Summary of Consolidated Financial Statements for the Year Ended
December 31, 2013 [Japanese Standard]
February 10, 2014
Company name: Lion Corporation Listed stock exchanges: Tokyo Stock Exchange Code: 4912 URL: http://www.lion.co.jp/ Representative: Itsuo Hama, Representative Director and President Contact: Yoshiaki Kamao, Director of Finance Department Telephone: +81-3-3621-6211 Annual meeting of shareholders: March 28, 2014 (plan) Start date for payment of year end dividend: March 5, 2014 (plan) Scheduled date of filing of financial report: March 31, 2014 (plan) Supplementary materials prepared for quarterly results: Yes Quarterly results information meeting held: Yes (for investors and analysts, etc.) Figures in this and subsequent tables are rounded down to the nearest million.
1. Consolidated Results for the Year Ended December 31, 2013
(January 1, 2013 – December 31, 2013)
(1)Consolidated Results (cumulative total) (Percentage figures denote year-on-year change)
Net sales Operating income Ordinary income Net income
Millions of yen
% Millions of
yen %
Millions of yen
% Millions of
yen %
Fiscal 2013 352,005 5.0 10,819 50.0 12,300 43.6 6,097 44.0
Fiscal 2012 335,171 2.3 7,213 (35.4) 8,564 (29.7) 4,235 3.9
Note: Comprehensive income: December 31, 2013: ¥13,261 million (15.5%) December 31, 2012: ¥11,478 million (347.5%)
EPS Diluted EPS Return on
equity
Ratio of ordinary
income to total assets
Ratio of operating
income to net sales
Yen Yen % % %
Fiscal 2013 22.72 22.68 5.4 4.6 3.1
Fiscal 2012 15.77 15.75 4.0 3.4 2.2
Note: Equity in earnings of non-consolidated subsidiaries and affiliates: ¥696 million in FY 2013 and
¥803 million in FY 2012.
(2)Consolidated Financial Position
Total assets Net assets
Shareholders’ equity to total
assets
Net assets per share
Millions of yen Millions of yen % Yen
Fiscal 2013 282,098 124,232 42.0 441.59
Fiscal 2012 257,595 114,163 42.4 407.08
Note: Shareholders’ equity: December 31, 2013: ¥118,448 million
December 31, 2012: ¥109,261 million
(3)Consolidated Cash Flows
Cash flows from
operating activities Cash flows from
investing activities Cash flows from
financing activities
Cash and cash equivalents at end
of period
Millions of yen Millions of yen Millions of yen Millions of yen
Fiscal 2013 22,910 (12,819) (2,772) 48,941
Fiscal 2012 18,762 (9,172) (4,923) 40,913
2. Dividend
Cash dividends per share / Yen Total dividend
paid (annual)
Payout ratio
(consolidated)
Dividend/ Net
assets
(consolidated)
Record Date First
Quarter
Second
Quarter Third
Quarter Year-End Annual
Millions of yen
% %
Fiscal 2012 - 5.00 - 5.00 10.00 2,685 63.4 2.5
Fiscal 2013 - 5.00 - 5.00 10.00 2,683 44.0 2.4
Fiscal
2014(plan) - 5.00 - 5.00 10.00
38.3
3. Forecast of Consolidated Financial Results for the Fiscal Year Ending December 31, 2014
(January 1, 2014 – December 31, 2014)
Net sales Operating income Ordinary income Net income EPS
Millions of yen
% Millions of yen
% Millions of yen
% Millions of yen
% Yen
Interim 2014
171,000 3.0 3,000 4.4 3,500 (10.5) 1,600 (23.9) 5.96
Fiscal 2014
360,000 2.3 12,000 10.9 13,000 5.7 7,000 14.8 26.10
Notes: Percent figures for net sales, operating income, ordinary income, and net income express percentage
change over the year-ago period.
4. Notes
(1)Significant Change in Scope of Consolidation during Period: No
(2)Changes in accounting principles, procedures and presentation methods in connection with the
preparation of quarterly consolidated financial statements:
a. Changes associated with revision in accounting standards: No
b. Other changes: No
c. Changes in accounting estimates: No
d. Restatement: No
(3)Number of outstanding shares (common stock)
a. Number of outstanding shares on balance sheet dates (including treasury stocks):
As of December 31, 2013: 299,115,346 shares
As of December 31, 2012: 299,115,346 shares
b. Number of treasury stocks on balance sheet date:
As of December 31, 2013: 30,882,704 shares
As of December 31, 2012: 30,713,613 shares
c. Average shares outstanding over period (cumulative; consolidated)
As of December 31, 2013: 268,341,003 shares
As of December 31, 2012: 268,611,675 shares
*Note on Audit Process
This earnings report is out of the scope of the external auditor’s review procedure, which is required by
the “Financial Instruments and Exchange Act.” The auditing of the Company’s consolidated financial
statements has not been completed as of the disclosure of this earnings report.
Appropriate use of business forecast; other special items
The forecasts and projected operating results contained in this report are based on information available
at the time of preparation, and thus involve inherent risks and uncertainties. Accordingly, readers are
cautioned that actual results may differ materially from those projected as a result of a variety of factors.
For more details, refer to “I. Overview of Results of Operations” on page 2-10.
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
1
Contents
I. Overview of Results of Operations ---------------------------------------------------------------------------- 2
1. Qualitative Information Concerning the Consolidated Results of Operations ------------------ 2
2. Qualitative Information Concerning Consolidated Financial Status ------------------------------ 8
3. Basic Policy on the Distribution of Earnings and Cash Dividends -------------------------------- 9
4. Business Risks ------------------------------------------------------------------------------------------------ - 10
II. Corporate Group -------------------------------------------------------------------------------------------------- 11
III. Management Policies ------------------------------------------------------------------------------------------ 16
1. Basic Management Policies -------------------------------------------------------------------------------- 16
2. Performance Targets ----------------------------------------------------------------------------------------- 16
3. Medium and Long-term Management Strategies ----------------------------------------------------- 16
4. Management Issues ----------------------------------------------------------------------------------------- - 16
IV. Consolidated Financial Reporting Statements ----------------------------------------------------------- 18
1. Consolidated Balance Sheets ----------------------------------------------------------------------------- - 18
2. Consolidated Statements of Income and
Consolidated Statements of Comprehensive Income ---------------------------------------------- - 20
3. Consolidated Statement of Changes in Shareholders’ Equity ------------------------------------- 22
4. Consolidated Statements of Cash Flows --------------------------------------------------------------- - 24
5. Segment Information ----------------------------------------------------------------------------------------- 26
6. Per Share Information --------------------------------------------------------------------------------------- - 29
7. Important Subsequent Events ----------------------------------------------------------------------------- 30
V. Other Information ------------------------------------------------------------------------------------------------ - 31
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
2
< Qualitative Information and Financial Statements >
I. Overview of Results of Operations
1. Qualitative Information Concerning the Consolidated Results of Operations
(1) Performance Overview for the Consolidated Fiscal Year (January 1, 2013 – December 31,
2013)
1) Overall Performance
During the 2013 fiscal year (January 1, 2013–December 31, 2013), there was a sense of
recovery in the Japanese economy as corporate profits improved alongside a pickup in
personal consumption, with consumer prices bottoming out in the latter half of the year.
The business environment in the Lion Group’s main business domain, the domestic toiletries
industry, remained severe, as competition in stores remained intense, despite signs that unit
prices were ceasing to fall.
In this harsh environment, the Lion Group is implementing its medium-term management plan,
“Vision 2020 Part-1 (V-1 Plan),” centering on four strategies: (1) Qualitative growth of
domestic businesses; (2) Quantitative Expansion of Overseas Businesses; (3) Development
of New Business Value; and (4) Enhancement of Organizational Learning Capabilities.
Domestically, Lion worked to nurture high-value-added products, including products in the
Oral Care Products, Fabric Care Products and Pharmaceutical Products businesses, while
seeking to improve profitability by advancing efficiency of competition costs and reducing
costs. The Group engaged in aggressive marketing activity aimed at volume growth in
functional food and other products and worked to expand its direct-to-consumer sales product
business domain by introducing new hair care products targeted at mature women.
