panel on Climate Change (IPCC)’s
Sixth Assessment Report (AR6), to envision how conditions related to daily living will shift due toclimate change as a perspective for exploring new business opportunities.

Core Elements of the TCFD’s
Recommended Climate-related
Disclosures

Governance

Strategy

The organization’s
governance relating toclimate-related risks
and opportunities

The actual andpotential impacts ofclimate-related risks
and opportunities on
the organization’s
businesses, strategy
and financial planning

The Lion Group’s Initiatives• Climate-related risks and opportunities are reported to the
Sustainability Promotion Council (which meets twice a year) by its E
Subcommittee and also reported, as needed, to the Senior Executive
Committee, Executive Committee and Board of Directors.
• In addition, a working group has been established under the council
to swiftly identify business opportunities resulting from changes inexternal conditions brought about by climate change.
• Based on the TCFD recommendations, we conducted analyses of
two scenarios—an increase in the average global temperature of
1.5°C and an increase of 4°C—for the Consumer Products Businessand some countries of the Overseas Business, the operations ofwhich are likely to be impacted by climate change by 2030 and 2050.
• We worked to identify and evaluate short-, medium- and long-termclimate-related risks for the period from the present to 2050 andfactor them into our businesses, strategy and financial planning.

Risk
Management

The processes usedby the organization
to identify, assess
and manage climaterelated risks• The Lion Group has designated certain climate-related risks thathave the potential to significantly impact the Group’s businesses as“shared risks” to be managed Group-wide. The Corporate Planning
Department and E Subcommittee coordinate management of suchrisks, working together to identify, assess and manage these risks.

Metrics andTargets

The metrics andtargets used to assess
and manage relevant
climate-related risks
and opportunities• The CO2 emissions (Scope 1, 2 and 3) of Lion Corporation and its
domestic consolidated subsidiaries are currently disclosed on Lion’s
website. The LION Eco Challenge 2050 long-term environmental
objectives include realizing a decarbonized, resource-circulating
society as well as targets for 2030 based on the metrics of CO2
emissions, petrochemical-derived plastic usage and water usage.

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Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Disclosure Based on the TCFD Recommendations

Scenario Analysis Results

The Lion Group’s Main Climate-related Risks and Opportunities
Impact1
Risks and Opportunities

Introduction of a carbon tax(Scope 1, 2 and 3)

Increased
cost of raw
materials
Transition

Increased
cost ofcontainers
and otherpackagingmaterials

4˚C

1.5˚C

• Increased factory operating costs due to the full-scale
introduction of emissions trading and the applicationof carbon taxes by national governments

Small

Large2• Increased raw material procurement costs due tocarbon taxes on emissions, including Scope 3 emissions

already advancing efforts to replace such raw materials with plant-based materials and reinforcing• Increased costs due to the full-scale introduction ofemissions trading and the application of carbon taxes

Large

MediumPalm oil-derived• Increased costs due to tightening of palm oilregulations and increased use of certified oil

Small

MediumPlant-derived (fromcorn, mint, etc.)• Increased prices due to decreases in crop yields

Small

Small

Plastic-derived• Increased costs due to regulations on plastic use

Small

MediumAluminum-derived• Increased costs due to a shift from iron to aluminum
as a result of regulations on vehicle weight, etc.

Small

MediumForest resourcederived• Increased costs due to forest fires, forest protection
or logging regulations

Small

Small

• Expansion of demand for sustainable products,
including those that save water and power, due torising customer awareness of ethical consumption

Small

Large

• Increased operational and personnel costs due to
growing energy costs and burden on workers

Small

Small

Increased average temperature

4°C Scenario
Under this scenario, the increased cost of fossil fuel-derived raw materials is a major risk. Lion is

Fossil fuel-derived

Expansion of markets forsustainable products

PhysicalDescription

Lion has been advancing efforts to address the scenarios used in the most recent analyses forsome time but will continue to direct management efforts at further reinforcing resilience tochange going forward.

other efforts aimed at decarbonization. Furthermore, to address rising physical risks, such as thoseof floods and water stress, we are advancing efforts such as reinforcing business continuity planningand supply chain data coordination. In terms of opportunities, the markets in areas such as
products related to infection prevention and laundry are expected to grow, so we are working to• Increased sales of laundry-related products due
to higher temperatures and of hygiene-related
products, and of services due to increases in
infectious diseasedevelop related products and reinforce related services. Furthermore, we will continue to explore
growth opportunities in the fields of inclusive oral care and infection control—areas of strength for
Lion—to address the increase in the risk of the spread of infectious disease.

1.5°C Scenario
Under this scenario, the increased cost of plastic-, aluminum- and palm oil-derived raw materials
and packaging is a major risk. Lion is already advancing initiatives to reduce such risk, including
reducing use of petroleum-derived plastic and procuring RSPO-certified palm oil and palm kernel oil
derivatives. In terms of opportunities, we expect substantial expansion in demand for environmentallyfriendly products, presenting the potential for business expansion by increasing offerings of productsthat meet the Lion eco-standard. Furthermore, these initiatives will help to reduce CO2 emissions

MediumSmallduring the product use and disposal stages, which account for the majority of Lion’s Scope 3
emissions. In addition to these efforts, as under the 4°C scenario, we are exploring other ways of
securing opportunities for further growth. These include the development of technologies suited to

Changes in precipitation andweather patterns• Increased costs of dealing with impacts on theoperations of Lion or its suppliers due to increased
flooding and water stress. Potential for decreased
credibility in the event that stable supply cannot
be maintained.

MediumIncreased severity of extreme
weather events• Decreased revenue due to internal logistics delays
and supply chain interruptions resulting fromincreased severity of extreme weather events.
Potential for decreased credibility in the event thatstable supply cannot be maintained.

Small

the growth of sustainable fashion and other lifestyle changes as well as expanding the supply ofSmallelectro-conductive carbon, which will be necessary for the development of decarbonizedtransportation, including the spread of electric vehicles.

1. Risks are shown in red, opportunities are shown in blue
2. Impact if the LION Eco Challenge 2050 long-term environmental objectives are not met and CO2 emissions are notsignificantly reduced

Small

In addition, we will monitor social trends as we consider measures to address issues thatcurrently have only a small quantifiable financial impact but could present a large future risk to
Lion (such as procuring high-quality mint).
WEB

Disclosure based on TCFD recommendations
https://www.lion.co.jp/en/sustainability/env/tcfd

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Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Messages from External Directors
Expectations for the new corporate management in achieving the goals of Vision2030

A new style of leadership that shatters
Lion’s conservative image

Hedging against country risk while
flexibly responding to social andmarket changes

Kazunari Uchida

Takashi Shiraishi

External Director

External Director

For many years Lion has provided high-quality products and reliable services, and as a result
the Company has earned the trust of its customers and built very strong brands. I am impressedat how employees, not just management, continue to pour their efforts into meeting customers’
expectations and how they value the Lion brand.
On the other hand, a corporate culture like this tends to lead to a conservative, safe
management style, and leaves me feeling that the Group’s vitality is a bit wanting. As such, I
hope that the new corporate management, in particular the new president, Masayuki Takemori,can demonstrate a youthful style of leadership that shatters Lion’s conservative image. Moreover,following a somewhat stagnant period, I also look forward to drastic transformations in Lion’s
financial performance and its corporate culture.
Personally, I will take care to ensure that my check-and-balance functions as an external
director do not obstruct growth opportunities in Japan and abroad or cause delays in the
Company’s expansion into global markets, particularly markets in Asia. At the same time, I will
fully support the new corporate management as they work to grow and transform the Company.

As part of its long-term strategic framework Vision2030, Lion aims to become an advanced
daily healthcare company. By accelerating growth in four fields of value creation, the Company
is targeting approximately ¥600 billion in net sales, and an overseas sales ratio of 50% by 2030.
This equates to an increase in sales of more than ¥170 billion from the Overseas Businesscompared with the ¥129.3 billion, or 30.3% of consolidated net sales, that the businessachieved in 2022. Considering the potential for economic growth and market expansion inSoutheast Asia and China between now and 2030, I believe this target is achievable.
Economic growth rate forecasts for the countries and regions of Asia differ. While 5%–7%
growth is forecast for countries such as Indonesia, Vietnam, the Philippines and Bangladesh, forothers, the growth forecast is limited to 2%–3%. Generally speaking, however, the middle-classwill expand mainly in cities in places such as Southeast Asia and China, and interest in safe,
secure and environmentally friendly lifestyles also is expected to grow. As a result, I would
venture that demand for Lion’s high-quality products will also grow. People in these regions
already place great trust in Lion products, and so adding proposals for better living habits will
no doubt be widely accepted.

