ANNUAL REPORT 2022

Lion Corporation

Fiscal year ended December 31, 2022

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Consolidated Statement of Financial Position
Lion Corporation and Consolidated Subsidiaries
December 31, 2022 and 2021
Millions of yen

ASSETS

2022

Current assets:
Cash and cash equivalents [Notes 5, 30]
Trade and other receivables [Notes 6, 30]
Inventories [Note 7]
Other financial assets[Notes 8, 30]
Other current assets[Note 9]
Total current assets
Non-current assets:
Property, plant and equipment [Note 10]
Goodwill [Note 11]
Intangible assets [Note 11]
Right-of-use assets [Note 27]
Investments accounted for using the equity method [Note 12]
Deferred tax assets [Note 13]
Retirement benefit assets [Note 19]
Other financial assets [Notes 8, 30]
Other non-current assets [Note 9]
Total non-current assets
Total assets

2021

Thousands of
U.S. dollars[Note 2(d)]2022¥101,078
71,26353,9097,977
3,462
237,691¥97,250
70,11551,714
6,656
6,413
232,150$761,706
537,025
406,254
60,11626,092
1,791,194

130,137
327
23,91731,518
8,939
3,912
9,147
22,856
831
231,587¥469,278

120,673
182
23,975
5,416
6,935
6,005
9,768
21,815
1,100
195,875¥428,025

980,687
2,471
180,235
237,515
67,36929,481
68,935
172,239
6,262
1,745,195$3,536,389

See accompanying notes to consolidated financial statements.

Lion Corporation

ANNUAL REPORT 20222

Millions of yen

LIABILITIES AND EQUITY
Liabilities

2022

Current liabilities:
Trade and other payables [Notes 14,30]
Borrowings [Notes 15,30]
Income tax payables
Provisions [Note 18]
Lease liabilities [Note 30]
Other financial liabilities [Notes 16,30]
Other current liabilities [Note 17]
Total current liabilities
Non-current liabilities:
Borrowings [Notes 15,30]
Deferred tax liabilities [Note 13]
Retirement benefit liabilities [Note 19]
Provisions [Note 18]
Lease liabilities [Note 30]
Other financial liabilities [Notes 16,30]
Other non-current liabilities [Note 17]
Total Non-current liabilities
Total liabilities
Equity :Share capital [Note 21]
Capital surplus [Note 21]
Treasury stock [Note 21]
Other components of equity
Retained earnings [Note 21]
Equity attributable to owners of the parent
Non-controlling interests
Total equity
Total liabilities and equity

Lion Corporation

2021

Thousands of
U.S. dollars[Note 2(d)]2022¥126,024
1,433
2,182
1,444
1,746
1,681
7,061
141,574¥123,146
1,411
2,470
1,673
1,483
855
8,178
139,218$949,695
10,803
16,448
10,886
13,164
12,66853,216
1,066,879

141
2,701
10,431
2,058
28,8492,378
1,974
48,536
190,110392
1,270
12,684
332
5,088
2,469
1,554
23,792
163,011

1,068
20,35578,611
15,513
217,403
17,925
14,883
365,757
1,432,636

34,43331,069(8,056)
13,966
192,842
264,255
14,912
279,168¥469,278

34,43335,189(4,731)
9,311
177,370
251,572
13,442265,014¥428,025

259,486
234,133(60,713)105,245
1,453,223
1,991,373
112,380
2,103,753$3,536,389

ANNUAL REPORT 20223

Consolidated Statement of Profit or Loss
Lion Corporation and Consolidated Subsidiaries
Years ended December 31, 2022 and 2021

Net sales [Notes 4,23]
Cost of sales [Notes 7,24]
Gross profit
Selling, general and administrative expenses [Note 24]
Other income [Note 25]
Other expenses [Note 26]
Operating profit [Note 4]
Finance income [Note 28]
Finance costs [Note 28]
Share of profit (loss) of investments accounted
for using the equity method [Note 12]
Profit before income taxes
Income taxes [Note 13]
Profit for the year
Profit for the year attributable to:
Owners of the parent
Non-controlling interests
Profit for the year

Millions of yen
2022
2021
¥389,869¥366,234(215,263)(187,129)
174,605
179,104(151,046)(148,181)
6,738
1,208
(1,453)(953)
28,84331,178
804
817
(179)
(136)
1,824
31,292(8,182)
23,1102,229
34,089(8,657)25,431

13,747
235,814(61,662)
174,152

21,9391,170¥23,110

23,7591,671¥25,431

165,329
8,823$174,152
U.S. dollars[Note 2(d)]YenEarnings per share:
Basic [Note 29]
Diluted [Note 29]

Thousands of
U.S. dollars[Note 2(d)]2022$2,937,978(1,622,185)
1,315,793(1,138,257)
50,778(10,954)
217,360
6,060(1,353)¥77.0476.91¥81.73
81.59

$0.58
0.58

See accompanying notes to consolidated financial statements.

Lion Corporation

ANNUAL REPORT 20224

Consolidated Statement of Comprehensive Income
Lion Corporation and Consolidated Subsidiaries
Years ended December 31, 2022 and 2021

Profit for the year
Other comprehensive income
Items that will not be reclassified to profit or loss
Net gain (loss) on revaluation of financial assets measured at fair value throughother comprehensive income [Notes 22,30]
Remeasurements of defined benefit plans [Note 22]
Share of other comprehensive income(loss) of investments accounted for using
the equity method [Note 22]
Total items that will not be reclassified to profit or loss
Items that may be subsequently reclassified to profit or loss
Net gain (loss) on derivatives designated as cash flow hedges [Note 22]
Exchange differences on translation of foreign operations [Note 22]
Share of other comprehensive income(loss) of investments accounted for using
the equity method [Note 22]
Total items that may be subsequently reclassified to profit or loss
Total other comprehensive income, net of tax
Comprehensive income for the year
Comprehensive income for the year attributable to:
Owners of the parent
Non-controlling interests
Comprehensive income for the year

Millions of yen
2022
2021
¥23,110¥25,431

Thousands of
U.S. dollars[Note 2(d)]2022$174,152

729

85

5,496

2,523

1,457

19,015

24

30

187

3,277

1,573

24,699

(42)
5,680

0
1,824

(317)
42,806

－

(362)

－

5,638
8,915
32,025

1,462
3,035
28,46742,48967,188241,340

29,411
2,614¥32,025

26,618
1,848¥28,467

221,636
19,704$241,340

See accompanying notes to consolidated financial statements.

Lion Corporation

ANNUAL REPORT 20225

Consolidated Statement of Changes in Equity
Lion Corporation and Consolidated Subsidiaries
Fiscal 2022 (January 1 to December 31, 2022)

Share capital

Balance at January 1, 2022
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Dividends
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Share-based payments
Changes due to business combination
Transfer from other components ofequity to retained earnings¥34,433

21
21
21
21
20

Total transactions with owners
Balance at December 31, 2022

Millions of yen
Equity attributable to owners of the parent
Other components of equity
Net gain(loss) onrevaluation of
Remeasurements
financial assets
Treasury stock
Capital surplus
Subscriptionof defined benefit
measured at fairrights to sharesplansvalue through othercomprehensive
income¥35,189¥(4,731)¥135¥8,541¥--

1(4,259)137--(10,001)
46
6,630

(12)

670
670

2,523
2,523

(281)

(2,523)-(4,120)(3,324)

(12)

(281)

(2,523)¥34,433¥31,069¥(8,056)¥123¥8,930¥-Millions of yen
Equity attributable to owners of the parent
Other components of equity
Net gain (loss) on
Exchangederivatives
differences ondesignated astranslation of
cash flow hedges foreign operations
Balance at January 1, 2022
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Dividends
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Share-based payments
Changes due to business combination
Transfer from other components ofequity to retained earnings
Total transactions with owners
Balance at December 31, 2022

Retainedearnings

Total

¥-

¥634

¥9,311
-

(42)

4,319

7,471

(42)

4,319

7,471
(12)
-

21
21
21
21
20

Non-controllinginterests

Total

Total equity¥177,370
21,939¥251,572
21,939¥13,442
1,170

7,471

1,443

8,915

21,939(6,899)29,411(6,899)(10,001)
35
137
-

2,614
(1,169)25

32,025(8,069)(10,001)
35
137
25(2,371)(2,804)2,804-¥265,014
23,110---(2,817)(6,466)(16,728)(1,144)(17,872)¥(42)¥4,953¥13,966¥192,842¥264,255¥14,912¥279,168

Lion Corporation

ANNUAL REPORT 20226

Consolidated Statement of Changes in Equity
Lion Corporation and Consolidated Subsidiaries
Fiscal 2021 (January 1 to December 31, 2021)
Millions of yen

Equity attributable to owners of the parent

Share capital
Balance at January 1, 2021
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Dividends
Purchase of treasury stock
Disposal of treasury stock
Share-based payments
Transfer from other components ofequity to retained earnings

Treasury stock¥34,433¥34,986¥(4,739)

-

-

-

-

(3)
10

(2)

21
21
21
20

Total transactions with owners
Balance at December31,2021

Other components of equity
Subscription
Net gain(loss) on
Remeasurements
rights to shares
revaluation ofof defined benefit¥138¥10,592¥-

Capital surplus

1
202

113
113

1,457
1,457

(2,164)(1,457)

-

203

7

(2)

(2,164)(1,457)¥34,433¥35,189¥(4,731)¥135¥8,541¥-Millions of yen
Equity attributable to owners of the parent

Balance at January 1, 2021
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Dividends
Purchase of treasury stock
Disposal of treasury stock
Share-based payments
Transfer from other components ofequity to retained earnings
Total transactions with owners
Balance at December31,2021

Other components of equity
Net gain (loss) on
Exchangederivatives
differences ondesignated astranslation of
cash flow hedges foreign operations¥(0)¥(654)
0
0

1,288
1,288

¥-

¥634

21
21
21
20

Total
¥10,076
2,858
2,858
(2)
-

Retainedearnings¥156,965
23,75923,759(6,977)

Non-controllinginterests¥231,723
23,7592,858
26,618(6,977)(3)
8
202(3,621)

3,621-(3,624)¥9,311(3,355)¥177,370(6,769)¥251,572

Lion Corporation

Total equity

Total¥13,133
1,671
177
1,848
(1,539)¥244,856
25,431
3,035
28,467(8,517)(3)
8
202(1,539)¥13,442(8,309)¥265,014-

ANNUAL REPORT 20227

Consolidated Statement of Changes in Equity
Lion Corporation and Consolidated Subsidiaries
Fiscal 2022 (January 1 to December 31, 2022)

Thousands of U.S. dollars [Note 2(d)]Equity attributable to owners of the parent

Other components of equity
Share capital
Balance at January 1, 2022
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Dividends
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Share-based payments
Changes due to business combination
Transfer from other components ofTotal transactions with owners
Balance at December 31, 2022

Capital surplus

Treasury stock$259,486$265,183$(35,659)

Subscription
rights to shares$1,022----(75,372)348
49,969(93)(25,054)$(60,713)

(93)
$930

21
21
21
21
20

14
(32,096)
1,033$259,486(31,049)$234,133

Net gain(loss) on
Remeasurements
revaluation ofof defined benefit$64,366$5,056
5,056

19,01519,015(2,121)(2,121)$67,301(19,015)(19,015)$-

Thousands of U.S. dollars [Note 2(d)]Equity attributable to owners of the parent
Other components of equity
Net gain (loss) on
Exchangederivatives
differences ondesignated astranslation of
cash flow hedges foreign operations
Balance at January 1, 2022
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Dividends
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Share-based payments
Changes due to business combination
Transfer from other components ofequity to retained earnings
Total transactions with owners
Balance at December 31, 2022$(317)(317)$4,77832,55332,553

21
21
21
21
20

$(317)$37,331

Non-controllinginterests

Total equity

Retainedearnings

Total$70,167$1,336,625$1,895,800$101,297$1,997,097

56,30756,307(93)-

165,329

165,329
56,307
221,636(51,994)(75,372)
270
1,033
-

8,823
10,881
19,704(8,814)

193

174,152
67,188241,340(60,808)(75,372)
270
1,033
193

(8,621)$112,380(134,684)$2,103,753

Total

165,329(51,994)(17,873)(21,136)

21,136-(21,229)$105,245(48,731)$1,453,223(126,063)$1,991,373

Lion Corporation-

ANNUAL REPORT 20228

Consolidated Statement of Cash Flows
Lion Corporation and Consolidated Subsidiaries
Years ended December 31, 2022 and 2021
Thousands of
U.S. dollars
Millions of yen
2022
2021

[Note 2(d)]2022Cash flows from operating activities:
Profit before income taxes¥31,292¥34,089$235,814

Depreciation and amortization

17,665

14,252

133,126

Impairment loss

501

15

3,777

Interest and dividend income

(671)

(699)

(5,061)

Interest expenses

179

136

1,353

Share of loss (profit) of investments accounted for using the equity method(1,824)(2,229)(13,747)

Loss (gain) on disposal of non-current assets(4,932)

373(37,168)

992(7,106)

7,478

Decrease (increase) in inventories(1,065)(5,839)(8,031)

Increase (decrease) in trade and other payables
Increase in net retirement benefit liabilities

(870)
1,070

3,936
1,801

(6,558)8,063

Decrease (increase) in trade and other receivables

Other

3,139

(876)

23,662

Subtotal

45,47737,853342,707

1,592

1,490

12,004

(41)

(34)

(310)

(5,066)(20,013)(38,184)

41,962

19,296316,217

Interest and dividends received
Interest paid
Income taxes (paid) refund
Net cash flows from operating activities
Cash flows used in investing activities:
Net decrease (increase) in time deposits(1,312)

2,837(9,892)

Purchases of property, plant and equipment(18,490)(37,282)(139,340)

Proceeds from sales of property, plant and equipment

5,521

56

41,608Purchases of intangible assets(4,655)(5,639)(35,084)

Purchases of other financial assets

(331)

(901)

(2,499)Proceeds from sales of other financial assets

677

4,023

5,103

Proceeds from sales of affiliates
Purchase of shares of subsidiaries resulting in change in scope of consolidation

35
(96)

3,077
-

267
(724)

Other
Net cash flows used in investing activities

(883)

(347)

(6,658)(19,535)(34,177)(147,218)

Cash flows used in financing activities:
Repayment of long-term borrowings

(274)

(259)

(2,070)Cash dividends paid

(6,895)(6,974)(51,965)

Cash dividends paid to non-controlling interests(1,169)

Repayment of lease liabilities(1,504)(1,539)(1,456)(11,341)

Purchase of treasury stock(10,001)-(75,372)

25

5

193

(19,821)(10,225)(149,369)

Other
Net cash flows used in financing activities(8,814)

Effect of exchange rate changes on cash and cash equivalents

1,222

822

9,213

Net increase in cash and cash equivalents

3,827(24,283)

28,844

97,250¥101,078

121,534¥97,250

732,863$761,706

Cash and cash equivalents at beginning of the period [Note 5]
Cash and cash equivalents at end of the period [Note 5]
See accompanying notes to consolidated financial statements.

Lion Corporation

ANNUAL REPORT 2022

9

Notes to Consolidated Financial Statements
Lion Corporation and Consolidated Subsidiaries, December 31, 2022
Note 1: Reporting Entity
Lion Corporation (hereinafter the “Company”) is a company, as defined by Japan’s Companies Act,and is based in Japan. The consolidated financial statements of the Company and its subsidiaries(hereinafter the “Group”) presented herein comprise the results for the year ended December 31,
2022 recorded by the Company, its subsidiaries and the Group’s interests in its equity-method
affiliates.
Information about the Group’s primary business activities can be found in Note 4 “Segment
Information.”
Note 2: Basis of Preparation(a) Compliance with IFRSThe Group’s consolidated financial statements have been prepared in accordance with theInternational Financial Reporting Standards (IFRS) issued by the International AccountingStandards Board (IASB).
The Group meets the requirements for a “designated international accounting standards
specified company” as specified in Article 1-2 of the Ordinance on Terminology, Forms, andPreparation Methods of Consolidated Financial Statements. As such, the provisions of Article
93 of said ordinance apply.
(b) Approval of consolidated financial statements
The consolidated financial statements have been approved by the board of directors on March
29, 2023.
(c) Basis of measurement
Except for specific financial instruments stated in Note 3 “Significant Accounting Policies” thatare measured at fair value, the consolidated financial statements have been prepared based on
acquisition cost.
(d) Functional currency and presentation currency
The Company and its domestic consolidated subsidiaries maintain their accounting records inJapanese yen, and its foreign consolidated subsidiaries maintain their accounting records in thecurrencies of their respective countries of domicile. The U.S. dollar amounts included in theaccompanying consolidated financial statements, solely for the convenience of the reader,
represent the arithmetic results of translating yen amounts into U.S. dollar amounts at ¥132.70=
U.S.$1.00, the approximate rate of exchange in effect on December 31, 2022. This translation
into U.S. dollars should not be construed as a representation that the yen amounts have been or
could be converted into U.S. dollars at the above or any other rate.
As permitted under the Financial Instruments and Exchange Act of Japan, amounts of less than

Lion Corporation

ANNUAL REPORT 202210

one million yen have been omitted. As a result, the totals shown in the accompanying
consolidated financial statements do not necessarily agree with the sum of the individual
amounts.
(e) Accounting judgments, estimates and assumptions
In preparing the Group’s consolidated financial statements, management makes estimates,
judgments and assumptions that may affect the application of accounting policies and thereported amounts of assets, liabilities, revenues and expenses. Actual results may differ fromthese estimates.
Management reviews such estimates and their underlying assumptions on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the estimate is revised
and the future periods affected by such revisions.
Key items for which management made judgments, estimates and assumptions are as follows:・Assessment of refund liabilities and sales-related provisions
Refund liabilities and sales-related provisions are calculated by using the most likely outcome
method based on contract provisions, past sales performance, etc. If the estimated amount ofsales ultimately differs from the actual amount of sales due to unforeseeable events, there is apossibility that this will have a material impact on the consolidated financial statements for thefollowing fiscal year.
Details of estimates, book value, assumptions and uncertainty of estimates are as follows:
Assessment of refund liabilities (Note 3 “Significant Accounting Policies” (15), Note 14“Trade and Other Payables”)
Provisions (Note 3 “Significant Accounting Policies” (12), Note 18 “Provisions”)
・Assessment of intangible assets for which useful life cannot be determined
An impairment test is performed annually. It is judged that the likelihood of recognizing asignificant impairment loss for the cash-generating unit is low, and that this would be the caseeven if any of the key assumptions used for determining impairment were to change within areasonably foreseeable range.
Details of estimates, book value, assumptions and uncertainty of estimates are as follows:
Impairment of non-financial assets (Note 3 “Significant Accounting Policies” (10), Note11“Goodwill and Intangible Assets”)(f) Standards issued but not yet effective
There are no main standards and interpretations already issued but not yet effective which brings
significant impact at the approval date of the consolidated financial statements.
Note 3: Significant Accounting Policies
The Group’s accounting policies are prepared in accordance with IFRS for which application aremandatory as of December 31, 2022.
Unless otherwise noted, the significant accounting policies applied to these consolidated financial

Lion Corporation

ANNUAL REPORT 202211

statements have been consistently applied to each fiscal period presented herein.