Overseas, the Group promoted the cultivation of products in the key oral care and laundry
detergent fields, principally in Thailand, and increased its production capacity. The Group also
moved into a new region, beginning sales in the Philippines.
Consequently, consolidated results for the period under review are as follows:
Net sales amounted to ¥352,005 million, a year-on-year increase of 5.0% (or an increase of
0.9% in terms of real net sales, which exclude the influence of exchange rate conversions).
The Company recorded operating income of ¥10,819 million, up 50.0% compared with the
same period of the previous fiscal year, and ordinary income of ¥12,300 million, up 43.6% year
on year. Net income stood at ¥6,097 million, up 43.9% compared with the previous fiscal year.
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
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<Consolidated Results> (Millions of yen)
FY 2013 Ratio to net sales
FY 2012 Ratio to net sales
Increase/ decrease
Change
Net sales 352,005 335,171 16,833 5.0%
Operating income 10,819
8,564
4,23511,1
69
3.1% 7,213
8,564
4,23511,1
69
2.2% 3,605 50.0%
Ordinary income 12,300 3.5% 8,564 2.6% 3,735 43.6%
Net income 6,097 1.7% 4,235 1.3% 1,861 43.9%
2) Results by Business Segment <Consolidated Business Segment> (Millions of yen)
Net sales Segment income (Operating income)
FY2013 FY2012 Increase/
decrease Change FY2013 FY2012
Increase/
decrease Change
Consumer Products
265,207 266,042 (835) (0.3%) 7,289 4,304 2,985 69.4%
Industrial Products
51,630 49,784 1,846 3.7% 778 360 417 115.8%
Overseas 76,865 59,173 17,691 29.9% 1,435 1,462 (27) (1.9%)
Other 28,723 29,798 (1,075) (3.6%) 1,016 971 44 4.6%
Subtotal 422,427 404,799 17,629 4.4% 10,519 7,098 3,421 48.2%
Adjustment (70,421) (69,627) (794) ― 300 115 184 160.0%
Total 352,005 335,171 16,833 5.0% 10,819 7,213 3,605 50.0%
3) Overview by Business Segment
<Consumer Products Business>
The Consumer Products Business segment is divided into the Oral Care Products, Beauty Care
Products, Fabric Care Products, Living Care Products, Pharmaceutical Products and Other
Products businesses. Segment net sales decreased 0.3% compared with the previous fiscal year.
Segment income increased 69.4% due in part to the cultivation of high-value-added products and
decreased competition costs, including the improved cost efficiency of sales promotion.
(Millions of yen)
FY2013 Ratio to net sales
FY2012 Ratio to net sales
Increase/ decrease
Change
Net sales 265,207 266,042 (835) (0.3%)
Segment income 7,289 2.7% 4,304 1.6% 2,985 69.4%
Note: Net sales include internal net sales within and among segments, which amounted to ¥22,499 million in FY 2013 and
¥21,757 million in FY 2012.
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
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[Net Sales by Products Segment] (Millions of yen)
FY2013 FY2012 Increase/ decrease
Change
Oral Care Products 51,628 52,917 (1,288) (2.4%)
Beauty Care Products 19,044 20,374 (1,329) (6.5%)
Fabric Care Products 80,951 80,596 354 0.4%
Living Care Products 21,620 21,851 (231) (1.1%)
Pharmaceutical Products 36,776 37,193 (416) (1.1%)
Other Products 55,185 53,108 2,076 3.9%
Oral Care Products
In toothpaste, sales of Lion’s mainstay brand Dentor Systema were firm, and those of the
new-and-improved Hitect Shoyaku no Megumi (Bountiful Herbal Medicine) were steady. However,
due in part to sluggish sales of Dentor Clear MAX, overall sales were less than those in the previous
fiscal year.
In toothbrushes, sales of Clinica Advantage toothbrushes, featuring an extremely thin head and
slender neck to clean right to the back of the molars, garnered favorable consumer reviews, and
overall sales edged up compared with the same period of the previous fiscal year.
In mouthwashes, sales of Dentor Systema dental rinses were firm, but sales of platius beautiful
teeth essence dental rinse were sluggish, resulting in overall sales that were down from those in the
same period of the previous fiscal year.
Beauty Care Products
In hand soaps, while sales of KireiKirei Medicated Foaming Hand Soap were strong, sales of regular liquid hand soaps were stagnant. As a result, overall sales remained level with those in the previous fiscal year. In antiperspirants and deodorants, new Ban Shower Deodorant, an aqueous mist spray deodorant that provides a long-lasting feeling of smooth skin thanks to proprietary micro powder ingredients, garnered favorable consumer reviews. However, sluggish sales of Lion’s mainstay Ban Deodorant Powder Spray line resulted in overall sales that were lower than those in the same period of the previous fiscal year.
Fabric Care Products
In laundry detergents, sales of super-concentrated TOP HYGIA, which enhances the antibacterial properties of laundry through washing, and TOP Clear Liquid were favorable as the market for liquid laundry detergents continued to expand. However, powder detergents were affected by market shrinkage, and overall sales were below those of the previous year. In fabric softeners, the Kaori to Deodorant no SOFLAN (SOFLAN with Fragrance and Deodorant) Aroma Rich series enjoyed strong sales and the new-and-improved Kaori to Deodorant no SOFLAN (SOFLAN with Fragrance and Deodorant) Aroma Natural series received favorable consumer reviews. As a result, overall sales were substantially greater than those in the same period of the previous fiscal year. Additionally, newly released TOP HYGIA Fabric Refresher antibacterial, antiviral deodorant, a new product that eliminates bacteria, viruses and odors with just a quick spray, garnered favorable consumer reviews.
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
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Living Care Products
In dishwashing detergents, although sales of the CHARMY Crysta series for dishwashers were strong, those of the CHARMY Awa no Chikara (Power of Suds) series were weak, leading to an overall year-on-year sales decline. In household cleaners, sales of bathroom fungicide LOOK Bath Antimold Fogger were favorable and new LOOK Mame-Pika Antibacterial Toilet Cleaner, containing antibacterial ingredients that fight odor-causing bacteria, garnered favorable customer reviews. As a result, overall sales were higher than those of the previous fiscal year.
Pharmaceutical Products
In analgesics, sales of Lion’s mainstay brand BUFFERIN A were affected by intensifying competition, and overall sales fell year on year. In eye drops, Smile 40 Premium, a new, effective ophthalmic remedy that helps alleviate tired, bleary eyes caused by aging and overuse, as well as Smile 40EX GOLD Mild, featuring a milder cooling sensation for gentle, comfortable application, both received favorable consumer reviews. As a result, overall sales increased substantially compared with the corresponding period of the previous fiscal year. In insecticides, sales of Lion’s mainstay Varsan fogger series were affected by market contraction, and overall sales fell year on year.
Other Products
In direct-to-consumer sales products, within functional food products, sales of Lion’s mainstay brand Nice rim essence Lactoferrin were strong, and new Fleuria, a hair care series for the mature woman that promotes healthy and beautiful hair, received favorable consumer reviews. As a result, overall sales were considerably higher than in the corresponding period of the previous fiscal year. In pet supplies, sales of Nioi wo Toru Suna (Deodorizing Cat Litter) were firm, but overall sales remained level with those in the corresponding period of the previous fiscal year.
<Industrial Products Business>
The Industrial Products Business segment engages in the manufacture and sale of activators derived from oils and fats, electro-conductive carbon, detergents for institutional use and other products. Segment net sales increased 3.7% compared with the corresponding period of the previous fiscal year. Segment income, however, increased 115.8% year on year due in part to extended sales of highly profitable products.
(Millions of yen)
FY2013 Ratio to net sales
FY2012 Ratio to net sales
Increase/ decrease
Change
Net sales 51,630 49,784 1,846 3.7%
Segment income 778 1.5% 360 0.7% 417 115.8%
Note: Net sales include internal net sales within and among segments, which amounted to ¥20,394 million in FY2013 and
¥19,625 million in FY2012
In activators derived from fats and oils, sales of raw materials for detergents and shampoos were strong, and overall sales edged up year on year. In electro-conductive carbon, overseas sales of products used in electronics devices were firm, and overall sales increased considerably year on year. In detergents for institutional use, sales of hand soaps and alcohol sanitizers for kitchen use were strong, leading to overall sales that were considerably higher than those in the same period of the
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
6
previous fiscal year.