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Lion Integrated Report 2023

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Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Messages from External Directors

Expectations for the new corporate management in achieving the goals of Vision2030

Bold decision-making and the impetus
to make the required changes, as wellas the communication skills tochange behavior

Prioritizing speed to achieve theCompany’s ambitious goals for 2030

Takako Sugaya

Reiko Yasue

External Director

External Director

In working toward the successful achievement of Vision2030, I look forward to the newcorporate management showcasing (1) fearless creativity unfettered by the past; (2) bolddecisiveness; (3) strong impetus; and (4) effective communication. In 2023, management
features a significantly younger president on one hand and richly experienced internal directors
on the other. I believe that the new corporate management have sufficient expertise andwisdom to drive business forward with new ideas, bold decisiveness and strong impetus.
Lion’s purpose is “Make a difference in everyday lives by redesigning habits: ReDesign” andit aims to become an advanced daily healthcare company by 2030. To put its purpose into
practice and become such a company, in addition to bringing peace of mind to people’s daily
lives through the safety, security, and healthy habits that it is already known for, Lion must also
create new healthy habits and reinforce existing habits. It is also important for the Company tomake bold decisions and advance required changes to meet the needs of the times, be it
launching new businesses, expanding overseas or tackling sustainability issues. The mostimportant thing for ensuring that Lion can make a difference in everyday lives, however, iseffective communication that resonates with each generation to ensure thorough understandingof the Company’s initiatives and its good qualities so that people incorporate them into theirlives, leading to behavioral changes.
As one of Lion’s external directors, I will help to ensure thorough compliance, which isessential for proceeding steadfastly toward desired goals, while supporting the development of
the human resources who will be key for driving the Company forward. Moreover, I will examine
the rationality of decision-making at board meetings, maintaining my perspective as a consumer
and shareholder and helping Lion to make a difference in people’s everyday lives.

Lion has formulated its long-term strategic framework Vision2030 with the aim of becoming an
advanced daily healthcare company. The concept for Vision2030 1st STAGE is “gear change
toward future growth,” while 2nd STAGE and 3rd STAGE are positioned as periods to“accelerate transformation and growth.” Overall, the focus of Vision2030 is on speed, and now
is the time for the Company to make good on its promise. Lion has set some ambitious goals,
including ¥30 billion in sales from new business models, as well as a CAGR of 10% inestablished regions and ¥60 billion from expansion into new countries or regions in theOverseas Business. To achieve all of these goals, speed is vital. I look forward to seeing Mr.
Takemori fearlessly take on many new challenges as the first person in Lion’s history to rise to
the role of president so swiftly. Under the new corporate management, I hope to see meaningful
developments in the Overseas Business through its reinforced business structure, and thecreation of new business models that capture changes with fresh ideas and approaches, allwhile preserving Lion’s DNA—that is, a sincere approach to customers and excellent
technological capabilities.
Regarding activities for sustainability, although many people recognize the high level of Lion’scontributions to the establishment of good oral care habits, the Company is also actively
engaged in initiatives to create a resource-circulating society. However, customers’ and thegeneral public’s awareness of the Company’s efforts for sustainability is insufficient. This is why
I believe it will be important to more widely showcase both the Company’s and its employees’
activities for sustainability.
My role as an external director will be to prioritize the Company’s commitment to its
shareholders as I use my experience in company management to provide oversight for an
appropriate balance between business growth and governance while using the expertise andlatest information I have gained through both my experience and current roles in business tooffer necessary advice regarding the Company’s DX activities and international business.

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Our Strategy

Corporate Governance53

Performance/Data

Corporate Governance
Basic Approach

Initiatives to Enhance Management Auditing and Supervision

The Lion Group’s top priorities for corporate governance are to increase management

Formulated the Lion Group Charter for Corporate Behavior and Behavioral Guidelines
Established the Management Evaluation Committee (now the Advisory Committee)

transparency, strengthen supervisory functions, accelerate decision-making and ensurecompliance. By strengthening and enhancing its corporate governance system, Lion aims
to increase its corporate value.
WEB

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

Basic Approach to Corporate GovernanceAppointed independent officers and notified the Tokyo Stock Exchange of the appointments

https://www.lion.co.jp/en/company/governance/approach.php

Established the Basic Corporate Governance Policy
Established the Nomination Advisory Committee
Began evaluations of the Board of Directors

Corporate Governance System

Increased the number of external directors
from three to four
Increased the number of external Audit &Supervisory Board members from two to three

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

2003

2004

2006

2007

2010

2012

2016

2017

2021

• Has adopted an executive officer system
Increased the number of external directors
from two to three	To reinforce the Board of Directors’ management supervisory function and accelerate decision-making• Has established a voluntary advisory body

Separated roles of Chief Executive Officer and Chief Operating Officer	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

Board of Directors
Supervision of management

Response

Compensation Advisory
Committee

Consultation• D ecisions on execution ofimportant management matters• S upervision of directors’
executive performance• Supervision of executive officers

Reporting

Advisory Committee

Auditing

Opinions andadvice on legal
compliance

Reporting

Auditing

Delegation

AdviceInternal control offinancial reporting

Reporting
Proposals

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

Establishment of the Compensation Advisory Committee (2006)
Monitoring

Legality, fairness andReporting efficiency audits; complianceprogress audits

Auditing Office

Response

Audit & Supervisory
Board Members
Legality audits
Operational audits

Auditing

Accounting Auditors

Consultation

Built a system for internal controlof financial reporting

Measures to Enhance Business Execution and Supervisory Functions

Annual Meeting of Shareholders

Nomination Advisory
Committee

Implemented the
Executive Officer System

Lion has established a Compensation Advisory Committee comprising external directors and external Audit & Supervisory
Board members. Because of their independence, committee members enhance objectivity and transparency in mattersrelated to director compensation. The Board of Directors consults the Compensation Advisory Committee regarding suchmatters as the compensation system, compensation levels and methods for calculating director and Audit & Supervisory
Board member bonuses. The committee considers the matters in question and provides a response to 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 the necessary qualities of directors and otherofficers, reasons for their selection or dismissal, and related processes. The committee considers the matters in questionand provides a response to the Board of Directors (or, for matters regarding Audit & Supervisory Board members, to the
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)
Departments
Execution of operations
Business divisions, Production and Logistics Headquarters,
R&D Headquarters and operating divisions

Auditing

Strengthening of legal compliance and ethics

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

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 appropriatenessand other aspects of Lion’s management policies and measures and serves toreflect objective opinions from a wide range of perspectives in management.
In principle, the committee meets twice a year. The chairman of the Board of
Directors reports a summary of the committee’s advice to the Board of Directors.

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

Lion Integrated Report 2023

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Our Strategy

Corporate Governance54

Performance/Data

Corporate Governance

Skills, Expertise and Meeting Attendance of Directors and Audit & 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 andmanagement from the viewpoints of various stakeholders.

Audit & Supervisory Board Members

Directors

Principal Skills and Areas of Expertise
Name

Current Position

Masazumi Kikukawa

Reappointment

Representative Director,
Chairman of the Board of Directors

Masayuki Takemori

New appointment

Representative Director,
President and Executive Officer

Hitoshi Suzuki

Reappointment

Director, Vice President andExecutive Officer

Kenjiro Kobayashi

Reappointment

Director,
Senior Executive Officer

Yugo Kume

Reappointment

Director,
Senior Executive Officer

Fumitomo Noritake

Reappointment

Director,
Senior Executive Officer

Kengo Fukuda

Reappointment

Director,
Senior Executive Officer

Kazunari Uchida

Reappointment

Takashi Shiraishi

Reappointment

Takako Sugaya

Reappointment

External
Independent
External
Independent
External
Independent
External

Corporate
management

Globalbusiness

Finance/
Accounting

Legal/Risk Human resources/
Sustainability
management HR development

IT/DX

Sales/
Marketing

R&D/
Production

FY2022 Boardof Directors
Attendance—
18/18 meetings(100%)
18/18 meetings(100%)
18/18 meetings(100%)
18/18 meetings(100%)
14/14 meetings(100%)
17/18 meetings(94.4%)
18/18 meetings(100%)
18/18 meetings(100%)
18/18 meetings(100%)

External Director
External Director
External Director

Reappointment

Naoki Miidera

New appointment

Audit & Supervisory Board
Member—Yoshitada Ishii

New appointment

Audit & Supervisory Board
Member—Atsuko Suzuki

Continuing
in officeExternal

External Audit & Supervisory
Board Member

16/18 meetings(88.9%)

Masatoshi MatsuzakiNewappointment

External

External Audit & Supervisory
Board Member—

Akemi Sunaga

Newappointment

External

External Audit & Supervisory
Board Member—

Independent
Independent
Independent

Compensation
Advisory
Committee

18/18 meetings(100%)

Reiko Yasue

Independent

Nomination
Advisory
Committee

External Director

Notes: 1. For Mr. Fukuda, attendance shown is the number of times he attended following his appointment at the 161st Annual Meeting of Shareholders held on March 30, 2022.
2. Attendance for Messrs. Takemori, Miidera, Ishii and Matsuzaki and Ms. Sunaga is not shown as they were appointed at the 162nd Annual Meeting of Shareholders held on March 30, 2023.
3. The above table does not show all the skills and experience that directors and Audit & Supervisory Board members possess.

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

Audit & Supervisory Board
External

Nomination Advisory Committee
Internal

External

Internal

External

Compensation Advisory Committee
External

Director/Audit & Supervisory Board Member Candidate Selection Standards
1. Candidates 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 fields such 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 and accounting,corporate governance and risk management as well as the necessary qualities to contribute to fair and transparent decision-making in the Company.
5. Candidates for director must possess the qualities necessary to appropriately fulfill their duty of care as good managers and duty of loyalty. Candidates
for Audit & Supervisory Board member must possess the qualities necessary to appropriately carry out their duty of care as good managers.
6. Candidates must not be hindered from performing their duties by health-related or other factors not specified in the Companies Act as reasons fordisqualification as director or Audit & Supervisory Board member.