(1) Basis of consolidation
A. Subsidiaries
Subsidiaries are entities controlled by the Group. The Group is deemed to control an entity when,through its involvement with the entity, it has exposure to or holds rights to variable returns fromthe entity and has the authority to affect those returns through its power over the entity. The
financial statements of subsidiaries are included in the consolidated financial statements of theGroup from the date that the Group’s control commences until the date that control ceases.
Balances and internal transactions existing between the entity and subsidiaries or between
subsidiaries as well as any unrealized income and expenses arising from such transactions are
eliminated when preparing the consolidated financial statements. Non-controlling interests in
subsidiaries are recognized separately from the Group’s interests.
The comprehensive income of subsidiaries is attributed to the owners of the parent and any noncontrolling interests even if doing so results in the non-controlling interest having a deficit
balance.
B. Affiliates
Affiliates are entities over whose financial and operating policies decisions the Group hassignificant influence but neither control nor joint control. The Group is assumed to havesignificant influence over a company if it directly or indirectly owns between 20% and 50% of
said entity’s voting rights. Investments in affiliates are initially recognized at acquisition cost andaccounted for by the equity method from the date that the Group’s significant influencecommences until the date that said significant influence ceases.
C. Jointly Controlled Entity
Jointly controlled entity is an entity over which two or more parties, including the Group, sharecontrol per a contractual arrangement and for which important decisions require the unanimous
consent of the parties sharing control.
The Group accounts for its investments in jointly controlled entities by the equity method.
(2) Business combinations
Business combinations are accounted for using the acquisition method.
The identifiable assets and liabilities of acquirees are measured at fair value on the acquisition date.
In the event that the total of the consideration transferred for the business combination, the noncontrolling interests in the acquiree and the fair value of the equity in the acquiree already held by
the acquirer exceeds the net amount of the acquiree’s identifiable assets and liabilities on theacquisition date as measured in accordance with IFRS 3 “Business Combinations” (hereinafter

Lion Corporation

ANNUAL REPORT 2022

12

“IFRS 3”), this excess is recognized as goodwill. The consideration transferred for the businesscombination is calculated as the sum of the fair value at the acquisition date of assets transferred by
the acquirer, liabilities to the acquiree’s former owners incurred by the acquirer and equity interests
issued by the acquirer.
Whether the Group measures non-controlling interests at fair value or as the amount of theacquiree’s identifiable net assets proportionate to the non-controlling interests is determined
individually for each business combination. Acquisition-related costs are accounted for as expenses
in the period in which they are incurred.
Additional acquisitions of non-controlling interests after the acquisition of control are accounted foras equity transactions, and the Group does not recognize goodwill from such transactions.
(3) Foreign currency translation
A. Foreign currency denominated transactions
Transactions denominated in foreign currencies are translated into the Group’s relevant
functional currencies using the exchange rates at the date of each transaction. Monetary assets
and liabilities denominated in foreign currencies are translated using the exchange rates at the
fiscal period-end, and exchange differences resulting from such translation are recognized as
net gains or losses. However, if gains or losses associated with such assets and liabilities arerecognized in other comprehensive income, exchange differences on such gains or losses arerecognized in other comprehensive income.
Non-monetary assets and liabilities measured at acquisition cost that are denominated in foreign
currencies are translated using the exchange rates at the date of transaction.
B. Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments
resulting from the acquisition of foreign operations, are translated at the exchange rates as of
the fiscal period-end date. Income and expenses recorded by foreign operations are translatedusing the average exchange rate during the fiscal period, except for cases of significant
exchange rate movements during the fiscal period.

(4) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, readily available deposits and short-term, highly
liquid investments with original maturities of three months or less that entail insignificant pricefluctuation risk.

(5) Inventories
Inventories are measured at the lower of acquisition cost or net realizable value. The cost of

Lion Corporation

ANNUAL REPORT 202213

inventories is calculated based on the moving-average method and includes purchase cost,
processing costs and other expenses incurred in bringing the inventories to their present locationand state. Net realizable value represents the estimated selling price in the ordinary course ofbusiness, less all estimated costs of completion and estimated costs necessary to sell.

(6) Property, plant and equipment
The Group applies the cost model to measure property, plant and equipment.
Property, plant and equipment is stated at acquisition cost less accumulated depreciation andaccumulated impairment loss.
Such acquisition cost includes expenses directly attributable to the acquisition of the assets; thecosts of dismantling and removing such assets as well as restoring the site on which they arelocated; and borrowing costs that meet the requirements for capitalization.
For all property, plant and equipment other than land, the depreciable amount, calculated asacquisition cost less the residual value at the end of estimated useful life, is depreciated evenly overeach asset’s estimated useful life using the straight-line method.
Estimated useful lives, residual value and method of depreciation of property, plant and equipment
are reviewed at the fiscal year-end, and the effect of any changes is accounted for on a prospective
basis as changes in accounting estimates.
The estimated useful lives of the main categories of property, plant and equipment are as follows:
・Buildings and structures 3–50 years
・Machinery and equipment 5–15 years(7) Goodwill
Goodwill arising from business combinations is stated at acquisition cost less accumulated
impairment loss.
Goodwill is not amortized. It is allocated to a cash-generating unit or group of cash-generating units
that are tested for impairment annually or whenever there is an indication of impairment.
Impairment losses on goodwill are recognized in profit or loss, and no subsequent reversal is made.
The measurement of goodwill upon initial recognition is described in (2) Business combinations.
(8) Intangible assets
The Group applies the cost model to measure intangible assets.
Intangible assets are stated at acquisition cost less accumulated amortization and accumulated
impairment loss.
Intangible assets acquired individually are measured at acquisition cost at initial recognition.
Intangible assets acquired through business combinations are measured at fair value at theacquisition date.

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Expenditures on internally generated intangible assets are recognized as expenses in the period
when incurred, except for those that satisfy the criteria for capitalization.
Intangible assets for which useful lives can be determined are amortized over their respective
estimated useful lives using the straight-line method and tested for impairment whenever there is anindication of impairment.
The estimated useful life and amortization method of intangible assets for which useful lives can be
determined are reviewed at the fiscal year-end, and the effect of any changes is accounted for on aprospective basis as changes in accounting estimates.
The estimated useful lives of the main category of intangible assets are as follows:
・Software 5–10 years
Intangible assets for which useful lives cannot be determined are not amortized but are tested for
impairment annually and whenever there is an indication of impairment individually or as part oftheir respective cash-generating units.
(9) Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contractis, or contains, a lease if the contract transfers the right to control the use of an identified asset for aperiod of time in exchange for consideration.
(i)

Leases as a lessee
The Group recognizes a right-of-use asset and a lease liability at the commencement date of
the lease contract. The initial Measurement of the right-of-use asset is measured at the amountof the initial measurement of the lease liabilities at the commencement date adjusted for initial
direct cost etc., and the cost of restoration obligation required under the lease contract. Afterthe commencement date, right-of-use assets apply a cost model and are measured atacquisition cost less any accumulated depreciation and impairment losses. Right-of-use assets
are depreciated using the straight-line method from the commencement to the earlier of theend of the useful life of the assets or the end of the lease term, unless it is reasonably certainthat the Group will acquire ownership of the underlying asset by the end of the lease term. The
Group determines the term of the lease to be the non-cancellable term of the lease, as well as
any optional period for which the Group is reasonably certain to exercise an option to extend
the lease or not exercise an option to terminate the lease.
At the commencement date, lease liability is measured at the present value of the lease
payments that are not paid at that date discounted using the lessee’s incremental borrowing
rate. After the commencement date, the book value of the lease liability is adjusted to reflect
the interest incurred on the lease liability and lease payments made. When a lease is modified,the lease liability is remeasured. Furthermore, for lease modifications that are not accounted
for as a separate lease and that decrease the scope of the lease, the book value of the right-ofuse assets are decreased to reflect the partial or full termination of the lease, and any gain or

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loss resulting from such termination is recognized in profit or loss. For other leasemodifications, an adjustment to the right-of-use asset is made.
The Group recognizes the lease payments on short-term leases and leases of low-value assets
as expense on a straight-line method over the lease term.
(ⅱ) Leases as a lessor
The Group classifies each of its leases as either an operating lease or a finance lease. If thelease transfers substantially all the risks and rewards incidental to the ownership of theunderlying asset, it is classified as a finance lease; otherwise, it is classified as an operatinglease. The Group assesses whether a lease is a finance lease or an operating lease dependingon the substance of the transaction rather than the form of the contract.
(a) Finance leases
At the commencement date of the lease, assets held under finance leases are presented asreceivables in an amount equal to the net investment in the lease.
(b) Subleases
In classifying a sublease, the intermediate lessor classify the sublease with reference to theright-of-use asset arising from the head lease.
(10) Impairment of assets
A. Impairment of non-financial assets
The Group assesses whether there is any indication that assets may be impaired at eachreporting period-end. If any such indication is found or the asset requires an annual impairment
test, the Group estimates the asset’s recoverable amount. The recoverable amount of an asset isestimated as the higher of fair value less disposal cost or value in use. If the recoverable amountof an individual asset cannot be determined, the recoverable amount of the cash-generating unit
or group of cash-generating units to which the asset belongs is estimated. If the book value of acash-generating unit or group of cash-generating units exceeds its recoverable amount,
impairment of the corresponding assets is recognized, and their value is written down to therecoverable amount. In determining the value in use, estimated future cash flows are discounted
to present value using a pre-tax discount rate that reflects current market assessments of thetime value of money and the risks specific to the asset.
Note that, in principle, the business plans used to estimate future cash flows extend no longer
than five years. Future cash flows beyond the estimates of the business plans are, in principle,
calculated based on steady or declining rates of growth.
Fair value less disposal cost is calculated using appropriate valuation models backed byavailable indicators of fair value.
B. Reversal of impairment loss
At the end of each reporting period, the Company evaluates whether there is any indication that
impairment losses recognized in prior years for assets other than goodwill have decreased orLion Corporation

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may no longer exist. If such indication of a reversal of an impairment loss exists, therecoverable amount of the asset, cash-generating unit or group of cash-generating units is
estimated. If this recoverable amount exceeds the book value of the asset, cash-generating unit
or group of cash-generating units, a reversal of impairment loss is recognized up to the lower ofthe recoverable amount or the book value less the depreciation and amortization that would
have been recognized had no impairment loss been recognized. Reversal of impairment loss isrecognized in profit or loss.
(11) Employee benefits
A. Post-employment benefits
The Group operates defined benefit plans and defined contribution plans as retirement benefit
plans for its employees.
(i) Defined benefit plans
The Group calculates the present value of defined benefit obligation as well as related current
and prior service costs for each plan individually using the projected unit credit method.
The discount rate is calculated based on market yields on high-quality corporate bonds thathave terms corresponding to the residual terms until the estimated date of future payment as ofthe end of the corresponding reporting period.
Assets and liabilities related to defined benefit plans are calculated by deducting the fair valueof plan assets from the present value of the defined benefit obligation.
Remeasurements of assets and liabilities related to defined benefit plans are recognized intheir entirety in other comprehensive income for the period in which they occur and are
immediately reflected in retained earnings.
Prior service costs are recognized as expenses for the period in which they are incurred.
(ii) Defined contribution plans
Costs related to defined contribution plans are recognized as expenses in the period in which
the contributions are made.
B. Other employee benefits
Short-term employee benefits are not subject to discount and are recognized as expenses when
the relevant services are provided.
The Group has legal or constructive obligations to pay bonuses. When a reliable estimate ofsuch bonuses can be made, the estimated amount of bonuses to be paid is recognized as aliability.
The Group has legal or constructive obligations related to its cumulative paid vacation
systems. When a reliable estimate of such cost of paid vacation can be made, the estimatedamount to be paid based on such systems is recognized as a liability.

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(12) Provisions
Provisions are recognized when the Group comes to have a present obligation (legal orconstructive) as a result of past events, it is likely that the settlement of said obligation will require
an outflow of resources that carry economic benefits, and the amount of the obligation can bereliably estimated.
If the effect of the time value of money is material, the amount of a provision is measured at thepresent value of expenditures expected to be required to settle the obligation.
Present value is calculated using a pre-tax discount rate that reflects current market
assessments of the time value of money and risks specific to the liability.
(13) Financial Instruments
A. Financial assets (excluding derivatives)(i) Initial recognition and measurement
The Group initially recognizes trade and other receivables on the date that they arise. The
Group initially recognizes all other financial assets at the trade date on which the Company
becomes a party to the relevant contract.
Financial assets are classified as either financial assets measured at fair value through profit orloss or other comprehensive income; or financial assets measured at amortized cost. This
classification is made upon initial recognition.
Financial assets are classified as financial assets measured at amortized cost when thefollowing conditions are met:
・ The financial asset is held based on a business model that has the objective of holding
financial assets in order to collect contractual cash flows
・ The contractual terms of the financial asset give rise on specified dates to cash flows that aresolely payments of principal and interest on the outstanding principal
Equity instruments are individually classified as either measured at fair value through profit orloss or measured at fair value through other comprehensive income, and this classification iscontinuously applied.
Debt instruments are classified as measured at fair value through other comprehensive income
when the conditions listed below are met or they are classified as measured at fair value
through profit or loss when said conditions are not met.
・ The financial asset is held based on a business model that has an objective that is achieved
when contractual cash flows are collected and the asset is sold・ The contractual terms of the financial asset give rise on specified dates to cash flows that aresolely payments of principal and interest on the outstanding principal
With the exception of financial assets measured at fair value through profit or loss, financial
assets are measured at the sum of fair value and transaction costs that are directly attributable

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ANNUAL REPORT 202218

to the financial assets in question.
(ii) Subsequent measurement
After their initial recognition, financial assets are measured using the following methods
applied by financial asset category.
(a) Financial assets measured at amortized cost
Assets in this category are measured at amortized cost based on the effective interest method.
(b) Other financial assets
Financial assets other than those measured at amortized cost are measured at fair value.
Changes in the fair value of assets in this category are recognized either in profit or loss or inother comprehensive income.
Changes in the fair value of equity instruments that are classified as financial assets measured
at fair value through other comprehensive income are recognized in other comprehensive
income. In cases where the Group derecognizes said assets or the fair value of said assets
drops significantly, such changes are transferred to retained earnings.
Changes in the fair value of debt instruments that are classified as financial assets measured atfair value through other comprehensive income are recognized in other comprehensive
income, excluding impairment and gains and losses on foreign exchange until thederecognition or reclassification of the financial assets in question. In cases where the Groupderecognizes said assets, previously recognized other comprehensive income is transferred to
profit or loss.
(iii) Derecognition of financial assets
The Company derecognizes financial assets only when the contractual rights to the cash flows
from the financial assets expire or when the financial assets and substantially all the risks andrewards of ownership are transferred.
(iv) Impairment of financial assets
At every fiscal period-end, the Group evaluates whether the credit risk of financial assets
measured at amortized cost has increased significantly since each asset’s initial recognition. If
said risk is not found to have increased significantly, the asset’s 12-month expected credit loss
is recognized under allowance for doubtful accounts. If said risk has increased significantly,
the asset’s lifetime expected credit loss is recognized under allowance for doubtful accounts.
However, for trade receivables, the lifetime expected credit loss is recognized from the time ofinitial asset recognition.
To determine whether the credit risk has increased significantly, the Group refers todelinquency rate data and supported information that the Group can reasonably obtain, such as
internal and external ratings.
Estimates of the expected credit loss on financial assets reflect the following factors.
・ An unbiased and probability-weighted amount determined by evaluating a range of possible
outcomes