<Overseas Business>
The Overseas Business segment comprises business operations primarily in Thailand, South Korea
and China, with operations newly begun in the Philippines. Segment net sales increased 29.9%
year on year (or in terms of real net sales, which exclude the influence of exchange rate
conversions, increased 5.2%). Segment income decreased 1.9% due to increases in competition
costs made in order to strengthen market position.
(Millions of yen)
FY2013 Ratio to
net sales FY2012
Ratio to
net sales
Increase/
decrease Change
Net sales 76,865 59,173 17,691 29.9%
Segment income 1,435 1.9% 1,462 2.5% (27) (1.9%)
Note: Net sales include internal net sales within and among segments, which amounted to ¥4,208 million in FY2013 and
¥3,079 million in FY2012.
In Thailand, sales of Systema toothbrushes were strong and those of laundry detergents were steady. As a result, overall sales rose considerably compared with the previous fiscal year. Overall sales after yen conversions also rose significantly. In South Korea, sales of dishwashing detergents were stagnant, but sales of KireiKirei hand soap and Beat brand liquid laundry detergent were strong. As a result, overall sales increased only slightly compared with the previous fiscal year, although overall sales after yen conversions rose significantly. In China, sales of Systema toothbrushes were strong, leading to a slight year-on-year increase in overall sales. Overall sales after yen conversions were substantially increased.
<Other>
(Millions of yen)
FY2013 Ratio to
net sales FY2012
Ratio to
net sales
Increase/
decrease Change
Net sales 28,723 29,798 (1,075) (3.6%)
Segment income 1,016 3.5% 971 3.3% 44 4.6%
Note: Net sales include internal net sales within and among segments, which amounted to ¥23,318 million FY2013 and
¥25,164 million FY2012.
In Other, which includes the construction contracting business, overall sales came to ¥28,723 million, a year-on-year decrease of 3.6%. Segment income came to ¥1,016 million, up 4.6% from the previous fiscal year. (2) Qualitative Information Concerning the Forecast of Consolidated Financial Results <Consolidated> (Millions of yen)
FY 2014 forecast FY 2013 Increase/decrease Change
Net sales 360,000 352,005 7,994 2.3%
Operating income 12,000 10,819 1,180 10.9%
Ordinary income 13,000 12,300 699 5.7%
Net income 7,000 6,097 902 14.8%
EPS (yen) 26.10 22.72 3.37 14.8%
During fiscal 2014, although continued recovery is forecast for the Japanese economy, concerns remain
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
7
due to a temporary drop expected in domestic demand, which is driven primarily by personal consumption, accompanying the coming increase in the consumption tax rate. The economic outlook for the global economy is expected to remain unclear due to such factors as trends in U.S. monetary policy and economic deceleration in emerging countries. The business environment of the domestic toiletries industry, the Lion Group’s main business domain, is expected to grow more challenging, reflecting the impact of the consumption tax rate increase, intensifying competition in stores and rises in materials costs. Amid these circumstances, the Lion Group will continue to steadily advance strategies based on the “Vision 2020 Part-1 (V-1 Plan).” In the Consumer Products Business segment, the Lion Group will release new, high-value-added products in its mainstay toothpaste, antiperspirant and deodorant and analgesics brand lines to reinforce its profit base. The Group will also work to expand its direct-to-consumer sales product business through aggressive marketing activity, particularly of hair care products released in fiscal 2013 that target mature women. As a result of these initiatives, the Lion Group expects overall sales to increase in this business segment. In the Industrial Products Business segment, the Lion Group will focus on cultivating new customers for its detergents for institutional use while strengthening market development in such key product areas as electro-conductive carbon and other highly functional products as well as activators derived from oils and fats. Sales in this business segment, however, are expected to be lower in fiscal 2014, reflecting the reorganization of segment businesses with priority on profitability. With regard to the Overseas Business segment, the Lion Group will bolster its marketing activities, primarily in the areas of oral care products and laundry detergents. In addition, the Group is aiming for business expansion in the Philippines, where it began operations in fiscal 2013, and in the MES (methyl ester sulfonate) business in Malaysia, where it recently increased its production capacity. Based on these efforts, the Group expects overall sales in this business segment to rise. As a result of the above, consolidated results forecasts for fiscal 2014 are as follows: net sales of ¥360,000 million (up 2.3% year on year), operating income of ¥12,000 million (up 10.9% year on year), ordinary income of ¥13,000 million (up 5.7% year on year) and net income of ¥7,000 million (up 14.8% year on year). (Preconditions for the Estimated Figures in Outlook for Fiscal 2014) Lion adopted the following foreign exchange rates in the calculation of the aforementioned estimated figures: ¥102 = US$1.00 ¥3.1 = 1.00 baht
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
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2. Qualitative Information Concerning Consolidated Financial Status
(1) Status of Assets, Liabilities, Net Assets
<Consolidated Financial Status >
FY 2013 FY 2012
Increase/
decrease
Total assets (millions of yen) 282,098 257,595 24,502
Net assets (millions of yen) 124,232 114,163 10,069
Shareholders’ equity to total assets *1 (%) 42.0 42.4 (0.4)
Net assets per share *2 (yen) 441.59 407.08 34.51
*1 Shareholders’ equity to total assets = (Net assets – Subscription rights to shares and Minority interests) / Total assets
*2 Subscription rights and minority interests were excluded from calculation of net assets per share.
Total assets rose ¥24,502 million compared with the previous consolidated fiscal year-end to
¥282,098 million. This is primarily attributable to an increase in marketable securities. Net assets
increased ¥10,069 million to ¥124,232 million. Shareholders’ equity to total assets stood at 42.0%.
(2) Status of Cash Flows
<Consolidated Cash Flows> (Millions of yen)
FY 2013 FY 2012 Increase/
decrease
Net cash provided by (used in) operating activities 22,910 18,762 4,147
Net cash provided by (used in) investment activities (12,819) (9,172) (3,647)
Net cash provided by (used in) financing activities (2,772) (4,923) 2,151
Effect of exchange rate change on cash and cash equivalents 709 602 106
Net increase (decrease) in cash and cash equivalents 8,027 5,273 2,754
Cash and cash equivalents at end of period 48,941 40,913 8,027
Net cash provided by operating activities totaled ¥22,910 million, due mainly to a decrease in notes
and accounts receivable—trade.
Net cash used in investing activities totaled ¥12,819 million, due in part to the purchase of property,
plant and equipment.
Net cash used in financing activities totaled ¥2,772 million. Major components of this reduction in
cash flows included cash dividends paid and repayments of long-term loans payable.
As a result of the above, cash and cash equivalents as of December 31, 2013 increased ¥8,027
million to ¥48,941 million compared with the consolidated fiscal year ended December 31, 2012.
(3) Forecast of Fiscal 2014 Consolidated Cash Flows
In cash flows from operating activities, Lion projects income before income taxes of approximately
¥12,500 million. Lion estimates depreciation and amortization changes of about ¥11,000 million.
In cash flows from investment activities, Lion plans to undertake capital expenditures of around
¥11,000 million during fiscal 2014.
The cash flows from financing activities are expected to decrease to about ¥25,500 million mainly
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
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due to cash dividends paid and the repayment of loans payable.
Based on these projections, Lion estimates that cash and cash equivalents at the end of fiscal
2014 will decrease approximately ¥13,000 million year on year.
(4) Changes in cash flow indicators
FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
Shareholders’ equity to total assets (%) 39.2 39.3 40.9 42.4 42.0
Shareholders’ equity to total assets on a
market value basis (%) 47.8 45.6 49.0 45.7 55.8
Debt redemption (years) 1.9 1.8 3.2 1.8 1.6
Interest coverage ratio 23.2 30.0 12.5 27.6 32.2
(Notes)
Shareholders’ equity to total assets: Net assets / Total assets
Shareholders’ equity to total assets on a market value basis: Value of shares / Total assets
Debt redemption (years): Interest-bearing liabilities / Cash flows from operating activities
Interest coverage ratio: Cash flows from operating activities / Interest payment
* All the indicators are based on consolidated financial data.