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Corporate Governance

Board of Directors
The Board of Directors is composed of 11 directors. The Board of Directors regularly meetsonce a month and holds extraordinary meetings, as necessary. In addition to matters stipulated
by laws and regulations or the Articles of Incorporation, the Board of Directors determines
important matters related to the business execution of the Company and supervises thebusiness execution of directors and executive officers. Resolutions of the Board of Directors
may be made at the regular Board of Directors meetings, as well as in writing in accordancewith laws and regulations. For important corporate strategies such as the basic policies of
medium- to long-term management plans, a system is established that enables 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, fromvarious 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 theboard’s operating methods and the content and status of the proposals it considers, among
other factors. This evaluation includes examinations of each director. A summary of the resultsof the evaluation is disclosed in the Corporate Governance Report.
Evaluation Process
Completion of selfassessment surveys
by all directors andAudit & Supervisory
Board members

Report and discussion
at Board of Directors
meetings of compiled
and analyzed
survey results

Identification of issues
based on evaluationof results

Promotion of
initiatives to address
issues

Items Covered by the Survey• Composition of the Board of Directors• Status of Proposals Being Deliberated by the Board of Directors• Status of Operations of the Board of Directors• Other

2022 Evaluation Results
2022 Evaluation Results Summary• The number of persons on Lion’s Board of Directors, including the number and proportion of external
directors, is sufficient for deliberations. Board members have the knowledge, experience, capabilities
and diversity necessary to enhance corporate value.
• The meeting frequency as well as the number of agenda items considered and amount of time allowed
for deliberation 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.

Issues Identified and Initiatives to Address Them
Issues Identified in 2021•D
 iscussions of management strategy should be enhanced to further increase corporate value.
•E xternal directors and Audit & Supervisory Board members should be provided with more extensive
information regarding the background and context of important agenda items.

Initiatives Taken in 2022•W
 e held four informal meetings for directors to exchange opinions on and discuss resolutions inadvance of Board of Directors meetings. As a result, the time necessary for deliberating on importantmatters related to the corporate philosophy and medium- to long-term strategies was secured.
•W e took steps to enhance the information provided and facilitate understanding regarding such mattersas the background, objective and content of agenda items. These steps included having officers fromthe divisions that propose such items participate, as needed, in pre-meeting briefings for external
directors and Audit & Supervisory Board members conducted by the secretariat of the Board of Directors.

Survey Evaluation of 2022 Initiatives•H olding informal meetings in advance of meetings of the Board of Directors to share information anddeepen discussion of agenda items enhanced deliberations at board meetings. However, importantmatters needing discussion in advance of board meetings remained. Therefore, further opportunities toshare information and exchange opinions are required, including informal meetings for directors.
•E fforts were made to secure the time necessary for deliberating on important matters at board
meetings, including holding pre-meeting briefings for external directors and Audit & Supervisory Board
members and appending summaries of items to be reported. However, further reduction in items to bereported and revision of meeting length are required to secure more time for deliberations.

To date, evaluations of the board’s effectiveness have uncovered certain issues. While Lion
has achieved a measure of success with initiatives aimed at addressing each of these issues, as
described above, the Company recognizes that there is still room for improvement, for example,
making execution more agile by revising items to be delegated to directors and executive
officers, in tandem with further enhancements to the Board of Directors’ supervision ordeliberation of important matters. Looking ahead, Lion will continue to implement necessary
measures and make efforts to further enhance the effectiveness of the Board of Directors.

55

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance56

Performance/Data

Corporate Governance

Audit & Supervisory Board

Succession Planning

The Audit & Supervisory Board comprises five Audit & Supervisory Board members. It holds

Lion is looking Group-wide, including outside Japan, to secure and develop senior management

regular meetings once every two months and extraordinary meetings and liaison meetings, asnecessary. In accordance with the Audit & Supervisory Board’s standards, audit policy, audit plansand 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 bodies (such as the Executive Committee, Nomination Advisory Committee,
Compensation Advisory Committee, Corporate Ethics Committee, Sustainability Promotion
Council, Safety, Hygiene and Disaster Prevention Meeting, Customer Satisfaction Committee,
Product Liability Committee and Advisory Committee), share information with directors andexecutive officers and audit the status of the execution of their duties (including the status of theexecution of duties pertaining to the development and operation of internal control of financial
reporting), read important approval documents, share information with and conduct onsite
audits of department heads at Lion’s head office and major offices and plants, as well as ofpresidents, directors, Audit & Supervisory Board members and other members of domestic andoverseas affiliates, and confirm the accounting auditor’s audit plans and implementation
progress and results reports, among other tasks. Furthermore, Audit & Supervisory Board
member conduct comprehensive themed audits of response to important management issues.
Themes in 2022 were the Corporate Governance Code, risk management, global compliance,
IT governance and sustainability.

who can drive the Group toward the achievement of its management vision. The Nomination
Advisory Committee identifies and discusses potential management successors based on
Lion’s Basic Corporate Governance Policy. The Board of Directors receives reports on
candidates from the Nomination Advisory Committee and provides ongoing supervision of all
related initiatives.

Main Auditing Activities in 2022
Details
Share information with directors andaudit the status of the execution of
their duties

Frequency(Times)10 (4 times withrepresentative
directors)

Exchange opinions with external directors

1

Share information with executive officers
and audit the status of the execution of
their duties

9

Share information with and conduct
onsite audits of department heads at
Lion’s head office and major offices
and plants

21

Share information with and conduct
onsite audits of presidents, directors,
Audit & Supervisory Board members andother members of affiliates

5

Total

46

External directors and Audit & Supervisory Board members
exchanging opinions at a meeting

Succession Planning Process
Formulation ofrequirements forpresident

Selection ofcandidates

Development

Assessment

Narrowing downof candidates

Board of Directors
Nomination Advisory Committee

Message from the Chairperson of the Nomination Advisory Committee

High expectations for the new president’s energy, leadership and ability
to overcome challenges
In selecting Masayuki Takemori as the new president and executive
officer, Nomination Advisory Committee members spent a significant
amount of time through the year and in every committee meeting frankly
and honestly discussing his business achievements, decisiveness,leadership, judgement and expertise on corporate governance. These
discussions allowed us to confirm that he possesses the skills andqualities suitable for the role. Lion is developing the next generation ofmanagement from a long-term perspective, and occasionally the
Nomination Advisory Committee sets up opportunities to speak withindividuals who are expected to take over management roles in the
future. Mr. Takemori was one of these individuals. Opportunities like thisenabled committee members to develop a better understanding of him.
Through this process we determined that his energy, leadership andability to overcome challenges were ideal qualities to execute Lion’s
long-term strategic framework Vision2030 and fulfill the Company’s visionof becoming an advanced daily healthcare company, and ultimately
reported to the Board of Directors that he was ideally suited to assume
the role of president.

Takashi Shiraishi
External Director,
Chairperson of Nomination
Advisory Committee

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Corporate GovernanceCorporate Officer Compensation
Overview and Details of Basic Policy Regarding Compensation for
Directors and Audit & Supervisory Board Members

Performance-Linked Compensation System

Overview of Basic Policy
Lion has designed a corporate officer compensation system to provide sound and appropriate
incentives necessary for retaining 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 isdecided 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.

Indicators

Core operating income
An earnings indicator used to measure regular business performance, calculated by subtracting selling,
general and administrative expenses from gross 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 anddecreases in shareholder value

Total payment
amountTotal number of points (number of shares) assigned
Total payment amount: Sum of (1) and (2) below
Total number of points for individual directors as(1) 5
 0% of 0.5% of core operating income for the
calculated in “Individual payment amount,” below
relevant year(2) 50% of 0.75% of profit for the period attributableto owners of the parent
Note: Rounded down to the nearest ¥10,000. If
the result of either calculation is negative, itsvalue is set at 0.

Type

Policy Details
Compensation for directors (excluding external directors) consists of fixed monthly compensationand performance-linked compensation (bonuses and stock-based compensation). It is made up
of approximately 50% fixed compensation 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 to rank and is revised asneeded. Fixed monthly compensation is raised or lowered once per year following an appraisalof the results of each director’s management supervision and execution of duties, and thedegree to which the director has contributed to addressing the Sustainability Material Issues.
Performance-linked compensation is calculated based on the degree to which performancetargets have been met in each year and is paid individually at a designated time after the end of
the relevant year.
Approximate Composition of Compensation of Executive Corporate Officers(Excluding External Directors and Audit & Supervisory Board Members)(1) C alculation of payment per point
IndividualTotal payment amount ÷ (Points assigned
payment amount(1) Calculation of number of points(Fixed base amount + Performance-linked baseamount × Performance-linked coefficient) ÷ Pershare acquisition cost
• Fixed base amount and performance-linked baseamount: ¥4 million each (multiplied by 1.0–3.625,
depending on rank)• Performance-linked coefficient: 0–2.0, dependingon 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 uponretirement in a number equivalent to the total
number of points they have been assigned

Upper limit¥250 million per year

¥200 million (per year)
Total number of shares: 120,000 (per year)

Malus andclawback clause

No

Yes*

according to rank × Number of officers)(2) Individual payment amountPayment 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* In the event of a serious violation of internal rules or professional duties, forfeiture of points already granted or return of theamount equivalent to the shares already received

Fixed monthly
compensation 50%
Performance-linked
compensation 50%

Fixed Monthly Compensation
Determining Policy

Bonus 30%

Performance-Linked
Stock-Based Compensation

Performance-Linked Bonus

Stock-based
compensation 20%
Fixed
portion

Performancelinked portion

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
the results of each director’s management
supervision and execution of duties, and thedegree to which the director has contributed toaddressing the Sustainability Material Issues.