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19

・ The time value of money
・ Reasonable and supportable information that is available without undue cost or effort at thereporting date about past events, current conditions and forecasts of economic conditions
Increases in the allowance for doubtful accounts related to financial assets are recognized in
profit or loss. When the allowance for doubtful accounts decreases, the reversal of said
allowance is recognized in profit or loss.
B. Financial liabilities (excluding derivatives)(i) Initial recognition and measurement
Financial liabilities other than derivatives are categorized as financial liabilities measured atamortized cost.
The Group initially measures all financial liabilities at fair value. In the case of financial
liabilities measured at amortized cost, transaction costs that are directly attributable to thefinancial liabilities in question are deducted from such fair value.
(ii) Subsequent measurement
After their initial recognition, financial liabilities measured at amortized cost are remeasured
at amortized cost based on the effective interest method. Amortization determined by theeffective interest method and gain or loss due to derecognition are recognized in profit andloss.
(iii) Derecognition of financial liabilities
Financial liabilities are derecognized when the relevant obligations are discharged; cancelled;
expired and replaced by significantly different conditions; or changed to significantly different
conditions.
C. Offset of financial instruments
Financial assets and liabilities are offset only when the Group currently has a legally enforceable
right to offset the transactions and intends either to settle on a net basis or to simultaneously realize
the financial assets and settle the financial liabilities. The net outcome of such offset is recorded on
the Consolidated Statement of Financial Position.
D. Fair Value of Financial Instruments
The fair value of financial instruments being traded in active markets as of the end of the fiscal
period is determined with reference to quoted market prices or dealer prices.
The fair value of financial instruments without active markets is calculated using appropriate
valuation techniques or calculated with reference to prices stated by counterpart financial
institutions.
E. Derivatives and Hedge Accounting
The Group utilizes such derivatives as forward exchange contracts and interest rate swaps ashedges against foreign exchange risk and interest rate risk, respectively. These derivatives are
initially measured at fair value as of the contract date and subsequently remeasured at fair value.
Changes in the fair value of derivatives are recognized in profit or loss. However, gains or losses on

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20

the effective portion of cash flow hedges and hedges of net investments in foreign operations arerecognized in other comprehensive income.
At the inception of a hedge relationship, the Group formally designates and documents the hedge
relationship to which it is applying hedge accounting as well as its risk management objectives andstrategy for undertaking the hedge.
This documentation includes the specific hedging instrument, the hedged items, the nature of therisk being hedged and how the Group will assess the effectiveness of changes in the fair values of
the hedging instruments to offset exposure to changes in the fair value or cash flows of the hedged
items due to the risks hedged against (including analysis of the sources of hedge ineffectivenessand the method of determining the hedging ratio).
Upon the designation of the hedge relationship and on an ongoing basis, the Group evaluates
whether the derivative used in the hedge effectively offsets changes in the fair value or cash flowsof the hedged item.
Specifically, a hedge is deemed effective if the economic relationship between the hedged items
and hedging instruments will result in an offset.
Hedges that meet the criteria for hedge accounting are classified and accounted for as follows.
(a) Fair value hedges
Changes in the fair value of derivatives are recognized in profit or loss. When the fair value ofhedged items changes (due to the hedged risks), the book values of such items are adjusted andthe change is recognized in profit or loss.
(b) Cash flow hedges
The effective portion of gain or loss on hedging instruments is recognized in othercomprehensive income, while the ineffective portion is recognized immediately in profit orloss.
The amount related to hedging instruments thus recorded in other comprehensive income istransferred to profit or loss when the hedged transaction affects profit or loss.
If hedged items result in the recognition of non-financial assets or liabilities, the amounts
recognized in other comprehensive income are accounted for as adjustments to the initial bookvalue of the non-financial assets or liabilities.
If the forecast transaction is no longer expected to occur, any related cumulative gain or loss
that has been recognized in equity through other comprehensive income is transferred to profit
or loss.
When a hedging instrument expires, is sold or is terminated or exercised without being replacedwith another hedging instrument or renewed, or when hedge accounting is discontinued due to achange of risk management purpose, any related cumulative gain or loss that has beenrecognized in equity through other comprehensive income remains in equity until the forecast
transaction occurs.
(c) Hedges of net investments in foreign operations

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Translation differences resulting from the hedge of net investments in foreign operations areaccounted for similarly to a cash flow hedge. The effective portion of gains or losses on hedging
instruments is recognized in other comprehensive income, while the ineffective portion is recognizedin profit or loss. When foreign operations are disposed of, any related cumulative gain or loss thathas been recognized in equity through other comprehensive income is transferred to profit or loss.
(14) Stock-based compensation
A. Stock option system
The Company grants Group directors and executive officers stock options that can be exercised topurchase shares of the Company. Stock options are measured at fair value estimated at the grant
date and recognized in profit or loss over the vesting period, with an equal amount recognized as
equity.
B. Performance-linked stock-based compensation system
The Company grants shares of the Company to directors (excluding external directors) and executive
officers through a trust. Consideration for services received is estimated based on the fair value ofCompany shares at the grant date and recognized in profit or loss over the vesting period, with anequal amount recognized in equity.
(15) Revenue
The Group applies the following steps to recognize revenue.
Step 1: Identify the contract with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the Group satisfies a performance obligation
Revenue is recognized at a point in time or over a period of time when a performance obligation ina contract with a customer is satisfied. Revenues from the sale of goods in the course of normal
business activities are recorded when said goods are delivered, as the performance obligation issatisfied upon the transfer of control of the goods to the customer. Specifically, revenue isrecognized when the goods are delivered, as the legal ownership, physical ownership, andsignificant risk and economic value of ownership of the goods are transferred to the customer upon
said goods’ delivery.
The Group has in place a distribution system in which, in principle, products are delivered tocustomers on the day they are shipped, and there is no significant time lag between shipping anddelivery.
Revenue is measured at the monetary amount of consideration to which the Group gains a right inexchange for the transfer of the promised goods to the customer, factoring in discounts, rebates andreturns. The consideration that the Group expects to refund to customers is recorded as refund

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liabilities. Said refund liabilities are estimated using a modal value based on the terms of therelevant contracts, past performance and other factors. Furthermore, advances received from
customers are recorded as contract liabilities.
Consideration for goods under sales contracts is mainly collected within 12 months of the transfer
of control over said goods to the customer. This consideration includes no significant financial
elements.
For performance obligations satisfied over time, the Group recognizes revenue over time based on
estimates of its progress toward the complete satisfaction of the obligation.
(16) Finance income and finance costs
Finance income is composed mainly of interest income and dividend income. Interest income isrecognized by the effective interest method when it arises. Dividend income is recognized when theGroup’s right to receive it is established.
Finance costs are composed mainly of interest expenses.
(17) Income taxes
Current income taxes for the current period and prior periods are measured at the amount expected
to be paid to or recovered from the taxation authorities using the tax rates and tax laws that havebeen enacted or substantively enacted at the end of the fiscal period.
Deferred taxes are recognized using the asset and liability method on temporary differences arising
between the carrying amount of an asset or liability of financial position and its taxable base.
In principle, deferred tax liabilities are recognized for all taxable temporary differences, anddeferred tax assets are recognized for deductible temporary differences and tax loss carryforwards
to the extent that it is probable that taxable profits will be available against which said deductible
temporary differences and tax loss carry forwards can be utilized.
However, as exceptions to the above, the following temporary differences are not recorded asdeferred tax assets or liabilities.
・ Temporary differences arising from the initial recognition of goodwill
・ Temporary differences arising from the initial recognition of assets and liabilities intransactions other than business combinations that affect neither the accounting profit nor the
taxable profit
・ Deductible temporary differences associated with investments in subsidiaries and affiliates orinterests in joint-control agreements when it is probable that such differences will not reverse in
the foreseeable future, or it is improbable that taxable profits against which the differences canbe utilized will be earned

・ Taxable temporary differences associated with investments in subsidiaries and affiliates orinterests in joint-control agreements when the timing of the reversal of the temporary
differences can be controlled by the Group and it is probable that the temporary differences

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will not reverse in the foreseeable future
The book values of deferred tax assets and liabilities (including unrecognized deferred tax
assets) are reviewed at the end of each fiscal period.
Deferred tax assets and liabilities are measured using the estimated tax rates for the periods inwhich the deferred tax assets are realized or deferred tax liabilities are settled based on tax
rates and tax laws that have been enacted or substantively enacted as of the end of the fiscal
period.
Deferred tax assets and liabilities are offset if the Group has a legally enforceable right tooffset a current tax asset against a current tax liability and the same taxation authority levies
income taxes either on the same taxable entity or different entities that intend to realize theasset and settle the liability at the same time.
(18) Assets held for saleNon-current assets or disposal groups whose book value is expected to be recovered throughsale and not continuing use are classified as assets held for sale. However, to be classified asassets held for sale, said non-current assets or disposal groups must be available for immediatesale and highly probable be sold within 12 months. Assets held for sale are measured at thelower of book value or fair value less selling cost. Assets categorized as held for sale are notsubject to depreciation or amortization.
(19) Equity
A. Share capital and capital surplus
The issue price of equity instruments issued by the Company is recognized in share capital andcapital surplus. Transaction costs arising directly from such issuance are deducted from capitalsurplus.
B. Treasury stock
When the Company acquires treasury stock, said treasury stock is recognized at acquisition
cost and stated as a deduction from equity. In addition, transaction costs arising directly fromsuch acquisition are deducted from equity. When the Company sells treasury stock, theconsideration received is recognized as an increase in equity, and any difference between thebook value and the consideration received is included in capital surplus.
(20) Earnings per share
Basic earnings per share are calculated by dividing profit for the period attributable to common
stock of the Company by the weighted-average number of outstanding common sharesadjusted for treasury stock. Diluted earnings per share are calculated by adjusting for the effectof all potentially dilutive shares.

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(21) Government grants
Income from government grants is measured at fair value and recognized when there isreasonable assurance that the requirements for the issue of the grant will be met and the grant
will be received. Grants for expenses are recorded as revenue in the same fiscal year as therelevant expenses. Grants for the acquisition of assets are recognized under liabilities as deferredincome that is then recognized in profit or loss on a systematic basis over the useful lives of therelated assets.
(22) Notes to Changes in Accounting Principles

None.

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Note 4: Segment Information
1. Overview of Reportable Segments
The Group’s reportable segments are component units of the Company for which separate financial information is available andthat are subject to regular review by the board of directors for the purpose of making decisions regarding the allocation ofmanagement resources and evaluating business performance.
The Group’s business divisions are organized by product category; each business division formulates a comprehensive strategy and carries out
business activities for the products it handles. Affiliated companies in Japan undertake business activities pertinent to the characteristicsof their respective products and services.
Affiliated companies located overseas are independent management units that conduct business activities pertinent to the characteristicsof the regions in which they operate.
Accordingly, the Group comprises three reportable segments divided by product and service type and by region, which are in turnbased on business divisions and companies; namely, the reportable segments are Consumer
Products Business, Industrial Products Business and Overseas Business.
The Group's reportable segments are as follows.
(a) Consumer Products Business
Manufacture and sale of commodities, OTC drugs and functional food products in Japan
Main products: toothpaste, toothbrushes, hand soaps, analgesics, eyedrop solutions, health tonic drinks, insecticides, laundry detergents,
dishwashing detergents, fabric softeners, household cleaners, bleaches and pet supplies(b) Industrial Products Business
Manufacture and sale of chemical raw materials, industrial products and other items in Japan and overseas
Main products: activators, electro-conductive carbon and industrial cleaners(c) Overseas Business
Manufacture and sale of commodities by the Company's subsidiaries located overseas
The "Other" category refers to business segments that are not included in the reportable segments,
the Company's subsidiaries located in Japan conducting operations to support the reportable segments.
Main products and services: construction contractor business, real estate management and temporary staffing services
2. Methods of Calculating Net Sales, Profit (Loss), Assets, Liabilities and Other Items for Reportable Segments
The methods of accounting for the reportable segments are the same as those stated in “3. Significant Accounting Policies”.
Reportable segment profit is stated on an operating profit basis.
The prices of inter-segment transactions and transfers are principally determined by price negotiations based on market prices, total
supplier costs and Company notification of preferred prices.

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3. Net Sales, Profit (loss), and other items by reportable segment
Segment information for the years ended December 31, 2022 and 2021 was as follows:
Millions of yen
2022

Net sales(1) External customers(2) Intersegment*1
Total
Core operating income
Other income
Other expenses
Operating profit
Finance income
Finance costs
Share of profit(loss) ofinvestments accounted for using
the equity method
Profit before tax
Other
Depreciation and amortization

Consumer
Products
Business

Reportable segments
Industrial
Overseas
Products
Business
Business¥230,520
35,035¥265,555
11,454¥37,849
20,226¥58,076
3,132¥118,042
11,300¥129,342
5,116

Other

¥3,475
11,918¥15,394
1,202

Total

Adjustments*2

Consolidated
total*3¥(18)(78,480)¥(78,499)
2,654¥389,869¥389,869
23,5596,738(1,453)¥28,843804(179)¥389,887
78,480¥468,368
20,904

1,824¥31,292¥10,873¥1,202¥3,320¥117¥15,514¥2,151¥17,665

Notes: *1.Includes intra-segment transactions within the reportable segments.
*2. (1) A ¥2,654 million adjustment of core operating income mainly comprises intersegment eliminations andcorporate expenses not allocated to any reportable segment.
(2) The depreciation and amortization adjustment is depreciation and amortization of corporate assets andintersegment eliminations.
*3. Core operating income is reconciled with gross profit as follows:
Gross profit
Selling, general and administrative expenses
Core operating income¥174,605(151,046)¥23,559

Core operating income is calculated as gross profit less selling, general and administrative expenses, and is the basis on which
the board of directors evaluates the performance of each segment.
Millions of yen
2021
Consumer
Products
Business
Net sales(1) External customers(2) Intersegment*1
Total
Core operating income
Other income
Other expenses
Operating profit
Finance income
Finance costs
Share of profit(loss) ofinvestments accounted for using
the equity method
Profit before tax
Other
Depreciation and amortization

Reportable segments
Industrial
Overseas
Products
Business
Business¥229,595
28,337¥257,932
18,974¥34,779
15,627¥50,407
2,716¥98,727
10,525¥109,253
6,005

Other

¥3,193
24,687¥27,881
2,145

Total

Adjustments*2

Consolidated
total*3¥(62)(79,178)¥(79,240)
1,081¥366,234¥366,234
30,923
1,208(953)¥31,178817(136)¥366,296
79,178¥445,474
29,841

2,229¥34,089¥8,485¥1,119¥3,009¥104¥12,719¥1,533¥14,252

Notes: *1.Includes intra-segment transactions within the reportable segments.
*2. (1) A ¥1,081 million adjustment of core operating income mainly comprises intersegment eliminations andcorporate expenses not allocated to any reportable segment.
(2) The depreciation and amortization adjustment is depreciation and amortization of corporate assets andintersegment eliminations.
*3.Core operating income is reconciled with gross profit as follows:
Gross profit
Selling, general and administrative expenses
Core operating income¥179,104(148,181)¥30,923Core operating income is calculated as gross profit less selling, general and administrative expenses, and is the basis on which
the board of directors evaluates the performance of each segment.

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27

Thousands of U.S. dollars
2022

Net sales(1) External customers(2) Intersegment*1
Total
Core operating income
Other income
Other expenses
Operating profit
Finance income
Finance costs
Share of profit(loss) ofinvestments accounted for using
the equity method
Profit before tax
Other
Depreciation and amortization

Consumer
Products
Business

Reportable segments
Industrial
Overseas
Products
Business
Business$1,737,154
264,019$2,001,173
86,317$285,227
152,423$437,650
23,605$889,546
85,156$974,702
38,554

Adjustments* Consolidated
2
total*3

Other

Total

$26,189
89,818$116,007
9,058$2,938,115
591,415$3,529,531
157,535$(138)(591,415)$(591,553)
20,001$2,937,978$2,937,978
177,536
50,778(10,954)$217,360
6,060(1,353)
13,747$235,814$81,940$9,065$25,021$888$116,914$16,212$133,126

Notes: *1.Includes intra-segment transactions within the reportable segments.
*2. (1) A $20,001 thousands adjustment of core operating income mainly comprises intersegment eliminations andcorporate expenses not allocated to any reportable segment.
(2) The depreciation and amortization adjustment is depreciation and amortization of corporate assets andintersegment eliminations.
*3.Core operating income is reconciled with gross profit as follows:
Gross profit$1,315,793
Selling, general and administrative expenses(1,138,257)
Core operating income$177,536Core operating income is calculated as gross profit less selling, general and administrative expenses, and is the basis on which
the board of directors evaluates the performance of each segment.
4. Changes in reportable segments
Due to changes in the business structure of Lion Chemical Co., Ltd., a consolidated subsidiary,
which was previously included in the "Industrial Products Business," included in the "Industrial Products Business"and the "Consumer Products Business" from the first quarter of the current fiscal year.
The segment information for the fiscal year ended December 31, 2021 has also been reclassified to reflect this change.