* “Value of shares” is calculated on the basis of the “closing stock price as of the end of the term” multiplied by “the number
of outstanding stocks as of the end of the term” (after the deduction of treasury stocks).
* “Cash flows from operating activities” are those in the consolidated cash flow data.
“Interest-bearing liabilities” means all liabilities that are bearing interest among the liabilities in the consolidated
balance sheet. For the amount of interest paid, figures in the consolidated cash flow data are used.
3. Basic Policy on the Distribution of Earnings and Cash Dividends
Lion considers its most important management issue to be the return of profits to shareholders on a
permanent and stable basis. To this end, the Company strives to consistently lift consolidated
earnings capacity in an effort to ensure the payment of continuous and stable cash dividends.
Taking into consideration the appropriate level of internal reserves required to secure medium- and
long-term growth, Lion also undertakes the acquisition of treasury stock. Working to reinforce the
Company’s growth potential and to develop a sustainable business foundation, Lion allocates
internal reserves to research and development, capital investment in production facilities and the
acquisition of external resources.
Taking into consideration the Company’s cash dividend payment record, as well as its dividend
payout ratio target, Lion’s Board of Directors resolved to pay an interim dividend of ¥5 per share
(payment date: September 5, 2013) and a year-end dividend of ¥5 per share (payment date: March
5, 2014) for fiscal 2013.
With regard to dividends to be paid in fiscal 2014 Lion plans to maintain both the interim and
year-end dividend at ¥5 per share each, reflecting its basic policy on the distribution of earnings and
cash dividends. As a result, the total annual dividend is expected to be ¥10 per share.
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
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4. Business Risks
The Lion Group’s management performance and financial status may be adversely affected by
various risks as business activities are pursued in the future. Of these risks, the following items, in
particular, may have a material impact on the decisions of investors.
Forward-looking statements are based on decisions made by the Lion Group as of February 10,
2014.
Business risks are not limited to the items listed below.
(1) Product quality and value The Lion Group plans, develops, produces, and sells products under management based on international quality standards while strictly following related laws and regulations, such as the Pharmaceutical Affairs Law, to provide worry-free, safe, convenient, and environmentally conscious products to consumers. In addition, we use consumers’ opinions received through our Consumer Service Office to improve our products and packaging as well as respective displays and text. In the event of an unforeseen and serious problem with product quality, however, the affected product and all products made by the Lion Group may lose their perceived value. This may adversely affect the Lion Group’s management performance and financial status. (2) Changes in raw material prices The Lion Group’s products use petrochemical and vegetable oils and fats as basic materials. Since these materials are easily affected by international market prices, we have measures in place to reduce costs and diversify the range of materials used. However, an increase in raw material prices may adversely affect the Lion Group’s management performance and financial status.
(3) Exchange rate fluctuations
The Lion Group translates into yen the financial statements of overseas subsidiaries when
preparing consolidated financial statements. For items denominated in foreign currency, their yen
values may be affected by prevailing foreign exchange rates when translated into yen. The Lion
Group has taken steps to minimize the risk of an increase in raw material costs by hedging against
exchange rate fluctuations. However, short-, medium-, and long-term changes in foreign exchange
rates may adversely affect the Lion Group’s management performance and financial status.
(4) Major lawsuits As of December 31, 2013, Lion is not involved in any lawsuits that may have significant impact on its business. However, if the Lion Group were to be successfully sued for significant damages, these could adversely affect the Lion Group’s management performance and financial status. (5) Earthquakes and other natural disasters In the product manufacturing process, the Lion Group has put in place safety measures against earthquakes and other natural disasters. In the event of a major disaster, however, our production equipment may be damaged, or a suspension of raw materials procurement or distribution activities may cause business activities to cease, adversely affecting the Lion Group’s management performance and financial status.
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
11
II. Corporate Group
The Lion Group consists of Lion Corporation, 26 subsidiaries (including 25 consolidated subsidiaries and
one non-consolidated equity-method subsidiaries), and 13 affiliates (including seven equity-method
affiliates). Principal business activities consist of the manufacture and sale of consumer products,
industrial products and overseas. Other business activities involve distribution related to the above
business activities and other services.
The relationship between group business activities and business segments is shown below, which is
based on the categorization used for business segments.
Business segment Main activities Main companies
Consumer Products Business
Manufacture and sale of domestic commodities, OTC drugs and functional food products in Japan
Domestic affiliates
Lion Corporation Lion Dental Products Co., Ltd. Lion Trading Co., Ltd. Lion Packaging Co., Ltd. Lion Field Marketing Co., Ltd. issua Co. Ltd.
Industrial Products Business
Manufacture and sale of chemical raw materials, industrial products and other items in Japan and overseas
Domestic affiliates
Lion Corporation Lion Chemical Co., Ltd. Lion Hygiene Co., Ltd. Ipposha Oil Industries Co., Ltd. Lion Akzo Co., Ltd. Lion Idemitsu Composites Co., Ltd.
Overseas Business
Manufacture and sale of commodities and chemical raw materials overseas
Overseas affiliates
Lion Corporation (Hong Kong) Ltd. Lion Corporation (Singapore) Pte. Ltd. Lion Advertising Ltd. Lion Eco Chemicals Sdn. Bhd. Lion Daily Necessities Chemicals (Qingdao) Co., Ltd.
Lion (China) Home Products & Technology Co., Ltd.
PT. IPPOSHA INDONESIA CJ Lion Corporation Lion Chemical Industry (Taiwan) Co., Ltd. Lion Corporation (Thailand) Ltd. Peerless Lion Corporation Lion Service Co., Ltd. Eastern Silicate Company Limited Southern Lion Sdn. Bhd. P.T. Lion Wings
Other
Transport and storage of merchandise and finished products; design, construction, and maintenance of storage facilities; real estate management; Human resources services, etc.
Domestic affiliates
Lion Engineering Co., Ltd. Lion Cordial Support Co., Ltd. Lion Business Service Co., Ltd. Lion Logistics Service Company, Ltd. Planet Logistics Co., Ltd. Planet, Inc.
Lion Corporation (Code 4912): Summary of Financial Statements for the Year Ended December 31, 2013
12
Business Organization Chart
Sale of pet food products Sale of dental
products Sale of cosmetics and beauty equipments Manufacture and sale
of kitchen detergents Manufacture and sale of surfactants Manufacture and sale of
resin compounds
(Consolidated subsidiary) Lion Trading Co., Ltd.
(Consolidated subsidiary)
Lion Dental Products Co., Ltd.
(Consolidated
subsidiary) issua Co. Ltd.
(Consolidated
subsidiary) Lion Hygiene Co., Ltd.
(Consolidated subsidiary) Ipposha Oil Industries Co.,
Ltd.
(Equity-method subsidiary) Lion Idemitsu Composites
Co., Ltd.
Lion Corporation
Consumer Products Industrial Products
Suppliers
(Consolidated subsidiaries) Lion Packaging Co., Ltd. Lion Chemical Co., Ltd.
(Equity-method subsidiaries) Lion Akzo Co., Ltd.
Overseas customers
Note: The thick arrows represent transactions of merchandise, finished products, and raw materials. The line arrows represent provision of services, etc.
Sales promotion services
(Consolidated subsidiaries) Lion Field Marketing Co., Ltd.
Overseas business
(Consolidated subsidiaries) Lion Corporation (Hong Kong) Ltd. Lion Corporation (Singapore) Pte. Ltd. Lion Eco Chemicals Sdn. Bhd. Lion Daily Necessities Chemicals (Qingdao) Co., Ltd. CJ Lion Corporation
(Consolidated subsidiaries) Lion Chemical Industry (Taiwan) Co., Ltd. Lion Corporation (Thailand) Ltd.