Upper Limit¥300 million (per year)

57

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance58

Performance/Data

Corporate GovernanceCorporate Officer Compensation
Achievement of Performance-Linked Compensation Indicators (2022)

Total Consolidated Compensation by Corporate Officer (2022)

Achievement of targets for core operating income and profit for the period attributable toowners of the parent are as below.
TargetAchievement

Achievement rate

Core operating income

Indicator¥23,000 million¥23,559 million

102%

Profit for the period attributableto owners of the parent¥20,000 million¥21,939 million

110%

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 and responsibilities.

Total Compensation for Directors and Audit & Supervisory Board
Members (2022)
Number of
Corporate
Officers

Fixed
Compensation(Millions of yen)

Directors(External Directors)

12 (4)

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

Performance-Linked
Compensation

Total(Millions of yen)

Bonuses(Millions of yen)

Stock-Based
Compensation(Millions of yen)

287 (48)141 (–)109 (–)

538 (48)5 (3)

96 (36)

– (–)

– (–)

96 (36)

17 (7)

383 (84)

141 (–)109 (–)

634 (84)

1. There are no individuals serving concurrently as employees and corporate officers.
2. An 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. An 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. Within performance-linked compensation, bonus amounts are calculated and determined based on the core operating income and the profit
attributable to the owners 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 the 156th 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’sbusiness 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 year 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. The amounts shown are rounded down to the nearest million yen.

Name

Corporate
OfficerClassification

Total Amount by Type of Compensation(Millions of yen)
Basic
Compensation

Bonuses

PerformanceLinked
Stock-Based
Compensation

Retirement
Benefits

Total
Compensation(Millions of yen)Itsuo Hama

Director

61

39

31

—

131

Masazumi Kikukawa

Director

61

39

31

—

131

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

WEB

Compensation System for Corporate Officers
https://www.lion.co.jp/en/company/governance/compensation.php

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance59

Performance/Data

Compliancework by its employees. The trust the Group enjoys has been a key driver of its growth anddevelopment.
Ethics guide individuals along the correct path. We regard ethics as meaning, broadly, doing
what is right. In concrete terms, we see this as rooted in being honest, observing social mores,
not antagonizing others, and thinking of others as we think of ourselves. Based on thisunderstanding, we formulated the Lion Group 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 Lion Group is committed to being useful and valuable to society.
To enhance awareness of compliance among corporate 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 2022, approximately 91.5% of all
employees responded.
The Group also holds regular annual compliance training sessions using e-learning platforms.
As a compulsory curriculum, compliance content is available on the Lion Career Village (LCV)
on-demand media platform. Employees are encouraged to complete the curriculum in a set
period of time, and after that they can review the materials at any time.
There were 10 items in the 2022 curriculum. Among them were “compliance (includingharassment issues),” “initiatives for human rights,” “approach to quality” and “social mediarelated risks.”* Anonymous questionnaire survey covering such topics as compliance with the Lion Group Charter for Corporate Behavior,
whether there was feedback from the results of the previous Compliance Awareness Survey, and awareness of the AL
Heart Hotline.

WEB

WEB

WEB

Lion Group Charter for Corporate Behavior / Behavioral Guidelines
https://www.lion.co.jp/en/company/governance/policies/indicator.php

Internal and External Whistle-Blowing System: All Lion (AL) Heart Hotline
The Lion Group has set up an The AL Heart Hotline Systeminternal and external
Consulter/Reporter
Employees of the Lion Group,
whistleblowing system, thetemporary staff or external business partners
AL Heart Hotline, as a set ofConsultations
Consultations
Feedback
Feedback
contacts for consultations forand reports
and reports
use when an employee orReport details of
consultations/other stakeholder, including
reports
Internal contact
External contact
General manager
anyone working with the
responsible for
LawyerReportcorporate ethics
Group, a family member, ainvestigation
former Group employee or a
results andInstruction
Reportingcountermeasuresbusiness partner, learns of acompliance violation within the
Corporate Ethics
Board of Directors
Committee Chair
Report as
workplace that is impossible toneededreport or cannot be handledappropriately through normal
Corporate Ethics
Committee
workplace channels, or forwhich the appropriate reportingSet up as neededchannel cannot be identified.
Ethics Evaluation Committee
External experts
The system features tworeporting hotlines, one internal
and the other external, from which users can select depending on the nature of their findings.
Users are encouraged to fill out the supplied reporting form to report their findings in writing or
to report via email to ensure accurate understanding of the nature of the report or consultation.
Once the details of said report or consultation and the response desired by the reporter are
confirmed, the general manager responsible for corporate ethics promptly investigates andconfirms the relevant facts.
In 2022, the hotlines received 25 reports and consultations. However, none of the cases
were judged to constitute serious misconduct, and each is being appropriately addressed.
Seeking Solutions/Resolving Problems

The Lion Group’s strong reputation for trustworthiness has been built through decades of hardInternal Control System
https://www.lion.co.jp/en/company/governance/system.php

AL Heart Hotline Consultations and Reports

Compliance

Subject of consultations
and reports received

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

2020

2021

2022

Harassment

8

12

13

Personnel and labor
management issues

7

5

9

Other

58

2

3

Employee Awareness of the AL
Heart Hotline
2020

2021

2022

99.5%

99.0%

99.4%

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Risk Management
Lion’s business activities entail a wide range of risks. To avoid and minimize losses caused by the actualization of risks, 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) Management and employees strive to prevent the actualization of risks that could harmGroup business operations as part of their normal duties based on Lion’s Basic Internal
Control System Policy.
(2) In the event that a risk materializes, we strive to minimize losses and harm to employees,
shareholders, customers, local communities and other stakeholders.
(3) We report materialized risks to senior management immediately and promptly take steps tounderstand the situation, elucidate the events and factors that led to it, develop measures for
improvement and strive to prevent recurrences.

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 and other infectious diseases), the relevant facts are reported to thepresident 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 on these actions to the Executive Committee
and the Board of Directors.

Business Continuity Plan (BCP)
Rules and Other Structures Related to the Management of Risk
Response under Normal Conditions(1) The director responsible for the Corporate Planning Department has overall responsibility forthe risk management of the Group. The Corporate Planning Department comprehensively
manages the Group’s risk.
(2) The Auditing Office audits the status of risk management for each department within theGroup and reports its findings to the Executive Committee and the Board of Directors.
(3) Each department periodically identifies its own risks and implements appropriate risk
management measures (encompassing avoidance, transfer, reduction and acceptance). 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 then deliberated on by the Senior Executive Committee and Executive Committee
for implementation.
(4) For the management of risk related to the environment, quality assurance, and accidents anddisasters, the administrative offices for the deliberative bodies with responsibility for therespective areas (the Sustainability Promotion Council, CS/PL Committee,* Safety, Hygieneand Disaster Prevention Meeting, etc.) are designated as the departments with responsibility
for risk. These departments consider preventive countermeasures, with deliberation by the
Executive Committee when necessary, and implement risk management. Furthermore, theGroup Risk Officer (general manager for special missions in the Corporate Planning
Department) participates in the meetings of the deliberative bodies to confirm from an
objective, overarching perspective that they are advancing appropriate, timely measures.
* CS/PL Committee: A cross-departmental committee focused on customer satisfaction (CS) and product liability (PL) to
promote quality assurance activities

Lion works to build and maintain systems to minimize damage and to ensure the continuation ofbusiness operations so that it can provide products to customers even in 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) Secure the safety of employees and their families(2) Continue priority businesses and key operations to minimize business damage(3) Carry out corporate social responsibilities and contribute to local communities
Key Points of Plan
(1) Priority business: Consumer Products Business(2) Priority operations: Operations necessary for continuation of product supply(3) Target timeframes for restoring operations and organizational chains of command

Implementing Risk Management
The Lion Group has positioned the 13 risks outlined on page 61 as shared risks to be managed
on a priority basis 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 each department. The Corporate Planning Department
compiles the results and reports them to the Board of Directors and Executive Committee. The
status of each department’s risk management is further assessed by the Auditing Office via
business operations audits.
WEB

Risk Management
https://www.lion.co.jp/en/company/governance/risk-management.php

60

Lion Integrated Report 2023

Contents

Our Purpose

Our 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 andsupplying products to customers. We are focusing particular efforts on managing these risks.
Risk

Description

Main Initiatives(1)	Risks related to market andconsumer change

Risks of being unable to supply superior products and services useful for everyday living due todelays in responding to changes in markets, wholesalers, retailers or consumers

We analyze changes in markets and consumer lifestyles on an ongoing basis and develop products thatoffer new living habits.

Risks of problems with products, such as unforeseen product-related accidents, due tounforeseen product defects or mistaken use by customers

We ensure compliance with related laws and regulations and implement product development and otherprocesses in line with our Product 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 systemfor quality.

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

We ensure stable raw material procurement through the use of interchangeable materials, purchasing frommultiple sources and practicing global procurement, and furthermore implement responsible procurement
activities based on our Procurement Principles.

(4)	Overseas business risks

Risks of incurring costs associated with response measures or limitations on businessactivities arising from political and economic developments or changes in or the tighteningof 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 andregulations in the counties and regions where we do business, continually gathering information andpreparing for changes.