Lion Corporation

ANNUAL REPORT 2022

28

5. Information by product and service category
Thousands of
U.S. dollars
2022

Millions of yen
2022
Net sales to external customers
Healthcare
HouseholdChemicals
Other
Total

2021

¥189,327
168,993
27,311
4,237¥389,869¥177,702
160,802
24,3953,333¥366,234$1,426,735
1,273,497
205,81331,932$2,937,9786. Geographic Information
Thousands of
U.S. dollars
2022
2021
2022
Japan
¥266,646¥263,957$2,009,393
Asia
121,041
101,070
912,142
Thailand
48,85742,331
368,181
Other
2,181
1,205
16,443
Consolidated¥389,869¥366,234$2,937,978
Net sales to external customers, classified by country or geographic region based on customer location.
(1) Net sales

Millions of yen

Thousands of
U.S. dollars
2022
2021
2022
Japan
¥158,737¥125,217$1,196,214
Asia
27,994
26,131
210,957
Thailand
14,315
13,736
107,879
Total¥186,731¥151,349$1,407,171
Non-current assets are classified by country or geographic region based on asset location and do not include investments
accounted for using the equity method, deferred tax assets, retirement benefit assets or other financial assets.
(2) Non-current assets

Millions of yen

7. Information about major customers
Millions of yen
2022

2021

Thousands of
U.S. dollars
2022

Customer

Related segments

PALTAC Corporation

Consumer Products,
Industrial Products¥101,628¥96,837$765,850

Arata Corporation

Consumer Products,
Industrial Products¥43,363¥45,254$326,781

Net sales

Lion Corporation

ANNUAL REPORT 2022

29

Note 5: Information on Cash Flows(1) Cash and cash equivalents
Cash and cash equivalents at December 31, 2022 and 2021 consisted of the following:

Millions of yen
2022
2021
¥94,277¥98,7972,281
2,973¥101,078¥97,250

Cash and time deposits
Short-term investments
Cash and cash equivalents at end of the year

Thousands of
U.S. dollars
2022$744,514
17,192$761,706

The balance of cash and cash equivalents presented in the consolidated statement of Financial Position is equal to the balance of
cash and cash equivalents presented in the consolidated statement of cash flows.
(2) Significant non-cash transactions
Significant non-cash transactions in the current fiscal year ended December 31,2022 consisted of the acquisition of right-of-use assets through lease transactions.
The increase due to the acquisition of right-of-use assets is described in Note "27. Leases".
(3) Changes in liabilities arising from financing activities
Changes in liabilities arising from financing activities during the years ended December 31, 2022 and 2021 consisted of the following:

Short-term borrowings
Long-term borrowings (include current portion)
Lease liabilities
Total

January 1,
2022¥1,150653
6,571¥8,375

Millions of yen
Changes arising
Non-cash changes
from cash flows Foreign currency
New leases¥¥¥(274)46(1,504)122
25,252¥(1,779)¥169¥25,252

Short-term borrowings
Long-term borrowings (include current portion)
Lease liabilities
Total

January 1,
2021¥1,150895
6,072¥8,118Millions of yen
Changes arising
Non-cash changes
from cash flows Foreign currency
New leases¥¥¥(259)
17(1,456)69
2,355¥(1,716)¥87¥2,355

Short-term borrowings
Long-term borrowings (include current portion)
Lease liabilities
Total

January 1,
2022$8,666
4,926
49,524$63,116

Thousands of U.S. dollars
Changes arising
Non-cash changes
from cash flows Foreign currency
New leases$$$(2,070)
348(11,341)927
190,301$(13,411)$1,275$190,301

Lion Corporation

¥153
¥153

December 31,
2022¥1,150425
30,596¥32,171¥(469)¥(469)

December 31,
2021¥1,150653
6,571¥8,375

other

other

other
$1,157$1,157

December 31,
2022$8,666
3,205
230,567$242,438

ANNUAL REPORT 2022

30

Note 6: Trade and Other Receivables
Trade and other receivables at December 31, 2022 and 2021 consisted of the following:

Trade receivables

Millions of yen
2022
2021
¥69,215¥69,382

Thousands of
U.S. dollars
2022$522,856
14,415

Other receivables

1,912

933

Allowance for doubtful accounts
Total

(32)

(32)

(246)

¥71,263¥70,115$537,025

Lion Corporation

ANNUAL REPORT 2022

31

Note 7: Inventories
Inventories at December 31, 2022 and 2021 consisted of the following:

Merchandise and finished goods

Millions of yen
2022
2021
¥36,531¥37,183

Thousands of
U.S. dollars
2022$280,210

Work in progress

3,357

2,779

25,302

Raw materials and supplies
Total

13,36812,403

100,742¥53,909¥51,714$406,254

The above amounts are measured at the lower of acquisition cost or net realizable value.
The acquisition cost recognized as expenses are mainly included in cost of sales.
The amount of write-downs of inventories or reversals of write-downs recognized in profit or loss are not significant.

Lion Corporation

ANNUAL REPORT 2022

32

Note 8: Other Financial Assets
Other financial assets at December 31, 2022 and 2021 consisted of the following:Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Financial assets measured at amortized cost
Time Deposits due over three months¥7,323¥5,361$55,188

Other

3,079

3,593

23,204

1,561-

11,767

18,869-18,4371,080

142,196$232,356

Financial assets measured at fair value through profit or loss
Financial assets measured at fair value throughother comprehensive income
Securities
Other¥30,833¥28,472

Current assets

7,977

6,656

60,116

Non- Current assets

22,856

21,815

172,239

Total

Lion Corporation

ANNUAL REPORT 2022

33

Note 9: Other Assets
Other assets at December 31, 2022 and 2021 consisted of the following:

Prepaid expenses

Millions of yen
2022
2021
¥3,432¥3,254

Thousands of
U.S. dollars
2022$24,522

Other
Total

1,039

4,081

7,833

¥4,293¥7,514$32,355

Current assets

3,462

6,413

26,092

831

1,100

6,262

Non- current assets

Lion Corporation

ANNUAL REPORT 2022

34

Note 10: Property, Plant and Equipment(1) Changes in property, plant and equipment
The following tables present changes in book value, acquisition costs and accumulated depreciation and accumulated impairment losses
of property, plant and equipment.
Book value

January 1, 2021

Buildings
andstructures

MachineryandvehiclesMillions of yen
Construction
inprogress

Land

Other

Total

¥27,332¥31,132¥19,922¥35,494¥4,497

Acquisition

75

279

-

14,408204¥118,379
14,968Depreciation(2,381)(7,771)--(2,028)(12,181)

Impairment loss

(2)

(13)

-

-

-

(15)

Sales and disposal

(32)

(119)

-

-

(10)

(163)

210

91

97

3

26

429

17,591¥42,792

24,835¥48,433¥20,019(45,638)¥4,2682,469¥5,159(743)¥120,673

Exchange differences on foreign currencies
Reclassification and otherDecember 31, 2021
Acquisition

129

278

4,035

18,135134

22,714

Depreciation(2,849)(9,611)--(2,056)(14,517)

Impairment loss

(352)

(121)

-

-

(27)

(501)

Sales and disposal

(15)

(193)

(180)

-

(20)

(410)

Exchange differences on foreign currencies

790

697

599

117

88

2,293

3,089
¥43,586

8,142¥47,625¥24,473(13,877)¥8,6432,530¥5,807(115)¥130,137

Reclassification and otherDecember 31, 2022

Depreciation is recognized in cost of sales and selling and administrative expenses on the consolidated statement of profit or loss.
Acquisition cost
Buildings
andstructures¥103,059
99,01181,450Machineryandvehicles¥166,726
160,379
137,222

Millions of yen
ConstructionLandinprogress¥31,593¥8,64327,1394,268
27,04235,494

Accumulated depreciation and accumulated impairment loss
Buildings
andstructures
December 31, 2022
¥59,472
December 31, 2021
56,218January 1, 2021
54,117

Machineryandvehicles¥119,100
111,946
106,089

Millions of yen
ConstructionLandinprogress¥7,120
7,120
7,120
-

Buildings
andstructures

MachineryandvehiclesThousands of U.S. dollars
Construction
Land
in
Other
progress

December 31, 2022
December 31, 2021
January 1, 2021

Book value

December 31, 2021

Other

Total

¥30,429
28,543
26,533¥340,452
319,342
307,742

Other

Total

¥24,621
23,38322,035¥210,314
198,668
189,362

Total$322,479$364,984$150,861$32,170$38,879

Acquisition

978

2,102

30,411

136,663

1,015

171,169

Depreciation(21,472)(72,429)--(15,500)(109,400)

Impairment loss

(2,654)

(918)

-

-

(205)

(3,777)

Sales and disposal(113)(1,460)(1,363)-(158)(3,093)

Exchange differences on foreign currencies

5,960

5,257

4,518

885

666

17,285

Reclassification and other$909,372

23,282

61,362-(104,579)

19,066(869)$328,460$358,900$184,427$65,138$43,763$980,687

Buildings
andstructures

MachineryandvehiclesThousands of U.S. dollars
Construction
Land
in
Other
progress$776,632$1,256,418$238,083

Accumulated depreciation and accumulated impairment loss
Buildings
andstructures
December 31, 2022
$448,173

Machineryandvehicles$897,518

Thousands of U.S. dollars
Construction
Land
in
Other
progress$53,657$‐$185,540

December 31, 2022
Acquisition cost

December 31, 2022

Lion Corporation$65,138

Total$229,312$2,565,583

Total$1,584,887

ANNUAL REPORT 202235

(2) Impairment loss
The company performs an impairment test to some property, plant and equipment if there is any indication that assets may be impaired.
The grouping of the company's business assets are based on individual business units which are the lowest level of generating cash inflows.
Idle assets that are not prospected to use in the future are individually assessed for impairment test.
Impairment loss, which have been included in "Other expense" of consolidated statement of income amounted to \501 million ( U.S.$3,777 thousand)and \15 million for the years ended December 31, 2022 and 2021, respectively.
The significant impairment losses are as following:
For the year ended December 31, 2022, the Group reviewed the grouping of the buildings and structures of the Tokyo office,which were company-wide assets owned by the Group, due to the contract for the transfer of the land and buildings of the Tokyo office.
Then, the Group conducted an impairment test of the Tokyo office as an independent cash-generating unit.
As a result, the carrying amount was reduced to the memorandum value, and impairment loss was recorded \337 million ( U.S.$2,544 thousand).
The recoverable amount of this asset group was calculated based on value in use, and the value in use was evaluated at zero.
(3) Assets pledged as collateral and debt obligations covered by collateral
Assets pledged as collateral and debt obligations covered by collateral at December 31, 2022 and 2021 consisted of the following:
Assets pledged as collateralMillions of yen
Buildings and structures
Machinery and vehicles
Total

2022
¥1,776899¥2,6762021¥1,578732¥2,311Thousands of
U.S. dollars
2022$13,390
6,781$20,172

Debt obligations covered by collateralMillions of yen
2022
Trade and other payables
Total

2021
¥177
¥177

¥311
¥311

Thousands of
U.S. dollars
2022$1,337$1,337(4) Commitments
See " Note 31. Commitments " .

Lion Corporation

ANNUAL REPORT 2022

36

Note 11: Goodwill and Intangible Assets(1) Changes in goodwill and intangible assets
The following tables present changes in book value, acquisition costs, accumulated amortization and accumulated impairment losses,of goodwill and intangible assets.
Book value
GoodwillJanuary 1, 2021

Trademarks

Millions of yen
Intangible assets
Software related
Softwaretemporaryaccount¥2,047¥9,580

Other

Total

¥182

¥6,969¥324¥18,921

Acquisition

-

6

58

5,730

0

5,795

Amortization

-

(11)

(767)

-

(42)

(821)

Impairment loss

-

-

-

-

-

-

Sales and disposal

-

-

(2)

-

-

(2)

Exchange differences on foreign currencies

-

0

4

0

0

4

Reclassification and other

-

-

436

(359)

0

77

December 31, 2021

¥182

¥6,964¥1,778¥14,950¥282¥23,975

Acquisition

145

3

51

1,607

0

1,663

Amortization-(8)(1,821)-(43)(1,873)

Impairment loss

-

-

-

-

-

-

Sales and disposal

-

-

(0)

-

-

(0)

Exchange differences on foreign currencies

-

0

27

2

0

31

Reclassification and other-7

15,968(15,859)

4

121

¥327

¥6,967¥16,003

¥701

¥244

¥23,917

December 31, 2022

The main contents of acquisition is due to individual acquisition.
Amortization is recognized in cost of sales and selling, general and administrative expenses on the consolidated statement of profit or loss.
Acquisition cost
Goodwill

December 31, 2022
December 31, 2021
January 1, 2021

Trademarks

¥327
182
182

¥39,692
39,67939,673

Millions of yen
Intangible assets
Software related
Softwaretemporaryaccount¥25,491¥701
9,084
15,200
8,563
9,830

Other

Total

¥906
1,380
1,350

¥66,791
65,34659,417

Accumulated amortization and accumulated impairment loss

Goodwill
December 31, 2022
December 31, 2021
January 1, 2021

Trademarks¥-¥32,724
32,71532,703

Book value
Goodwill

Trademarks

Millions of yen
Intangible assets
Software related
Softwaretemporaryaccount¥9,488¥7,306
250
6,515
250
Thousands of U.S. dollars
Intangible assets
Software related
Softwaretemporaryaccount$13,399$112,667

Other

Total

¥662
1,098
1,025

Other

¥42,874
41,37040,495

Total

December 31, 2021

$1,376$52,483

Acquisition

1,095

26

387

12,116

3

12,532

Amortization

-

(64)

(13,729)-(324)(14,117)

Impairment loss

-

-

-

-

-

-

Sales and disposal

-

-

(3)

-

-

(3)

Exchange differences on foreign currencies

-

6

206

23

1

235

$2,471

57$52,507

120,337$120,596(119,516)$5,29034$1,842912$180,235

Reclassification and otherDecember 31, 2022
Acquisition cost

December 31, 2022

Thousands of U.S. dollars
Intangible assets
Software Goodwill
relatedSoftwareTrademarks
temporaryaccount$2,471$299,112$192,098$5,290$2,128

Other$6,831$180,676

Total$503,330

Accumulated amortization and accumulated impairment loss

December 31, 2022

Thousands of U.S. dollars
Intangible assets
Software Goodwill
relatedSoftwareTrademarks
temporaryaccount$‐$246,605$71,501$‐

Other$4,989

Lion Corporation

Total$323,095

ANNUAL REPORT 202237

(2) Intangible assets with indefinite useful lives
Intangible assets with indefinite useful lives are some trademarks.
The company classified them to the intangible assets with indefinite useful lives because they will continue as long as the company continues the business.
(3) Research and development costs recognized as expenses
Research and development costs that are not eligible for capitalization are expensed as incurred.
Research and development costs recognized as expenses amounted to ¥11,077 million(U.S.$83,480 thousand) and ¥11,180 million
for the years ended December 31, 2022 and 2021, respectively.
In addition, the company didn't recognize significant internally generated intangible assets.
(4) Significant intangible assets and impairment tests
Significant intangible assets recognized in the consolidated statement of financial position are the trademarks of antipyretic analgesics " BUFFERIN " in the Asia-Oceania region(except for some countries and regions, including China). The carrying amount of the trademarks at December 31, 2022 and 2021 are ¥6,560 million(U.S.$49,435 thousand).
These trademarks classified as intangible assets with indefinite useful lives are tested for impairment annually.
This testing involves aggregating related businesses in a single cash-generating unit, and measuring the recoverable amount based on the value in use.
The value in use is calculated by discounting to present value of the estimated future cash flow, which in turn is based on business plans that have been approved by management.
The discount rate applied is 5.7%(December 31, 2021：5.6%), which is based on the pre-tax weighted average cost of capital of the cash-generating unit.
The business plans are based on past experience and external information, and are prepared to reflect management's assessment of the future prospects for the businesses concerned.
In addition, future cash flow beyond the period forecast in the business plans is assumed to have a growth rate of 0%.
The significant assumptions in estimating the value in use are sales projections, growth rate and the discount rate.
It is judged that the likelihood of recognizing a significant impairment loss for the cash-generating unit is low, and that this would be the case even if any of the key
assumptions used for determining impairment were to change within a reasonably foreseeable range.
The company doesn't recognize impairment loss from goodwill and intangible assets with indefinite useful lives at December 31, 2022 and 2021.
(5) Impairment loss
There are no impairment losses on goodwill and intangible assets.
(6) Intangible assets pledged as collateral
No intangible assets has been pledged as collateral to secure the debt.
(7) Commitments
See " Note 31. Commitments " .

Lion Corporation

ANNUAL REPORT 2022

38

Note 12: Investments Accounted for Using the Equity Method
Investments accounted for using the equity method at December 31, 2022 and 2021 consisted of the following:

Affiliated companies

Investments accounted for using the equity method

Millions of yen
2022
2021
¥6,935¥8,939Thousands of
U.S. dollars
2022$67,369

Thousands ofProfitMillions of yen
2022
2021
¥2,229¥1,824

Other comprehensive income
Total

24

(331)

187

¥1,849¥1,898$13,934

The Group's share

U.S. dollars
2022$13,747

There are no individually important affiliated companies accounted for by the equity method for the years ended December 31, 2022 and 2021.