(Equity-method subsidiaries) Southern Lion Sdn. Bhd. P.T. Lion Wings
Customers
Other
Real estate management and others
(Consolidated subsidiaries) Lion Business Service Co., Ltd. Lion Cordial Support Co., Ltd.
(Equity-method subsidiary) Planet, Inc.
Design, construction, and maintenance of facilities
(Consolidated subsidiary) Lion Engineering Co., Ltd.
Transport and storage of merchandise and finished products
(Consolidated subsidiary) Lion Logistics Service Co., Ltd.
(Equity-method subsidiary) Planet Logistics Co., Ltd.
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
13
Subsidiaries and Affiliates Consolidated Subsidiaries
Name Location Capitalization Business
Voting
shares
held by
Lion
Nature of business relationship
Shared positions Financial
support
Business
dealings
Lease of
facilities, etc. Lion
officers
Lion
employees
Lion Engineering Co.,
Ltd.
Sumida-ku,
Tokyo
Millions of yen
100 Other
%
100.0 2 6 None
Design,
construction,
and
maintenance of
facilities
Lease of part
of office
space
*1
Lion Chemical Co., Ltd.
Sumida-ku,
Tokyo 7,800 Industrial products 100.0 3 8 Loans
Purchase of raw
materials and
merchandises
Rental of part
of office
space and
land
Lion Cordial Support
Co., Ltd.
Sumida-ku,
Tokyo 20 Other 100.0 - 5 None
Human
resources
services
Lease of
office space
Lion Dental Products
Co., Ltd.
Sumida-ku,
Tokyo 10 Consumer products 100.0 1 7 None
Sale of
merchandises
and finished
products
Lease of
office space
Lion Trading Co., Ltd. Sumida-ku,
Tokyo 240 Consumer products 100.0 2 6 None -
Lease of part
of office
space
Lion Hygiene Co., Ltd. Sumida-ku,
Tokyo 300 Industrial products 100.0 2 7 None
Sales and
purchase of
merchandises
Lease of part
of office and
warehouse
space
Lion Packaging Co.,
Ltd.
Ichihara
-shi, Chiba 180 Consumer products 100.0 1 6 None
Purchase of
materials and
merchandises
Rental of part
of office
space and
lease of part
of land
Lion Business Service
Co., Ltd.
Sumida-ku,
Tokyo 490 Other 100.0 - 4 None
Rental, dealing,
and brokerage
of real estate,
and insuring
Rental of part
of office
space and
land
Lion Field Marketing
Co., Ltd.
Sumida-ku,
Tokyo 50 Consumer products 100.0 2 6 None
Sales promotion
activities
Lease of part
of office
space
Lion Logistics Service
Company, Ltd.
Sumida-ku,
Tokyo 40 Other 100.0 2 7 None
Transport and
storage of
merchandises
and finished
products
Lease of part
of office
space
issua Company, Ltd. Minato-ku,
Tokyo 20 Consumer products 100.0 1 5 Loans
Sale of
merchandises
and finished
products
Lease of part
of office
space
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
14
Name Location Capitalization Business
Voting
shares
held by
Lion
Nature of business relationship
Shared positions Financial
support
Business
dealings
Lease of
facilities, etc. Lion
officers
Lion
employees
Ipposha Oil Industries
Co., Ltd.
Ono-shi,
Hyogo
Millions of yen
200 Industrial products 100.0 2 4 Loans
Sale of
merchandises
and finished
products and
purchase of raw
materials and
merchandises
Lease of part
of office
space
Lion Corporation (Hong
Kong) Ltd.
China
(Hong
Kong)
Thousands of
HK$
12,000
Overseas business 100.0 1 2 None
Sale of
merchandises
and finished
products
-
Lion Corporation
(Singapore) Pte. Ltd. Singapore
Thousands of
S$
9,000
Overseas business 100.0 1 1 None
Sale of
merchandises
and finished
products
-
Lion Advertising Ltd.
China
(Hong
Kong)
Thousands of
HK$
100
Overseas business
*2
100.0
(100.0)
1 1 None - -
*1
Lion Eco Chemicals
Sdn. Bhd.
Malaysia
Thousands of
M$
201,000
Overseas business 100.0 1 4 None - -
Lion Daily Necessities
Chemicals (Qingdao)
Co., Ltd.
China Millions of yen
723 Overseas business 100.0 3 4 None
Sale of
merchandises
and finished
products
and purchase of
merchandises
-
Lion (China) Home
Products & Technology
Co., Ltd.
China
Thousands of
US$
33,500
Overseas business 100.0 3 4 None - -
PT. IPPOSHA
INDONESIA Indonesia
Thousands of
US$
750
Overseas business
*3
100.0
(90.0)
- 1 None - -
CJ Lion Corporation South
Korea
Thousands of
won
5,000,000
Overseas business 81.0 3 2 None
Sale of
merchandises
and finished
products
and purchase of
merchandises
-
Lion Chemical Industry
(Taiwan) Co., Ltd. Taiwan
Thousands of
NT$
218,150
Overseas business 53.8 1 5 None
Sale of
merchandises
and finished
products
-
Lion Corporation
(Thailand) Ltd. Thailand
Thousands of
baht
300,000
Overseas business 51.0 5 4 None
Sale of
merchandises
and finished
products
and purchase of
merchandises
-
Peerless Lion
Corporation Philippines
Thousands of
peso
600,000
Overseas business 51.0 1 2 None - -
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
15
Name Location Capitalization Business
Voting
shares
held by
Lion
Nature of business relationship
Shared positions Financial
support
Business
dealings
Lease of
facilities, etc. Lion
officers
Lion
employees
Lion Service Co., Ltd. Thailand
Thousands of
baht
7,000
Other businesses
*3
49.0
(49.0)
- - None - -
Eastern Silicate
Company Limited
Thailand
Thousands of
baht
500
Other businesses
*4
99.9
(99.9)
- 2 None - -
Equity-method affiliates
Name Location Capitalization Business
Voting
shares
held by
Lion
Nature of business relationship
Shared positions Financial
support
Business
dealings
Lease of
facilities, etc. Lion
officers
Lion
employees
Lion Akzo Co., Ltd. Yokkaichi-
shi, Mie
Millions of yen
1,000 Industrial products
%
50.0
3 1 None
Purchase of
fatty acid
nitrogen
derivatives
Lease of part
of office space
Lion Idemitsu
Composites Co., Ltd.
Taito-ku,
Tokyo 100 Industrial products 50.0 2 3 None
Purchase of
special synthetic
resin com-
pounds
-
Planet Logistics Co.,
Ltd.
Sumida-ku,
Tokyo 240 Other 20.8 1 1 None
Transport and
storage of
merchandises
and finished
products
-
Planet, Inc. Minato-ku,
Tokyo 436 Other 16.1 1 - None
Utilization of
VANs -
Southern Lion Sdn.
Bhd. Malaysia
Thousands of
M$
22,000
Overseas business 50.0 1 2 None
Sale of
merchandises
and finished
products
and purchase
of merchandises
-
P.T. Lion Wings Indonesia
Millions of
rupiah
64,062
Overseas business 48.0 1 3 None
Sale of
merchandises
and finished
products
and purchase
of merchandises
-
*1. Lion Chemical Co., Ltd. and Lion Eco Chemicals Sdn. Bhd. are specified subsidiary.
*2. The voting shares of Lion Advertising Ltd. are held by Lion Corporation (Hong Kong) Ltd.
*3. 90% of PT. IPPOSHA INDONESIA’s voting shares are held by Ipposha Oil Industries Co., Ltd.
*4. The voting shares of Lion Service Co., Ltd. and Eastern Silicate Company Limited are held by Lion Corporation
(Thailand) Ltd.
5. The figure in parentheses in the “Voting shares held by Lion” column is the percentage of total voting shares held
indirectly by Lion Corporation.
6. In addition to the companies listed above, there are one small-scale, non-consolidated equity-method companies
and one small-scale equity-method affiliate.
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
16
III. Management Policies
1. Basic Management Policies
The Lion Group positions “Fulfilling a Spirit of Love” as fundamental to its management, and thus
contributes to the enrichment of the happiness and lives of people. Based on this motto, the Lion
Group provides customers with superior products and services that are useful in securing the
healthy, clean and comfortable lifestyles of people. The Group fully recognizes its mission to make
an active contribution to society through such efforts.