(5)	Human resource risks

Risks of stagnation in corporate growth due to difficulty in securing and developing
necessary human resources according to plans as a result of such factors as theshrinking labor force and changes in the employment environment

We practice year-round hiring and are expanding our ranks of specialized human resources while
implementing the LION Professional Fulfillment Reforms.

Risks of information leaks, system paralysis or other incidents due to such unforeseen
events as computer virus infections or improper system access

We have designated countermeasures to system problems in the Information Security Regulations, which
are updated as needed, and implement thorough information management, including that of trade secrets,
based on the Basic Policy on Information Management.

Risks of serious legal or regulatory violations due to the unforeseen establishment or
abolition of relevant laws or significant regulatory changes or tightening

We have established the Lion Group Charter for Corporate Behavior and Behavioral Guidelines, which
serve as a code of conduct, and for which we implement periodic education for all employees.

Risks of inappropriate comments or messages on social media or other platforms quickly
spreading and generating controversy or backlash

We have established the Lion Group Social Media Policy, implement education for all employees andstrive to quickly detect inappropriate information through the ongoing monitoring of social media and otherplatforms. We are also compiling a Social Media Risk Response Manual.

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

We carefully monitor the exchange rates of key currencies and strive to reduce risks presented by exchange
rate fluctuations through hedging and other means.

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.

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 “Manual on Countermeasures against Novel Influenza and Other Infectious Diseases” inaddition to creating a system to enable quick and appropriate action in the event of an outbreak.

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 eventof a disaster in order to fulfill our product supply responsibilities.

Risks related to responding to tightening regulations, rising raw material costs, othercost increases and reputational damage due to delays in responding arising from global
temperature increases caused by climate change

Working to realize a sustainable society, we have established LION Eco Challenge 2050, a set of longterm environmental objectives for 2050, and are ambitiously working to realize a decarbonized, resourcecirculating society.

(2)	Product quality risks(3)	Raw material procurementrisks(6)	Information managementrisks(7)	Compliance risks(8)	Reputation risks(9)	Exchange rate risks(10)	Major lawsuit risks(11)	Novel influenza and otherinfectious disease risks(12)	Major earthquake and othernatural disaster risks(13)	Climate change and otherenvironmental change risks

Note: More information on the 13 risks and Lion’s main initiatives to address them can be found in Lion’s Securities Report for 2022 (Japanese only).
WEB

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

61

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Leadership Team
Directors, Audit & Supervisory Board Members and Executive Officers (As of March 31, 2023)
Representative Director,
Chairman of the Board of Directors

Representative Director,
President and Executive Officer

Director,
Vice President and Executive Officer

Masazumi Kikukawa

Masayuki Takemori

Hitoshi Suzuki

Chief Executive Officer

Chief Operating Officer

April 1984
Joined Lion Corporation
March 2012
Director, Executive Officer
March 2016
Executive Director, Executive Officer
March 2017
Director, Managing Executive Officer
March 2018
Representative Director, Senior Managing Executive Officer
January 2019	Representative Director, President and Executive Officer,
Chief Operating Officer
March 2022	Representative Director, President and Executive Officer,
Chief Executive Officer
March 2023	Representative Director, Chairman of the Board of Directors,
Chief Executive Officer

April 1993	Joined Lion Corporation
January 2021	Executive Officer
January 2022	Senior Executive Officer
March 2023	Representative Director, President and Executive Officer,
Chief Operating Officer

April 1985	Joined Lion Corporation
January 2016	Executive Officer
March 2019	Senior Executive Officer
March 2021	Director, Executive Officer
March 2023	Director, Vice President and Executive Officer
Responsible for Overseas Strategic Planning Department, Northeast Asia
Business Division, Southeast and South Asia Business Division and Overall
Overseas Businesses

Director,
Senior Executive Officer

Director,
Senior Executive Officer

Director,
Senior Executive Officer

Director,
Senior Executive Officer

Kenjiro Kobayashi

Yugo Kume

Fumitomo Noritake

Kengo Fukuda

April 1987	Joined Lion Corporation
March 2012	Director, Executive Officer
March 2017	Director, Senior Executive Officer
Responsible for Human Resources Development Center, Corporate
Ethics, General Affairs Department, Management Support Department
and Sustainability Promotion Department

April 1984	Joined Lion Corporation
January 2016	Executive Officer
March 2018	Director, Executive Officer
January 2021	Director, Senior Executive Officer

April 1988	Joined Lion Corporation
January 2016	Executive Officer
March 2019	Director, Executive Officer
March 2023	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

Responsible for Supply Chain Management Planning Headquarters,
Manufacturing Innovation Headquarters, Purchasing Headquarters, Researchand Development Headquarters, Production and Logistics Headquarters,
Overall Chemicals Businesses, Digital Strategy Department, Intellectual Property
Department and Safety and Disaster Prevention Department

April 1987	Joined Lion Corporation
January 2017	Executive Officer
January 2022	Senior Executive Officer
March 2022	Director, Executive Officer
March 2023	Director, Senior Executive Officer
Responsible for Finance Department, Risk Management, Corporate Planning
Department, Consumer Service Center, Reliability Assurance Department andLegal Department

External Director

External Director

External Director

External Director

Kazunari Uchida

Takashi Shiraishi

Takako Sugaya

Reiko Yasue

January 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)
April 2022	Professor Emeritus, Waseda University (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 and Department ofHistory, College of Arts and Sciences, 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 and Innovation,
Cabinet Office
April 2011	President, National Graduate Institute for Policy Studies
January 2013	Member, Management Evaluation Committee(now the 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 Law
June 2018	External Director, Haruyama Holdings, Inc.
March 2019	External Director, Lion Corporation (current position)

April 1991	Joined Nagoya Research Institute, Panasonic Information
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)

62

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Leadership Team
Audit & Supervisory Board Member

Audit & Supervisory Board Member

Naoki Miidera

Yoshitada Ishii

April 1986	Joined Lion Corporation
April 2013	General Manager of the Corporate Planning Department forSpecial Mission
January 2017	General Manager of the Corporate Planning Department forSpecial Mission of Corporate Strategy Headquarters
January 2019	General Manager of Legal Department and General Managerof the Corporate Planning Department for Special Mission of
Corporate Strategy Headquarters
August 2019	General Manager of Legal Department
January 2023	Assistant to the President
March 2023	Audit & Supervisory Board Member

April 1986	Joined Lion Corporation
August 2020	Acting General Manager of Finance Department
August 2022	Finance Department
January 2023	Assistant to the President
March 2023	Audit & Supervisory Board Member

External Audit & Supervisory Board
MemberExternal Audit & Supervisory Board
MemberAtsuko Suzuki

Masatoshi Matsuzaki

April 1986	Joined Matsushita Electric Industrial Co., Ltd. (now Panasonic
Corporation)
April 2008	Director and Manager of the CSR Office, Matsushita ElectricIndustrial 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 Division of
Asahi Group Holdings, Ltd.
March 2021	External Audit & Supervisory Board Member, Lion Corporation(current position)

External Audit & Supervisory Board
MemberAkemi Sunaga

April 1976	Joined Konishiroku Photo Industry Co., Ltd. (now KONICAMINOLTA, INC.)
October 2003	Director, Konica Minolta Business Technologies Co., Ltd.
April 2005	Executive Officer, Konica Minolta Holdings, Inc. (now KONICAMINOLTA, INC.)
	Representative Director and President, Konica Minolta
Business Technology Center Co., Ltd.
April 2006	Executive Vice President and Executive Officer, Konica
Minolta Holdings, Inc. (now KONICA MINOLTA, INC.)
June 2006	Director, Executive Vice President and Executive Officer
April 2009	Director, President, Representative Executive Officer
April 2014	Director, Chairman of the Board, KONICA MINOLTA, INC.
June 2016	Outside Director, Nomura Research Institute, Ltd.
Outside Director, Nippon Sheet Glass Co., Ltd.
January 2019	Member, Advisory Committee, Lion Corporation
June 2022	Special Adviser, KONICA MINOLTA, INC. (current position)
March 2023	External Audit & Supervisory Board Member, Lion Corporation(current position)

Senior Executive Officer

Executive Officer

Masaharu Mikuni

Tomomichi Okano

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

Responsible for Corporate Environmental Strategy

Executive Officer

Executive Officer

Jiro Nagasawa

Yasutsugu Shimizu

Executive General Manager of Gift and ChannelSpecific Products Division

Executive General Manager of Production andLogistics Headquarters

Executive Officer

Executive Officer

Yoko Koike

Annette Ling

General Manager of Human Resources
Development Center

General Manager of Overseas Strategic Planning
Department

Executive Officer

Executive Officer

Kei Minamikawa

Akihiko Takeo

Executive General Manager of Supply Chain
Management Planning Headquarters

General Manager of Finance Department

Executive Officer

Executive Officer

Katsuhiko Chikyu

Ayako Suzuki

Executive General Manager of Purchasing
Headquarters

Executive General Manager of Research andDevelopment Headquarters

Executive Officer

Yasuhiro Urao
October 1989	Joined Aoyama Audit Corporation (nowPricewaterhouseCoopers Aarata LLC)
February 1991	Joined Chuo Audit Corporation
August 1993	Acquired Japanese CPA certification
October 1994	Acquired Japanese tax accountant certification
November 1994	Established Sunaga CPA Firm (current position)
November 1996	Established and became representative director of
Marunouchi Business Consulting Ltd. (current position)
January 2012	Established and became representative of Marunouchi
Business Consulting Tax Co. (current position)
June 2016	External Audit & Supervisory Board Member of
Matsumotokiyoshi Holdings Co., Ltd.
June 2017	Senior Partner/CEO of Marunouchi Audit Corporation
March 2019	Alternate Audit & Supervisory Board Member ofLion Corporation
January 2022	Senior Partner of Marunouchi Audit Corporation(current position)
March 2023	External Audit & Supervisory Board Member, Lion Corporation(current position)

Executive General Manager of Health and Home
Care Products Division

WEB

Leadership Teamhttps://www.lion.co.jp/en/company/officer/

Note: Notification of the appointment of Mr. Uchida, Mr. Shiraishi, Ms. Sugaya and Ms. Yasue as independent directors, and Ms. Suzuki, Mr. Matsuzaki and Ms. Sunaga as independent Audit & Supervisory Board members has been sent to the Tokyo Stock Exchange.