Lion Corporation

ANNUAL REPORT 2022

39

Note 13: Income taxes(1)Deferred tax assets and deferred tax liabilities
The major components of deferred tax assets and liabilities at December 31, 2022 and 2021 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2022
Deferred tax assets
Provisions, and Other current liabilities,etc.
Retirement benefit assets and liabilities
Excess depreciation
Accrued enterprise and office taxes
Valuation loss on inventories
Unrealized profit on inventories and non-current assets
Other
Total
Deferred tax liabilities
Special depreciation of non-current assets
Valuation difference upon contribution of securities toretirement benefit trust
Temporary differences due to distribution of retained
earnings at overseas affiliates
Net gain (loss) on revaluation of financial assets measured
at fair value through other comprehensive income
Trademarks
Other
Total

2021

2022

¥4,435
7,234
711
172
528
1,173
2,182
¥16,438¥4,679
8,323
660
278
561
1,279
1,842
¥17,626$33,443
54,520
5,360
1,299
3,981
8,842
16,431$123,877¥(1,929)¥(827)$(14,537)(3,862)(3,902)(29,108)(2,891)(2,384)(21,787)(3,625)(2,046)(873)¥(15,227)(3,406)(2,035)(335)¥(12,891)(27,319)(15,426)(6,575)$(114,751)

The major changes to deferred tax assets and liabilities during each fiscal year are as follows.
Thousands of
U.S. dollars

Millions of yen
2022
Net deferred tax assets and (liabilities)
Balance at beginning of the year
Deferred income taxes
Deferred taxes related to other comprehensive income items
Net gain (loss) on revaluation of financial assets measured at fair value
Net gain (loss) on derivatives designated as cash flow hedges
Remeasurements of defined benefit plans
Other
Balance at end of the year

2021

2022

4,735
(2,528)

4,353
(124)

$35,682(19,057)(367)
18(1,021)373¥1,210

(116)
0
585
37
¥4,735(2,772)140(7,700)
2,832$9,126(2) Unrecognized deferred tax assets
Deductible temporary differences, net loss carryforwards and tax credit carryforwards for which deferred tax assets
are not recognized are as follows.
Thousands ofMillions of yen
U.S. dollars
2022
2021
2022
$ 64,962¥8,602¥8,620
Deductible temporary differences
There are no net loss carryforwards or tax credit carryforwards for which deferred tax assets are not recognized.

Lion Corporation

ANNUAL REPORT 202240

(3) Unrecognized deferred tax liabilities
There were no significant taxable temporary differences related to the investments in subsidiaries not recognized
as deferred tax liabilities at Dcember 31, 2022 and 2021.
(4) Income taxes
Income taxes recognized through profit or loss are as follows.

Current income taxes
Deferred income taxes
Origination and reversal of temporary differences
Adjustment and reversal of deferred tax assets
Total

Millions of yen
2022
2021
¥5,653¥8,5332,524
5¥8,182665(541)¥8,657

Thousands of
U.S. dollars
2022$42,605
19,014
43$61,662(5) Reconciliation of the applicable tax rate and the average effective tax rate
The main factors responsible for the difference between the applicable tax rate and the average effective tax rate are as follows.
2022
2021
Applicable tax rate
30.6%
30.6%
0.2%
0.2%
Entertainment expenses and other non-deductible items
Dividend income and other items not recognizable asincome for tax purposes(1.0%)
0.2%
Unrecognized deferred tax assets
0.1%(0.0%)
Differences in tax rates applicable to foreign subsidiaries(1.8%)(2.2%)(2.1%)(3.1%)
Research and development expenses and other special deductions
0.5%
0.5%
Foreign tax credits(0.4%)(0.8%)
Other
Average effective tax rate
26.1%
25.4%
The Company is subject to taxes mainly comprising income taxes, residence taxes and enterprise taxes.
Calculated based on these taxes, the statutory tax rate for the fiscal years ended December 31, 2022 and December 31, 2021 was 30.6%.
However, overseas subsidiaries are subject to the income and other taxes of their respective locations.

Lion Corporation

ANNUAL REPORT 2022

41

Note 14: Trade and Other Payables
Trade and other payables at December 31, 2022 and 2021 consisted of the following:

Accounts（Trade） payable and Notes payable
Accrued payables and accrued expenses
Refund liabilities and contract liabilities*
Total

Millions of yen
2022
2021
¥64,151¥67,887

Thousands of
U.S. dollars
2022$511,583

51,85851,569390,798

6,278

7,426

47,314¥126,024¥123,146$949,695* This figure for the fiscal year ended December 31, 2022 and 2021 includes ¥5,444 million(U.S.$41,026 thousand) and¥5,826 million of refund liabilities in the form of discounts, rebates, etc.

Lion Corporation

ANNUAL REPORT 2022

42

Note 15: Borrowings
Borrowings at December 31, 2022 and 2021 consisted of the following:

Short-term borrowings
Current portion of long-term borrowings

Millions of yen
2022
2021
¥1,150¥1,150Thousands of
U.S. dollars
2022$8,666

283

261

2,137
1,068

Long-term borrowings
Total

141

392

¥1,575¥1,803$11,871

Current liabilities

1,433

1,411

10,803

141

392

1,068

Non-Current liabilities

Lion Corporation

ANNUAL REPORT 2022

43

Note 16: Other Financial Liabilities
Other financial liabilities at December 31, 2022 and 2021 consisted of the following:Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Financial liabilities measured at amortized cost
Long-term deposits¥2,378¥2,468$17,925

Other
Financial liabilities for which hedge
accounting was applied

1,621

856

12,21959¥3,325$30,593

449

Derivatives
Total¥4,059Current liabilities

1,681

855

12,668

Non-Current liabilities

2,378

2,469

17,925

Lion Corporation

ANNUAL REPORT 2022

44

Note 17: Other Liabilities
Other liabilities at December 31, 2022 and 2021 consisted of the following:Accrued bonus

Millions of yen
2022
2021
¥5,334¥4,256

Thousands of
U.S. dollars
2022$32,073

Accrued paid annual leave

2,418

2,431

18,223

Other accrued employee benefits

1,024

1,034

7,719

Other
Total

1,338

931

10,083¥9,036¥9,732$68,098

Current liabilities

7,061

8,178

53,216

Non-Current liabilities

1,974

1,554

14,883

Lion Corporation

ANNUAL REPORT 2022

45

Note 18: Provisions
The changes in provisions during the year ended December 31, 2022 consisted of the following:

At beginning of year
Increase
Decrease (used)
Decrease (reversal)
At end of year

Millions of yen
Provisionfor sales*1
Other*2¥1,665
¥340
1,436
2,033
(1,665)(9)(296)¥1,436¥2,066

Thousands of
U.S. dollars
Provisionfor sales
Other$12,550$2,563
10,825
15,322(12,550)(74)(2,236)$10,825$15,574

Notes: *1.Provision for sales are mainly consisted of the expected expenditure for sales promotion that will be paid within a year
*2.The restoration obligation associated with the real estate lease agreement of the head office is included.
Based on the real estate lease agreement, the cost of restoration to the original state at the time of moving out
is calculated based on a third party's estimate.
Amounts expected to be paid in the future are recognized as asset retirement obligations.
The Group expects restoration expenditures to be incurred after one year or more,
however, this will be affected by future business plans and other factors.

Lion Corporation

ANNUAL REPORT 2022

46

Note 19: Post-employment benefits
The Company and certain consolidated subsidiaries maintain funded and unfunded defined benefit and defined
contribution retirement plans to pay employee post-employment benefits.
The main retirement benefit plan in which the Company participates is the LION PENSION FUND.
Furthermore, the Company and 9 other companies maintain lump-sum retirement benefit plans.
Furthermore, the Company has established a retirement benefit trust.
(1) Defined benefit plans
The amounts related to defined benefit pension plans presented in the Consolidated Statement of
Financial Position are as follows.
Thousands of
U.S. dollars

Millions of yen
2021

2022
Present value of defined benefit obligation
Fair value of plan assets
Total
Retirement benefit liabilities
Retirement benefit assets
Net liabilities presented in the Consolidated Statement of Financial Position¥57,287(56,003)¥1,284
10,431(9,147)¥1,2842022¥64,428(61,512)¥2,916
12,684(9,768)¥2,916$431,709(422,033)$9,67678,611(68,935)$9,676

Millions of yen
2021
2022
¥64,428¥66,558
2,188
2,315
215
212

Thousands of
U.S. dollars
2022$485,523
16,492
1,622

A. Changes in the present value of defined benefit obligation

Balance of defined benefit obligation at beginning of year
Current service costs
Interest expenses
Remeasurements
Experience adjustments
Actuarial gains and losses arising from changes
in demographic assumptions
Actuarial gains and losses arising from changes
in financial assumptions
Retirement benefit payments
Other
Balance of defined benefit obligation at end of year

(678)

(237)

(5,113)---(3,836)(5,306)276¥57,287(4,424)4¥64,428(28,912)(39,987)2,084$431,709

The weighted average duration of the defined benefit obligation was 10.1 years at December 31, 2022 and 10.6
years at December 31, 2021.
B. Changes in the fair value of plan assets

Balance of plan assets at beginning of year
Interest income
Remeasurements
Return on plan assets(excluding interest income)Contribution by the employer
Retirement benefit payments
Other
Balance of plan assets at end of year

Millions of yen
2021
2022
¥61,512¥63,485
210
206
(984)
384
(5,202)
82¥56,003

1,792
320(4,312)
19¥61,512

Thousands of
U.S. dollars
2022$463,548
1,584(7,417)2,899(39,203)621$422,033

The Group's planned contribution to defined benefit plans in the consolidated fiscal year ending December 31, 2023 is ¥426 million (U.S.$3,216 thousand).

Lion Corporation

ANNUAL REPORT 202247

Plan asset management policy
The pension assets held by the LION PENSION FUND account for approximately 60% of the Group's plan
assets. Management of the LION PENSION FUND's pension assets is aimed at securing the necessary total
returns over the long term to ensure the payment of the defined benefit obligation going forward. Specifically,
the Group manages such assets by considering factors that include the expected rates of return, risk
and combinations of investment assets to determine an investment asset mix that will be optimal into the future
and then maintaining this mix. Every year, the asset mix is evaluated, and if the conditions upon which it wasformulated have changed, it is revised as needed. At present, in light of the fund’s highly mature financial status
with retirement benefit payments greatly exceeding revenues from premiums, the fund is managed in a relatively
low-risk manner with an asset mix focused primarily on bonds.
The retirement benefit trusts set up for the defined benefit corporate pension plans operated by the LIONPENSION FUND at the Company and the lump-sum retirement benefit payment plans maintained by theCompany account for approximately 40% of plan assets. The Company's strategically held shares account forthe majority of the assets in these retirement benefit trusts. The investment profitability of each suchstockholding is recognized as cost of capital and other items, and the Company's board of directors examines
the economic rationality of each such stockholding on an annual basis.
C. Components of plan assets
The components of plan assets are as follow.
Thousands of
U.S. dollars

Millions of yen
2021

2022

Bonds
Stocks
Other

Total

2022

Plan assets withquoted prices
in active markets

Plan assets
without
quoted prices
in active markets

Plan assets withquoted prices
in active markets

Plan assets
without
quoted prices
in active markets

Plan assets withquoted prices
in active markets

Plan assets
without
quoted prices
in active markets¥20,205
9,555¥29,760¥22,336
3,907¥26,243¥19,874
8,376¥28,251¥28,438
4,822¥33,261$152,263
72,006$224,268$168,322
29,443$197,765

D. Actuarial assumptions
The main actuarial assumptions used at the period-end are as follows.
2021

2022
Discount rate(%)

0.3%

1.0%

E. Sensitivity analysis of actuarial assumptions
The changes to the period-end defined benefit obligation if the discount rate were to change as shown below are as follows.
This analysis assumes that other relevant variables are fixed.
Thousands of
U.S. dollars

Millions of yen
2022

2021

2022

Discount rate(+0.5%)¥(2,448)¥(2,930)$(18,453)

Discount rate(-0.5%)¥2,687¥1,897$20,253(2) Defined contribution plans
The amounts recognized as expenses related to defined contribution plans are as follows.
Thousands of
U.S. dollars

Millions of yen
2022
Expenserelated to defined
contribution plans¥3,0622021¥3,0742022$23,075

Lion Corporation

ANNUAL REPORT 2022

48

Note 20: Share-based Payment(1)Stock option system① Details of stock options
Company nameResolution date
Grantee information
Stock information *1
Grant dateSettlement
Vesting conditions
Length of service
Exercise period

Company nameResolution date
Grantee information
Stock information *1
Grant dateSettlement
Vesting conditions
Length of service
Exercise period

Company nameResolution date
Grantee information
Stock information *1
Grant dateSettlement
Vesting conditions
Length of service
Exercise period

Submitting Company
March 28, 2008
9 Directors(excluding external directors)
9 Employees（Executive
officer）
Common stock 143,771
April 15, 2008
Equity-settled*2－
From April 15, 2008
to April 14, 2038

Submitting Company
March 27, 2009

Submitting Company
March 30, 2010

Submitting Company
March 30, 2011

Common stock 99,781
April 15, 2009
Equity-settled*4－
From April 15, 2009
to April 14, 2039

Common stock 103,778
April 15, 2010
Equity-settled*4－
From April 15, 2010
to April 14, 2040

Submitting Company
December 27, 2011
1 Directors
10 Employees（Executive
officer）
Common stock 71,392
January 12, 2012
Equity-settled*2－
From January 12, 2012
to January 11, 2042

Submitting Company
March 29, 2012

Submitting Company
March 28, 2013

Submitting Company
December 25, 2013
2 Directors
8 Directors
8 Directors
8 Employees（Executive(excluding external directors) (excluding external directors)
officer）
Common stock 96,418
Common stock 99,716
Common stock 41,576
April 17, 2012
April 15, 2013
January 14, 2014
Equity-settled
Equity-settled
Equity-settled
*4
*4
*2
－
－
－
From April 17, 2012
From April 15, 2013
From January 14, 2014
to April 16, 2042
to April 14, 2043
to January 13, 2044

Submitting Company
March 28, 2014
8 Directors(excluding external directors)
Common stock 82,672
April 15, 2014
Equity-settled*4－
From April 15, 2014
to April 14, 2044

Submitting Company
December 25, 2014
7 Employees（Executive officer）
Common stock 34,762
January 13, 2015
Equity-settled*3－
From January 13, 2015
to January 12, 2045

Submitting Company
March 27, 2015
8 Directors(excluding external directors)
Common stock 73,062
April 13, 2015
Equity-settled*4－
From April 13, 2015
to April 12, 2045

9 Directors
8 Directors
8 Directors(excluding external directors) (excluding external directors) (excluding external directors)

Lion Corporation

Common stock 97,575
April 18, 2011
Equity-settled*4－
From April 18, 2011
to April 17, 2041

Submitting Company
December 25, 2015
11 Employees（Executive officer）
Common stock 29,447
January 12, 2016
Equity-settled*3－
From January 12, 2016
to January 11, 2046

ANNUAL REPORT 2022

49

Company nameResolution date
Grantee information
Stock information*1
Grant dateSettlement
Vesting conditions
Length of service
Exercise period

Submitting Company
March 30, 2016
6 Directors(excluding external
directors)
Common stock 30,892
April 18, 2016
Equity-settled*4－
From April 18, 2016
to April 17, 2046

*1:
The number of stock options granted are converted to the number of stock.
*2:i)Directors
Directors can exercise the stock options warrant within ten days from the next day they are retired after their term of 1 year (exclude death), or lose their positions.
They have to exercise the stock options warrant in a lump.
ii)Executive officer
Executive officer can exercise the stock options warrant within ten days from the next day they are retired after their term of 1 year (exclude death), or lose their positions.
They have to exercise the stock options warrant in a lump. However, the board of directors can determine that certain directors can exercise their stock options warrant(not later than 1 year )divided proportionally to the term they are qualificated, when their terms in office are no more than 1 year or they lose their positions
because they are retired during their tenure no more than 1 year. Fractional of divided stock options warrants are rounded off.
iii)Board of directors can determine the term to exercise stock options warrant, during the period mentioned above.
iv)Other conditions are fixed under the contract between the Company and guarantees based on the determination of the board of directors.
*3:i)Executive officer can exercise the stock options warrant within ten days from the next day they are retired after their term of 1 year (exclude death), or lose their positions.
They have to exercise the stock options warrant in a lump. However, the board of directors can determine that certain directors can exercise their stock options warrant(not later than 1 year )divided proportionally to the term they are qualificated, when their terms in office are no more than 1 year or they lose their positions because
they are retired during their tenure no more than 1 year or they are retired from employees or being directors. Fractional of divided stock options warrants are rounded off.
ii)Board of directors can determine the term to exercise stock options warrant, within the period mentioned above.
iii)Other conditions are fixed under the contract between the Company and guarantees based on the determination of the board of directors.
*4:i)Executive officer can exercise the stock options warrant within ten days from the next day they are retired after their term of 1 year (exclude death), or lose their positions.
They have to exercise the stock options warrant in a lump.
ii)Board of directors can determine the term to exercise stock options warrant, within the period mentioned above.
iii)Other conditions are fixed under the contract between the Company and guarantees based on the determination of the board of directors.