The Lion Group takes continual steps to further improve its corporate value. To this end, the Group
provides products and services that place the utmost priority on customer satisfaction based on an
accurate understanding of the changes taking place in peoples’ values and the social role
companies are required to play. At the same time, Lion promotes environmental preservation
activities and enhances its corporate governance systems in order to remain a highly trustworthy
company that meets the expectations of stakeholders, including shareholders, customers, business
partners, local communities/society and employees.
2. Performance Targets
Through the thorough selection and concentration of investment in management initiatives, efforts
to reform its business structure and reinforce its earnings structure, and aggressive acquisitions and
the development of new businesses, Lion is striving to increase its corporate value with the goal of
reaching a consolidated ROE of 10%.
3. Medium and Long-term Management Strategies
In recognition of ongoing social change, the Lion Group has formulated a management vision,
“Vision 2020,” as an ideal for the Lion Group in 2020, and is advancing the “V-1 Plan” as a
medium-term management plan that comprises basic strategies to achieve this management vision.
“Vision 2020”
Management Vision: The Ideal Lion Corporation in Fiscal 2020 (Three Defining Characteristics)
1. Be a company that creates value for lifestyle and spiritual fulfillment
2. Be a company that is advanced in the area of environmental responsiveness
3. Be a company that continues to take on challenges, create and learn
【Four Strategies: Framework to Achieve “Vision 2020” 】
1. Qualitative Growth of Domestic Businesses
2. Quantitative Expansion of Overseas Businesses
3. Development of New Business Value
4. Enhancement of Organizational Learning Capabilities
4. Management Issues
As it steadily implements the four strategies of the V-1 Plan with the aim of realizing “Vision 2020,” the
Lion Group recognizes the existence of certain management issues that have a direct impact on the
achievement of its objectives.
(1) Qualitative Growth of Domestic Businesses
In the Consumer Products Business in Japan, Lion will strengthen its profitability. To this end, the
Company will implement thorough strategies to boost its brand recognition and streamline competition
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
17
costs in the mainstay Health Care and Household businesses. In addition, by strategically focusing
resources on R&D and strengthening outside collaborative activities, Lion will work to create the seeds
of new technology and ensure a stable, efficient supply chain.
(2) Quantitative Expansion of Overseas Businesses
Mainly in burgeoning Asian markets, Lion will place further emphasis on marketing activities and steadily
expand production capacities, primarily for oral care products and laundry detergents, with the aim of
enhancing its market presence. Furthermore, while focusing on growing its business in the Philippines,
the Lion Group will bolster efforts to explore new business areas overseas as it works to achieve
business expansion.
(3) Development of New Business Value
In pursuit of the further expansion of sales in the area of mail-order services, Lion will strengthen its
initiatives in new product development and commercialization while actively launching new businesses
that utilize its existing management resources and seeking new business opportunities.
(4) Enhancement of Organizational Learning Capabilities
In line with the new corporate message, Lion will create workplaces where a diverse workforce can
thrive and carry out human resource development initiatives, seeking to create a bolder, more
enterprising corporate culture. Lion will also concentrate on its ECO LION activities to further reinforce
and facilitate its environmental approach in order to help protect the environment.
By vigorously promoting the aforementioned four strategies, the Lion Group aims to increase profitability
and strengthen its business foundation. Simultaneously, the Group will make broad-ranging
contributions to the realization of a sustainable, recycling-oriented society and thereby enhance its
corporate value.
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
18
IV. Consolidated Financial Reporting Statements 1. Consolidated Balance Sheets
(Millions of yen)
Fiscal Year
Ended December 31, 2012
Fiscal Year Ended December
31, 2013
Assets
Current assets
Cash and deposits 26,149 25,559
Notes and accounts receivable-trade 51,218 57,246
Short-term investments securities 16,358 25,429
Merchandise and finished goods 20,383 23,005
Work in process 3,496 3,278
Raw materials and supplies 7,954 8,802
Deferred tax assets 3,239 2,569
Other 2,288 2,311
Allowance for doubtful accounts (41) (52)
Total current assets 131,047 148,150
Noncurrent assets
Property, plant and equipment
Buildings and structures 65,075 71,030
Accumulated depreciation (45,731) (47,556)
Buildings and structures, net 19,344 23,474
Machinery, equipment and vehicles 123,064 127,500
Accumulated depreciation (107,082) (107,888)
Machinery, equipment and vehicles, net 15,981 19,611
Land 18,853 18,891
Lease assets 438 422
Accumulated depreciation (277) (217)
Lease assets, net 161 205
Construction in progress 4,705 3,630
Other 20,377 21,142
Accumulated depreciation (17,469) (17,966)
Other, net 2,908 3,175
Total property, plant and equipment 61,955 68,989
Intangible assets
Goodwill 256 128
Right of trademark 15,301 10,577
Other 2,197 1,901
Total intangible assets 17,754 12,606
Investments and other assets
Investment securities 28,564 33,362
Long-term loans receivable 11 14
Prepaid pension cost 15,878 16,249
Deferred tax assets 1,263 1,455
Other 1,159 1,306
Allowance for doubtful accounts (39) (37)
Total Investments and other assets 46,837 52,351
Total noncurrent assets 126,547 133,948
Total assets 257,595 282,098
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
19
(Millions of yen)
Fiscal Year
Ended December 31, 2012
Fiscal Year Ended December
31, 2013
Liabilities
Current liabilities
Notes and accounts payable-trade 40,530 49,918
Short-term loans payable 5,943 9,611
Current portion of long-term loans payable 2,416 22,466
Accounts payable-other and accrued expenses 39,650 39,087
Income taxes payable 1,532 3,057
Provision for bonuses 1,928 2,176
Provision for sales returns 664 603
Provision for sales promotion expenses 408 744
Provision for directors' bonuses 147 231
Asset retirement obligation 9 0
Other 2,911 3,759
Total current liabilities 96,142 131,656
Noncurrent liabilities
Long-term loans payable 22,670 204
Provision for retirement benefits 19,231 19,353
Provision for directors' retirement benefits 331 373
Asset retirement obligation 324 340
Other 4,731 5,936
Total noncurrent liabilities 47,288 26,208
Total liabilities 143,431 157,865
Net assets
Shareholders’ equity
Capital stock 34,433 34,433
Capital surplus 31,499 31,499
Retained earnings 57,996 61,410
Treasury stock (16,656) (16,755)
Total shareholders' equity 107,273 110,588
Accumulated other comprehensive income
Valuation difference on available-for-sale securities 3,688 6,921
Deferred gains or losses on hedges 6 24
Foreign currency translation adjustment (1,708) 914
Total accumulated other comprehensive income 1,987 7,860
Subscription rights to shares 129 193
Minority interests 4,772 5,590
Total net assets 114,163 124,232
Total liabilities and net assets 257,595 282,098
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
20
2. Consolidated Statements of Income and Consolidated Statement of Comprehensive Income
Consolidated Statements of Income
(Millions of yen)
Fiscal year
Ended December 31, 2012
Fiscal year Ended December
31, 2013
Net sales 335,171 352,005
Cost of sales 145,385 153,336
Gross profit 189,785 198,668
Selling, general and administrative expenses 182,572 187,849
Operating income 7,213 10,819
Non-operating income
Interest income 160 206
Dividends income 512 565
Equity in earnings of affiliates 803 696
Royalty income 205 256
Foreign exchange gains 133 216
Other 453 414
Total non-operating income 2,268 2,357
Non-operating expenses
Interest expenses 698 726
Loss on disposal of inventories 115 56
Other 104 94
Total non-operating expenses 917 876
Ordinary income 8,564 12,300
Extraordinary income
Gain on disposal of noncurrent assets 299 41
Gain on sales of investment securities 67 1,428
Other - 83
Total extraordinary income 367 1,552
Extraordinary loss
Loss on disposal of noncurrent assets 205 899
Impairment loss 131 1962
Loss on valuation of investment securities - 40
Other - 24
Total extraordinary losses 337 2,926
Income before income taxes 8,594 10,925
Income taxes-current 2,044 4,053
Income taxes-deferred 1,654 159