63

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Consolidated net sales ¥389.8 billion

Results by Business Segment

Consumer Products Business (Japan)
The Consumer Products Business segment comprises
the Oral Care Products, Beauty Care Products, FabricCare Products, Living Care Products, Pharmaceutical
Products and Other Products businesses. Segment net
sales increased 3.0% compared with the previous fiscal
year. Segment profit decreased 39.6%, partly as aresult of the substantial impact of increases in raw
material prices.

Percentage of Consolidated
External Sales

Corporate GovernanceConsolidated core operating income ¥Net Sales by Product Category in 2022

(Billions of yen)

Other Products

250
200

215.3 219.3

229.7

229.5

230.5

The Overseas Business segment comprises business
operations located in Southeast Asia, including Thailand
and Malaysia, and Northeast Asia, including South
Korea and China. Segment net sales increased 18.4%
year on year (a 7.1% increase at constant currency
excluding exchange rate fluctuations). Segment profit
decreased 14.8%, partly as a result of the substantial
impact of increases in raw material prices.

0

Beauty Care
Products
17.8

19.6
2019

24.6
2020

19.0
2021

The Industrial Products Business segment includes the
Mobility, Electronics and Detergents for Institutional Use
fields. These businesses handle products that includeanti-sticking agents for tires, electro-conductive carbon
for secondary batteries, and detergents for institutional
and kitchen use, respectively. Segment net sales
increased 15.2% compared with the previous fiscal
year. Segment profit increased 15.3%.

11.4%

11.4
2022

2023
(Forecast)Fabric Care Products

10.3%

26.1%

Net Sales in Southeast and Northeast Asia

(Billions of yen)(Billions of yen)

140

118.0

120
100

94.7

80

91.7

91.2

126.0

Southeast Asia
Northeast Asia

80

81.2

70

98.7

60

60

69.5

66.4

68.7
48.0

50

40

40.4

40

20

6.8

7.5

7.1

6.0

5.1

2018

2019

2020

2021

2022

0

Percentage of Consolidated
External Sales

Living Care Products

Net Sales (Excluding Internal Sales) andCore Operating Income

Net Sales (Excluding Internal Sales)
Core operating income

Industrial Products Business

28.1%

Pharmaceutical
Products

10.9%

2018

30.3%

Oral Care Products

13.2%

100
50

Percentage of Consolidated
External Sales

244.0

150

Net Sales (Excluding Internal Sales)
Core operating income

Overseas Business23.5 billion

Net Sales (Excluding Internal Sales) andCore Operating Income
300

59.1%

64

Performance/Data02023(Forecast)

31.5
2019

35.1
2020

2021

2022

Net Sales (Excluding Internal Sales) andCore Operating Income(Billions of yen)
40

34.0
30

9.7%

32.9

31.5

34.7

37.8

38.0

20
10
0

2.3

1.7

2.1

2.6

3.1

2018

2019

2020

2021

2022

Net Sales (Excluding Internal Sales)
Core operating income

2023(Forecast)

Note: In Other Business, our subsidiaries are mainly engaged in operations related to Group businesses, with sales comprising 0.9% of consolidated net sales. The main products and services of this business include construction contracting, real estate management
and temporary staffing.

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Results by Business Segment

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

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

Oral Health

Propose high-added-value products and build a new business model in the field of oral health
As Japan’s leading manufacturer of oral care products in terms of market share, we are driving market growth by offering
brands for various life stages and oral conditions. In addition, in 2022 we launched a preventive dentistry habits solution
business in collaboration with the industrial, academic, public, and medical sectors and are nurturing it into a growth driver
to further expand the oral care business.

Market Position
Toothpastes

Toothbrushes

Dental rinses

Hand soaps

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

Body soaps

Laundry
detergents

Fabricsofteners

Dishwashingdetergents

No. 4 shareNo. 3 shareNo. 3 shareNo. 3 share

Bathdetergents

Antipyretic
analgesics

Eye drops

No. 2 shareNo. 2 shareNo. 3 share

Note: Market position (market share) in 2022 according to Lion Corporation survey

Market Environment (Risks and Opportunities)
Although life is gradually returning to pre-COVID conditions, in Japan’s consumer products
market, awareness of health and hygiene is continuing to rise, as is awareness of social issues
such as environmental friendliness. Meanwhile, changes in lifestyles are driving changes in
consumer purchasing behavior. While use of e-commerce platforms is increasing, consumers are
shopping less frequently, which is leading to the purchase of larger-size products. As populations
and the number of households fall, simply planning and developing excellent products is notenough. While proposing products and services that lead to better habits among our consumers,
we must also create new business models in order to achieve business growth.

Beauty Care Products

Infection Control

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.
As life returns to normal following the COVID-19 pandemic, we will continue to proactively promote hygiene-related habitsthat go beyond hand washing while working to achieve business growth by proposing an even higher level of hygienerelated habits.

Fabric Care Products

Smart Housework

Create new markets by proposing even better laundry habits (positive habits)
We will propose more enjoyable, positive daily laundry habits initially through our new fabric softener SOFLAN Airis. By
continuing to launch products that propose even better habits and offer new value, we will work to make them the defacto standard and create new markets.

Living Care Products

Smart Housework

Pursue more efficient, labor-saving housework and greater value in cleanliness and hygiene, and propose
new housework habits for the next generation
Through the promotion of CHARMY, LOOK, and REED—brands that offer simple, convenient and clean solutions fortroublesome housework routines, from dishwashing and bathroom/toilet cleaning to cooking—we will create newhousework habits that address changes in various lifestyles.

Pharmaceutical Products
Propose self-care habits to solve health issues and promote physical and mental health
We will offer self-care solutions centered on the BUFFERIN and Smile brands to enable consumers to deal proactively with
their own specific ailments and discomforts. We will also contribute to market expansion by focusing on the developmentof Stoppa and Sucrate, unique antidiarrheal and gastrointestinal medications, respectively.

65

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Segment Overview

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

Summary of 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: Reinforce strategies for each region through our glocalization strategy• We will promote a cross-regional management system by transitioning from our conventionalcountry-centered approach to a business-centered approach.
• We will define market types across borders based on consumer features and trends, maximizing
synergy and streamlining management based on an optimal approach for each market.

Market Position

Expand Qingdao Lion business

Southern Lion
Sdn. Bhd.

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

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• Hand soaps
No. 1 share•T oothpastes andtoothbrushes• Laundry detergents• Dishwashing detergents• Laundry
detergents• Hand soaps
No. 1 shareNo. 1 share• Laundry
detergents• Dishwashingdetergents• Regular
toothbrushes
via e-commercechannels• We will extend sales inland to regional centers from our previous focus on coastal cities ande-commerce.
• While maintaining our priority focus on oral care, we aim to expand into closely related fields, such asoral care for pets, a category we entered in 2021, and products for dental clinics.

Priority Measures

Lion Corporation(Thailand) Ltd.

We will move away from a home care-centered business structure—selling laundry and dishwashingdetergents, for example—to a more robust business structure by reinforcing the personal care category
centered on oral care products, which is a strength of the Lion Group.

Expand into new countries and regions
We aim to expand operations into two or more new countries or regions during Vision2030 1st STAGE.
To reinforce the M&A process, we have created an organization under the direct control of the president
and are taking steps such as hiring mid-career experts from outside the Company. We entered
Bangladesh and Vietnam in 2022 and 2023, respectively, and will continue exploring further countries
and regions for possible expansion of our operations.

Note: Market position (market share) in 2022 according to Lion Corporation survey

Market Environment (Risks and Opportunities)

Educational activities to promote better living habits
Oral care and cleanliness and hygiene habits

Educational activities

In the markets of Asia in 2022, COVID-19-related restrictions on activities were graduallyloosened, and there were signs of economic recovery in each country and region. On the other
hand, the Lion Group’s businesses were significantly impacted by soaring raw material prices.
We expect the risks of fluctuating raw material prices, geopolitical issues and fluctuatingexchange rates to continue in our business operations.
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 andthe increase in middle-income households, as well as needs for healthcare products that help
establish cleanliness and hygiene habits, there are opportunities for business growth throughproduct proposals that are optimized to address the specific trends and features of eachcountry and region.