Lion Corporation

ANNUAL REPORT 202250

②Numbers of stock options and weighted average exercise price
2021
2022
Weighted average
Weighted average
Number of shares exercise price
Number of shares exercise price
(yen)
(yen)
Beginning balance of outstanding
231,9531
234,630
1GrantedExpiredExercised
16,006
1
2,677
1
Expired at maturity
Ending balance of outstanding
215,947
1
231,953
1
Ending balance of exercisable
Range of exercise price1
1
Weighted averageremaining term of contract
20 years
21 years③Numbers of Exercised during the period
2021
2022
Weighted average
Weighted average
Number of shares exercise price
Number of shares exercise price
(yen)
(yen)
December 25, 2013
5,060
1,526
December 25, 2014
4,966
1,526
December 25, 2015
2,677
1,526
2,677
2,142
March 30, 2016
3,303
1,315
(2)Performance Share Plan
The Company introduced a performance share plan (hereinafter the "Plan") for the members of the board of directors (excluding outside directors)
and executive officers (collectively, "Directors, etc.")for the aim of raising medium and long term performance and enhancing the value of the company.
The Company has introduced the Plan using a structure called a Board Incentive Plan (hereinafter "BIP Trust") . A BIP Trust is designed as an executive incentive plan
based on the performance share plans and restricted stock plans in the U.S. The Company's shares that are acquired through the BIP Trust and amount equivalent
to the converted value of such shares will be vested or paid to directors, etc. depending on the level of achievement of performance targets.
(3) Share-based Payment Expenses
Share-based Payment Expense for the fiscal year ended December 31, 2022 and 2021 were ¥172 million (U.S.$1,302 thousand) and ¥211 million , respectively.
These are recognized in the consolidated statements of profit or loss as selling general and administrative expenses.

Lion Corporation

ANNUAL REPORT 2022

51

Note 21: Equity(1) Share capital
The following table presents changes in the number of outstanding shares and authorized shares.
Thousands ofshares
2022
2021
1,185,600
1,185,600
Number of authorized shares
Number of outstanding shares
At beginning of period
Net change
At end of period

299,115
299,115

299,115(6,578)292,536*1. All shares issued by the Company are ordinary shares which have no par value and no limitations on rights.
*2. The decrease in the number of shares issued was due to the retirement in treasury stock.
(2) Capital surplus
The Companies Act of Japan provides that more than one-half amount of contribution to the Company shall be recorded as share capital andthe amount not recorded as share capital shall be recorded as capital surplus. The Companies Act of Japan also provides that capital reserve may beappropriated to the share capital by resolution of the shareholders meeting.
(3) Retained earnings
The Companies Act of Japan provides that an amount equal to 10% of the amount to be disbursed as distributions of capital surplus(other than the capital reserve) and retained earnings (other than the earned reserve) be transferred to the capital reserve and the earned reserve,
respectively, until the legal reserve equals 25% of the capital stock account.
Transferred earned reserves can be appropriated to reserve for future loss. The reversal of earned reserves is determined in the shareholders meeting.
(4) Treasury stockThousands ofshares2022
At beginning of period
Increase due to requests of shareholders
owning odd lot shares of ordinary shares
Decrease due to request of shareholders
owning odd lot shares of ordinary shares
Decrease due to exercise of stock options
Decrease due to sales of ordinary sharesto the BIP Trust

2021
8,382

8,399

1

1

(0)

-

(16)

(2)

(63)

(15)

6,578
Purchases(6,578)Retirement
At end of period
8,382
8,304
The increase in the number of shares due to purchases of treasury stock is due to the Tokyo Stock Exchange's off-auction treasury stock repurchase (ToSTNeT-3).
(5) Dividends
Dividends paid for each year are as following:
Fiscal year ended December 31, 2022
Resolution
February 14, 2022
Board of Directors
August 8, 2022
Board of Directors

Class of shares

Total dividends(Thousands of
U.S. dollars)(Millions of yen)

Dividends per share(Yen)

Record date($)

Effective dateOrdinary shares

3,498

26,36012.00

0.09 December 31, 2021

Ordinary shares

3,419

25,767

12.00

0.09

June 30, 2022

March 2, 2022
September 5, 2022

The amount of total dividends approved by the board of directors on February 14, 2022 included dividends of ¥9 million(U.S.$70 thousand) dividend on the company's stock held by the BIP trust.
The amount of total dividends approved by the board of directors on August 8, 2022 included dividends of ¥8 million(U.S.$64 thousand) dividend on the company's stock held by the BIP trust.
Fiscal year ended December 31, 2021
Resolution

Type of stock

Total dividends(Millions of yen)February 12, 2021
Board of Directors

Ordinary shares

3,494

August 4, 2021
Board of Directors

Ordinary shares

3,498

Dividends per
share
(Yen)

Record date

Effective date

12.00

December 31, 2020

March 2, 2021

12.00

June 30, 2021

September 3, 2021

The amount of total dividends approved by the board of directors on February 12, 2021 included dividends of ¥5 million dividend on the company's stock held by the BIP trust.
The amount of total dividends approved by the board of directors on August 4, 2021 included dividends of ¥9 million dividend on the company's stock held by the BIP trust.
Dividends for which the effective date is in the following fiscal year are as follows:
Fiscal year ended December 31, 2022
Resolution

Type of stockFebruary 13, 2023
Board of Directors

Ordinary shares

Total dividends(Thousands of
U.S. dollars)(Millions of yen)

3,704

27,914

Dividends per share(Yen)

Record date

($)
13.00

Effective date

0.10 December 31, 2022

March 2, 2023

The amount of total dividends approved by the board of directors on February 13, 2023 included dividends of ¥9 million(U.S.$69 thousand) dividend on the company's stock held by the BIP trust.
Fiscal year ended December 31, 2021
Resolution

Type of stock

Total dividends(Millions of yen)February 14, 2022
Board of Directors

Ordinary shares

3,498

Dividends per
share
(Yen)
12.00

Record date

Effective date

December 31, 2021

March 2, 2022

The amount of total dividends approved by the board of directors on February 14, 2022 included dividends of ¥9 million dividend on the company's stock held by the BIP trust.

Lion Corporation

ANNUAL REPORT 2022

52

Note 22: Other Comprehensive Income
Other comprehensive income during the years ended December 31, 2022 and 2021 consisted of the following:Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Items that will not be reclassified to profit or loss
Net gain (loss) on revaluation of financial assets measured at fair value
through other comprehensive income
Gains/(losses) during the year

¥1,097¥(30)

Gains/(losses) before tax effect

1,097

(30)

8,268

Amount of tax effectGains/(losses) after tax effect

(367)

116

(2,772)¥729¥85$5,496

Gains/(losses) during the year

¥3,545¥2,042$26,715

Gains/(losses) before tax effect

3,545

2,042

26,715

Amount of tax effectGains/(losses) after tax effect(1,021)(585)(7,700)¥2,523¥1,457$19,015

Gains/(losses) during the year

¥24

¥30

$187

Gains/(losses) before tax effect

24
-

30

187

¥24

¥30

$187

Gains/(losses) during the year

¥(60)

¥0

$(457)

Gains/(losses) before tax effect

(60)

0

(457)

Amount of tax effectGains/(losses) after tax effect

18

(0)

140

¥(42)

¥0

$(317)¥5,680-¥1,824$42,806¥1,82442,806¥1,824$42,806$8,268Remeasurements of defined benefit plans

Share of other comprehensive income of investments accounted forusing the equity method

Amount of tax effectGains/(losses) after tax effect-Items that may be subsequently reclassified to profit or loss
Net gain (loss) on derivatives designated as cash flow hedges

Exchange differences on translation of foreign operations
Gains/(losses) during the year
Reclassification during the year to profit or loss

5,680
-

Gains/(losses) before tax effectAmount of tax effectGains/(losses) after tax effect¥5,680-Share of other comprehensive income of investments accounted forusing the equity method
Gains/(losses) during the year
Reclassification during the year to profit or loss¥-

Gains/(losses) before tax effect-Amount of tax effectGains/(losses) after tax effect-¥(362)
(362)

$-

¥-

¥(362)$--¥10,286
10,286(1,370)¥8,915¥3,504
3,504(468)¥3,035$77,520
77,520(10,332)$67,188

Total
Gains/(losses) during the year
Reclassification during the year to profit or loss
Gains/(losses) before tax effectAmount of tax effectGains/(losses) after tax effectLion Corporation

ANNUAL REPORT 2022

53

Note 23: Revenue from contracts with customers
The Group comprises three reportable segments divided by product and service type and by region, which are in turn based on business divisions and companies;
namely, the reportable segments are Consumer Products Business, Industrial Products Business and Overseas Business.
The Group’s reportable segments are component units of the Group for which separate financial information is available and that are subject to regular review
by the board of directors for the purpose of making decisions regarding the allocation of management resources and evaluating business performance.
Therefore, the revenue recognized at reportable segments and relevant business are represented as net sales.
Moreover, Net sales are classified by country or geographic region based on customer location.
(1) Disaggregation of revenue
Disaggregation of revenue during the year ended December 31, 2022 and 2021 consisted of the following:Japan
Consumer Products BusinessIndustrial Products Business
Overseas Business
Other
Total
Adjustment
Consolidated¥230,037
33,151
3,475
266,664(18)¥266,646

Japan
Consumer Products BusinessIndustrial Products Business
Overseas Business
Other
Total
Adjustment
Consolidated¥229,131
31,694
3,193
264,019(62)¥263,957

Japan
Consumer Products BusinessIndustrial Products Business
Overseas Business
Other
Total
Adjustment
Consolidated$1,733,515
249,826
26,1892,009,530(138)$2,009,393

Millions of yen
2022
Asia
Thailand¥454¥3,986618
116,600
48,239121,041
48,857¥121,041¥48,857
Millions of yen
2021
Asia
Thailand¥454¥2,840452
97,776
41,878101,070
42,331¥101,070¥42,331
Thousands of
U.S. dollars
2022
Asia
Thailand$3,424$30,040
4,661
878,679
363,520
912,142
368,181$912,142$368,181

Other
¥28
711
1,442
2,181
¥2,181

Other
¥10
244
951
1,205
¥1,205

Other
$215
5,361
10,867
16,443$16,443

Total¥230,520
37,849118,0423,475
389,887(18)¥389,869

Total¥229,595
34,77998,7273,193
366,296(62)¥366,234

Total$1,737,154
285,227
889,546
26,1892,938,115(138)$2,937,978

The Consumer Products Business engages in the manufacture and sale of commodities, over-the-counter drugs and foods with function claims, primarily in Japan,
Its customers are primarily corporate customers and private customers in Japan who engage in the wholesale or retail business.
The Industrial Products Business engages primarily in the manufacture and sale of chemical raw materials, industrial products and other items in Japan and overseas.
Its customers are primarily chemical manufacturers, hotels, restaurants, hospitals, nursing homes, schools, governments, companies, food factories,
linen supply factories and laundry shops and so on.
The Overseas Business engages mainly in the manufacture and sale of commodities by affiliated overseas businesses.
Its customers are primarily corporate customers overseas who engage in the wholesale or retail business.
Other Business includes subsidiaries located in Japan primarily undertake operations like construction contracting and so on, related to Group businesses.
See Note 3 "Significant Accounting Policies (15) Revenue" regarding the timing of satisfaction of performance obligations in contracts with customers,
the transaction price and the method of calculating the amount allocated to performance obligations.
(2) Contract balances
Contract balances with customers at December 31, 2022 and 2021 consisted of the following:
Millions of yen

Receivables from contracts with customers
Notes and accounts receivable
Contract assets
Total
Contract liabilities
Total

Thousands of
U.S. dollars

2022

2021

2022

¥69,382
184¥69,567261¥261¥69,215316¥69,531950¥950$522,856
1,393$524,248
1,969$1,969The amount of revenue recognized during the fiscal years ended December 31, 2022 and 2021 included in contract liabilities at the beginning of the year is not significant.
The amount of revenue recognized from performance obligations satisfied or partially-satisfied during the past year is not significant.
Receivables from contracts with customers, contract assets are included in "Trade and other receivables".
Contract liabilities are included in "Trade and other payables".
(3) Transaction price allocated to the remaining performance obligations
The construction contract amount allocated to the remaining performance obligations during the years ended December 31, 2022 and 2021 consisted of the following:Amount allocated to the remaining performance obligations

Millions of yen
2022
2021
¥2,035¥339

Thousands of
U.S. dollars
2022$2,555The Group applies the practical expedient under IFRS 15.121. The information on contracts that have an original expected duration of one year or less is not disclosed.
As of the transaction price allocated to the remaining performance obligations, the Group recognizes revenue in accordance with the progress of contract.
Expected term for the recognition of the total amount and revenue of transaction price allocated to the remaining performance obligations as of December 31,
2022 and 2021 is within 1 year respectively.
In addition, there are no significant amounts in consideration from contracts with customers that are not included in transaction prices.
(4) Assets recognized from the costs to obtain or fulfill a contract with a customer
Closing balance of assets recognized from the costs incurred to obtain or fulfill a contract with a customer is not significant.

Lion Corporation

ANNUAL REPORT 2022

54

Note 24: Classification of Selling, General and Administrative Expenses
Classification of selling, general and administrative expenses during the years ended December 31, 2022 and 2021 consisted of the following:

Personnel expenses

Millions of yen
2022
2021
¥49,916¥50,061

Thousands of
U.S. dollars
2022$377,251

Depreciation and amortization

17,665

14,252

133,126

Sales promotion expenses

31,79428,466

239,597

Transportation and warehousing expenses

20,744

20,169156,323

21,14324,908159,331

Advertising expenses

Lion Corporation

ANNUAL REPORT 2022

55

Note 25: Other Income
Other income during the years ended December 31, 2022 and 2021 consisted of the following:

Royalty income
Gain on disposal of non-current assets *Millions of yen
2022
2021
¥562
¥628

Thousands of
U.S. dollars
2022$4,7395,312

2640,031

797

618

6,007
Other
¥1,208¥6,738$50,778
Total* Gain on disposal of non-current assets in the current consolidated fiscal year are mainly due to the sale of land usedas the Tokyo office owned by Lion Business Service Co., Ltd..
Even after the transfer, the property will be used as the base of our Tokyo office.

Lion Corporation

ANNUAL REPORT 2022

56

Note 26: Other Expenses
Other expenses during the years ended December 31, 2022 and 2021 consisted of the following:

Loss on disposal of inventories

Millions of yen
2022
2021
¥242
¥349

Thousands of
U.S. dollars
2022$2,631

Loss on disposal of non-current assets

355

400

2,679

Impairment loss

501

15

3,777

Other
Total

247

294

1,866

¥1,453¥953$10,954

Lion Corporation

ANNUAL REPORT 2022

57

Note 27: Leases
Leases as a lessee
The Group has entered into leases on certain buildings and other assets as a lessee.
Some leases contain renewal or purchase options.
In addition, lease arrangements do not have escalation clauses or restrictions.
①Income or expenses and cash flows recognized form lease transactions during the year ended December 31, 2022 and 2021 consisted of the following:Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Depreciation expense of Right-of-use assets
Class of Underlying assets
Buildings and structures

¥700

¥655

$5,280Machinery and vehicles

487

500

3,676

Land

31

26

236

55

65

418

¥1,275¥1,248$9,609Other tangible assets
Total
Interest expense on lease liabilities

126

77

955

Expense relating to short-term leases

609

444

4,591

Expense relating to leases of low-value assets
Total amount of lease cash-flows
Gains arising from sale and leaseback transactions

931

942

7,018

3,045
5,305

2,843
-

22,951
39,979②Book value of right-of-use assets at December 31, 2022 and 2021 consisted of the following:Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Class of Underlying assets
Buildings and structures¥29,176¥3,188$219,865

Machinery and vehicles

1,200

1,418

9,046

720

672

5,432

421
¥31,518

136¥5,416

3,173$237,515

Land
Other tangible assets
Total

The amount of Right-of-Use assets increased in the fiscal years ended December 31,2022 and December 31,2021 was ¥27,226 million (U.S$205,171 thousand)and ¥1,911 million, respectively.The increase in the year ended December 31, 2022 is mainly due to the commencement of lease contracts
in connection with the relocation of the Company's head office.
③Lease liabilities
See " Note 30. Financial Instruments (3) Liquidity risk management " for the maturity analysis of lease liabilities.
Leases as a lessor
The Group provide rented dormitories and houses for employees as a part of welfare benefits, which are corresponding to the lease transaction as a lessor.
In addition, from the perspective of effective utilization of assets, the Group leases a portion of its land holdings to third parties.
The amount of lease income in each year and uncollected lease investment are not significant.