Total income taxes 3,699 4,213
Income before minority interests 4,895 6,712
Minority interests in income 659 615
Net Income 4,235 6,097
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
21
Consolidated Statement of Comprehensive Income
(Millions of yen)
Fiscal Year
Ended December 31, 2012
Fiscal Year Ended December
31, 2013
Income before minority interests 4,895 6,712
Other comprehensive income
Valuation difference on available-for-sale securities 4,041 3,214
Deferred gains or losses on hedges 13 17
Foreign currency translation adjustment 2,318 3,147
Share of other comprehensive income of associates accounted for using equity method
209 169
Total other comprehensive income 6,583 6,548
Comprehensive income 11,478 13,261
Comprehensive income attributable to:
Comprehensive income attributable to owner of the parent
10,209 11,970
Comprehensive income attributable to minority interests
1,268 1,290
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
22
3. Consolidated Statement of Changes in Shareholders’ Equity Consolidated Results for the Year Ended December 31, 2012 (January 1 to December 31, 2012)
(Millions of yen)
Shareholders’ equity
Capital stock Capital surplus Retained earnings
Treasury stock Total shareholders' equity
Balance at the start of current period
34,433 31,499 56,755 (16,653) 106,035
Changes of items during the period
Dividends from surplus (2,954) (2,954)
Net income 4,235 4,235
Purchase of treasury stock (155) (155)
Disposal of treasury stock (40) 152 111
Net changes of items other than shareholders' equity
Total changes of items during the period
- - 1,241 (2) 1,238
Balance at the end of current period
34,433 31,499 57,996 (16,656) 107,273
(Millions of yen)
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Accumulated other comprehensive income
Subscription rights to shares
Minority interests
Net assets
Balance at the start of current period
(351) (6) (3,628) (3,986) 180 3,023 105,252
Changes of items during the period
Dividends from surplus
(2,954)
Net income 4,235
Purchase of treasury stock
(155)
Disposal of treasury stock
111
Net changes of items other
than shareholders' equity
4,040 13 1,919 5,973 (50) 1,749 7,672
Total changes of items during the period
4,040 13 1,919 5,973 (50) 1,749 8,911
Balance at the end of current period
3,688 6 (1,708) 1,987 129 4,772 114,163
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
23
Consolidated Results for the Year Ended December 31, 2013 (January 1 to December 31, 2013)
(Millions of yen)
Shareholders’ equity
Capital stock Capital surplus Retained earnings
Treasury stock Total shareholders' equity
Balance at the start of current period
34,433 31,499 57,996 (16,656) 107,273
Changes of items during the period
Dividends from surplus (2,683) (2,683)
Net income 6,097 6,097
Purchase of treasury stock (101) (101)
Disposal of treasury stock 0 2 2
Net changes of items other than shareholders' equity
Total changes of items during the period
- 0 3,413 (99) 3,314
Balance at the end of current period
34,433 31,499 61,410 (16,755) 110,588
(Millions of yen)
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Accumulated other comprehensive income
Subscription rights to shares
Minority interests
Net assets
Balance at the start of current period
3,688 6 (1,708) 1,987 129 4,772 114,163
Changes of items during the period
Dividends from surplus
(2,683)
Net income 6,097
Purchase of treasury stock
(101)
Disposal of treasury stock
2
Net changes of items other than shareholders' equity
3,232 17 2,622 5,873 63 817 6,754
Total changes of items during the period
3,232 17 2,622 5,873 63 817 10,069
Balance at the end of current period
6,921 24 914 7,860 193 5,590 124,232
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
24
4. Consolidated Statements of Cash Flows
(Millions of yen)
Fiscal year
Ended December 31, 2012
Fiscal year Ended December
31, 2013
Net cash provided by (used in) operating activities
Income before income taxes and minority interests 8,594 10,925
Depreciation and amortization 11,834 11,227
Impairment loss 131 1,962
Increase (decrease) in provision for bonuses (238) 156
Increase (decrease) in provision for retirement benefits (810) (378)
Interest and dividends income (672) (772)
Interest expenses 698 726
Loss (gain) on disposal of noncurrent assets (94) 858
Loss (gain) on sales of investment securities (67) (1,428)
Loss (gain) on valuation of investment securities - 40
Equity in (earnings) losses of affiliates (803) (696)
Decrease (increase) in notes and accounts receivable-trade 5,572 (4,167)
Decrease (increase) in inventories (725) (2,207)
Increase (decrease) in notes and accounts payable-trade (2,546) 8,440
Increase (decrease) in accounts payable-other and accrued expenses (724) 304
Increase (decrease) in other current liabilities 214 293
Decrease (increase) in other current assets (493) (281)
Other, net 91 (209)
Subtotal 19,961 24,793
Interest and dividends income received 1,199 1,068
Interest expenses paid (678) (711)
Income taxes paid (1,719) (2,240)
Net cash provided by (used in) operating activities 18,762 22,910
Net cash provided by (used in) investment activities
Decrease (increase) in time deposits (886) (69)
Purchases of property, plant and equipment (7,973) (14,649)
Proceeds from sales of property, plant and equipment 457 183
Purchase of intangible assets (907) (112)
Purchase of investment securities (73) (1,018)
Proceeds from sales of investment securities 110 2,802
Payments of loans receivable (0) (162)
Collection of loans receivable 8 157
Other, net 93 49
Net cash provided by (used in) investment activities (9,172) (12,819)
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
25
(Millions of yen)
Fiscal year
Ended December 31, 2012
Fiscal year Ended December
31, 2013
Net cash provided by (used in) financing activities
Increase in short-term loans payable 15,747 18,881
Decrease in short-term loans payable (15,441) (15,967)
Repayment of long-term loans payable (2,416) (2,416)
Purchase of treasury stock (20) (101)
Proceeds from disposal of treasury stock 3 2
Cash dividends paid (2,959) (2,676)
Cash dividend to minority shareholders (239) (440)
Proceeds from minority interests in establishment of consolidated subsidiaries
545 -
Other, net (142) (52)
Net cash provided by (used in) financing activities (4,923) (2,772)
Effect of exchange rate change on cash and cash equivalents 602 709
Net increase (decrease) in cash and cash equivalents 5,269 8,027
Cash and cash equivalents at beginning of period 35,640 40,913
Increase in cash and cash equivalents from newly consolidated subsidiary
3 -
Cash and cash equivalents at end of period 40,913 48,941
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
26
5. Segment Information
[Segment Information]
1. Overview of Reportable Segments
The reportable segments of Lion Corporation comprise those entities for which obtaining separate
financial reports is possible and that are subject to regular review by the Board of Directors, which
decides upon the distribution of management resources to said segments.
Lion Corporation positions segments distinguished by their products within each business division.
Each segment proposes comprehensive product strategies while pursuing business expansion.
Affiliated companies in Japan undertake business activities that are in line with the characteristics
of their respective products and services.
Affiliated companies located overseas are independent management units that conduct business
activities that conform to the characteristics of the regions in which they operate.
The three reportable segments (distinguished by products, services and regions) that therefore
comprise Lion Corporation’s operations are: Consumer Products Business, Industrial Products
Business and Overseas Business.
The Company’s Reportable Segments are as follows.
1) Consumer Products Business
The Consumer Products Business engages in the manufacture and sale of commodities, OTC
drugs and functional food products primarily 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
2) Industrial Products 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.
Main products: activators, electro-conductive carbon and industrial cleaners
3) Overseas Business
The Overseas Business engages mainly in the manufacture and sale of commodities by affiliated
overseas businesses.
4) Other Business
Lion subsidiaries located in Japan primarily undertake operations of each Lion Group business.
Main products and services: construction contractor business, real estate management,
distribution/storage and temporary staffing services.
2. Methods for Calculating Net Sales, Profits, Losses, Assets, Liabilities and Other Monetary Items for
Each Reportable Segment
Profit figures for each reportable segment are based on operating income.