Reinforce the personal care category mainly in Southeast Asia

The 2030 target for our top-priority Sustainability
Material Issue of creating healthy living habits is a totalof 1 billion people provided with products, services
and information aimed at creating healthy living habits(500 million people for oral care habits and 500 million
for cleanliness and hygiene habits). To establish pointsof contact with a total of 1 billion people, our Overseas
Business will play a major role in conducting rolloutsof our products in Asian countries and regions as wellas educational and awareness activities.

An event in Asia to raise public awareness of oral care,cleanliness and hygiene habits

66

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

Segment Overview

Industrial Products Business
Detergents for Institutional Use Products Business

Chemical Products Business

Providing Unique Cleanliness and Hygiene Solutions to Corporate Customers
and Contributing to the Resolution of Social Challenges

Becoming a Global Niche Company That Provides New Value forIndustrial Customers’ Next-Generation Products

Market Environment (Risks and Opportunities)

Market Environment (Risks and Opportunities)

Although we expect economic activity to return to normal as COVID-19-related restrictions areloosened, price hikes caused by soaring raw material prices are causing uncertainty in markets
and in market trends. However, we believe we can achieve continuous growth by creating
healthy and hygienic environments for our customers. To accomplish this, we will examine theissues facing different business types and customers and leverage our solutions technologies toprovide value through distinctive products and services.

In the Chemical Products Business, continuous growth is expected in the electric vehicle (EV)market as we move toward a decarbonized society due to changing consumer lifestyles andawareness; 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 of risksof fluctuating material prices, stability issues in product and raw material supply and delays in
distribution, we need to build a stable business foundation.

Summary of Detergents for Institutional Use Products Business Strategy
in Vision2030 1st STAGE

Summary of Chemical Products Business Strategy in Vision2030 1st STAGE

Using our ability to offer hygiene-related solutions that combine the washing technologies of theLion Group and the specialized hygiene management expertise of Lion Hygiene Co., Ltd., we
aim to drive growth by focusing on promising growth businesses—the vegetable-washingbusiness, 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.
Commercial Vegetable and Food Business

Because of their high potential for future growth and as areas in which we have a thoroughunderstanding of customer needs, we have positioned CASE (connected, autonomous, shared,and electric) technologies and sanitary products as our key categories and will focus ourmanagement resources there. Furthermore, 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 to enhance the value of the Lion Group’s business.
CASE (Markets centered on connected, autonomous, shared and electric technologies)

We aim to further evolve and expand the range of applications for the ozone sterilization technologies of our Yasai Kirei MiBO
and Yasai Kirei SaO vegetable-washing and sterilization systems, which are used by convenience store vendors andvegetable processing plants. We aim to provide a comprehensive range of solutions matched with our various detergents forfood processing plants.

Restaurant and Hygiene BusinessIn addition to detergents, we will work to expand our customer base by proposing the use of our Hayaraku HACCP hygiene
diagnosis system in health and hygiene management for all types of restaurants in line with current social needs.

Nursing Care Facility Business
For nursing care and daycare facilities, where demand continues to increase, we will step up our user-oriented initiatives
based on comprehensive proposals in facility hygiene, infection countermeasures and laundry.

Focus: T he Advantages and Environmental Friendliness of Our Yasai Kirei
Vegetable-washing and Sterilization Systems
Our Yasai Kirei MiBO and new Yasai Kirei SaO vegetable-washing and sterilization systems
use microbubble ozone technology. They leave no sterilization agent residue and maintainthe natural flavor and appearance of the vegetables. Moreover, they contribute to the
reduction of food loss by enhancing the freshness of the vegetables.

WEB

Lion Hygiene Co., Ltd.
https://www.lionhygiene.co.jp/ (Japanese only)• In the growing secondary battery market, which has been driven by rising demand for electric vehicles (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 tocapture top global market share for both.

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

Focus: A dvantages of KETJENBLACK (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 throughour customers.

WEB

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

67Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance68

Performance/Data

Financial and Non-Financial Highlights
Financial Highlights

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

Net Sales and Sales Growth Rate

¥389.8 billion
Up 6.5% year on year
400
300

(%)

200

6.5
349.4

347.5

355.3

366.2
389.8

2.0
-0.5

100

2.3

8
6

3.1

(Billions of yen)

40
20

0

2020

2021

2022

8.6

37.0
30.0
28.3

40.5
35.9

47.6

8.4

6.0
30.9 45.1
23.5

39.9

2019

2020

2021

2030 target: 55% reduction

8
4

2022

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, calculated by subtracting
selling, general and administrative expenses from gross profit.
2. E
 BITDA is an indicator of profitability on a cash-flow basis. It is thesum of core operating profit and depreciation and amortization(excluding right-of-use assets).

Cash Dividends per Share andConsolidated Payout Ratio

ROIC* and ROE
ROIC 6.0%
ROE 8.5%

Down 2.8 percentage points
year on year

15
12
9

13.9
13.1

6

13.6
10.7

9.8

10.3

10.7

2019

2020

ROIC

8.5
6.0

2021

20
10

8.8

0
2018

29.7

30

2022

ROE

* ROIC is an indicator of the profitability and efficiency of invested
capital. It is calculated as net operating profit after tax (NOPAT)
divided by average invested capital (total equity plus interest-bearing
liabilities) during the period.

29.4

Lion implemented energy-saving activities and purchasesof electricity from renewable energy sources throughout
the Company, including production, administration,
sales and R&D divisions, in order to realize a decarbonizedsociety, as set forth in the LION Eco Challenge 2050,
a set of long-term environmental objectives.

Human Resources: Ratio of

Women in Management

32.4

22.4

22.7
20

21

2018

2019

23

24

25

in 2022(%)

Cash dividends per share (left scale)
Consolidated payout ratio (right scale)

2021

2022

SDGs:

Human Resources: Percentage of Employees
Who Feel That Employees with Diverse
Values Are Able to Succeed Professionally

20

2030
Sustainability
Material Issues

54%

in 2022
Result of the Employee Awareness andBehavior Survey (Japan)
SDGs:

30

0
2020

2030
Sustainability
Material Issues

20%

10

0

SDGs:
With the aim of creating healthy living habits, Lion has
held this event to teach elementary school students
correct tooth brushing habits 79 times.

SDGs:

Seventh consecutive fiscal year of
dividend growth
(Yen)

(%)

* Compared with 2017 levels; absolute quantity; allwork sites; Figure after deducting purchases ofcarbon credits. 4% reduction if not deducted.

¥25

Down 1.3 percentage points
year on year

the Oral Health Event of Tooth
Brushing for Children

2030
Top-Priority
Sustainability
Material Issues(Cumulative, from 1932 through 2022)

0
2018

Health: Number of Participants in

Approx. 2.46 million

in 2022

12

10.1

0

-2
2019

8.1

2030
Top-Priority
Sustainability
Material Issues

13% reduction*
(%)

60

4
2

0

2018

CO2 Emissions throughout
Business Activities¥23.5 billion
Down 23.8% year on year

(Billions of yen)
500

Environment: Reduction ofWith the aim of expanding creative business activities
by utilizing diverse human resources, we are actively
working to create a corporate culture where womencan participate fully and advance professionally.
Our Group target for the ratio of women in
management is 30% or more by 2030.

Lion aims to enable employees with diverse values andideas to fully express their individuality and abilities andsucceed professionally.
Our Group target for the ratio of employees who feelthat employees with diverse values are able to succeed
professionally is 80% or more by 2030.

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance69

Performance/Data

Key Financial Data
V-1 Plan
2012–2014

V-2 Plan
2015–2017

Japanese GAAPLIVE Plan
2018–2020(Millions of yen)

2013

2014

2015

2016

Vision2030 1st STAGE
2022–2024

IFRS

2017

(Millions of yen)

2018

2019

2020

2021

2022

Consolidated Statement of Income
Net sales

352,005367,396378,659

395,606

410,484

Consolidated Statement of Income
Net sales

349,403347,519355,352

366,234

389,869

Cost of sales

153,336

160,677

162,435

161,992

171,209

Cost of sales

177,673

175,588

175,479

187,129

215,263

Gross profit

198,668

206,718

216,223

233,613239,275

Gross profit

171,729

171,931

179,872

179,104

174,605

56.4

56.3

57.1

59.1

58.3

49.1

49.5

50.6

48.9

44.8

187,849

194,312

199,848

209,110

212,068

Selling, general and administrative expenses

143,353

141,882

143,934

148,181

151,046

Selling, general and administrative expenses to net sales (%)

Gross profit to net sales (%)
Selling, general and administrative expenses
Selling, general and administrative expenses to net sales (%)
Operating income
Operating income to net sales (%)

53.4

52.9

52.8

52.9

51.7

10,81912,406

16,37424,502

27,206

3.1

3.4

4.3

6.2

6.6

Gross profit to net sales (%)

Core operating income2
Core operating income to net sales (%)
Operating profit

Profit attributable to owners of parent

6,097

7,368

10,68015,951

19,827

Operating profit to net sales (%)
Profit before tax
Profit before tax to net sales (%)