Lion Corporation

ANNUAL REPORT 2022

58

Note 28: Finance Income and Finance Costs
Finance income and finance expenses during the years ended December 31, 2022 and 2021 consisted of the following:Thousands of
U.S. dollars
2022

Millions of yen
2022
2021
Finance income
Interest income
Financial assets measured at amortized cost

¥163

¥104

$1,229

508

594

3,833

85

-

642

47

118

357

¥804

¥817

$6,060

Dividend income
Financial assets measured at fair value through other comprehensive income
Other Finance income
Financial assets measured at fair value through profit or loss
Foreign exchange gains, net
Total

Millions of yen
2022
2021

Thousands of
U.S. dollars
2022

Finance costs
Interest expenses
Financial liabilities measured at amortized cost
Total

¥179
¥179

Lion Corporation

¥136
¥136

$1,353$1,353

ANNUAL REPORT 2022

59

Note 29: Earnings per Share(1) Basic earnings per share
Profit for the year attributable to owners of the parent (millions of yen)

2022
¥21,9392021¥23,759

Weighted average number of ordinary shares-basic (thousands of shares)

284,763

290,729

Basic earnings per share (yen)¥77.04¥81.73

Profit for the year attributable to owners of the parent (thousands of U.S. dollars)

2022$165,329

Weighted average number of ordinary shares-basic (thousands of shares)

284,763
0.58

Basic earnings per share (U.S. dollars)(2) Diluted earnings per share
Profit for the year attributable to owners of the parent (millions of yen)

2022
¥21,9392021¥23,759--

Profit for the year used to calculate diluted earnings per share (millions of yen)

21,93923,759Weighted average number of ordinary shares (thousands of shares)

Adjustments to profit for the year (millions of yen)

284,763

290,729

Stock options (thousands of shares)

218

231

Executive compensation BIP trust (thousands of shares)

290

245

285,272

291,206

76.91

81.59

Weighted average number of ordinary shares-diluted (thousands of shares)
Diluted earnings per share (yen)Profit for the year attributable to owners of the parent (thousands of U.S. dollars)
Adjustments to profit for the year (thousands of U.S. dollars)Profit for the year used to calculate diluted earnings per share (thousands of U.S. dollars)
Weighted average number of ordinary shares (thousands of shares)
Stock options (thousands of shares)
Executive compensation BIP trust (thousands of shares)
Weighted average number of ordinary shares-diluted (thousands of shares)
Diluted earnings per share (U.S. dollars)

Lion Corporation

2022$165,329
165,329
284,763218
290
285,272
0.58

ANNUAL REPORT 2022

60

Note 30: Financial Instruments(1) Capital management
The Group's basic policy is to secure investment funds to sustain medium- to long-term growth and to maintain financial soundness.
The Group uses return on equity attributable to owners of the parent (ROE) and return on invested capital (ROIC) as important indicators.
2022
Return on equity attributable toowners of the parent (ROE)
Return on invested capital (ROIC)

2021
8.5％

9.8%

6.0％

8.8%

Return on Invested Capital (ROIC) is NOPAT (Net Operating Profit After Tax) divided by average invested capital (total equity plus interest-bearing debt) for the period.
It is a measure of efficiency and profitability relative to invested capital.
(2)Credit risk management
The Group is exposed to credit risks such as a counterparty's default on its contractual obligations resulting in a financial loss of the group.
Notes and accounts receivable are trade receivables that expose the Group to customer credit risk.

The Group manages that risk with an internal process for investigating and approving customer credit on initial transactions, and by obtaining deposits, collateral or other guarantees as necessary.
The Group also manages due dates and outstanding balances by customer.
The Group limits the use of derivatives to actual risk mitigation needs, and does not use derivatives for trading or other speculative purposes, and reduces credit risk by limiting transactions tohighly creditworthy financial institutions.
In the events that these financial assets are deemed as default, including cases where the assets are still significantly past due, they are considered to be credit-impaired financial assets.
In the events that all or part of the financial assets are evaluated as uncollectable and the Group considers it is appropriate to write off the assets based on the results of credit checks,
the Group directly writes off the book value of financial assets.
The carrying amount of financial assets in the consolidated statement of financial position represents the Group's maximum exposure to the credit risk of financial assets.
①Aging analysis
Aging analysis is not disclosed here because the Group does not have any long overdue accounts receivable.
②Allowance for doubtful receivables
Changes in the allowance for doubtful receivables of trade and other receivables and other financial assets are as follows.
Thousands ofMillions of yen
U.S. dollars
2022
2021
2022
At beginning of year
¥63
¥58
$476
Increase during the year provision
924
3
Decrease (used)
(7)
(16)
(2)
Decrease (reversal)
(0)
(23)
(3)
Other
2
16
2
At end of year
¥63
¥63
$477
(3) Liquidity risk management
Liquidity risk is the risk that the Group may not be able to fulfill its obligation to pay financial liabilities, such as trade payables and loans.
The Group manages its funds effectively using scheduled financing plans and by operating a cash providing system within the Group.
Financial liabilities by maturity date consist of the following.

Carrying amountNon-derivative financial liabilities
Trade and other payables
Borrowings
Lease liabilities
Total¥126,024
1,575
30,596¥158,196

Not later
than 1 year
Non-derivative financial liabilities
Trade and other payables
Borrowings
Lease liabilities
Total¥126,024
1,452
2,618
¥130,096

Carrying amountNon-derivative financial liabilities
Trade and other payables
Borrowings
Lease liabilities
Total¥123,146
1,803
6,571
¥131,521

Not later
than 1 year
Non-derivative financial liabilities
Trade and other payables
Borrowings
Lease liabilities
Total¥123,146
1,439
1,649
¥126,235

Carrying amountNon-derivative financial liabilities
Trade and other payables
Borrowings
Lease liabilities
Total$949,694
11,871
230,567$1,192,133

Millions of yen
2022
Averageinterest rate

Contract
cash flow¥126,024
1,597
42,047¥169,668

2.28%
0.63%
-

Maturity dateJune, 2024
October, 2052-

Millions of yen
2022
Later than 1 year Later than 2 years Later than 3 years Later than 4 years
but not laterbut not laterbut not laterbut not later
than 2 years
than 3 years
than 4 years
than 5 years
¥144
2,371
¥2,516¥2,118¥2,118Millions of yen
2021
Averageinterest rate

Contract
cash flow¥123,146
1,845
7,094
¥132,086

2.45%
1.04%
-

¥1,809¥1,809¥1,556¥1,556

¥133
861
¥995

Thousands of
U.S. dollars
2022
Contract
Averagecash flowinterest rate$949,694
12,035
316,858$1,278,589

2.28%
0.63%
-

¥31,572¥31,572

Maturity dateJune, 2024
February, 2046-

Millions of yen
2021
Later than 1 year Later than 2 years Later than 3 years Later than 4 years
but not laterbut not laterbut not laterbut not later
than 2 years
than 3 years
than 4 years
than 5 years
¥273
1,215
¥1,489Later than
5 years

¥608
¥608

¥482
¥482

Later than
5 years¥2,276¥2,276

Maturity dateJune, 2024
October, 2052-

Lion Corporation

ANNUAL REPORT 2022

61

Thousands of
U.S. dollars
2022
Later than 1 year Later than 2 years Later than 3 years Later than 4 years
but not laterbut not laterbut not laterbut not later
than 2 years
than 3 years
than 4 years
than 5 years

Not later
than 1 year
Non-derivative financial liabilities
Trade and other payables
Borrowings
Lease liabilities
Total$949,694
10,94819,735$980,378$1,087
17,874$18,961$15,962$15,962$13,638$13,638

Later than
5 years$11,725$11,725$237,922$237,922

Average interest rate is a weighted average rate for the ending balance.
In addition, long-term deposits payable is not included above because it is operating guarantee to be returned when business is closed(4) Exchange rate risk
The Group is engaged in business activities worldwide and is exposed to the risk of exchange rate fluctuations arising out of transactions entered into currencies other than its functional currency.
The Group is hedging the risk using derivative instruments, such as foreign exchange contract and currency swaps.
Major exchange rates are as follows.

U.S. dollar
Thai Baht

Yen
2021
2022
Average exchange
Average exchange
Closing rate
Closing rate
rate during therate during the
year
year
132.1
132.7
110.4
115.0
3.7
3.8
3.4
3.4

①Net Exposure to exchange rate risk is as follows.

Thousands of
U.S. dollars
2022
Thai Baht
U.S. dollar

Millions of yen
2021

2022
U.S. dollar
Financial instruments
denominated in foreign currency¥1,931Thai Baht¥277

U.S. dollar

Thai Baht¥1,267¥210$14,551$2,091② Foreign currency sensitivity analysis
The impact on the profit before income taxes of a 10% appreciation of the yen is as follows.
This analysis is assuming that the other factors are constant and there is no significant impact of the net exposure of currencies other than U.S. dollar and Thai Baht.
Millions of yen
2022
2021
U.S. dollar¥(193)¥(126)
Thai Baht
¥(27)
¥(21)
*Above ( ) means the negative impact on the profit before income taxes.

Thousands of
U.S. dollars
2022$(1,455)$(209)(5) Interest rate risk
Interest-bearing liabilities the Group holds are exposed to the risk of fluctuations in interest rates.
The Group maintains a balance between variable and fixed interest rates of loans and uses currency swaps as needed.
Interest rate sensitivity analysis is not disclosed here, because the impact of the fluctuation of market interest rate on profit or loss is limited.

(6) Price fluctuation risk
The Group is holding stock of counterparties and these are exposed to the risk of the fluctuation of market price.
The Group manages the risk by reviewing the fair values of the shares and financial conditions of the issuers periodically.
① Sensitivity analysis
The impact to the Net gain(loss) on revaluation of financial assets measured at fair value through other comprehensive income (before tax) on theConsolidated Statement of comprehensive Income of decreasing by 10% of the listed shares the Group holds is following.
This analysis is assuming that the other factors are constant.
Thousands ofMillions of yen
U.S. dollars
2022
2021
2022
Other comprehensive income(before tax)¥(1,583)¥(1,559)$(11,931)*Above ( ) means the negative impact on Other comprehensive income(before tax).
(7) Fair Value①Fair Value of Financial Instruments(1) Fair Value hierarchy level
The fair value hierarchy of financial instruments is categorized as follows, based on inputs used for fair value measurement.
Inputs include the stock price, foreign exchange rate and interest rate as well as index of financial instruments price and others.
Level 1: Fair value measured using quoted prices in active markets
Level 2: Fair value measured using inputs other than quoted prices categorized within Level 1 that are observable either directly or indirectly
Level 3: Fair value measured using inputs that are not based on observable market data
The fair value hierarchy of financial instruments measured at fair value is shown below.
Millions of yen
2022
Level 3
Level 1
Level 2Financial assets
Other financial assets
Financial assets measured at fair¥¥¥1,561
value through profit or loss
Financial assets measured at fair
15,833
3,035
value through other comprehensive
incomeDerivative assets for which
hedge aoounting is applied
Total¥¥15,833¥4,596
Financial liabilities
Other financial liabilities
Derivative liabilities for which¥¥¥ 59hedge accounting is applied¥¥¥ 59
Total

Total

¥1,561
18,869¥20,430¥ 59¥ 59

Lion Corporation

ANNUAL REPORT 2022

62

Millions of yen
2021
Level 3

Level 1
Financial assets
Other financial assets
Financial assets measured at fairvalue through other comprehensive
incomeDerivative assets for which
hedge aoounting is applied
Total
Financial liabilities¥15,596¥-¥3,921¥19,517

-

-

-

-

¥15,596¥-¥3,921¥19,517

¥-

¥-

¥-

¥-

¥-

¥-

¥-

¥-

Other financial liabilities
Derivative liabilities for which
hedge accounting is applied
Total

Thousands of U.S. dollars
2022
Level 3

Level 1
Financial assets
Other financial assets
Financial assets measured at fairvalue through profit or loss
Financial assets measured at fairvalue through other comprehensive
incomeDerivative assets for which
hedge aoounting is applied
Total
Financial liabilities
Other financial liabilities
Derivative liabilities for which
hedge accounting is applied
Total

Total

Level 2

Total

Level 2$-$-

$ 11,767$ 11,767

119,319-

22,877142,196

-

-

-

-

$119,319$-$34,636$153,963

$-

$ 452

$-

$ 452

$-

$ 452

$-

$ 452

The Group processes transfers between levels of fair value hierarchy when there is an event or a change in circumstances that caused the transfer.
No financial instruments were transferred between levels of the fair value hierarchy for the fiscal years ended December 31, 2022 or 2021.

The measurement methods for the fair value of the main financial assets and liabilities are as follows.
(Derivative assets and liabilities)
Derivative assets and liabilities are measured based on prices provided by financial institution.

(Equity financial instruments)
A market value is used when it is available. A fair value of financial instrument having no market value available is estimated primarily based on the net asset-based evaluation model(a method to calculate corporate value based on net asset of a company issuing the shares or based on a revised amount if any matter requiring revision for the market evaluation).
Any fluctuation on fair value of financial instruments classified in level 3 that would be important in case of any change to unobservable inputs that reflect reasonably possible alternative
assumptions are not expected.
Changes in financial instruments categorized within Level 3 are as follows.
Millions of yen
2022
2021
¥3,068¥3,921Thousands of
U.S. dollars
2022$29,549

Beginning balance
Gains (losses)*
profit or loss¥$1,273¥168
other comprehensive income
12
1,470
195
Purchases
890
2,661
353
Sales
(12)
Others
(41)
(38)
(310)
Ending balance¥3,921$34,636¥4,596*Gains or losses on financial assets at fair value through profit or loss are recognized in "Finance income" and "Finance costs" in the consolidated statement of income.
Gains or losses on financial assets at fair value through other comprehensive income are recognized in "Net gain (loss) on revaluation of financial assets measured at fair value through other comprehensive income"in the consolidated statement of comprehensive income.

Financial instruments categorized within Level 3 are primarily unlisted equity securities. Each responsible department of the Group measures the fair value
based on the evaluation policy and procedures. The calculated Measurement results are approved by appropriate person in charge.
② Financial instruments measured at amortized cost
The following tables present the fair value of major financial instruments measured at amortized cost.
Book values of those that mostly are settled in a short while, or those using a variable rate by which a short-term market rate is being reflected are rational approximations of their fair values andtherefore they are not included in the table below (primary cash and cash equivalents, trade and other receivables, trade and other payables).

Book value
Financial liabilities measured atamortized cost
Borrowings¥-$11,871¥ 1,576

Total¥-

Millions of yen
2021
Fair Value
Level 3
Level 2

Level 1¥1,803

Book value
Financial liabilities measured atamortized cost
Borrowings

Level 1

¥1,575

Book value
Financial liabilities measured atamortized cost
Borrowings

Millions of yen
2022
Fair Value
Level 3
Level 2¥-

¥1,817

Total¥-

Thousands of U.S. dollars
2022
Fair Value
Level 3
Level 2

Level 1$-

$11,881¥ 1,576¥1,817

Total$-$11,881

The measurement method for the fair value is as follows.
(i) Borrowings
The fair values of borrowings are measured by discounting the future cash flows of principals and interests at an interest rate that would apply for a new loan borrowed under similar conditions.

Lion Corporation

ANNUAL REPORT 2022

63

③Equity financial instruments
Equity Securities are held by the Group for maintaining and strengthening the long-medium term relationship with companies.
The Group has designated such equity securities as financial assets measured at fair value through other comprehensive income.
Issuers names and fair values of these securities are as follows.
Thousands of
U.S. dollars

Millions of yen
2022
Saha Pathanapibul Public Company
LimitedSaha Pathana Inter Holding PublicCompany Limited
ARATA CORPORATION
Rengo Co., Ltd.
Inabata & Co., Ltd.

2021

2022

¥4,115¥3,615$31,010

3,486
2,017
829
598

3,081
2,118
794
497

26,272
15,206
6,247
4,511

The Group sells these equity financial instruments considering its fair values (market prices) and the necessity for business.
The total amounts of the fair value of such financial assets at the time of sale and the cumulative gains or losses on sales are as follows.
The cumulative gains or losses (after tax) recognized as other component of equity are transferred to the retained earnings at the time of sale.
Thousands ofMillions of yen
2022
Fair value
Cumulative gains or losses

¥677
405

U.S. dollars

2021¥4,023
3,119

2022$5,103
3,056

Dividend income from equity securities is as follows.
Thousands ofMillions of yen
2022
Equity Securities derecognized in
the period
Equity Securities held at the end of
the period

U.S. dollars

2021

2022

¥6

¥100

$50

501

494

3,783

(8) Derivative and Hedge accounting
In order to hedge cash flow fluctuation risks caused by the foreign exchange fluctuations, the Group uses forward foreign exchange contracts as a hedging method and designates them as a cash flow hedge.
Details of the method of hedge accounting applied as a cash-flow hedege at December 31, 2022 are as follows.
There is no amount of hedge accounting at December 31, 2021.
Millions of yen
2022
Account name on
Book value
Contract amount More than 1 year
the Consolidated
AssetsLiabilities
Statement of
Foreign exchange risk
Forward foreign exchange
Other financial
contracts¥818¥¥¥59 liabilities

Contract amountForeign exchange risk
Forward foreign exchange
contracts$6,170Thousands of U.S. dollars
2022
Book value
More than 1 year
AssetsLiabilities$-$-

Account name on
the Consolidated

Other financial$452 liabilities

Lion Corporation

ANNUAL REPORT 2022

64

Note 31: Commitments
The significant commitments to purchase property, plant and equipment and intangible assets
at December 31, 2022 and 2021 consisted of the following:

Property, plant and equipment and intangible assets

Millions of yen
2022
2021
¥7,365¥19,087

Lion Corporation

Thousands of
U.S. dollars
2022$143,838

ANNUAL REPORT 2022

65

Note 32: Contingencies
Contingencies at December 31, 2022 and 2021 consisted of the following:
Guarantees

PT. Lion Wings
Employees
Total

Millions of yen
2022
2021
¥381
¥652
223
¥605

252
¥905

Thousands of
U.S. dollars
2022$2,876
1,685$4,561The Group has provided the above guarantee for the guarantors' borrowings.
Guarantees of \190 million(U.S. $1,438 thousand) included in the total guarantee of \605 million(U.S.$4,561 thousand)at December 31, 2022 were reguaranteed from others.
Guarantees of \326 million included in the total guarantee of \905 million at December 31, 2021 were reguaranteed from others.