Intersegment transaction and transfer prices are, in principle, established based on negotiations
reflecting market prices, total supplier costs and the Company’s asking price.
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
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3. Information Regarding Net Sales, Profits, Losses, Assets, Liabilities and Other Monetary Items
for Each Reportable Segment
Consolidated Results for the Year Ended December 31, 2012 (January 1 to December 31, 2012) (Millions of yen)
Reportable segments
Other Total Adjustment*2 Consolidated
total*3 Consumer
Products
Business
Industrial
Products
Business
Overseas
Business
1. Net sales
(1) Sales to
external
customers
(2)Intersegment
sales*1
244,285
21,757
30,159
19,625
56,093
3,079
4,633
25,164
335,171
69,627
-
(69,627)
335,171
-
Total 266,042 49,784 59,173 29,798 404,799 (69,627) 335,171
Segment income 4,304 360 1,462 971 7,098 115 7,213
Segment assets 107,962 39,683 39,365 21,372 208,383 49,211 257,595
Other monetary
items
Depreciation and
amortization
Investment in
equity method
affiliates
Increases in
property, plant and
equipment and
intangible assets
9,017
2,973
6,244
1,429
564
1,134
903
91
2,754
251
1,874
160
11,601
5,504
10,294
232
(73)
525
11,834
5,431
10,820
Notes: 1. Internal transactions are included within reportable segments.
2. (1) Segment income adjustments totaling ¥115 million are composed mainly of internal transaction
eliminations.
(2) Segment asset adjustments include internal transaction eliminations resulting in a ¥66,602 million
deduction and a ¥115,414 million addition that reflects Company assets not allocated to reportable
segments.
Company assets are composed mainly of financial assets (including cash and deposits, short-term
investment securities and investment securities) and administration assets, both of which are not
attributable to reportable segments.
(3) Depreciation and amortization adjustments are composed of those involving Company assets and
internal transaction eliminations.
3. Segment income is adjusted based on operating income in consolidated income statements.
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
28
Consolidated Results for the Year Ended December 31, 2013 (January 1 to December 31, 2013) (Millions of yen)
Reportable segments
Other Total Adjustment*2 Consolidated
total*3 Consumer
Products
Business
Industrial
Products
Business
Overseas
Business
1. Net sales
(1) Sales to
external
customers
(2)Intersegment
sales*1
242,707
22,499
31,236
20,394
72,656
4,208
5,404
23,318
352,005
70,421
-
(70,421)
352,005
-
Total 265,207 51,630 76,865 28,723 422,427 (70,421) 352,005
Segment income 7,289 778 1,435 1,016 10,519 300 10,819
Segment assets 110,188 40,605 51,391 20,740 222,926 59,172 282,098
Other monetary
items
Depreciation and
amortization
Investment in
equity method
affiliates
Increases in
property, plant and
equipment and
intangible assets
8,361
3,351
6,084
1,167
629
1,069
1,187
117
6,513
217
1,992
104
10,934
6,090
13,772
292
(145)
(63)
11,227
5,944
13,709
Notes: 1. Internal transactions are included within reportable segments.
2. (1) Segment income adjustments totaling ¥300 million are composed mainly of internal transaction
eliminations.
(2) Segment asset adjustments include internal transaction eliminations resulting in a ¥66,399 million
deduction and a ¥125,572 million addition that reflects Company assets not allocated to reportable
segments.
Company assets are composed mainly of financial assets (including cash and deposits, short-term
investment securities and investment securities) and administration assets, both of which are not
attributable to reportable segments.
(3) Depreciation and amortization adjustments are composed of those involving Company assets and
internal transaction eliminations.
3. Segment income is adjusted based on operating income in consolidated income statements.
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
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6. Per Share Information
FY 2012
(January 1 to December 31, 2012)
FY 2013
(January 1 to December 31, 2013)
Net assets per share 407.08 Yen 441.59 Yen
EPS 15.77 Yen 22.72 Yen
Diluted EPS 15.75 Yen 22.68 Yen
Basis for Calculations 1. Amount of Net Assets Per Share
Item FY 2012
(January 1 to December 31, 2012)
FY 2013 (January 1 to
December 31, 2013)
Total amount of net assets in Consolidated Financial Reporting Statements (Millions of yen)
114,163 124,232
Amount of net assets related to common stock (Millions of yen)
109,261 118,448
Principal breakdown of balances (Millions of yen)
Subscription rights 129 193
Minority interest 4,772 5,590
Number of outstanding shares of common stock (Thousands of shares)
299,115 299,115
Numbers of shares of treasury stock as common stock (Thousands of shares)
30,713 30,882
Number of shares of common stock that are calculated based on the amount of net assets per share (Thousands of shares)
268,401 268,232
2. Net income per share (EPS) and diluted net income per share (diluted EPS)
FY 2012
(January 1 to December 31, 2012)
FY 2013 (January 1 to
December 31, 2013)
EPS
Net income (millions of Yen) 4,235 6,097
Amount not belong to common stockholders (millions of Yen)
- -
Net Income concerning common stock (millions of Yen)
4,235 6,097
Average number of outstanding shares during the period (thousands of shares)
268,611 268,341
Diluted EPS
Net income adjustment (millions of Yen)
Increase in number of common stocks (thousands of shares)
393 460
Of which, stock options (thousands of shares) (393) (460)
Summary of residual shares not included in diluted EPS due to lack of dilution effect.
- -
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
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7. Important Subsequent Events Lion reached a decision at the January 31, 2014 Board of Directors meeting to acquire additional shares
of Lion Akzo Co., Ltd. (“LACO”), a joint venture established in tandem with Akzo Nobel N.V. (“AN”), by
taking over AN’s equity stake in LACO through a share transfer.
1. Purpose: Recognizing LACO as strategically important to the Consumer Products and Industrial
Products businesses, Lion intends to make LACO a wholly owned subsidiary through this share
transfer, thereby further streamlining its use of Groupwide management resources.
2. Transferor of Shares: Akzo Nobel N.V. (the Netherlands)
3. Date of transfer: March 31, 2014 (scheduled)
4. Method: Share acquisition in exchange for cash
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
31
V. Other information
Personnel Changes
1. Change of Representative
There is no change.
Immediately following the Company’s Regular Shareholders’ Meeting scheduled for March 28, 2014, the
following management team is scheduled to assume office and begin exercising their duties, attending a
Board of Directors meeting following said Regular Shareholders’ Meeting.
(1) Director
Name Position
Sadayoshi Fujishige Representative Director and Chairman of the Board
Itsuo Hama Representative Director and President
Executive Officer, Chief Executive Officer
Takayasu Kasamatsu Executive Director, Executive Officer
Yuji Watari Executive Director, Executive Officer
Masazumi Kikukawa Director, Executive Officer
Kenjiro Kobayashi Director, Executive Officer
Yasuo Shimizu Director, Executive Officer
Toshio Kakui Director, Executive Officer
Mitsuaki Shimaguchi External Director
Professor Emeritus of Keio University
Hideo Yamada External Director
Attorney at Law
The notification of the nomination of Mr. Mitsuaki Shimaguchi and Mr. Hideo Yamada as independent directors has been sent to the Tokyo Stock Exchange.
(2)Corporate Auditor
Name Position
Shinjiro Iwahori Standing Corporate Auditor
Shozo Hanada Standing Corporate Auditor
Hideo Doi External Corporate Auditor
(Certified Public Accountant)
Sumiaki Nomura External Corporate Auditor
(Certified Tax Accountant)
The notification of the nomination of Mr. Hideo Doi and Mr. Sumiaki Nomura as independent directors has been sent to the Tokyo Stock Exchange.
Lion Corporation (Code 4912): Consolidated Financial Statements for the Year Ended December 31, 2013
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(3) Substitute Corporate Auditor
Name Position
Noboru Kojima Substitute Corporate Auditor
(Certified Public Accountant, Certified Tax Accountant)
(4) Executive Officer (Excluding interlocking directors)
Name
Hideyuki Imai Sadao Hamada
Fumihiro Mikuchi Takeo Sakakibara
Shu Kawazoe Hiroyuki Chiba
Tomomichi Okano Kohei Miyauchi