Consolidated Balance Sheets

41.0

40.8

40.5

40.5

38.7

28,37530,04835,93730,92323,559

8.1

8.6

10.1

8.4

6.0

34,196

29,83244,074

31,17828,843

9.8

8.6

12.4

8.5

7.4

35,65831,40244,49434,08931,292

10.2

9.0

12.5

9.3

8.0

Profit for the period attributable to owners of the parent

25,606

20,55929,87023,75921,939Total assets

282,098

283,352

282,434

298,510331,751

Consolidated Statement of Financial Position
Total assets

355,365

380,701

435,501

428,025

469,278

Property, plant and equipment, net

68,98979,27575,06074,40280,981

Property, plant and equipment, net

81,54690,903

118,379

120,673

130,137

Total noncurrent liabilities

26,20840,38018,455

17,19017,511

Total non-current liabilities

21,35023,781

24,016

23,792

48,536

Total liabilities

157,865

155,918

139,703

140,630

144,736

Total liabilities

151,093

159,499

190,644

163,011

190,110

Total net assets

124,232

127,434

142,730

157,879

187,015

Total equity

204,271

221,201

244,856

265,014279,168

Capital expenditures1

13,70913,555

8,801

9,407

14,892

Capital expenditures1

16,67823,64447,57021,89024,314R&D expenses

9,618

9,439

9,808

10,084

10,474R&D expenses

10,96910,944

10,906

11,18011,077

Depreciation and amortization1

11,227

10,301

11,166

10,244

9,386

Depreciation and amortization1

8,707

10,504

11,732

14,252

17,665

Number of employees

6,162

6,343

6,816

6,895

7,075

Number of employees

6,941

7,151

7,452

7,584

7,587

Earnings per share – basic

22.72

27.47

39.35

55.13

68.23

Basic earnings per share

88.11

70.72

102.75

81.73

77.04

Earnings per share – diluted

22.68

26.16

36.84

55.04

68.15

Diluted earnings per share

87.99

70.63

102.61

81.59

76.91

Dividends per share

10.00

10.00

10.00

13.00

17.00

Cash dividends paid per share

20.00

21.00

23.00

24.00

25.00

Net assets per share

441.59449.94469.05513.76607.61Equity attributable to owners of the parent to total assets per share

657.50716.94797.08865.31

929.72Other selected data

Other selected data

Per share data (yen)Per share data (yen)Number of shares outstanding (common stock) 299,115,346 299,115,346 299,115,346 299,115,346 299,115,346

Number of outstanding shares (common stock) 299,115,346 299,115,346 299,115,346 299,115,346 292,536,446

Management indicators

Management indicators

Return on equity (ROE) (%)

5.4

6.2

8.5

11.2

12.2

EBITDA3 (billions of yen)

—

—

47.66

45.17

ROIC4 (%)

—

—

10.7

8.8

6.0

13.9

10.3

13.6

9.8

8.5

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

1. Includes intangible assets.
2. C ore operating income is an earnings indicator used to measure regular business performance, calculated by subtracting selling, general and administrative expenses from gross profit.
3. E
 BITDA is an indicator of profitability on a cash basis. It is the sum of core operating profit and depreciation and amortization (excluding right-of-use assets). The calculation method for this indicator changed in 2022.
4. ROIC is an indicator of the profitability and efficiency of invested capital. It is calculated as net operating profit after tax (NOPAT) divided by average invested capital (total equity plus interest-bearing liabilities) during the period.

WEB

39.94

Financial Highlights
https://www.lion.co.jp/en/ir/finance/

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance70

Performance/Data

Key Non-Financial Data
Environment
TargetCommunity
Item

Greenhouse gas emissions
throughout the supply chain

Realizing a
DecarbonizedNon-renewable energy consumption
Society*
Renewable energy consumption

Classification

Unit

2020

2021

2022

Scope 11,000 t-CO2

73

85

76

Scope 2

1,000 t-CO2

90

74

89

Scope 31,000 t-CO2

4,680

4,770

4,870

GWh

538

546

549

GWh

0.05

42

2

Carbon credits purchased*
Realizing a
ResourceCirculatingSociety

1,000 t-CO2

00

0

16

Plastic usage (household products)

1,000 t

42

43

36

Water usage throughout productlifecycles

Million m

2,273

2,291

2,303

3

* Lion Corporation (Thailand) has purchased solar power-derived T-VER carbon credits. T-VER is a carbon credit system run by a public
institution in Thailand.

Since its founding, Lion has sought to help consumers enjoy healthy living through the provisionof products while carrying out educational and awareness activities and communication aimed
at creating better living habits.
Item

Unit

2020

2021

2022

Oral care educational and awarenessactivities: Oral Health Event of Tooth
Brushing for Children1

No. ofparticipants

Japan and Asia
Approx. 269,000

Japan and Asia
Approx. 252,000Japan and Asia
Approx. 253,000

Hand washing habit educational andawareness activities: Education incorrect hand washing methods2

No. ofparticipants

Approx.
200

Approx.
1,300

Approx.
2,360

1. An event for elementary school students held since 1932 during Dental and Oral Health Week (June 4–10)
2. Fun educational events on hand washing techniques for nursery school students, school students and schoolteachers alike

Employees
Item
Employees

Scope
Lion Corporation (including employees on loan)

Unit

2020

2021

2022

Male (No.)

2,355

2,347

2,317

Female (No.)

1,205

1,238

1,270

Male (No.)

54

46

35

Female (No.)

33

38

30

New employees (New graduates)

Lion Corporation (including employees on loan)

Women in management

Lion Corporation (including employees on loan)

%

9.1

10.3

11.1

Re-hired retirees

Lion Corporation (including employees on loan)

(No.)

243

293

343

Employees with disabilities

Lion Corporation (including employees on loan)

Average service years (excluding re-hired retirees)

Lion Corporation (including employees on loan)

%

2.7

2.7

2.8

Male (Years)

19.7

19.5

19.6

Female (Years)

14

14.1

14.2

Male (No.)

32

54

55

Employees who took childcare leave

Lion Corporation (including employees on loan)

Female (No.)

78

84

77

Annual paid leave used

Lion Corporation (excluding employees on loan)

%

68

65.9

69.2

Employee Awareness and Behavior Survey: Ratio of employees
who take pride in their work

Lion Corporation (excluding employees on loan)

%

97.3

80.5

77.1

Average hours per FTE of training and development

Lion Group

Hours

12.1

31

34.9

Average amount spent per FTE on training and development

Lion GroupYen

29,30036,70051,400WEB

ESG Data and Third-Party Verification
https://www.lion.co.jp/en/sustainability/management/data/

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance

Performance/Data

External Evaluations and Participation in External Organizations (As of March 31, 2023)
In addition to financial considerations, the Lion Group works to address environmental, social and governance issues. We have been selected for inclusion in leading socially responsible investing (SRI) indices.
Our environmental, logistics and human resources initiatives have been highly evaluated by governmental and other external institutions.

Inclusion in SRI Indices

Evaluations, Certifications and Awards
Evaluations, Certifications and Awards Related to Overall CSR

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 OR PROMOTION OF LIONCORPORATION 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 OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

Evaluations and Certifications Related to Human Resources

Evaluations and Certifications Related to the Supply Chain

Participation in External Organizations

RSPO
Evaluations and Certifications Related to the Environment

WEB

Initiatives and External Evaluations
https://www.lion.co.jp/en/sustainability/management/investor/

71

Lion Integrated Report 2023

Contents

Our Purpose

Our Strategy

Corporate Governance72

Performance/Data

Corporate Overview and Stock Information (As of December 31, 2022)

Corporate Overview

Stock Information

Corporate Name

Lion Corporation

Stock Listing

Prime Market2 of Tokyo Stock Exchange

Foundation

October 30, 1891

Securities Code

4912

Establishment

September 1918

Transfer Agent

Mitsubishi UFJ Trust and Banking Corporation

Capital¥34,433,720,000

Address1

1-3-28 Kuramae, Taito-ku, Tokyo 111-8644, Japan

Number of Shares ofCommon Stock

292,536,446(Issued and outstanding)

Employees

3,190 (Consolidated: 7,587)

Number of Shareholders

198,809

1. We moved our head office in April 2023.

2. Lion Corporation was moved to the Prime Market following a restructuring of market segments by the Tokyo Stock Exchange in April 2022.

Shareholders by Category

Share Price and Trading Volume

Foreign institutions and individuals 22.00%

Individual investors and others(including treasury stock)Total Shareholder Returns
December
2018

December
2019

December
2020

December
2021

December
2022

Lion

107.3%

101.5%

120.0%

76.1%

76.2%

Reference: TOPIX net total return index

84.0%

99.2%

106.6%

120.2%

117.2%

26.10%
Other Japanese corporations 13.94%
Financial instrument firms 4.39%

Japanese financial institutions 33.57%

Lion shares

Principal Shareholders
Shareholder

Shareholding ratio (%)

TOPIX

Trading volume(Yen)(Millions of shares)

3,000

90

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

12.22

Custody Bank of Japan, Ltd. (Trust Account)

8.20

2,500

75

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

2.90

2,000

60

STATE STREET BANK AND TRUST COMPANY 505223

2.63

1,500

45

MUFG Bank, Ltd.

2.48

1,000

30

Tokio Marine & Nichido Fire Insurance Co., Ltd.

1.56

SMBC Nikko Securities Inc.

1.54

500

15

Meiji Yasuda Life Insurance Company

1.43

0

0

TOYOTA TSUSHO CORPORATION

1.23

Mitsubishi UFJ Trust and Banking Corporation

1.22

Note: Shareholding ratios are calculated based on a total of 284,937,523 shares, which is the number of shares issued and outstanding less thenumber of shares of treasury stock, rounded down to the second decimal place.

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12
2020

2021

2022