Lion Corporation

ANNUAL REPORT 2022

66

Note 33: Related Party(1) Information about subsidiaries and affiliates
Consolidated Subsidiaries
Name

Location

Capitalization

Business

Voting shares
held by theCompany(%)

Nature of business relationship
Shared positions
Financial
Transactions
Company company
supportofficers employees(Note 1)
Lion Chemical Co., Ltd.

Sumida-ku, Tokyo JPY7,800 million

Industrial
products andConsumerproducts

100.0

2

10

Loans

Lion Business Service Co., Ltd.

Sumida-ku, Tokyo JPY490 million

Other

100.0

—

5

None

Lion Specialty Chemicals Co., Ltd.

Sumida-ku, Tokyo JPY400 million

Industrial
products

100.0

2

10

Loans

Lion Hygiene Co., Ltd.

Sumida-ku, Tokyo JPY300 million

100.0

2

7

None

(Note 2)
Lion Trading Co., Ltd.

Sumida-ku, Tokyo JPY240 million

100.0

2

6

None

Lion Engineering Co., Ltd.

Sumida-ku, Tokyo JPY100 million

Other

100.0

2

9

None

Kyuzituhack Company, Ltd.

Sumida-ku, Tokyo JPY80 million

Other

100.0

—

4

None

issua Company, Ltd.

Minato-ku, Tokyo JPY20 million

Consumerproducts

100.0

—

5

None

Lion Cordial Support Co., Ltd.

Sumida-ku, Tokyo JPY20 million

Other

100.0

—

4

None

Sumida-ku, Tokyo JPY10 million

Consumerproducts

100.0

—

9

None

Lion Dental Products Co., Ltd.

Industrial
products
Consumerproducts(Note 1)
Lion Daily Necessities Chemicals(Qingdao) Co., Ltd.

Qingdao

USD39,065
thousandOverseasbusiness

100.0

1

6

None

Lion Home Products (Taiwan) Co.,Ltd.

New Taipei City

TWD530,000
thousandOverseasbusiness

100.0

—

5

None

South Korea

KRW9,976,250
thousandOverseasbusiness

100.0

—

5

None

SGD9,000thousandHKD12,000
thousandOverseasbusiness

100.0

—

3

None

Lion Corporation (Korea)
Lion Corporation (Singapore) Pte
Ltd
Lion Corporation (Hong Kong)
Ltd.

Singapore
Hong Kong

Overseas business

100.0

—

2

None

Overseasbusiness(Note 3)100.0
(100.0)

—

2

None

75.0

—

2

Lion Advertising Ltd.

Hong Kong

HKD100thousand

Lion Kallol Limited

Bangladesh

BDT70,000
thousandOverseasbusiness

Lion Corporation (Thailand) Ltd.

Thailand

THB500,000
thousandOverseasbusiness

Health Care Service Co., Ltd.

Thailand

THB7,000thousandOverseasbusiness

Eastern Silicate Co., Ltd.

Thailand

THB500thousandOverseasbusiness

Southern Lion Sdn. Bhd.

Malaysia

MYR22,000
thousandOverseasbusiness

PT. Ipposha Indonesia

Indonesia

USD750thousandOverseasbusiness

Purchase of raw
materials andmerchandise

Lease of facilities,
etc.
Rental of part ofoffice space, facilities
and landRental, dealing, andRental of part ofbrokerage of real
office space and land
estate, and insuring
Sale of merchandiseand finished products
Lease of part of officeand purchase of raw
space
materials andmerchandise
Sales and purchase of Lease of part of officemerchandise
and warehouse space
Lease of part of office—
space
Design, construction,
Lease of part of officeand maintenance of
space
facilities
Lease of part of office—
spaceSale of merchandise—and finished products
Human resources
Lease of office space
services
Sale of merchandise
Lease of office spaceand finished products
Sale of merchandiseand finished products—
and purchase ofmerchandise
Sale of merchandise—and finished products
Sale of merchandiseand finished products—
and purchase ofmerchandise
Sale of merchandise—and finished products
Sale of merchandise—and finished products
—

—

None

—

—
—

3

7

None

Sale of merchandiseand finished products
and purchase ofmerchandise

—

—

None

—

—

—

2

None

—

—

50.0

1

2

None

—

(Note 4)100.0
(90.0)

Sale of merchandiseand finished products
and purchase ofmerchandise

—

4

None

—

—

51.0
(Note 5)100.0
(100.0)(Note 5)99.9
(99.9)

Lion Corporation

ANNUAL REPORT 2022

67Equity-method affiliates
Name

Japan Retail Innovation Co., Ltd.

Location

Capitalization

Voting shares
held by theCompany(%)

Business

Consumerproducts
Other

Minato-ku, Tokyo JPY100 million

Planet, Inc.

Nature of business relationship
Shared positions
FinancialCompany company
supportofficers employees

20.0

—

1

None

Transactions
Sales promotion
activities
Utilization of VANs
Sale of merchandiseand finished products

Minato-ku, Tokyo JPY436 million
15.6
1— NoneIDR64,062
PT. Lion Wings
Indonesia
Overseas business
48.0
1
3 NonemillionNotes: 1. Lion Chemical Co., Ltd. and Lion Daily Necessities Chemicals (Qingdao) Co., are specified subsidiaries.
2. Lion Trading Co., Ltd. changed its name to Lion Pet Co., Ltd. changed in January 1, 2023.
3. The voting shares of Lion Advertising Ltd. are held by Lion Corporation (Hong Kong) Ltd.
4. 90% of PT. Ipposha Indonesia’s voting shares are held by Lion Specialty Chemicals Co., Ltd.
5. The voting shares of Health Care Service Co., Ltd. and Eastern Silicate Company Limited are held by Lion Corporation (Thailand) Ltd.
6. On March 1, 2023, Lion Corporation acquired 36% of the outstanding shares of MERAP and included it in the scope of equity-method affiliates.
Details are provided in "Note 34. Subsequent Event".
7. The figures in parentheses in the “Voting shares held by the Company” column are the percentages of total voting shares held indirectly by Lion Corporation.
8. In addition to the companies listed above, there is one small-scale, non-consolidated equity-method company.

Lease of facilities,
etc.
—
—
—

(2) Key management personnel compensation
Key management personnel compensation during the years ended December 31, 2022 and 2021 consisted of the following:
Millions of yen
2022
2021
¥421
¥380

Short-term benefits
Share-based payment
Total

Thousands of
U.S. dollars
2022$2,871

109

113

826

¥490

¥535

$3,697(3) Related party transactions
Millions of yen
2022
Transaction
amount of thetransactions
PT. Lion Wings
Loan guarantee¥381
Affiliates
The Group has provided the above guarantees for the borrowings of an affiliate.
Type

Name

Contents oftransactions

Outstandingbalances

Allowance for
doubtful accounts¥-¥-

The transaction amount of the transaction is the balance at the end of the year.
Millions of yen
2021
Type

Name

Transaction
amount of thetransactions¥652

Contents oftransactions

Outstandingbalances

PT. Lion Wings
Loan guarantee
Affiliates
The Group has provided the above guarantees for the borrowings of an affiliate and joint venture.

Allowance for
doubtful accounts¥-¥-

The transaction amount of the transaction is the balance at the end of the year.
Thousands of U.S. dollars
2022
Type
Affiliates

Name
PT. Lion Wings

Contents oftransactions
Loan guarantee

Transaction
amount of thetransactions$2,876

Outstandingbalances$-

Lion Corporation

Allowance for
doubtful accounts$-

ANNUAL REPORT 2022

68

Note 34: Subsequent Event
Making a Company an Equity-Method Affiliate by Share Acquisition
Lion Corporation reached a decision at the January 16, 2023 Board of Directors meeting to acquire 36% of the sharesof Vietnam-based MERAP HOLDING CORPORATION ("MERAP"). A share transfer agreement was concluded the same day.
Lion Corporation made MERAP an equity-method affiliate following the acquisition of its shares on March 1, 2023.
(1) Reasons for the Acquisition
The Lion Group has established the management vision "Becoming an advanced daily healthcare company,"
driven by its purpose, "Make a difference in everyday lives by redesigning habits: ReDesign,"
and is working toward the realization of this vision. In particular, to expand the Overseas Business,
which is important to achieving the vision for 2030, Lion is working to reinforce its businesses in countries
and areas where it already operates while also entering new countries and areas with the aim of expanding its presence in Asia. Until now,
Lion has exported certain products to the Vietnamese market mainly through its overseas affiliates. Now, to expand its business in this market,
which is expected to see ongoing growth, Lion has decided to acquire shares of MERAP, which operates in the country.
MERAP possesses major brands in the healthcare field, mainly in over-the-counter pharmaceuticals, as well as a distribution networkand sales capabilities covering hospitals, clinics and pharmacies throughout Vietnam. We will pursue synergy by combining these business foundations
with the Lion Group's strengths in product development and production technology. By doing so, we aim to contribute to the creation of better habits
and achieve business expansion in Vietnam.
(2) Overview of the acquiree(1) Name(2) Location(3) Representative(4) Business(5) Capital(6) Date of establishment

MERAP HOLDING CORPORATION
Ho Chi Minh City, Vietnam
Dao Xuan Dinh
Strategic and operational management of group companies involved
mainly in the manufacture and sale of pharmaceuticals and medical
224,000 million VND (approx. ¥1,254 million)
June 3, 2019(3) Shares to be Acquired and Shareholdings before and after Acquisition(1) Shares held by Lion before
acquisition(2) Shares to be acquired(3) Shares held by Lion after
acquisition

0 (0% of voting rights)
8,064,000 (36.0% of voting rights)
8,064,000 (36.0% of voting rights)(4) Dates of Agreement and Acquisition of Shares(1) Conclusion of the acquisition
agreement(2) Acquisition of shares

January 16, 2023
March 1, 2023

Note: By agreement of the parties to the transaction, the acquisition price is undisclosed.

Lion Corporation

ANNUAL REPORT 2022

69

Independent Auditor’s Report

The Board of Directors
Lion Corporation
OpinionWe have audited the accompanying consolidated financial statements of Lion Corporation andits subsidiaries (the Group), which comprise the consolidated statement of financial position as
at December 31, 2022, and the consolidated statements of profit or loss, comprehensive income,changes in equity, and cash flows for the year then ended, and notes to the consolidated financial
statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at December 31, 2022, and its
consolidated financial performance and its consolidated cash flows for the year then ended inaccordance with International Financial Reporting Standards (IFRSs).
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our audit of theconsolidated financial statements in Japan, and we have fulfilled our other ethicalresponsibilities in accordance with these requirements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significancein our audit of the consolidated financial statements of the current period. These matters wereaddressed in the context of the audit of the consolidated financial statements as a whole, and informing the auditor’s opinion thereon, and we do not provide a separate opinion on thesematters.
Calculation of the refund liabilities in the form of discounts, rebates, etc.
Description of Key Audit Matter

Auditor’s Response

As described in “Note 3: Significant
Accounting Policies (15) Revenue”, revenue
is measured at the amount of consideration towhich the Group expects to be entitled in
exchange for transferring promised goods to acustomer, considering discounts, rebates andreturns, etc., and the consideration that theGroup expects to refund to customers isrecorded as refund liabilities. Refund
liabilities in the form of discounts, rebates,etc. are determined using the most likely

The audit procedures we performed for
calculation of the refund liabilities at the endof the current fiscal year include thefollowing, among others:
・We selected samples of the promotional
expense schedules used in the calculations forthe amounts of the refund liabilities recorded
and matched it to the contracts, settlementagreements, and other supporting
documentation.

outcome method based on the terms of therelevant contracts, past performance, andother factors. The Group recorded refund
liabilities of ¥5,444 million at the end of thecurrent consolidated fiscal year, as describedin “Note 14: Trade and Other Payables”.
Refund liabilities are incurred mainly in the
consumer products business, where thebusiness environment is changing
dramatically and sales competition isintensifying, there is a large number ofcontracts, and the terms of the contracts vary
widely. Therefore, given the complicatednature of the calculation process for therefund liabilities, the calculation at the end of
the current fiscal year is especially significant
in the audit of the consolidated financial
statements, and we have determined it to be a
key audit matter.

・We performed an analysis of the year-toyear changes in the refund liabilities and thepercentage of sales deductions to determine
whether there have been any significant
changes in the calculation method.
・We compared the balance of refund
liabilities at the end of the previous fiscal
year to the actual payments, evaluatedinternal controls and examined the impact on
the calculation method of the refund
liabilities at the end of the current fiscal year.
・We reviewed the recorded amounts bycomparing the balance of refund liabilities atthe end of the current fiscal year to the actual
payments and the amount of accrued
expenses subsequent to the end of the current
fiscal year.

Valuation of intangible assets with indefinite useful lives related to the BUFFERIN brand of
antipyretic analgesics
Description of Key Audit Matter
As described in “Note 11: Goodwill andIntangible Assets (4)”, significant intangible
assets recognized in the consolidated
statement of financial position are thetrademarks of antipyretic analgesics“BUFFERIN” in the Asia-Oceania region(except for some countries and regions,
including China). The carrying amount of the
trademark right at the end of the previous andcurrent fiscal years was 6,560 million yen.
The Group tests the trademark right every
fiscal year for impairment as an intangible
asset with an indefinite useful life. As aresult, no impairment loss was recognized as
the value in use exceeded the carrying
amount in the current fiscal year.

Auditor’s Response
The audit procedures we performed toevaluate the valuation of intangible assets
with indefinite useful lives include thefollowing, among others:
・We reviewed the method of estimating
value in use and calculating the discount rateused for consistency with the applicableaccounting standards.
・We discussed with management andresponsible department head regarding theperformance and future plans of the business
related to antipyretic analgesics, andreviewed the materials reported to the boardof directors.

・With respect to future sales projections,
In performing the impairment test, the Group We compared historical future sales
projections to historical experience andmeasures the recoverable amount of theconsidered the need for changes inrelated business as a single cash-generating
management's assumptions, as well as theunit using value in use. The value in use iscalculated by discounting the estimated future impact of current economic conditions andcash flows, assuming growth after the period other relevant factors on management's
assumptions. In addition, we performedof the business plan and business plansensitivity analyses to assess the likelihood
approved by management, to present valuethat reasonably possible changes in futureusing a discount rate based on the weighted

average cost of capital. The business to which
the trademark is related is affected by market
trends in antipyretic analgesics and otherfactors. Considering that demand for
antipyretic analgesics has also been affectedby infectious disease outbreaks and otherfactors in recent years, future sales
projections in the business plan and growthrate after the term of the business plan are
particularly subject to uncertainty.

sales projections and growth rate would cause
the recoverable amount of the intangible
assets to be less than the carrying amount.
・We considered the consistency of the discountrate with the input information used and available
external information.

The selection of input information for the
discount rate is based on management's
judgment and has a significant impact on thecalculation of value in use.
Based on the above, we determined that thevaluation of intangible assets with indefinite
useful lives related to the BUFFERIN brandof antipyretic analgesics to be a key audit
matter.

Other Information
The other information comprises the information included in the Annual Report that contains
audited consolidated financial statements but does not include the consolidated financial
statements and our auditor’s report thereon.
We have concluded that the other information does not exist. Accordingly, we have not
performed any work related to the other information.
Responsibilities of Management, the Corporate Auditor and the Board of Corporate
Auditors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with IFRSs, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern and disclosing, as required by IFRSs, mattersrelated to going concern.
The Corporate Auditor and the Board of Corporate Auditors are responsible for overseeing theGroup’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements.

As part of an audit in accordance with auditing standards generally accepted in Japan, we
exercise professional judgment and maintain professional skepticism throughout the audit. We
also:
・ Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive tothose risks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the consolidated financial statements is not expressing an opinion on the effectiveness of theGroup’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause the Group to cease tocontinue as a going concern.
・ Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentationin accordance with IFRSs.
・ Obtain sufficient appropriate audit evidence regarding the financial information of theentities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance ofthe group audit. We remain solely responsible for our audit opinion.
We communicate with the Corporate Auditor and the Board of Corporate Auditors regarding,among other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our audit.
We also provide the Corporate Auditor and the Board of Corporate Auditors with a statementthat we have complied with the ethical requirements regarding independence that are relevant toour audit of the consolidated financial statements in Japan, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, related safeguards.
From the matters communicated with the Corporate Auditor and the Board of Corporate
Auditors, we determine those matters that were of most significance in the audit of theconsolidated financial statements of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a mattershould not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.

Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect tothe year ended December 31, 2022 are presented solely for convenience. Our audit also included
the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made on the basis described in Note 2(d) to the consolidated financial
statements.
Ernst & Young ShinNihon LLC
Tokyo, Japan
March 29, 2023

/s/ Hirokazu Tanaka
Designated Engagement Partner
Certified Public Accountant/s/ Masayuki Tada
Designated Engagement Partner
Certified Public Accountant